<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 0-21260
- --------------------- -------------------------------
DATRONIC EQUIPMENT INCOME FUND XX, L.P.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 36-3763539
- ---------------- ---------------------------
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 XX, 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 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 XX, 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 $205,182 $2,568,876 $2,774,058
Net investment in direct
financing leases 21,814 2,091,678 2,113,492
Diverted and other assets, net 14,389 198,473 212,862
Datronic assets - - -
Organization costs, net of
accumulated amortization
of $61,651 and $850,346,
respectively 2,125 29,317 31,442
Acquisition costs, net of
accumulated amortization
of $70,162 and $967,733,
respectively 2,135 29,448 31,583
-------- ---------- ----------
$245,645 $4,917,792 $5,163,437
======== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and
accrued expenses $ 370 $ 14,402 $ 14,772
Lessee rental deposits 2,877 53,932 56,809
-------- ---------- ----------
Total liabilities 3,247 68,334 71,581
Total partners' equity 242,398 4,849,458 5,091,856
-------- ---------- ----------
$245,645 $4,917,792 $5,163,437
======== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XX, 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 $ 198,315 $2,336,816 $2,535,131
Due from management company 2,306 39,066 41,372
Net investment in
direct financing leases 37,159 2,580,820 2,617,979
Diverted and other assets, net 14,389 198,473 212,862
Datronic assets, net - - -
Organization costs, net of
accumulated amortization
of $58,463 and $806,371,
respectively 5,313 73,292 78,605
Acquisition costs, net of
accumulated amortization of
$66,959 and $923,562,
respectively 5,338 73,619 78,957
----------- ---------- ----------
$ 262,820 $5,302,086 $5,564,906
=========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and
accrued expenses $ 2,319 $ 61,421 $ 63,740
Lessee rental deposits 3,678 53,152 56,830
----------- ---------- ----------
Total liabilities 5,997 114,573 120,570
Total partners' equity 256,823 5,187,513 5,444,336
----------- ---------- ----------
$ 262,820 $5,302,086 $5,564,906
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
DATRONIC EQUIPMENT INCOME FUND XX, 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 $ 1,068 $ 80,689 $ 81,757
Interest income 2,003 32,233 34,236
-------- --------- ---------
3,071 112,922 115,993
-------- --------- ---------
Expenses:
Amortization of organization
and equipment acquisition costs 6,391 88,146 94,537
General Partner's
expense reimbursement 15,927 239,841 255,768
Professional fees 3,109 46,355 49,464
Other operating expenses 497 7,204 7,701
Credit for lease losses (8,428) (116,241) (124,669)
-------- -------- --------
17,496 265,305 282,801
-------- --------- ---------
Net loss $(14,425) $(152,383) $(166,808)
======== ========= =========
Net loss - General Partner $ (144) $ (1,524) $ (1,668)
======== ========= =========
Net loss - Limited Partners $(14,281) $(150,859) $(165,140)
======== ========= =========
Net loss per limited partnership
unit $(2.80) $(2.14)
====== ======
Weighted average number
of limited partnership units
outstanding 5,100 70,396
===== ======
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
DATRONIC EQUIPMENT INCOME FUND XX, 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 $ 5,610 $ 179,301 $ 184,911
Interest income 5,237 76,214 81,451
-------- --------- ---------
10,847 255,515 266,362
-------- --------- ---------
Expenses:
Amortization of organization
and equipment acquisition
costs 6,391 88,147 94,538
Management fees-New Era 13,342 370,198 383,540
General Partner's
expense reimbursement 7,683 105,970 113,653
Professional fees 4,742 66,500 71,242
Other operating expenses 698 16,992 17,690
-------- --------- ---------
32,856 647,807 680,663
-------- --------- ---------
Net loss $(22,009) $(392,292) $(414,301)
======== ========= =========
Net loss - General Partner $ (220) $ (3,923) $ (4,143)
======== ========= =========
Net loss - Limited Partners $(21,789) $(388,369) $(410,158)
======== ========= =========
Net loss per limited partnership
unit $(4.27) $(5.52)
====== ======
Weighted average number
of limited partnership units
outstanding 5,100 70,396
===== ======
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
DATRONIC EQUIPMENT INCOME FUND XX, 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 $(306,906)* $272,834 $5,478,408 $5,444,336
Distributions to partners - - (185,672) (185,672)
Net loss (1,668) (14,281) (150,859) (166,808)
Allocation of General
Partner's Equity 308,574 (16,155) (292,419) -
--------- -------- ---------- ----------
Balance, March 31, 1997 $ - $242,398 $4,849,458 $5,091,856
========= ======== ========== ==========
</TABLE>
* Balance as previously reported was $0 due to allocation of $16,011 and
$290,895 to Liquidating and Continuing Limited Partners' Equity, respectively.
See accompanying notes to financial statements.
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XX, 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 $ (14,425) $ (152,383) $ (166,808)
Adjustments to reconcile net loss
to net cash used in
operating activities:
Amortization expense 6,391 88,146 94,537
Credit for lease losses (8,428) (116,241) (124,669)
Changes in assets and liabilities:
Accounts payable and accrued
expenses (1,949) (47,019) (48,968)
Lessee rental deposits (801) 780 (21)
Due to management company 2,306 39,066 41,372
--------- ----------- -----------
(16,906) (187,651) (204,557)
--------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 23,773 605,383 629,156
--------- ----------- ----------
Cash flows from financing activities:
Distributions to Limited Partners - (185,672) (185,672)
--------- ----------- ----------
Net increase in cash and
cash equivalents 6,867 232,060 238,927
Cash and cash equivalents:
Beginning of year 198,315 2,336,816 2,535,131
--------- ---------- ----------
End of first quarter $ 205,182 $2,568,876 $2,774,058
========= ========== ==========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 9
DATRONIC EQUIPMENT INCOME FUND XX, 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 $ (22,009) $ (392,292) $ (414,301)
Adjustments to reconcile net loss
to net cash used in
operating activities:
Amortization expense 6,391 88,147 94,538
Changes in assets and
liabilities:
Accounts payable and
accrued expenses (2,145) (27,188) (29,333)
Lessee rental deposits 24 340 364
Due to management company 16 (19,549) (19,533)
--------- ---------- ----------
(17,723) (350,542) (368,265)
--------- ---------- ----------
Cash flows from investing activities:
Purchases of lease receivables - (1,093,987) (1,093,987)
Principal collections on leases 36,709 762,639 799,348
Sale of leases 2,405 580,250 582,655
Principal collections on
installment contract
receivable 8,414 116,056 124,470
--------- ---------- ----------
47,528 364,958 412,486
--------- ---------- ----------
Cash flows from financing activities:
Distributions to
Limited Partners (156,009) (1,040,581) (1,196,590)
Distributions to
General Partner (408) (16,964) (17,372)
--------- ---------- ----------
(156,417) (1,057,545) (1,213,962)
--------- ---------- ----------
Net decrease in cash and
cash equivalents (126,612) (1,043,129) (1,169,741)
Cash and cash equivalents:
Beginning of year 253,297 2,470,149 2,723,446
--------- ---------- ----------
End of first quarter $ 126,685 $1,427,020 $1,553,705
========= ========== ==========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XX, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
NOTE 1 - ORGANIZATION:
Datronic Equipment Income Fund XX, L.P., a Delaware Limited Partnership (the
"Partnership"), was formed on April 30, 1991 for the purpose of acquiring and
leasing both high- and low-technology equipment. The offering of limited
partnership units terminated on May 1, 1992. Reference is made to Notes 3, 4
and 5 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 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 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, 1996 distribution and distributions to Continuing Limited Partners
were suspended after payment of the January 1, 1997 distribution.
NOTE 4 - LEASE PORTFOLIO SALE:
During the three months ended March 31, 1996, the Partnership and Datronic
Equipment Income Fund XIX, L.P. each entered into separate agreements to sell
equipment leases at a discount rate of 11.75% which resulted in aggregate net
proceeds of approximately $1.5 million. The Partnership's share of the proceeds
was approximately $583,000.
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, and make distributions to limited partners.
The Partnership's net investment in direct financing leases decreased by
approximately $504,000 for the period ended March 31, 1997 as compared to the
period ended December 31, 1996. This decrease is primarily attributable to
principal collections of approximately $629,000, partially offset by a credit
for lease loss of approximately $125,000.
Accounts payable and accrued expenses decreased approximately $49,000 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 $353,000 during the three months ended
March 31, 1997 due to distributions to partners of approximately $186,000 and a
net loss of approximately $167,000.
During the three months ended March 31, 1997, the Partnership's operating
activities resulted in a use of approximately $205,000 of cash. This was due to
a net loss of approximately $167,000 and decreases in accounts payable and
accrued expenses and lessee rental deposits of approximately $49,000 and a
non-cash credit for lease loss of $125,000, partially offset by a decrease in
due from management company of approximately $41,000 and a non-cash
amortization expense of approximately $95,000. During the period, cash flows
from investing activities aggregated approximately $629,000 comprised of
principal collections on leases. Cash flows used for financing activities of
approximately $186,000, consisted of distributions to limited partners.
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
11
<PAGE> 12
short and long term are sufficient to meet its operating cash obligations,
provide for the ongoing pursuit of litigation and an orderly liquidation of the
Partnership. Distributions to Liquidating Limited Partners were suspended
after the July 1, 1996 distribution. Distributions to the Continuing Limited
Partners were suspended after the January 1, 1997 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
Partnership's (see Notes 3, 4, and 8 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 $103,000 during the three months ended
March 31, 1997 as compared to the corresponding period in 1996 due to the
declining lease portfolio.
Interest income decreased approximately $47,000 during the three months ended
March 31, 1997 as compared to the corresponding period in 1996. This decrease
is primarily due to the early payoff of an installment contract receivable in
December 1996.
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
$384,000 for the same period in 1996. Subsequent to June 30, 1996 the General
Partner has assumed responsibility for day-to-day management of the Partnership
and the corresponding costs and expenses are included in General Partner's
expense reimbursement. See Note 7 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 $256,000 (all of which represents the general partner's expense
reimbursement). Total amounts paid to LRC for the three months ended March 31,
1996 were approximately $131,000 ($114,000 representing general partner's
expense reimbursement and $17,000 representing general partner distributions).
12
<PAGE> 13
The increase of approximately $125,000 results from expenses of approximately
$140,000 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 30 1996 (see Note 7 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 $15,000.
Professional fees decreased approximately $22,000 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, and audit fees.
Other operating expenses decreased approximately $10,000 for the three month
period ended March 31, 1997 as compared to the corresponding period in 1996,
primarily due to decreased bank charges and UCC filing fees.
Credit for lease losses reflects Management's ongoing assessment of potential
loss inherent in the lease portfolio and actual lease collections on certain
leases in excess of those anticipated in prior years.
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 XX, 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 XX, 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 XX, L.P.
15
<PAGE> 16
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>
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> 2,774,058
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,163,437
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,091,856
<TOTAL-LIABILITY-AND-EQUITY> 5,163,437
<SALES> 0
<TOTAL-REVENUES> 115,993
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,701
<LOSS-PROVISION> (124,669)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (166,808)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
