<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, 1998 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
--- ---
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DATRONIC EQUIPMENT INCOME FUND XX, L.P.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998
PART I - FINANCIAL INFORMATION
<TABLE>
<S> <C>
Item 1.
Index to Financial Statements
Balance Sheets
March 31, 1998 (unaudited) 3
December 31, 1997 4
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 1998 5
For the three months ended March 31, 1997 6
Statements of Changes in Partners' Equity
For the three months ended March 31, 1998 7
(unaudited)
Statements of Cash Flows (unaudited)
For the three months ended March 31, 1998 8
For the three months ended March 31, 1997 9
Notes to Financial Statements 10 - 11
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 12 - 13
PART II - OTHER INFORMATION
Items 1-6. 14
</TABLE>
2
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DATRONIC EQUIPMENT INCOME FUND XX, L.P.
BALANCE SHEETS
March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
ASSETS
------
Cash and cash equivalents $224,269 $3,808,087 $4,032,356
Net investment in direct
financing leases - 900,305 900,305
Residual interest in CRCA - - -
Diverted and other assets, net 15,700 216,545 232,245
Datronic assets - - -
-------- ---------- ----------
$239,969 $4,924,937 $5,164,906
======== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable and
accrued expenses $ 222 $ 12,544 $12,766
Lessee rental deposits 447 6,391 6,838
-------- ---------- ----------
Total liabilities 669 18,935 19,604
Total partners' equity 239,300 4,906,002 5,145,302
-------- ---------- ----------
$239,969 $4,924,937 $5,164,906
======== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XX, L.P.
BALANCE SHEETS
December 31, 1997
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
ASSETS
------
Cash and cash equivalents $221,305 $3,564,194 $3,785,499
Net investment in
direct financing leases - 1,101,279 1,101,279
Residual interest in CRCA - - -
Diverted and other assets, net 15,700 216,545 232,245
Datronic assets, net - - -
-------- ---------- ----------
$237,005 $4,882,018 $5,119,023
======== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable and
accrued expenses $ 355 $ 17,773 $ 18,128
Lessee rental deposits 1,916 38,461 40,377
-------- ---------- ----------
Total liabilities 2,271 56,234 58,505
Total partners' equity 234,734 4,825,784 5,060,518
-------- ---------- ----------
$237,005 $4,882,018 $5,119,023
======== ========== ==========
</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, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Revenue:
Lease income $ 552 $ 42,995 $ 43,547
Interest income 2,777 42,920 45,697
-------- ---------- ---------
3,329 85,915 89,244
-------- ---------- ---------
Expenses:
General Partner's
expense reimbursement 8,922 144,890 153,812
Professional fees 6,459 89,729 96,188
Other operating expenses 353 5,152 5,505
Credit for lease losses (16,971) (234,074) (251,045)
-------- ---------- ---------
(1,237) 5,697 4,460
-------- ---------- ---------
Net earnings $ 4,566 $ 80,218 $ 84,784
======== ========== =========
Net earnings - General Partner $ 46 $ 802 $ 848
======== ========== =========
Net earnings - Limited Partners $ 4,520 $ 79,416 $ 83,936
======== ========== =========
Net earnings per limited partnership
unit $ .89 $ 1.13
===== ======
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, 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.
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, 1997* $ - $234,734 $4,825,784 $5,060,518
Net earnings 848 4,520 79,416 84,784
Allocation of General
Partner's Equity (848) 46 802 -
--------- -------- ---------- ----------
Balance, March 31, 1998 $ - $239,300 $4,906,002 $5,145,302
========= ======== ========== ==========
</TABLE>
* Balances are net of $16,232 and $292,656, of General Partner's equity
previously allocated to Liquidating and Continuing Limited Partners'
Equity.
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, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 4,566 $ 80,218 $ 84,784
Adjustments to reconcile net
earnings to net cash used
in operating activities:
Credit for lease losses (16,971) (234,074) (251,045)
Changes in assets and
liabilities:
Accounts payable and
accrued expenses (133) (5,229) (5,362)
Lessee rental deposits (1,469) (32,070) (33,539)
----------- ---------- ----------
(14,007) (191,155) (205,162)
----------- ---------- ----------
Cash flows from investing activities:
Principal collections on leases 16,971 435,048 452,019
----------- ---------- ----------
Net increase in cash and
cash equivalents 2,964 243,893 246,857
Cash and cash equivalents:
Beginning of year 221,305 3,564,194 3,785,499
----------- ---------- ----------
End of first quarter $ 224,269 $3,808,087 $4,032,356
=========== ========== ==========
</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, 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.
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XX, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
(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. See Notes 5, 8 and 10 to the
Partnership's financial statements included in the 1997 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 1997 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 1997 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 - SUBSEQUENT EVENT: SETTLEMENT OF LITIGATION:
On May 5, 1998, Lease Resolution Corporation (LRC), on behalf of Datronic
Equipment Income Funds XVI, XVII, XVIII, XIX, XX and Datronic Finance Income
Fund I, reached an agreement to settle all claims of the aforementioned
partnerships against Weiss & Co. ("Settlement Agreement"). (See Note 8 to the
financial statements included in the Partnership's 1997 Form 10-K). The
Settlement Agreement is contingent upon subsequent approval by the United
States District Court dismissing Weiss & Co. as a party defendant. Pursuant to
the terms of the Settlement Agreement, Weiss & Co. has agreed to pay LRC, on
behalf of the aforementioned partnerships, $2.4 million. LRC will determine how
these proceeds, net of contingent attorneys fees of $600,000, will be
distributed among the partnerships upon completion of the trial currently in
process against Price Waterhouse. The Settlement Agreement
10
<PAGE> 11
provides for Weiss & Co. to transfer $2.4 million to an escrow account. This
amount will be transferred to LRC no later than 30 days following the United
States District Court entering an order of dismissal of Weiss & Co. for which no
date has yet been set. All limited partners will be notified of the date once
it has been scheduled.
11
<PAGE> 12
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,
1997 through March 31, 1998. The discussion and analysis of results of
operations is for the three month period ended March 31, 1998 as compared to
the corresponding period in 1997.
Liquidity and Capital Resources
During the three months ended March 31, 1998, Partnership assets continued to
be converted to cash in order to pay Partnership operating expenses, liquidate
Partnership liabilities and provide for the ultimate liquidation of the
Partnership.
During the three months ended March 31, 1998, the Partnership's cash and cash
equivalents increased by $247,000 to $4,032,000 at March 31, 1998 from
$3,785,000 at December 31, 1997. This increase is primarily due to cash
receipts from collections on leases of $245,000 and recovery of a portion of
the Partnership's residual interest in CRCA of $207,000, partially offset by
cash used in operations of $205,000.
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
leases owned by the Partnership. The lease portfolio is scheduled to be
substantially run out by the end of 2000, unless it is determined that it is in
the Partnership's best interest to dispose of the remaining portfolio earlier
through a bulk sale. In addition, the Partnership's sources of liquidity on a
long-term basis include proceeds from the sale of Diverted and other assets.
Management believes that its sources of liquidity in the short and long-term
are sufficient to meet its operating cash requirements, provide for ongoing
pursuit of litigation, and an orderly liquidation of the Partnership.
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. 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. The amount of future distributions, if any, to the
Limited Partners, in all likelihood, will be significantly less than the amount
of partners' equity reflected in the March 31, 1998 balance sheets (see
Partnership's financial statements included in Item 1.)
12
<PAGE> 13
Results of Operations
The Partnership had net income of $85,000 for the three months ended March 31,
1998 in the aggregate for all classes of partners. This compares to an
aggregate net loss for the same period in 1997 of $167,000. Differences in
operating results between Liquidating and Continuing Limited Partners are
attributable to lease income, acquisition costs, and expenses associated with
new 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 two periods
ended March 31, 1998 and 1997 include the following:
Lease income:
Since January 1997, the Partnership has been in its Liquidation 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 for the three months ended March 31, 1998 as compared to the
corresponding period in 1997.
Interest income:
Interest income increased for the three months ended March 31, 1998 as compared
to the corresponding period in 1997 as a result of increased invested cash
balances.
Amortization of organization and equipment acquisition costs:
Amortization of organization and equipment acquisition costs ended as of May
1997 when these costs became fully amortized.
General Partner's expense reimbursement:
The decrease in the first quarter 1998 expense is primarily due to D&O
insurance and reductions in staff and related costs. Through the first quarter
1997, insurance premiums were paid on an annual basis; however, in September
1997 a one-time premium was paid that extended coverage through the ultimate
liquidation date of the Partnership.
Professional fees:
The 1998 increase reflects fees paid in connection with the ongoing litigation
against the Partnership's former accountants which is presently scheduled for
trial in May of 1998. This increase is partially offset by the decreasing
level of professional services required in such areas as collections,
consulting and auditing. These decreases are the result of the decrease in the
Partnership's lease portfolio and related activities.
Credit for lease losses:
The credit reflects Management's ongoing assessment of the potential losses
inherent in the lease portfolio and collections on previously reserved
balances. The 1998 and 1997 amounts also include $207,000 and $125,000,
respectively, of recoveries on the residual interest in CRCA. See Note 4 to
the Partnership's financial statements included in the 1997 Form 10-K.
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, 1997 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
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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 15th day of May 1998.
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
-------------
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>
<CIK> 0000875272
<NAME> DATRONIC EQUIPMENT INCOME FUND XX, L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,032,356
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,164,906
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,145,302
<TOTAL-LIABILITY-AND-EQUITY> 5,164,906
<SALES> 0
<TOTAL-REVENUES> 89,244
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,505
<LOSS-PROVISION> (251,045)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 84,784
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
