<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
September 30, 1999 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 SEPTEMBER 30, 1999
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
September 30, 1999 (unaudited) 3
December 31, 1998 4
Statements of Revenue and Expenses (unaudited)
For the three months ended September 30, 1999 5
For the three months ended September 30, 1998 6
For the nine months ended September 30, 1999 7
For the nine months ended September 30, 1998 8
Statements of Changes in Partners' Equity
For the nine months ended September 30, 1999
(unaudited) 9
Statements of Cash Flows (unaudited)
For the nine months ended September 30, 1999 10
For the nine months ended September 30, 1998 11
Notes to Financial Statements 12 - 13
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 14 - 15
Item 3.
Quantitative and Qualitative Disclosures about
Market Risk 16
PART II - OTHER INFORMATION
Items 1-6. 17
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XX, L.P.
BALANCE SHEETS
September 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- -----------
ASSETS
- ------
Cash and cash equivalents $ 104,169 $ 2,112,783 $ 2,216,952
Net investment in direct financing
leases - 211,573 211,573
Residual interest in CRCA - - -
Diverted and other assets, net 8,172 112,713 120,885
Datronic assets, net - - -
--------- ----------- -----------
$ 112,341 $ 2,437,069 $ 2,549,410
========= =========== ===========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and accrued
expenses $ 103 $ 3,431 $ 3,534
--------- ----------- -----------
Total liabilities 103 3,431 3,534
Total partners' equity 112,238 2,433,638 2,545,876
--------- ----------- -----------
$ 112,341 $ 2,437,069 $ 2,549,410
========= =========== ===========
See accompanying notes to financial statements
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XX, L.P.
BALANCE SHEETS
December 31, 1998
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- -----------
ASSETS
- ------
Cash and cash equivalents $ 225,068 $ 4,315,347 $ 4,540,415
Judgment receivable, net 3,405 46,964 50,369
Net investment in direct financing
leases - 432,232 432,232
Residual interest in CRCA - - -
Diverted and other assets, net 8,172 112,713 120,885
Datronic assets, net - - -
--------- ----------- -----------
$ 236,645 $ 4,907,256 $ 5,143,901
========= =========== ===========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and accrued
expenses $ 761 $ 21,351 $ 22,112
Lessee rental deposits - 142 142
--------- ----------- -----------
Total liabilities 761 21,493 22,254
Total partners' equity 235,884 4,885,763 5,121,647
--------- ----------- -----------
$ 236,645 $ 4,907,256 $ 5,143,901
========= =========== ===========
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 September 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- --------
Revenue:
Lease income $ - $ 8,627 $ 8,627
Interest income 396 20,433 20,829
----------- ---------- --------
396 29,060 29,456
----------- ---------- --------
Expenses:
General Partner's expense
reimbursement 6,349 103,708 110,057
Professional fees 684 10,550 11,234
Other operating expenses 204 2,820 3,024
Credit for lease losses (923) (42,739) (43,662)
----------- ---------- --------
6,314 74,339 80,653
----------- ---------- --------
Net loss $(5,918) $(45,279) $(51,197)
=========== ========== ========
Net loss - General Partner $ (59) $ (453) $ (512)
=========== ========== ========
Net loss - Limited Partners $(5,859) $(44,826) $(50,685)
=========== ========== ========
Net loss per limited
partnership unit $ (1.15) $ (0.64)
=========== ==========
Weighted average number of limited
partnership units outstanding 5,100 70,396
=========== ==========
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 September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ------------- -----------
<S> <C> <C> <C>
Revenue:
Lease income $ 150 $ 23,060 $ 23,210
Interest income 2,617 46,309 48,926
----------- -------------- -----------
2,767 69,369 72,136
----------- -------------- -----------
Expenses:
General Partner's expense
reimbursement 6,576 114,938 121,514
Professional fees 636 9,631 10,267
Other operating expenses 179 2,490 2,669
Credit for lease losses (1,660) (22,904) (24,564)
----------- ------------- -----------
5,731 104,155 109,886
----------- ------------- -----------
Net loss $ (2,964) $ (34,786) $ (37,750)
=========== ============= ===========
Net loss - General Partner $ (30) $ (348) $ (378)
=========== ============= ===========
Net loss - Limited Partners $ (2,934) $ (34,438) $ (37,372)
=========== ============= ===========
Net loss per limited
partnership unit $ (0.58) $ (0.49)
=========== =============
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.
STATEMENTS OF REVENUE AND EXPENSES
For the nine months ended September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ------------- -----------
<S> <C> <C> <C>
Revenue:
Lease income $ 241 $ 38,736 $ 38,977
Interest income 3,581 89,451 93,032
----------- ----------- -----------
3,822 128,187 132,009
----------- ----------- -----------
Expenses:
General Partner's expense
reimbursement 23,088 370,326 393,414
Professional fees 2,477 49,256 51,733
Other operating expenses 792 11,257 12,049
Credit for lease losses (7,219) (168,576) (175,795)
----------- ----------- -----------
19,138 262,263 281,401
----------- ----------- -----------
Net loss $ (15,316) $ (134,076) $ (149,392)
=========== =========== ===========
Net loss - General Partner $ (153) $ (1,341) $ (1,494)
=========== =========== ===========
Net loss - Limited Partners $ (15,163) $ (132,735) $ (147,898)
=========== =========== ===========
Net loss per limited
partnership unit $ (2.97) $ (1.89)
=========== ===========
Weighted average number of limited
partnership units outstanding 5,100 70,396
=========== ===========
</TABLE>
See accompanying notes to financial statements
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XX, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the nine months ended September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- -------------- -----------
<S> <C> <C> <C>
Revenue:
Lease income $ 1,160 $ 99,712 $ 100,872
Interest income 8,096 134,090 142,186
----------- -------------- -----------
9,256 233,802 243,058
----------- -------------- -----------
Expenses:
General Partner's expense
reimbursement 23,191 386,529 409,720
Professional fees 17,013 239,193 256,206
Other operating expenses 937 13,241 14,178
Credit for lease losses (19,942) (275,064) (295,006)
----------- -------------- -----------
21,199 363,899 385,098
----------- -------------- -----------
Net loss $ (11,943) $ (130,097) $ (142,040)
=========== ============== ===========
Net loss - General Partner $ (119) $ (1,301) $ (1,420)
=========== ============== ===========
Net loss - Limited Partners $ (11,824) $ (128,796) $ (140,620)
=========== ============== ===========
Net loss per limited
partnership unit $ (2.32) $ (1.83)
=========== ==============
Weighted average number of limited
partnership units outstanding 5,100 70,396
=========== ==============
</TABLE>
See accompanying notes to financial statements
8
<PAGE> 9
DATARONIC EQUIPMENT INCOME FUND XX, 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, 1998* $ - $ 235,884 $ 4,885,763 $ 5,121,647
Distributions to partners - (108,330) (2,318,049) (2,426,379)
Net loss (1,494) (15,163) (132,735) (149,392)
Allocation of General
Partner's Equity 1,494 (153) (1,341) -
----------- ----------- ----------- ------------
Balance, September 30, 1999 $ - $ 112,238 $ 2,433,638 $ 2,545,876
=========== =========== =========== ============
</TABLE>
* Balances are net of $16,221 and $292,056 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 XX, 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 $ (15,316) $ (134,076) $ (149,392)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (7,219) (168,576) (175,795)
Changes in assets and liabilities:
Judgment receivable, net 3,405 46,964 50,369
Accounts payable and
accrued expenses (658) (17,920) (18,578)
Lessee rental deposits - (142) (142)
----------- ------------- -------------
(19,788) (273,750) (293,538)
----------- ------------- -------------
Cash flows from investing activities:
Principal collections on leases 1,304 307,650 308,954
Residual interest in CRCA 5,915 81,585 87,500
----------- ------------- -------------
7,219 389,235 396,454
----------- ------------- -------------
Cash flows from financing activities:
Distributions to Limited Partners (108,330) (2,318,049) (2,426,379)
----------- ------------- -------------
Net decrease in cash and
cash equivalents (120,899) (2,202,564) (2,323,463)
Cash and cash equivalents:
Beginning of year 225,068 4,315,347 4,540,415
=========== ============= =============
End of third quarter $ 104,169 $ 2,112,783 $ 2,216,952
=========== ============= =============
</TABLE>
See accompanying notes to financial statements
10
<PAGE> 11
DATRONIC EQUIPMENT INCOME FUND XX, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------- -------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (11,943) $ (130,097) $ (142,040)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (19,942) (275,064) (295,006)
Changes in assets and liabilities:
Accounts payable and
accrued expenses (198) (5,235) (5,433)
Lessee rental deposits (1,916) (38,310) (40,226)
------------- -------------- -------------
(33,999) (448,706) (482,705)
------------- -------------- -------------
Cash flows from investing activities:
Principal collections on leases 19,942 816,650 836,592
------------- -------------- -------------
Net increase (decrease) in cash and
cash equivalents (14,057) 367,944 353,887
Cash and cash equivalents:
Beginning of year 221,305 3,564,194 3,785,499
============= ============== =============
End of third quarter $ 207,248 $ 3,932,138 $ 4,139,386
============= ============== =============
</TABLE>
See accompanying notes to financial statements
11
<PAGE> 12
DATRONIC EQUIPMENT INCOME FUND XX, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(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 1998 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 1998 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
1998 Form 10-K.
NOTE 3 - LIMITED PARTNERSHIP DISTRIBUTIONS:
In early April 1999, the Partnership made a cash distribution to Limited
Partners who were owners of record on December 31, 1998. This distribution
consisted of two components: (i) the net proceeds from the Price Waterhouse and
Weiss & Company legal actions ($15,000 and $202,000 for Liquidating and
Continuing Limited Partners, respectively), and (ii) residual cash resulting
from the net cash flows of the Partnership ($93,000 and $2,116,000 for
Liquidating and Continuing Limited Partners, respectively). The portion of the
distribution attributable to legal action proceeds was allocated to each Limited
Partner based on the number of units held at the rate of $2.87 per unit. See
Note 8 to the Partnership's financial statements included in the 1998 Form 10-K.
Pursuant to the Partnership Agreement, residual cash was allocated to each
Limited Partner based on their proportionate share of total partners' capital
attributable to their Class.
NOTE 4 - RESIDUAL INTEREST IN CRCA:
Residual interest in CRCA represents the Partnership's fully reserved 35% (65%
for Fund XVIII) interest in the remaining assets of Computer Rental Corp. of
America, Inc. (CRCA). These assets consisted of a
12
<PAGE> 13
DATRONIC EQUIPMENT INCOME FUND XX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
---------------------------------------------
$4.2 million subordinated note receivable from Personal Computer Rental
Corporation (PRC) and $136,000 of cash. See Note 4 to the Partnership's
financial statements included in the 1998 Form 10-K. In early April 1999, CRCA
sold the note to PCR's senior secured creditor for $250,000. The Partnership's
share ($87,500) of the proceeds has been credited to the provision for lease
losses. The Partnership's 35% share of any residual cash that may remain after
payment of expenses will also be credited to the provision for lease losses when
paid to the Partnership.
13
<PAGE> 14
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, 1998
through September 30, 1999. The discussion and analysis of results of operations
is for the three and nine month periods ended September 30, 1999 as compared to
the corresponding periods in 1998. Any capitalized term not defined herein has
been defined or discussed in the Partnership's 1998 Form 10-K.
Liquidity and Capital Resources
During the nine months ended September 30, 1999, Partnership assets continued to
be converted to cash in order to pay Partnership operating expenses and to
provide for the ultimate liquidation of the Partnership. During this period,
Partnership cash and cash equivalents decreased by $2,323,000 to $2,217,000 at
September 30, 1999 from $4,540,000 at December 31, 1998. This decrease is
primarily due to the distribution paid to Limited Partners of $2,426,000 (see
below) and by cash used in operations of $293,000, partially offset by cash
receipts from collections on leases of $309,000 and $87,000 from the sale of a
CRCA note receivable.
In early April 1999, the Partnership made a cash distribution to Limited
Partners who were owners of record on December 31, 1998. This distribution
consisted of two components: (i) the net proceeds from the Price Waterhouse and
Weiss & Company legal actions ($15,000 and $202,000 for Liquidating and
Continuing Limited Partners, respectively), and (ii) residual cash resulting
from the net cash flows of the Partnership ($93,000 and $2,116,000 for
Liquidating and Continuing Limited Partners, respectively). The portion of the
distribution attributable to legal action proceeds was allocated to each Limited
Partner based on the number of units held at the rate of $2.87 per unit. See
Note 8 to the Partnership's financial statements included in the 1998 Form 10-K.
Pursuant to the Partnership Agreement, residual cash was allocated to each
Limited Partner based on their 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, cash receipts from leases owned by the Partnership and the
disposition of the remaining Diverted Assets (consisting primarily of an office
building in Schaumburg, Illinois). The lease portfolio is scheduled to be fully
liquidated by March 2001. The general partner expects that the building will be
sold sometime during 2000. The proceeds will be included in the next
distribution to the Limited Partners sometime during 2000. 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.
14
<PAGE> 15
The general partner expects this to occur sometime during the year 2001.
Results of Operations
The Partnership had net losses of $51,000 and $149,000 for the three and nine
months ended September 30, 1999 in the aggregate for all classes of partners.
This compares to net losses of $38,000 and $142,000 for the three and nine
months ended September 30, 1998. 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 three and nine month periods ended September 30, 1999
and 1998 include the following:
Lease income:
Since January 1997, 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. This trend will continue as the Partnership liquidates its
remaining leases.
Interest income:
Interest income includes earnings on invested cash balances. Interest income for
1999 was lower than 1998 because of lower average invested cash balances and
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 include expenses incurred by LRC in
its management of the day-to-day operations of the Partnership.
Professional fees:
Professional fees for the three and nine months ended September 30, 1999 reflect
a decreasing level of professional services required as a result of the decrease
in the Partnership's lease portfolio and related activities. Included in the
1998 amount are fees paid in connection with the litigation against the
Partnership's former accountants.
Credit for lease losses:
This credit reflects recovery of previously reserved balances. The 1999 credit
includes the Partnership's share ($87,500) 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 Item 1. The 1998
credit includes a $207,000 CRCA-related recovery from the collection of another
note receivable. See Note 4 to the Partnership's financial statements included
in the 1998 Form 10-K.
15
<PAGE> 16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for in this disclosure is not applicable to the
Registrant.
16
<PAGE> 17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 - Legal Proceedings in the Partnership's December
31, 1998 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.
17
<PAGE> 18
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 4th day of November 1999.
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.
18
<PAGE> 19
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.
19
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,216,952
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,549,410
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,545,876
<TOTAL-LIABILITY-AND-EQUITY> 2,549,410
<SALES> 0
<TOTAL-REVENUES> 132,009
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,049
<LOSS-PROVISION> (175,795)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (149,392)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
