<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 0-17744
- --------------------- ------------------------------
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
-----------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 36-3581924
------------------ ---------------------------
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 XVII, L.P.
-----------------------------------------
FORM 10-Q
---------
FOR THE QUARTER ENDED MARCH 31, 1997
------------------------------------
PART I - FINANCIAL INFORMATION
Item 1.
- -------
<TABLE>
<S> <C>
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
(unaudited) 7
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 (unaudited) 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 XVII, 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 $2,114,171 $3,724,605 $5,838,776
Net investment in direct
financing leases - 1,222,361 1,222,361
Diverted and other assets, net 94,076 204,388 298,464
Datronic assets, net - - -
----------- ---------- ----------
$2,208,247 $5,151,354 $7,359,601
=========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable and
accrued expenses $ 9,509 $ 42,003 $ 51,512
Lessee rental deposits 56,014 134,461 190,475
----------- ---------- ----------
Total liabilities 65,523 176,464 241,987
Total partners' equity 2,142,724 4,974,890 7,117,614
----------- ---------- ----------
$2,208,247 $5,151,354 $7,359,601
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XVII, 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 $2,203,075 $3,532,245 $5,735,320
Due from management company 12,676 31,334 44,010
Net investment in direct
financing leases 10,824 1,594,812 1,605,636
Diverted and other assets, net 94,076 204,388 298,464
Datronic assets, net - - -
----------- ---------- ----------
$2,320,651 $5,362,779 $7,683,430
=========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable and
accrued expenses $ 67,596 $ 173,025 $ 240,621
Lessee rental deposits 76,041 186,827 262,868
----------- ---------- ----------
Total liabilities 143,637 359,852 503,489
Total partners' equity 2,177,014 5,002,927 7,179,941
----------- ---------- ----------
$2,320,651 $5,362,779 $7,683,430
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
DATRONIC EQUIPMENT INCOME FUND XVII, 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 $ 6,033 $ 61,150 $ 67,183
Interest income 17,223 55,578 72,801
----------- ---------- ---------
23,256 116,728 139,984
----------- ---------- ---------
Expenses:
General Partner's
expense reimbursement 78,975 185,700 264,675
Professional fees 20,599 50,306 70,905
Other operating expenses 6,747 14,727 21,474
Credit for lease losses (48,775) (105,968) (154,743)
----------- ---------- ---------
57,546 144,765 202,311
----------- ---------- ---------
Net loss $ (34,290) $ (28,037) $ (62,327)
=========== ========== =========
Net loss - General Partner $ (343) $ (280) $ (623)
=========== ========== =========
Net loss - Limited Partners $ (33,947) $ (27,757) $ (61,704)
=========== ========== =========
Net loss per limited
partnership unit $ (0.54) $ (0.20)
=========== ==========
Weighted average number
of limited partnership units
outstanding 63,030 136,969
=========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
DATRONIC EQUIPMENT INCOME FUND XVII, 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 $ 18,332 $ 157,727 $ 176,059
Interest income 9,829 61,611 71,440
----------- ---------- ----------
28,161 219,338 247,499
----------- ---------- ----------
Expenses:
Management fees-New Era 79,828 196,893 276,721
General Partner's
expense reimbursement 40,740 88,511 129,251
Professional fees 38,846 93,096 131,942
Other operating expenses 6,297 14,612 20,909
----------- ---------- ----------
165,711 393,112 558,823
----------- ---------- ----------
Net loss $ (137,550) $ (173,774) $ (311,324)
=========== ========== ==========
Net loss - General Partner $ (1,376) $ (1,738) $ (3,114)
=========== ========== ==========
Net loss - Limited Partners $ (136,174) $ (172,036) $ (308,210)
=========== ========== ==========
Net loss per limited
partnership unit $ (2.16) $ (1.26)
=========== ==========
Weighted average number
of limited partnership units
outstanding 63,030 136,969
=========== ==========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
DATRONIC EQUIPMENT INCOME FUND XVII, 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 $ (392,712)* $2,275,030 $5,297,623 $7,179,941
Net loss (623) (33,947) (27,757) (62,327)
Allocation of General
Partner's Equity 393,335 (98,359) (294,976) -
----------- ---------- ---------- ----------
Balance, March 31, 1997 $ - $2,142,724 $4,974,890 $7,117,614
=========== ========== ========== ==========
</TABLE>
* Balance as previously reported was $0 due to allocation of $98,016 and
$294,696 to Liquidating and Continuing Limited Partners' Equity,
respectively.
See accompanying notes to financial statements.
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XVII, 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 $ ( 34,290) $ (28,037) $ (62,327)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Credit for lease losses (48,775) (105,968) (154,743)
Changes in assets and liabilities:
Accounts payable and
accrued expenses (58,087) (131,022) (189,109)
Lessee rental deposits (20,027) (52,366) (72,393)
Due to management company 12,676 31,334 44,010
---------- ---------- ----------
(148,503) (286,059) (434,562)
---------- ---------- ----------
Cash flows from investing activities:
Principal collections
on leases 59,599 478,419 538,018
---------- ---------- ----------
Net increase (decrease) in cash
and cash equivalents (88,904) 192,360 103,456
Cash and cash equivalents:
Beginning of year 2,203,075 3,532,245 5,735,320
---------- ---------- ----------
End of first quarter $2,114,171 $3,724,605 $5,838,776
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 9
DATRONIC EQUIPMENT INCOME FUND XVII, 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 $ (137,550) $ (173,774) $ (311,324)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Changes in assets and liabilities:
Accounts payable and accrued
expenses (31,973) (71,126) (103,099)
Lessee rental deposits (2,019) (2,436) (4,455)
Due to management company (44) (65) (109)
----------- ---------- ----------
(171,586) (247,401) (418,987)
----------- ---------- ----------
Cash flows from investing activities:
Principal collections on leases 143,273 1,040,449 1,183,722
Principal collections on
installment contract receivable 8,155 17,716 25,871
----------- ---------- ----------
151,428 1,058,165 1,209,593
----------- ---------- ----------
Cash flows from financing activities:
Distributions to
Limited Partners - (136,970) (136,970)
----------- ---------- ----------
Net increase (decrease) in cash
and cash equivalents (20,158) 673,794 653,636
Cash and cash equivalents:
Beginning of year 2,379,752 1,515,551 3,895,303
----------- ---------- ----------
End of first quarter $2,359,594 $2,189,345 $4,548,939
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
March 31, 1997
--------------
(Unaudited)
NOTE 1 - ORGANIZATION:
- ----------------------
Datronic Equipment Income Fund XVII, L.P., a Delaware Limited Partnership (the
"Partnership"), was formed on May 12, 1988 for the purpose of acquiring and
leasing both high-and low- technology equipment. Reference is made to Notes 3,
4, 5, and 6 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 April 1, 1995 distribution. Distributions to Continuing Limited Partners
were suspended after payment of the January 1, 1996 distribution.
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 to pay Partnership operating expenses and to increase
cash-on-hand to ensure sufficient cash is available to pursue pending
litigation and liquidate the Partnership in an orderly manner.
Net investment in direct financing leases decreased approximately $383,000
during the three months ended March 31, 1997. This decrease is primarily
attributable to principal collections of approximately $538,000, partially
offset by a credit for lease losses of $155,000.
Accounts payable and accrued expenses decreased approximately $189,000 during
the three months ended March 31, 1997 primarily due to payment of accrued legal
fees and sales and use taxes.
Lessee rental deposits decreased approximately $72,000 resulting from payments
made to lessees.
In the aggregate, partners' equity decreased approximately $62,000 during the
three months ended March 31, 1997 due to a net loss.
During the three months ended March 31, 1997, the Partnership's operating
activities resulted in a use of approximately $435,000 of cash. This was due
principally to a net loss of approximately $62,000, decreases in accounts
payable and rental deposits of approximately $262,000, and a non-cash credit
for lease loss of approximately $155,000, partially offset by a decrease in due
from management company of approximately $44,000. During the period, cash
flows from investing activities aggregated approximately $538,000 relating to
principal collections on leases.
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 short and long-term are sufficient to meet its operating cash
obligations, pursue litigation, and provide for the orderly
11
<PAGE> 12
liquidation of the Partnership. Distributions to the Liquidating Limited
Partners were suspended after the April 1, 1995 distribution and distributions
to the Continuing Limited Partners were suspended after the January 1, 1996
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
Partnerships (see Note 3, 5 and 9 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 $109,000 for the three month period ended
March 31, 1997 as compared to the corresponding period in 1996 primarily due to
the declining lease portfolio.
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
$277,000 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 8 to the Partnership's financial statements
included in the 1996 Form 10-K.
The General Partner's expense reimbursement represents the amount paid to LRC
in its capacity as general partner. Total amounts paid to LRC for the three
months ended March 31, 1997 were approximately $265,000 as compared to $129,000
for the three months ended March 31, 1996. The increase of approximately
$135,000 results from expenses of approximately $149,000 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 8 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 $14,000.
Professional fees decreased approximately $61,000 for the three month period
ended March 31, 1997 as compared to the corresponding period
12
<PAGE> 13
in 1996, primarily due to decreases in audit fees and consulting fees and legal
fees for collections and Partnership claims against former accountants and
others.
The credit for lease losses reflects Management's ongoing assessment of
potential losses inherent in the lease portfolios 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 XVII, 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 XVII, 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 XVII, 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>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,838,776
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,359,601
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,117,614
<TOTAL-LIABILITY-AND-EQUITY> 7,359,601
<SALES> 0
<TOTAL-REVENUES> 139,984
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 21,474
<LOSS-PROVISION> (154,743)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (62,327)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
