<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
June 30, 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
--- ----
<PAGE> 2
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
FORM 10-Q
FOR THE QUARTER ENDED June 30, 1997
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
June 30, 1997 (unaudited) 3
December 31, 1996 4
Statements of Revenue and Expenses (unaudited)
For the three months ended June 30, 1997 5
For the three months ended June 30, 1996 6
For the six months ended June 30, 1997 7
For the six months ended June 30, 1996 8
Statements of Changes in Partners' Equity
For the six months ended June 30, 1997 9
(unaudited)
Statements of Cash Flows (unaudited)
For the six months ended June 30, 1997 10
For the six months ended June 30, 1996 11
Notes to Financial Statements (unaudited) 12
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 13 - 15
PART II - OTHER INFORMATION
Items 1-6. 16
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
BALANCE SHEETS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- ---------- ---------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $2,038,478 $3,846,223 $5,884,701
Net investment in direct
financing leases - 958,404 958,404
Diverted and other assets, net 94,076 204,388 298,464
Datronic assets, net - - -
---------- ---------- ----------
$2,132,554 $5,009,015 $7,141,569
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and
accrued expenses $ 8,025 $ 37,719 $ 45,744
Lessee rental deposits 40,871 97,243 138,114
---------- ---------- ----------
Total liabilities 48,896 134,962 183,858
Total partners' equity 2,083,658 4,874,053 6,957,711
---------- ---------- -----------
$2,132,554 $5,009,015 $ 7,141,569
========== ========== ===========
</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 June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Revenue:
Lease income $ 6,341 $ 53,192 $ 59,533
Interest income 22,384 52,372 74,756
--------- --------- --------
28,725 105,564 134,289
--------- --------- --------
Expenses:
General Partner's
expense reimbursement 89,386 204,366 293,752
Professional fees 30,834 72,443 103,277
Other operating expenses 959 2,130 3,089
Credit for lease losses (33,388) (72,538) (105,926)
--------- --------- --------
87,791 206,401 294,192
--------- --------- --------
Net loss $ (59,066) $(100,837) $(159,903)
========= ========= =========
Net loss -
General Partner $ (591) $ (1,008) $ (1,599)
========= ========= =========
Net loss -
Limited Partners $ (58,475) $ (99,829) $(158,304)
========= ========= =========
Net loss per limited
partnership unit $ (.93) $ (.73)
======= =======
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 June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Revenue:
Lease income $ 15,592 $ 132,540 $148,132
Interest income 10,538 72,529 83,067
--------- --------- --------
26,130 205,069 231,199
--------- --------- --------
Expenses:
Management fees-New Era 76,885 185,285 262,170
General Partner's
expense reimbursement 15,771 34,265 50,036
Professional fees 29,301 67,476 96,777
Other operating expenses 349 942 1,291
--------- --------- ---------
122,306 287,968 410,274
--------- --------- ---------
Net loss $ (96,176) $ (82,899) $(179,075)
========= ========= =========
Net loss - General Partner $ (962) $ (829) $ (1,791)
========= ========= =========
Net loss - Limited Partners $ (95,214) $ (82,070) $(177,284)
========= ========= =========
Net loss per limited
partnership unit $(1.51) $ (.60)
====== =======
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.
STATEMENTS OF REVENUE AND EXPENSES
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Revenue:
Lease income $ 12,374 $ 114,342 $126,716
Interest income 39,607 107,950 147,557
--------- --------- --------
51,981 222,292 274,273
--------- --------- --------
Expenses:
General Partner's
expense reimbursement 168,361 390,066 558,427
Professional fees 51,433 122,749 174,182
Other operating expenses 7,706 16,857 24,563
Credit for lease losses (82,163) (178,506) (260,669)
--------- --------- ---------
145,337 351,166 496,503
--------- --------- ---------
Net loss $ (93,356) $(128,874) $(222,230)
========= ========= =========
Net loss -
General Partner $ (934) $ (1,289) $ (2,223)
========= ========= =========
Net loss -
Limited Partners $ (92,422) $(127,585) $(220,007)
========= ========= =========
Net loss per limited
partnership unit $(1.47) $ (.93)
====== =======
Weighted average number
of limited partnership
units outstanding 63,030 136,969
====== =======
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the six months ended June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Revenue:
Lease income $ 33,924 $ 290,267 $324,191
Interest income 20,367 134,140 154,507
--------- --------- --------
54,291 424,407 478,698
--------- --------- --------
Expenses:
Management fees-New Era 156,713 382,178 538,891
General Partner's
expense reimbursement 56,511 122,776 179,287
Professional fees 68,147 160,572 228,719
Other operating expenses 6,646 15,554 22,200
--------- --------- ---------
288,017 681,080 969,097
--------- --------- ---------
Net loss $(233,726) $(256,673) $(490,399)
========= ========= =========
Net loss - General Partner $ (2,337) $ (2,567) $ (4,904)
========= ========= =========
Net loss - Limited Partners $(231,389) $(254,106) $(485,495)
========= ========= =========
Net loss per limited
partnership unit $(3.67) $ (1.86)
====== =======
Weighted average number
of limited partnership
units outstanding 63,030 136,969
====== =======
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 9
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 (2,223) (92,422) (127,585) (222,230)
Allocation of General
Partner's equity 394,935 (98,950) (295,985) -
--------- ---------- ----------- ---------
Balance, June 30, 1997 $ - $2,083,658 $4,874,053 $6,957,711
========= ========== ========== ==========
</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.
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- ---------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (93,356) $ (128,874) $ (222,230)
Adjustments to reconcile net loss
to net cash used in
operating activities:
Credit for lease losses (82,163) (178,506) (260,669)
Changes in assets and liabilities:
Accounts payable and accrued
expenses (59,571) (135,306) (194,877)
Lessee rental deposits (35,170) (89,584) (124,754)
Due from management company 12,676 31,334 44,010
---------- ---------- ----------
(257,584) (500,936) (758,520)
---------- ---------- ----------
Cash flows from investing activities:
Principal collections on leases 92,987 814,914 907,901
Net increase (decrease) in cash
and cash equivalents (164,597) 313,978 149,381
Cash and cash equivalents:
Beginning of year 2,203,075 3,532,245 5,735,320
---------- ---------- ----------
End of second quarter $2,038,478 $3,846,223 $5,884,701
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 11
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (233,726) $ (256,673) $ (490,399)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Changes in assets and liabilities:
Accounts payable and accrued
expenses (74,854) (166,611) (241,465)
Lessee rental deposits (96,171) (213,375) (309,546)
Due to management company 18 54 72
---------- ---------- ----------
(404,733) (636,605) (1,041,338)
---------- ---------- ----------
Cash flows from investing activities:
Principal collections on leases 429,064 2,166,908 2,595,972
Principal collections on
installment contract receivable 16,514 35,877 52,391
Release of restricted cash 10,812 23,489 34,301
---------- ---------- ----------
456,390 2,226,274 2,682,664
---------- ---------- ----------
Cash flows from financing activities:
Distributions to
Limited Partners - (136,970) (136,970)
---------- ---------- ----------
- (136,970) (136,970)
---------- ---------- ----------
Net increase in cash
and cash equivalents 51,657 1,452,699 1,504,356
Cash and cash equivalents:
Beginning of year 2,379,752 1,515,551 3,895,303
---------- ---------- ----------
End of second quarter $2,431,409 $2,968,250 $5,399,659
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 12
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 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. Professional fees in the accompanying Statements of
Revenue and Expenses for the three months ended June 30, 1996 have been
adjusted from the amounts originally reported to reflect the correction of a
clerical error which caused them and the Net Loss for the period to be
overstated by approximately $49,000. This error had no effect on the six
months ended June 30, 1996.
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.
12
<PAGE> 13
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 June 30, 1997. The discussion and analysis of results of
operations is for the three and six month periods ended June 30, 1997 as
compared to the corresponding periods in 1996.
Financial Condition, Liquidity and Capital Resources
During the six months ended June 30, 1997, Partnership assets continued to be
converted to cash to pay Partnership operating expenses and liquidate
Partnership liabilities.
Net investment in direct financing leases decreased approximately $647,000
during the six months ended June 30, 1997. This decrease is primarily
attributable to principal collections of approximately $908,000, partially
offset by a credit for lease losses of approximately $261,000.
Accounts payable and accrued expenses decreased approximately $195,000 during
the six months ended June 30, 1997 primarily due to payment of accrued legal
fees and sales and use taxes.
Lessee rental deposits decreased approximately $125,000 resulting from payments
made to lessees at the end of lease term.
In the aggregate, partners' equity decreased approximately $222,000 during the
six months ended June 30, 1997 due to a net loss.
During the six months ended June 30, 1997, the Partnership's operating
activities resulted in a use of approximately $759,000 of cash. This was due to
a net loss of approximately $222,000, decreases in accounts payable and rental
deposits of approximately $320,000, and a non-cash credit for lease loss of
approximately $261,000, partially offset by a decrease in due from management
company of approximately $44,000. During the period, cash flows from investing
activities aggregated approximately $908,000 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 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
13
<PAGE> 14
orderly 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.
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 Notes 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. 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 June 30, 1997 Balance Sheets (see the
financial statements included in Item 1).
Results of Operations
Lease income decreased approximately $89,000 and $197,000 for the three month
and six month periods ended June 30, 1997 as compared to the corresponding
periods in 1996 primarily due to declining lease portfolios.
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 amounted to zero for the
three and six months ended June 30, 1997 as compared to $262,000 and $539,000
for the same periods in 1996. Subsequent to June 30, 1996, the General
Partner, Lease Resolution Corporation ("LRC"), 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 were
approximately $294,000 and $558,000 for the three and six month periods ended
June 30, 1997 as compared to $50,000 and $179,000 for the corresponding periods
in 1996. The increases of $244,000 and $379,000 primarily represent
incremental expenses associated with LRC's assumption of the day to day
management of the Partnership's operations effective July 1, 1996. These
expenses were previously included in Management Fees-New Era (see Note 8 to the
Partnership's financial statements included in the 1996 Form 10-K). Included
in the
14
<PAGE> 15
1997 expenses is $66,000 representing a one time expense associated with the
relocation of former New Era employees to reduced office space.
Professional fees increased approximately $7,000 for the three month period and
decreased approximately $55,000 for the six month period ended June 30, 1997 as
compared to the corresponding periods in 1996. The increase results from
additional legal fees for Partnership claims against former accountants and
others, partially offset by decreases in audit fees. The decrease is due to
reductions in audit fees and legal fees for collections and other matters.
The credit for lease losses reflects Management's ongoing assessment of
potential losses inherent in the lease portfolio and actual collections for
certain leases in excess of those anticipated in prior years.
15
<PAGE> 16
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.
16
<PAGE> 17
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 August 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.
17
<PAGE> 18
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.
18
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,884,701
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,141,569
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,957,711
<TOTAL-LIABILITY-AND-EQUITY> 7,141,569
<SALES> 0
<TOTAL-REVENUES> 274,273
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 24,563
<LOSS-PROVISION> (260,669)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (222,230)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
