<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 0-17744
- --------------------- ------------------------------
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, 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
(unaudited) 7
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 (unaudited) 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 XVII, 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 $ 1,743,960 $3,927,113 $5,671,073
Net investment in direct
financing leases - 315,399 315,399
Diverted and other assets, net 102,718 223,165 325,883
Datronic assets, net - - -
----------- ---------- ----------
$ 1,846,678 $4,465,677 $6,312,355
=========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
- -------------------------------------
Accounts payable and accrued expenses $ 548 $ 14,808 $ 15,356
Lessee rental deposits 19,729 48,097 67,826
----------- ---------- ----------
Total liabilities 20,277 62,905 83,182
Total partners' equity 1,826,401 4,402,772 6,229,173
----------- ---------- ----------
$ 1,846,678 $4,465,677 $6,312,355
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
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DATRONIC EQUIPMENT INCOME FUND XVII, 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 $ 1,843,376 $3,936,608 $5,779,984
Net investment in direct
financing leases - 461,900 461,900
Diverted and other assets, net 102,718 223,165 325,883
Datronic assets, net - - -
----------- ---------- ----------
$ 1,946,094 $4,621,673 $6,567,767
=========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued expenses $ 1,711 $ 20,086 $ 21,797
Lessee rental deposits 25,672 61,010 86,682
----------- ---------- ----------
Total liabilities 27,383 81,096 108,479
Total partners' equity 1,918,711 4,540,577 6,459,288
----------- ---------- ----------
$ 1,946,094 $4,621,673 $6,567,767
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
4
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DATRONIC EQUIPMENT INCOME FUND XVII, 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 $ 4,254 $ 25,428 $ 29,682
Interest income 21,317 49,462 70,779
----------- ---------- ----------
25,571 74,890 100,461
----------- ---------- ----------
Expenses:
General Partner's
expense reimbursement 49,070 116,437 165,507
Professional fees 77,153 169,194 246,347
Other operating expenses 5,346 11,802 17,148
Credit for lease losses (13,688) (84,738) (98,426)
----------- ---------- ----------
117,881 212,695 330,576
----------- ---------- ----------
Net loss $ (92,310) $ (137,805) $ (230,115)
=========== ========== ==========
Net loss - General Partner $ (923) $ (1,378) $ (2,301)
=========== ========== ==========
Net loss - Limited Partners $ (91,387) $ (136,427) $ (227,814)
=========== ========== ==========
Net loss per limited
partnership unit $(1.45) $ (1.00)
====== =======
Weighted average number
of limited partnership units
outstanding 63,030 136,969
====== =======
</TABLE>
See accompanying notes to financial statements.
5
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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.
6
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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, 1997* $ - $1,918,711 $4,540,577 $6,459,288
Net loss (2,301) (91,387) (136,427) (230,115)
Allocation of General
Partner's Equity 2,301 (923) (1,378) -
--------- ---------- ---------- ----------
Balance, March 31, 1998 $ - $1,826,401 $4,402,772 $6,229,173
========= ========== ========== ==========
</TABLE>
* Balances are net of $100,599 and $299,320, 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 XVII, 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 loss $ (92,310) $ (137,805) $ (230,115)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Credit for lease losses (13,688) (84,738) (98,426)
Changes in assets and liabilities:
Accounts payable and accrued
expenses (1,163) (5,278) (6,441)
Lessee rental deposits (5,943) (12,913) (18,856)
----------- ---------- ----------
(113,104) (240,734) (353,838)
----------- ---------- ----------
Cash flows from investing activities:
Principal collections on leases 13,688 231,239 244,927
----------- ---------- ----------
Net decrease in cash and
cash equivalents (99,416) (9,495) (108,911)
Cash and cash equivalents:
Beginning of year 1,843,376 3,936,608 5,779,984
----------- ---------- ----------
End of first quarter $ 1,743,960 $3,927,113 $5,671,073
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
8
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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.
9
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
(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. See Notes 4, 7, and 9 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 April 1, 1995 distribution. Distributions to Continuing Limited Partners
were suspended after payment of the January 1, 1996 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 7 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 provides for Weiss
& Co. to transfer $2.4 million to an escrow
10
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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 to provide for the ultimate liquidation of the
Partnership.
During the three months ended March 31, 1998, the Partnership's cash and cash
equivalents decreased by $109,000 to $5,671,000 at March 31, 1998 from
$5,780,000 at December 31, 1997. This decrease is primarily due to cash used
in operations of $354,000, partially offset by cash receipts from collections
on leases of $245,000.
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 1998. 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 a net loss of $230,000 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 $62,000. 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 May 1994, 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 period ended March 31, 1998 as compared to
the corresponding period in 1997.
General Partner's expense reimbursement:
The decrease in 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:
This credit reflects Management's ongoing assessment of the potential losses
inherent in the lease portfolio and collections on previously reserved
balances.
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 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,671,073
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,312,355
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,229,173
<TOTAL-LIABILITY-AND-EQUITY> 6,312,355
<SALES> 0
<TOTAL-REVENUES> 100,461
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,148
<LOSS-PROVISION> (98,426)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (230,115)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
