<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, 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
<PAGE> 2
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1.
Index to Financial Statements
<S> <C>
Balance Sheets
June 30, 1998 (unaudited) 3
December 31, 1997 4
Statements of Revenue and Expenses (unaudited)
For the three months ended June 30, 1998 5
For the three months ended June 30, 1997 6
For the six months ended June 30, 1998 7
For the six months ended June 30, 1997 8
Statements of Changes in Partners' Equity
For the six months ended June 30, 1998 9
(unaudited)
Statements of Cash Flows (unaudited)
For the six months ended June 30, 1998 10
For the six months ended June 30, 1997 11
Notes to Financial Statements (unaudited) 12 - 13
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 14 - 15
PART II - OTHER INFORMATION
Items 1-6. 16
</TABLE>
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
BALANCE SHEETS
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
ASSETS
------
Cash and cash equivalents $1,608,973 $3,774,254 $5,383,227
Net investment in direct
financing leases - 179,959 179,959
Diverted and other assets, net 102,718 223,165 325,883
Datronic assets, net - - -
----------- ---------- ----------
$1,711,691 $4,177,378 $5,889,069
=========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable and
accrued expenses $ 16 $ 13,932 $ 13,948
Lessee rental deposits 18,654 43,264 61,918
----------- ---------- ----------
Total liabilities 18,670 57,196 75,866
Total partners' equity 1,693,021 4,120,182 5,813,203
----------- ---------- ----------
$1,711,691 $4,177,378 $5,889,069
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
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
<PAGE> 5
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the three months ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 490 $ 19,297 $ 19,787
Interest income 21,292 48,401 69,693
----------- ---------- ----------
21,782 67,698 89,480
----------- ---------- ----------
Expenses:
General Partner's
expense reimbursement 48,058 115,269 163,327
Professional fees 116,572 255,612 372,184
Other operating expenses 4,787 10,377 15,164
Credit for lease losses (14,255) (30,970) (45,225)
----------- ---------- ----------
155,162 350,288 505,450
----------- ---------- ----------
Net loss $ (133,380) $ (282,590) $ (415,970)
=========== ========== ==========
Net loss - General Partner $ (1,334) $ (2,826) $ (4,160)
=========== ========== ==========
Net loss - Limited Partners $ (132,046) $ (279,764) $ (411,810)
=========== ========== ==========
Net loss per limited
partnership unit $ (2.09) $ (2.04)
=========== ==========
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, 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.
6
<PAGE> 7
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the six months ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 4,744 $ 44,725 $ 49,469
Interest income 42,609 97,863 140,472
----------- ---------- ----------
47,353 142,588 189,941
----------- ---------- ----------
Expenses:
General Partner's
expense reimbursement 97,128 231,706 328,834
Professional fees 193,725 424,806 618,531
Other operating expenses 10,133 22,179 32,312
Credit for lease losses (27,943) (115,708) (143,651)
----------- ---------- ----------
273,043 562,983 836,026
----------- ---------- ----------
Net loss $ (225,690) $ (420,395) $ (646,085)
=========== ========== ==========
Net loss - General Partner $ (2,257) $ (4,204) $ (6,461)
=========== ========== ==========
Net loss - Limited Partners $ (223,433) $ (416,191) $ (639,624)
=========== ========== ==========
Net loss per limited
partnership unit $ (3.54) $ (3.04)
=========== ==========
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, 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.
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, 1997* $ - $1,918,711 $4,540,577 $6,459,288
Net loss (6,461) (223,433) (416,191) (646,085)
Allocation of General
Partner's Equity 6,461 (2,257) (4,204) -
------------ ------------- ---------- ----------
Balance, June 30, 1998 $ - $1,693,021 $4,120,182 $5,813,203
============ ============= ========== ==========
</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.
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (225,690) $(420,395) $(646,085)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Credit for lease losses (27,943) (115,708) (143,651)
Changes in assets and liabilities:
Accounts payable and accrued
expenses (1,695) (6,154) (7,849)
Lessee rental deposits (7,018) (17,746) (24,764)
----------- ---------- ----------
(262,346) (560,003) (822,349)
----------- ---------- ----------
Cash flows from investing activities:
Principal collections on leases 27,943 397,649 425,592
----------- ---------- ----------
Net decrease in cash
and cash equivalents (234,403) (162,354) (396,757)
Cash and cash equivalents:
Beginning of year 1,843,376 3,936,608 5,779,984
----------- ---------- ----------
End of second quarter $1,608,973 $3,774,254 $5,383,227
=========== ========== ==========
</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, 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.
11
<PAGE> 12
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 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 - 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 for the Northern District of Illinois, Eastern Division (the
"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 expects to determine the
appropriate allocation of these proceeds among the Partnerships, net of
contingent attorneys fees of $600,000, during the third quarter after
considering all relevant factors associated with the Settlement. Weiss & Co.
has transferred $2.4 million to an escrow account; this amount will be
transferred to LRC no later than 30 days following the District Court entering
an order of dismissal of Weiss & Co. The District Court has scheduled a hearing
for August 19, 1998 to entertain the motion for dismissal of Weiss & Co. as a
party defendant.
On June 10, 1998, a verdict was rendered finding Price Waterhouse liable for
negligence, but not guilty of breach of contract. On July 20, LRC and Price
Waterhouse both filed post trial motions requesting relief from the Court. The
Court is not expected to rule on these motions for several months.
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,
1997 through June 30, 1998. The discussion and analysis of results of
operations is for the three and six month periods ended June 30, 1998 as
compared to the corresponding periods in 1997.
Liquidity and Capital Resources
During the six months ended June 30, 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 six months ended June 30, 1998, the Partnership's cash and cash
equivalents decreased by $397,000 to $5,383,000 at June 30, 1998 from
$5,780,000 at December 31, 1997. This decrease is primarily due to cash used
in operations of $823,000, partially offset by cash receipts from collections
on leases of $426,000.
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 the amount to be realized from the liquidation 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 significant 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 June 30, 1998 balance sheets (see Partnership's financial
statements included in Item 1).
13
<PAGE> 14
Results of Operations
The Partnership had net losses of $416,000 and $646,000 for the three and six
months ended June 30, 1998, respectively, in the aggregate for all classes of
partners. This compares to aggregate net losses of $160,000 and $222,000 for
the same periods in 1997. 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 six month periods ended June 30, 1998 as compared to
the same periods in 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 and six months ended June 30, 1998 as compared to
the corresponding periods in 1997.
General Partner's expense reimbursement:
The decrease for the three and six months ended June 30, 1998 is primarily due
to changes in the premium payments for D&O insurance, relocation costs and
reductions in staff and related costs. Through the first quarter 1997, D&O
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. Included in the second quarter 1997 is a
one-time charge for relocating staff to reduced office space.
Professional fees:
The 1998 increase reflects fees paid in connection with the ongoing litigation
against the Partnership's former accountants. As of August 14, 1998 the
litigation process continues. 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 primarily reflects collections on previously reserved balances.
14
<PAGE> 15
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.
Reference is made to Part I, Item 1, Note 4 for a discussion of legal
proceedings involving claims against Weiss & Co. and Price Waterhouse.
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.
15
<PAGE> 16
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 14th day
of August 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.
16
<PAGE> 17
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.
17
<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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,383,227
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,889,069
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,813,203
<TOTAL-LIABILITY-AND-EQUITY> 5,889,069
<SALES> 0
<TOTAL-REVENUES> 189,941
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 32,312
<LOSS-PROVISION> (143,651)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (646,085)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
