<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, 1999 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 MARCH 31, 1999
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
March 31, 1999 (unaudited) 3
December 31, 1998 4
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 1999 5
For the three months ended March 31, 1998 6
Statements of Changes in Partners' Equity
For the three months ended March 31, 1999 7
(unaudited)
Statements of Cash Flows (unaudited)
For the three months ended March 31, 1999 8
For the three months ended March 31, 1998 9
Notes to Financial Statements (unaudited) 10
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 12
PART II - OTHER INFORMATION
Items 1-6. 13
</TABLE>
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
BALANCE SHEETS
March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
-------------- -------------- --------------
ASSETS
<S> <C> <C> <C>
Cash and cash equivalents $ 1,736,407 $ 4,253,797 $ 5,990,204
Net investment in direct
financing leases -- -- --
Diverted and other assets, net 53,093 115,350 168,443
Datronic assets, net -- -- --
-------------- -------------- --------------
$ 1,789,500 $ 4,369,147 $ 6,158,647
============== ============== ==============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 2,373 $ 15,214 $ 17,587
Lessee rental deposits 9,551 22,745 32,296
-------------- -------------- --------------
Total liabilities 11,924 37,959 49,883
Total partners' equity 1,777,576 4,331,188 6,108,764
-------------- -------------- --------------
$ 1,789,500 $ 4,369,147 $ 6,158,647
============== ============== ==============
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
BALANCE SHEETS
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ ------------
ASSETS
<S> <C> <C> <C>
Cash and cash equivalents $ 1,748,534 $ 4,250,376 $ 5,998,910
Judgment receivable, net 42,059 91,376 133,435
Net investment in direct
financing leases -- 11,039 11,039
Diverted and other assets, net 53,093 115,350 168,443
Datronic assets, net -- -- --
------------ ------------ ------------
$ 1,843,686 $ 4,468,141 $ 6,311,827
============ ============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 3,973 $ 22,471 $ 26,444
Lessee rental deposits 9,682 23,030 32,712
------------ ------------ ------------
Total liabilities 13,655 45,501 59,156
Total partners' equity 1,830,031 4,422,640 6,252,671
------------ ------------ ------------
$ 1,843,686 $ 4,468,141 $ 6,311,827
============ ============ ============
</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, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Lease income $ 574 $ 9,917 $ 10,491
Interest income 19,482 45,459 64,941
------------ ------------ ------------
20,056 55,376 75,432
------------ ------------ ------------
Expenses:
General Partner's expense
reimbursement $ 60,860 $ 137,575 $ 198,435
Professional fees 16,000 35,329 51,329
Other operating expenses 1,990 4,585 6,575
Credit for lease losses (6,339) (30,661) (37,000)
------------ ------------ ------------
72,511 146,828 219,339
------------ ------------ ------------
Net loss $ (52,455) $ (91,452) $ (143,907)
============ ============ ============
Net loss - General Partner $ (525) $ (914) $ (1,439)
============ ============ ============
Net loss - Limited Partners $ (51,930) $ (90,538) $ (142,468)
============ ============ ============
Net loss per limited
partnership unit $ (0.82) $ (0.66)
============ ============
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, 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 - other 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
6
<PAGE> 7
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
General Limited Limited Total
Partner's Partner's Partner's Partner's
Equity Equity Equity Equity
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1998* $ -- $ 1,830,031 $ 4,422,640 $ 6,252,671
Net loss (1,439) (51,930) (90,538) (143,907)
Allocation of General
Partner's Equity 1,439 (525) (914) --
------------- ------------- ------------- -------------
Balance, March 31, 1999 $ -- $ 1,777,576 $ 4,331,188 $ 6,108,764
============= ============= ============= =============
</TABLE>
* Balances are net of $101,486 and $300,499 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, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (52,455) $ (91,452) $ (143,907)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (6,339) (30,661) (37,000)
Changes in assets and liabilities:
Judgment receivable, net 42,059 91,376 133,435
Accounts payable and
accrued expenses (1,600) (7,257) (8,857)
Lessee rental deposits (131) (285) (416)
------------ ------------ ------------
(18,466) (38,279) (56,745)
------------ ------------ ------------
Cash flows from investing activities:
Principal collections on leases 6,339 41,700 48,039
------------ ------------ ------------
6,339 41,700 48,039
------------ ------------ ------------
Net increase (decrease) in cash and
cash equivalents (12,127) 3,421 (8,706)
Cash and cash equivalents:
Beginning of year 1,748,534 4,250,376 5,998,910
------------ ------------ ------------
End of first quarter $ 1,736,407 $ 4,253,797 $ 5,990,204
============ ============ ============
</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, 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
------------ ------------ ------------
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
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(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 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 ($181,000 and $393,000 for Liquidating and
Continuing Limited Partners respectively), and (ii) residual cash resulting from
the net cash flows of the Partnership ($800,000 and $1,884,000 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 7 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.
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, 1998
through March 31, 1999. The discussion and analysis of results of operations is
for the three month period ended March 31, 1999 as compared to the corresponding
period 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 three months ended March 31, 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 the three months ended
March 31, 1999, Partnership cash and cash equivalents decreased by $9,000 to
$5,990,000 at March 31, 1999 from $5,999,000 at December 31, 1998. This decrease
is primarily due to cash used in operations of $57,000 partially offset by cash
receipts from collections on leases of $48,000.
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 ($181,000 and $393,000 for Liquidating and
Continuing Limited Partners respectively), and (ii) residual cash resulting from
the net cash flows of the Partnership ($800,000 and $1,884,000 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 7 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
remaining cash-on-hand after the April 1999 distribution, as well as the
disposition of Diverted Assets (consisting primarily of an office building in
Schaumburg, Illinois). The general partner expects these assets will be
converted to cash during 1999 thereby enabling the Partnership to pay an
additional distribution in early 2000. After all assets are disposed of and the
proceeds are 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. The general partner expects this to occur sometime
during the year 2000.
11
<PAGE> 12
Results of Operations
The Partnership had a net loss of $144,000 for the three month period ended
March 31, 1999 in the aggregate for all classes of partners. This compares to
aggregate net loss of $230,000 for the three months ended March 31, 1998.
Differences in operating results between Liquidating and Continuing Limited
Partners are attributable to lease income 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 periods ended March 31, 1999
and 1998 include the following:
Lease income:
Since May 1994, the Partnership has been in its Liquidating Phase which
prohibits investing in any new leases. Accordingly, any collections are the
result of recoveries against previously reserved balances.
General Partner's expense reimbursement:
General Partner's expense reimbursement includes payments to LRC for expenses it
incurred as general partner in excess of those covered by its partner
distributions. 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 months ended March 31, 1999 reflect a decreasing
level of professional services required as a result of the decrease in the
Partnership's lease collections 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 recoveries of previously reserved balances.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for in this disclosure is not applicable to the
Registrant.
12
<PAGE> 13
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
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.
13
<PAGE> 14
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 10th day of May 1999.
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.
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------
<S> <C>
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for Information only and not filed.
</TABLE>
<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-K.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 5,990,204
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,158,647
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,108,764
<TOTAL-LIABILITY-AND-EQUITY> 6,158,847
<SALES> 0
<TOTAL-REVENUES> 75,432
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,575
<LOSS-PROVISION> (37,000)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (143,907)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
