<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
September 30, 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 SEPTEMBER 30, 1999
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
September 30, 1999 (unaudited) 3
December 31, 1998 4
Statements of Revenue and Expenses (unaudited)
For the three months ended September 30, 1999 5
For the three months ended September 30, 1998 6
For the nine months ended September 30, 1999 7
For the nine months ended September 30, 1998 8
Statements of Changes in Partners' Equity
For the nine months ended September 30, 1999 9
(unaudited)
Statements of Cash Flows (unaudited)
For the nine months ended September 30, 1999 10
For the nine months ended September 30, 1998 11
Notes to Financial Statements (unaudited) 12
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 13 - 14
PART II - OTHER INFORMATION
Items 1-6. 15
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
BALANCE SHEETS
September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 661,711 $1,764,560 $2,426,271
Net investment in direct financing
leases -- -- --
Diverted and other assets, net 53,093 115,350 168,443
Datronic assets, net -- -- --
---------- ---------- ----------
$ 714,804 $1,879,910 $2,594,714
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 517 $ 6,829 $ 7,346
Lessee rental deposits 5,882 16,520 22,402
---------- ---------- ----------
Total liabilities 6,399 23,349 29,748
Total partners' equity 708,405 1,856,561 2,564,966
---------- ---------- ----------
$ 714,804 $1,879,910 $2,594,714
========== ========== ==========
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
BALANCE SHEETS
December 31, 1998
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
ASSETS
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 September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 6 $ 12 $ 18
Interest income 8,253 20,611 28,864
--------- --------- ---------
8,259 20,623 28,882
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 53,265 119,694 172,959
Professional fees 10,442 23,267 33,709
Other operating expenses 3,355 7,289 10,644
Credit for lease losses (7,216) (20,006) (27,222)
--------- --------- ---------
59,846 130,244 190,090
--------- --------- ---------
Net loss $ (51,587) $(109,621) $(161,208)
========= ========= =========
Net loss - General Partner $ (516) $ (1,096) $ (1,612)
========= ========= =========
Net loss - Limited Partners $ (51,071) $(108,525) $(159,596)
========= ========= =========
Net loss per limited
partnership unit $ (0.81) $ (0.79)
========= =========
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 September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 1,595 $ 11,578 $ 13,173
Interest income 20,486 47,040 67,526
--------- --------- ---------
22,081 58,618 80,699
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 53,347 128,501 181,848
Professional fees 8,431 20,216 28,647
Other operating expenses 2,231 4,875 7,106
Credit for lease losses (8,192) (17,799) (25,991)
--------- --------- ---------
55,817 135,793 191,610
--------- --------- ---------
Net loss $ (33,736) $ (77,175) $(110,911)
========= ========= =========
Net loss - General Partner $ (337) $ (772) $ (1,109)
========= ========= =========
Net loss - Limited Partners $ (33,399) $ (76,403) $(109,802)
========= ========= =========
Net loss per limited
partnership unit $ (0.53) $ (0.56)
========= =========
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 nine months ended September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 3,021 $ 9,959 $ 12,980
Interest income 37,170 90,131 127,301
--------- --------- ---------
40,191 100,090 140,281
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 156,293 352,797 509,090
Professional fees 36,187 83,662 119,849
Other operating expenses 11,654 25,595 37,249
Credit for lease losses (22,064) (72,267) (94,331)
--------- --------- ---------
182,070 389,787 571,857
--------- --------- ---------
Net loss $(141,879) $(289,697) $(431,576)
========= ========= =========
Net loss - General Partner $ (1,419) $ (2,897) $ (4,316)
========= ========= =========
Net loss - Limited Partners $(140,460) $(286,800) $(427,260)
========= ========= =========
Net loss per limited
partnership unit $ (2.23) $ (2.09)
========= =========
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 nine months ended September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Lease income $ 6,339 $ 56,303 $ 62,642
Interest income 63,095 144,903 207,998
----------- ----------- -----------
69,434 201,206 270,640
----------- ----------- -----------
Expenses:
General Partner's expense
reimbursement 150,475 360,207 510,682
Professional fees 202,156 445,022 647,178
Other operating expenses 12,364 27,054 39,418
Credit for lease losses (36,135) (133,507) (169,642)
----------- ----------- -----------
328,860 698,776 1,027,636
----------- ----------- -----------
Net loss $ (259,426) $ (497,570) $ (756,996)
=========== =========== ===========
Net loss - General Partner $ (2,594) $ (4,976) $ (7,570)
=========== =========== ===========
Net loss - Limited Partners $ (256,832) $ (492,594) $ (749,426)
=========== =========== ===========
Net loss per limited
partnership unit $ (4.07) $ (3.60)
=========== ===========
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.
STATEMENTS 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, 1998* $ -- $ 1,830,031 $ 4,422,640 $ 6,252,671
Distributions to partners -- (979,747) (2,276,382) (3,256,129)
Net loss (4,316) (140,460) (286,800) (431,576)
Allocation of General
Partner's Equity 4,316 (1,419) (2,897) --
----------- ----------- ----------- -----------
Balance, September 30, 1999 $ -- $ 708,405 $ 1,856,561 $ 2,564,966
=========== =========== =========== ===========
</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
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (141,879) $ (289,697) $ (431,576)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (22,064) (72,267) (94,331)
Changes in assets and liabilities:
Judgment receivable, net 42,059 91,376 133,435
Accounts payable and
accrued expenses (3,456) (15,642) (19,098)
Lessee rental deposits (3,800) (6,510) (10,310)
----------- ----------- -----------
(129,140) (292,740) (421,880)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 22,064 83,306 105,370
----------- ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners (979,747) (2,276,382) (3,256,129)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (1,086,823) (2,485,816) (3,572,639)
Cash and cash equivalents:
Beginning of year 1,748,534 4,250,376 5,998,910
----------- ----------- -----------
End of third quarter $ 661,711 $ 1,764,560 $ 2,426,271
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
10
<PAGE> 11
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (259,426) $ (497,570) $ (756,996)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (36,135) (133,507) (169,642)
Changes in assets and liabilities:
Accounts payable and
accrued expenses (1,463) (6,001) (7,464)
Lessee rental deposits (12,443) (29,187) (41,630)
----------- ----------- -----------
(309,467) (666,265) (975,732)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 36,135 516,119 552,254
----------- ----------- -----------
Net decrease in cash and
cash equivalents (273,332) (150,146) (423,478)
Cash and cash equivalents:
Beginning of year 1,843,376 3,936,608 5,779,984
----------- ----------- -----------
End of third quarter $ 1,570,044 $ 3,786,462 $ 5,356,506
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
11
<PAGE> 12
DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 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 ($799,000 and $1,883,000 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.
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, 1998
through September 30, 1999. The discussion and analysis of results of operations
is for the three and nine month periods ended September 30, 1999 as compared to
the corresponding periods 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 nine months ended September 30, 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 nine months
ended September 30, 1999, Partnership cash and cash equivalents decreased by
$3,573,000 to $2,426,000 at September 30, 1999 from $5,999,000 at December 31,
1998. This decrease is primarily due to the distribution paid to Limited
Partners of $3,256,000 (see below) and by cash used in operations of $422,000,
partially offset by cash receipts from collections on leases of $105,000.
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 ($799,000 and $1,883,000 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
cash-on-hand and the disposition of the remaining Diverted Assets (consisting
primarily of an office building in Schaumburg, Illinois). The general partner
expects that this building will be sold sometime during 2000. The proceeds will
be included in the next distribution to the Limited Partners sometime during
2000. After all assets are disposed of and the proceeds distributed to the
Limited Partners, the Partnership will be required to file final reports with
the Securities and Exchange Commission and the Internal Revenue
13
<PAGE> 14
Service. The general partner expects this to occur sometime during the year 2000
or early 2001.
Results of Operations
The Partnership had net losses of $161,000 and $432,000 for the three and nine
month periods ended September 30, 1999 in the aggregate for all classes of
partners. This compares to aggregate net losses of $111,000 and $757,000 for the
three and nine month periods ended September 30, 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 September 30, 1999 and 1998 include the
following:
Lease income:
The Partnership no longer has an active lease portfolio. Any lease collections
are the result of recoveries in excess of reserved balances.
Interest income:
Interest income includes earnings on invested cash balances. Interest income for
1999 was lower than 1998 because of lower average invested cash balances and
interest rates.
General Partner's expense reimbursement:
General Partner's expense reimbursement includes payments to LRC for expenses it
incurred as general partner. 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 nine months ended September 30, 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.
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, 1998 Form 10-K for a discussion of material legal proceedings involving the
Partnership.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
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 4th day of November 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.
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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,426,271
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,594,714
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,564,966
<TOTAL-LIABILITY-AND-EQUITY> 2,594,714
<SALES> 0
<TOTAL-REVENUES> 140,281
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 37,249
<LOSS-PROVISION> (94,331)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (431,576)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
