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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
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For the Quarter Ended
September 30, 2000 Commission File Number 0-17744
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
(Exact name of Registrant as specified in its charter)
Delaware 36-3581924
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State or other IRS Employer Identification
jurisdiction of Number
incorporation or
organization
1300 E. Woodfield Road, Suite 312 Schaumburg, Illinois 60173
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Address of principal City, State, Zip Code
executive offices
Registrant's telephone number: (847) 240-6200
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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
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(2) Yes x No
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2000
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
September 30, 2000 (unaudited) 3
December 31, 1999 4
Statements of Revenue and Expenses (unaudited)
For the three months ended September 30, 2000 5
For the three months ended September 30, 1999 6
For the nine months ended September 30, 2000 7
For the nine months ended September 30, 1999 8
Statements of Changes in Partners' Equity
For the nine months ended September 30, 2000 9
(unaudited)
Statements of Cash Flows (unaudited)
For the nine months ended September 30, 2000 10
For the nine months ended September 30, 1999 11
Notes to Financial Statements (unaudited) 12
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 13 - 15
Item 3.
Quantitative and Qualitative Disclosures About
Market Risk 15
PART II - OTHER INFORMATION
Items 1-6. 16
2
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
BALANCE SHEETS
September 30, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
ASSETS
Cash and cash equivalents $ 288,391 $ 669,783 $ 958,174
Net investment in direct financing
leases - - -
Diverted and other assets, net 34,574 75,114 109,688
Datronic assets, net - - -
----------- ----------- -----------
$ 322,965 $ 744,897 $ 1,067,862
=========== =========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 536 $ 4,931 $ 5,467
Lessee rental deposits 773 8,237 9,010
----------- ----------- -----------
Total liabilities 1,309 13,168 14,477
Total partners' equity 321,656 731,729 1,053,385
----------- ----------- -----------
$ 322,965 $ 744,897 $ 1,067,862
=========== =========== ===========
See accompanying notes to financial statements
3
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
BALANCE SHEETS
December 31, 1999
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
ASSETS
Cash and cash equivalents $ 590,360 $ 1,617,413 $ 2,207,773
Net investment in direct financing
leases - - -
Diverted and other assets, net 53,093 115,350 168,443
Datronic assets, net - - -
----------- ----------- -----------
$ 643,453 $ 1,732,763 $ 2,376,216
=========== =========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 471 $ 6,706 $ 7,177
Lessee rental deposits 2,962 10,194 13,156
----------- ----------- -----------
Total liabilities 3,433 16,900 20,333
Total partners' equity 640,020 1,715,863 2,355,883
----------- ----------- -----------
$ 643,453 $ 1,732,763 $ 2,376,216
=========== =========== ===========
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 September 30, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
Revenue:
Lease income $ 2,286 $ 4,966 $ 7,252
Interest income 1,744 5,951 7,695
----------- ----------- -----------
4,030 10,917 14,947
----------- ----------- -----------
Expenses:
General Partner's expense
reimbursement 47,319 102,805 150,124
Professional fees 7,166 15,720 22,886
Other operating expenses 1,628 3,538 5,166
Credit for lease losses (2,025) (4,399) (6,424)
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54,088 117,664 171,752
----------- ----------- -----------
Net loss $ (50,058) $ (106,747) $ (156,805)
=========== =========== ===========
Net loss - General Partner (500) (1,068) (1,568)
=========== =========== ===========
Net loss - Limited Partners $ (49,558) $ (105,679) $ (155,237)
=========== =========== ===========
Net loss per limited
partnership unit $ (0.79) $ (0.77)
=========== ===========
Weighted average number of limited
partnership units outstanding 63,030 136,969
=========== ===========
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 September 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
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
=========== ===========
See accompanying notes to financial statements
6
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the nine months ended September 30, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
Revenue:
Lease income $ 4,261 $ 9,257 $ 13,518
Interest income 12,807 34,202 47,009
----------- ----------- -----------
17,068 43,459 60,527
----------- ----------- -----------
Expenses:
General Partner's expense
reimbursement 273,579 594,332 867,911
Professional fees 30,707 67,290 97,997
Other operating expenses 11,905 25,868 37,773
Credit for lease losses (14,510) (33,368) (47,878)
----------- ----------- ----------
301,681 654,122 955,803
----------- ----------- -----------
Net loss $ (284,613) $ (610,663) $ (895,276)
=========== =========== ===========
Net loss - General Partner $ (2,846) $ (6,107) $ (8,953)
=========== =========== ===========
Net loss - Limited Partners $ (281,767) $ (604,556) $ (886,323)
=========== =========== ===========
Net loss per limited
partnership unit $ (4.47) $ (4.41)
=========== ===========
Weighted average number of limited
partnership units outstanding 63,030 136,969
=========== ===========
See accompanying notes to financial statements
7
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the nine months ended September 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
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
=========== ===========
See accompanying notes to financial statements
8
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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, 1999* $ - $ 640,020 $ 1,715,863 $ 2,355,883
Distibutions to partners - (33,751) (373,471) (407,222)
Net loss (8,953) (281,767) (604,556) (895,276)
Allocation of General
Partner's Equity 8,953 (2,846) (6,107) -
----------- ----------- ----------- -----------
Balance, September 30, 2000 $ - $ 321,656 $ 731,729 $ 1,053,385
=========== =========== =========== ===========
* Balances are net of $103,589 and $304,803 of General Partner's Equity previously
allocated to Liquidating and Continuing Limited Partners' Equity.
</TABLE>
See accompanying notes to financial statements
9
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
Cash flows from operating activities:
Net loss $ (284,613) $ (610,663) $ (895,276)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (14,510) (33,368) (47,878)
Changes in assets and liabilities:
Accounts payable and
accrued expenses 65 (1,775) (1,710)
Lessee rental deposits (2,189) (1,957) (4,146)
----------- ----------- -----------
(301,247) (647,763) (949,010)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 14,510 33,368 47,878
Diverted and other assets, net 18,519 40,236 58,755
----------- ----------- -----------
33,029 73,604 106,633
----------- ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners (33,751) (373,471) (407,222)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (301,969) (947,630) (1,249,599)
Cash and cash equivalents:
Beginning of year 590,360 1,617,413 2,207,773
----------- ----------- -----------
End of third quarter $ 288,391 $ 669,783 $ 958,174
=========== =========== ===========
See accompanying notes to financial statements
10
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
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
=========== =========== ===========
See accompanying notes to financial statements
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
NOTE 1 - LIMITED PARTNERSHIP DISTRIBUTIONS:
During June 2000, the Partnership made a cash distribution to Limited Partners
who were owners of record on March 31, 2000. This distribution was made from
residual cash, which is cash available for distribution after satisfying current
Partnership liabilities and setting aside reserves against potential future
liabilities. The total distribution paid to Continuing and Liquidating Limited
Partners was $373,000 and $34,000, respectively. Pursuant to the Partnership
Agreement, these amounts were allocated among the Limited Partners based on each
partner's proportionate share of total partners' capital attributable to their
Class.
NOTE 2 - LITIGATION
In connection with the 1992 Ventre class action, the United States District
Court for the Northern District of Illinois entered an order on September 27,
2000 finding that Edmund J. Lopinski, Jr. had caused the Datronic Partnerships
to sustain losses of $20.0 million. Against this amount, the Court offset $10.9
million that has already been realized on behalf of the Partnerships through the
sale of Diverted and Other Assets and insurance settlements. The Court also
found that Lopinski is entitled to offset the remaining $9.1 million loss with
the proceeds previously received from the other defendants in the Ventre action
and the appraised value of the Schaumburg office building. Proceeds received
from the other defendants totaled $4.9 million, leaving $4.2 million to be
recovered from the building. During the third quarter 2000, the General Partner
received appraisals for the building indicating that its value substantially
exceeds this amount. Accordingly, the losses assessed against Lopinski have been
fully mitigated.
With this ruling, the Ventre, et al v. Datronic Rental Corp., et al class action
is closed.
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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, 1999
through September 30, 2000. The discussion and analysis of results of operations
is for the three and nine month periods ended September 30, 2000 as compared to
the corresponding periods in 1999. Any capitalized term not defined herein has
been defined or discussed in the Partnership's 1999 Form 10-K.
Liquidity and Capital Resources
During the nine months ended September 30, 2000, the Partnership continued to
liquidate its assets and use its cash to pay Partnership operating expenses, pay
a distribution to Limited Partners and to provide for the ultimate liquidation
of the Partnership. During the nine months ended September 30, 2000, Partnership
cash and cash equivalents decreased by $1,250,000 to $958,000 at September 30,
2000 from $2,208,000 at December 31, 1999. This decrease is primarily due to a
distribution paid to Limited Partners of $407,000 (see below) and by cash used
in operations of $949,000, partially offset by cash receipts from collections on
leases of $48,000 and a distribution of Diverted and other assets of $59,000.
During June 2000, the Partnership made a cash distribution to Limited Partners
who were owners of record on March 31, 2000. This distribution was made from
residual cash, which is cash available for distribution after satisfying current
Partnership liabilities and setting aside reserves against potential future
liabilities. The total distribution paid to Continuing and Liquidating Limited
Partners was $373,000 and $34,000, respectively. Pursuant to the Partnership
Agreement, these amounts were allocated among the Limited Partners based on each
partner's 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 proceeds from the sale of Diverted Assets (consisting of
cash and an office building in Schaumburg, Illinois). The general partner
expects that the building will be sold during the first quarter of 2001 and the
proceeds included in a subsequent distribution to Limited Partners.
The Partnership's interest in the Schaumburg office building is carried on its
books at $110,000 (see Note 4 to the Partnership's financial statements included
in the 1999 Form 10-K). At March 1993,
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the date LRC was appointed general partner, the building was approximately 40%
occupied. Since then, occupancy has increased to more than 80% and base rental
rates have increased by 75%. An appraisal received during the third quarter 2000
indicates that the building's value has increased substantially over its book
value.
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 Service. The general
partner expects this to occur sometime during 2001.
Results of Operations
The Partnership had net losses of $157,000 and $895,000 for the three and nine
month periods ended September 30, 2000 in the aggregate for all classes of
partners. This compares to aggregate net losses of $161,000 and $432,000 for the
three and nine month periods ended September 30, 1999. Differences in operating
results between Liquidating and Continuing Limited Partners are attributable to
lease income and expenses associated with 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, 2000 and 1999 include the following:
Lease income:
The Partnership no longer has an active lease portfolio. However, it does have
$234,000 of fully reserved lease balances. Occasionally recoveries are made
against these balances and any such amounts in excess of the reserve result in
lease income.
Interest income:
Interest income includes earnings on invested cash balances. Interest income for
2000 was lower than 1999 because of lower average invested cash balances,
partially offset by an increase in 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 represent expenses incurred by LRC
in its management of the day-to-day operations of the Partnership. Included in
the first quarter 2000 expenses are $303,000 of insurance premiums associated
with the final wrap up of Partnership affairs and its ultimate liquidation and
dissolution.
14
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Professional fees:
Professional fees for the nine months ended September 30, 2000 reflect a
decreasing level of professional services required as a result of the decrease
in the Partnership's lease collections and related activities.
Credit for lease losses:
This credit reflects recoveries of previously reserved amounts.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for in this disclosure is not applicable to the
Registrant.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 - Legal Proceedings in the Partnership's December
31, 1999 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.
16
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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 14th day of November 2000.
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/ JEFFREY T. MCREYNOLDS
-----------------------------
Jeffrey T. McReynolds
Vice President and Chief Financial Officer, Lease Resolution
Corporation General Partner of Datronic Equipment Income Fund XVII,
L.P.
17
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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27 Financial Data Schedule, which is submitted electronically
to the Securities and Exchange Commission for Information
only and not filed.
18
