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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
----------------------------------
For the Quarter Ended
June 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
--------------------------
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 JUNE 30, 2000
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
June 30, 2000 (unaudited) 3
December 31, 1999 4
Statements of Revenue and Expenses (unaudited)
For the three months ended June 30, 2000 5
For the three months ended June 30, 1999 6
For the six months ended June 30, 2000 7
For the six months ended June 30, 1999 8
Statements of Changes in Partners' Equity
For the six months ended June 30, 2000 9
(unaudited)
Statements of Cash Flows (unaudited)
For the six months ended June 30, 2000 10
For the six months ended June 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
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 340,301 $ 779,656 $1,119,957
Net investment in direct financing
leases -- -- --
Diverted and other assets, net 34,574 75,114 109,688
Datronic assets, net -- -- --
---------- ---------- ----------
$ 374,875 $ 854,770 $1,229,645
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 474 $ 6,287 $ 6,761
Lessee rental deposits 2,687 10,007 12,694
---------- ---------- ----------
Total liabilities 3,161 16,294 19,455
Total partners' equity 371,714 838,476 1,210,190
---------- ---------- ----------
$ 374,875 $ 854,770 $1,229,645
========== ========== ==========
</TABLE>
See accompanying notes to financial statements
3
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
BALANCE SHEETS
December 31, 1999
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
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
========== ========== ==========
</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 June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 1,142 $ 2,482 $ 3,624
Interest income 5,215 13,324 18,539
--------- --------- ---------
6,357 15,806 22,163
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 65,968 142,276 208,244
Professional fees 10,688 23,448 34,136
Other operating expenses 7,921 17,208 25,129
Credit for lease losses (6,143) (13,965) (20,108)
--------- --------- ---------
78,434 168,967 247,401
--------- --------- ---------
Net loss $ (72,077) $(153,161) $(225,238)
========= ========= =========
Net loss - General Partner $ (721) $ (1,532) (2,253)
========= ========= =========
Net loss - Limited Partners $ (71,356) $(151,629) $(222,985)
========= ========= =========
Net loss per limited
partnership unit $ (1.13) $ (1.11)
========= =========
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, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 2,441 $ 30 $ 2,471
Interest income 9,435 24,061 33,496
--------- --------- ---------
11,876 24,091 35,967
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 42,168 95,528 137,696
Professional fees 9,745 25,066 34,811
Other operating expenses 6,309 13,721 20,030
Credit for lease losses (8,509) (21,600) (30,109)
--------- --------- ---------
49,713 112,715 162,428
--------- --------- ---------
Net loss $ (37,837) $ (88,624) $(126,461)
========= ========= =========
Net loss - General Partner $ (378) $ (886) $ (1,264)
========= ========= =========
Net loss - Limited Partners $ (37,459) $ (87,738) $(125,197)
========= ========= =========
Net loss per limited
partnership unit $ (0.59) $ (0.64)
========= =========
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.
STATEMENTS OF REVENUE AND EXPENSES
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 1,975 $ 4,291 $ 6,266
Interest income 11,063 28,251 39,314
--------- --------- ---------
13,038 32,542 45,580
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 226,260 491,527 717,787
Professional fees 23,541 51,570 75,111
Other operating expenses 10,277 22,330 32,607
Credit for lease losses (12,485) (28,969) (41,454)
--------- --------- ---------
247,593 536,458 784,051
--------- --------- ---------
Net loss $(234,555) $(503,916) $(738,471)
========= ========= =========
Net loss - General Partner $ (2,346) $ (5,039) $ (7,385)
========= ========= =========
Net loss - Limited Partners $(232,209) $(498,877) $(731,086)
========= ========= =========
Net loss per limited
partnership unit $ (3.68) $ (3.64)
========= =========
Weighted average number of limited
partnership units outstanding 63,030 136,969
========= =========
</TABLE>
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 six months ended June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ------------ --------
<S> <C> <C> <C>
Revenue:
Lease income $ 3,015 $ 9,947 $ 12,962
Interest income 28,917 69,520 98,437
--------- --------- ---------
31,932 79,467 111,399
--------- --------- ---------
Expenses:
General Partner's expense
reimbursement 103,028 233,103 336,131
Professional fees 25,745 60,395 86,140
Other operating expenses 8,299 18,306 26,605
Credit for lease losses (14,848) (52,261) (67,109)
--------- --------- ---------
122,224 259,543 381,767
--------- --------- ---------
Net loss $ (90,292) $(180,076) $(270,368)
========= ========= =========
Net loss - General Partner $ (903) $ (1,801) $ (2,704)
========= ========= =========
Net loss - Limited Partners $ (89,389) $(178,275) $(267,664)
========= ========= =========
Net loss per limited
partnership unit $ (1.42) $ (1.30)
========= =========
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, 1999* $ -- $ 640,020 $ 1,715,863 $ 2,355,883
Distibutions to partners -- (33,751) (373,471) (407,222)
Net loss (7,385) (232,209) (498,877) (738,471)
Allocation of General
Partner's Equity 7,385 (2,346) (5,039) --
----------- ----------- ----------- -----------
Balance, June 30, 2000 $ -- $ 371,714 $ 838,476 $ 1,210,190
=========== =========== =========== ===========
</TABLE>
* Balances are net of $103,589 and $304,803 of General Partner's Equity
previously allocated to Liquidating and Continuing Limited Partners' Equity.
See accompanying notes to financial statements
9
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (234,555) $ (503,916) $ (738,471)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (12,485) (28,969) (41,454)
Changes in assets and liabilities:
Accounts payable and
accrued expenses 3 (419) (416)
Lessee rental deposits (275) (187) (462)
----------- ----------- -----------
(247,312) (533,491) (780,803)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 12,485 28,969 41,454
Distribution of Diverted and other
assets 18,519 40,236 58,755
----------- ----------- -----------
31,004 69,205 100,209
Cash flows from financing activities:
Distributions to Limited Partners (33,751) (373,471) (407,222)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (250,059) (837,757) (1,087,816)
Cash and cash equivalents:
Beginning of year 590,360 1,617,413 2,207,773
----------- ----------- -----------
End of second quarter $ 340,301 $ 779,656 $ 1,119,957
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
10
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (90,292) $ (180,076) $ (270,368)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (14,848) (52,261) (67,109)
Changes in assets and liabilities:
Judgment receivable, net 42,059 91,376 133,435
Accounts payable and
accrued expenses (1,243) 6,237 4,994
Lessee rental deposits (1,679) (5,602) (7,281)
----------- ----------- -----------
(66,003) (140,326) (206,329)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 14,848 63,300 78,148
----------- ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners (979,747) (2,276,382) (3,256,129)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (1,030,902) (2,353,408) (3,384,310)
Cash and cash equivalents:
Beginning of year 1,748,534 4,250,376 5,998,910
----------- ----------- -----------
End of second quarter $ 717,632 $ 1,896,968 $ 2,614,600
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
11
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DATRONIC EQUIPMENT INCOME FUND XVII, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(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 1999 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 1999 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
1999 Form 10-K.
NOTE 3 - 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.
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, 1999
through June 30, 2000. The discussion and analysis of results of operations is
for the three and six month periods ended June 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 six months ended June 30, 2000, 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 six months ended
June 30, 2000, Partnership cash and cash equivalents decreased by $1,088,000 to
$1,120,000 at June 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 $781,000, partially offset by cash
receipts from collections on leases of $41,000 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 this building will be sold sometime during 2000 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%. Accordingly, the general partner believes that the
value of the building has increased and that this value will be realized when
the building is sold. The amount to be realized from the sale of the building,
however, cannot be determined until it is sold.
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 $225,000 and $738,000 for the three and six
month periods ended June 30, 2000 in the aggregate for all classes of partners.
This compares to aggregate net losses of $126,000 and $270,000 for the three and
six month periods ended June 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 June 30, 2000 and 1999 include the following:
Lease income:
The Partnership no longer has an active lease portfolio. However, it does have
$894,000 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.
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Professional fees:
Professional fees for the six months ended June 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.
15
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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 August 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
----------- -----------
27 Financial Data Schedule, which is submitted electronically to
the Securities and Exchange Commission for Information only
and not filed.
18
