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, 1996 Commission File Number 0-21276
- --------------------- -------------------------------
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 36-3744792
- ----------------- --------------------------
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>
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
FORM 10-Q
---------
FOR THE QUARTER ENDED MARCH 31, 1996
------------------------------------
PART I - FINANCIAL INFORMATION
Item 1.
_______
Index to Financial Statements
Balance Sheets
March 31, 1996 (unaudited)
December 31, 1995
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 1996
For the three months ended March 31, 1995
Statements of Changes in Partners' Equity
For the three months ended March 31, 1996
(unaudited)
Statements of Cash Flows (unaudited)
For the three months ended March 31, 1996
For the three months ended March 31, 1995
Notes to Financial Statements (unaudited)
Item 2.
- -------
Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Items 1-6.
- ----------
<PAGE>
<TABLE>
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
BALANCE SHEETS
--------------
March 31, 1996 - Unaudited
------------------------------------------
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- --------- -----------
<S> <C> <C> <C>
ASSETS
- ------
Cash and cash equivalents $452,689 $1,236,246 $1,688,935
Net investment in direct
financing leases 48,675 4,958,521 5,007,196
Diverted and Other Assets, net 154,191 1,012,162 1,166,353
Restricted Cash 44,363 291,209 335,572
Organization costs, net of
accumulated amortization 3,993 26,213 30,206
Acquisition costs, net of
accumulated amortization 11,830 77,653 89,483
-------- ---------- ----------
$715,741 $7,602,004 $8,317,745
======== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and
accrued expenses $ 4,997 $ 43,133 $ 48,130
Lessee rental deposits 38,619 326,781 365,400
Due to Management Company 48 3,645 3,693
-------- ---------- ----------
Total liabilities 43,664 373,559 417,223
Total Partners' equity 672,077 7,228,445 7,900,522
-------- ---------- ----------
$715,741 $7,602,004 $8,317,745
======== ========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
BALANCE SHEETS
--------------
December 31, 1995
-----------------------------------
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
---------- ---------- --------
<S> <C> <C> <C>
ASSETS
- ------
Cash and cash equivalents $469,897 $1,079,361 $1,549,258
Net investment in direct
financing leases 72,639 5,699,235 5,771,874
Diverted and Other Assets, net 154,191 1,012,162 1,166,353
Restricted Cash 44,363 291,209 335,572
Organization costs, net of
accumulated amortization 5,990 39,319 45,309
Acquisition costs, net of
accumulated amortization 17,744 116,479 134,223
-------- ---------- ----------
$764,824 $8,237,765 $9,002,589
======== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and
accrued expenses $ 7,934 $ 63,322 $ 71,256
Lessee rental deposits 40,486 338,107 378,593
Due to Management Company 37 243 280
-------- ---------- ----------
Total liabilities 48,457 401,672 450,129
Total Partners' equity 716,367 7,836,093 8,552,460
-------- ---------- ----------
$764,824 $8,237,765 $9,002,589
======== ========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
STATEMENTS OF REVENUE AND EXPENSES
----------------------------------
For the three months ended March 31, 1996
-----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ---------
<S> <C> <C> <C>
Revenue:
Lease income $ 2,216 $ 181,933 $ 184,149
Interest income 284 11,010 11,294
-------- ---------- ----------
2,500 192,943 195,443
======== ========== ==========
Expenses:
Amortization of organization
and equipment acquisition costs 7,911 51,932 59,843
Management fees-New Era 20,269 193,551 213,820
General Partner's
expense reimbursement 6,843 44,918 51,761
Professional fees 10,112 70,131 80,243
Other operating expenses 1,655 12,087 13,742
Provision for lease losses - 50,000 50,000
-------- ---------- ----------
46,790 422,619 469,409
-------- ---------- ----------
Net loss $ (44,290) $(229,676) $ (273,966)
======== ========== ==========
Net loss -
General Partner $ (443) $ (2,297) $ (2,740)
======== ========== ==========
Net loss -
Limited Partners $ (43,847) $(227,379) $ (271,226)
======== ========== ==========
Net loss per Limited
Partnership Unit $(5.70) $(4.50)
====== =======
Weighted average number
of Limited Partnership Units
outstanding 7,699 50,535
====== =======
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
STATEMENTS OF REVENUE AND EXPENSES
----------------------------------
For the three months ended March 31, 1995
-----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ---------- ---------
<S> <C> <C> <C>
Revenue:
Lease income $ 8,472 $ 271,928 $280,400
Interest income 668 10,222 10,890
-------- --------- ---------
9,140 282,150 291,290
======== ========= =========
Expenses:
Amortization of organization
and equipment acquisition costs 7,911 51,933 59,844
Management fees-New Era 21,491 219,159 240,650
General Partner's
expense reimbursement 2,531 16,615 19,146
Professional fees 8,678 59,961 68,639
Other operating expenses 444 7,097 7,541
Credit for lease losses (19,494) (127,964) (147,458)
-------- --------- ---------
21,561 226,801 248,362
-------- --------- ---------
Net earnings (loss) $(12,421) $ 55,349 $ 42,928
======== ========= =========
Net earnings (loss) -
General Partner $ (124) $ 553 $ 429
======== ========= =========
Net earnings (loss) -
Limited Partners $(12,297) $ 54,796 $ 42,499
======== ========= =========
Net earnings (loss) per
Limited Partnership Unit $(1.60) $ 1.08
====== ======
Weighted average number
of Limited Partnership Units
outstanding 7,699 50,535
====== ======
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
General Limited Limited Total
Partner's Partners' Partners' Partners'
Equity Equity Equity Equity
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 $(225,857)* $733,761 $ 8,044,556 $ 8,552,460
Distributions to partners
(Note 3) (4,143) - (373,829) (377,972)
Net loss (2,740) (43,847) (227,379) (273,966)
Allocation of General
Partner's Equity 232,740 (17,837) (214,903) -
--------- --------- ----------- -------------
Balance, March 31, 1996 $ - $672,077 $ 7,228,445 $ 7,900,522
========== ======== =========== ===========
<FN>
* Balance as previously reported was $0 due to allocation of $17,394 and $208,463 to Liquidating
and Continuing Limited Partners' Equity, respectively.
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
For the three months ended March 31, 1996
-----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(44,290) $(229,676) $ (273,966)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Amortization expense 7,911 51,932 59,843
Provision for lease losses - 50,000 50,000
Changes in assets and liabilities:
Accounts payable and accrued
expenses (2,937) (20,189) (23,126)
Lessee rental deposits (1,867) (11,326) (13,193)
Due to Management Company 11 3,402 3,413
-------- ---------- ----------
(41,172) (155,857) (197,029)
-------- ---------- ----------
Cash flows from investing activities:
Principal collections on leases 23,964 690,714 714,678
-------- ---------- ----------
23,964 690,714 714,678
-------- ---------- ----------
Cash flows from financing activities:
Distributions to limited partners (a) - (373,829) (373,829)
Distributions to General Partner - (4,143) (4,143)
-------- ---------- ----------
- (377,972) (377,972)
-------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents (17,208) 156,885 139,677
Cash and cash equivalents:
Beginning of year 469,897 1,079,361 1,549,258
-------- ---------- ----------
End of first quarter $452,689 $1,236,246 $1,688,935
======== ========== ==========
<FN>
(a)Distributions during the period were $0 per unit for Liquidating Limited Partners and $7.40 per
unit for Continuing Limited Partners (see Note 3).
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
For the three months ended March 31, 1995
-----------------------------------------
(Unaudited)
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (12,421) $ 55,349 $ 42,928
Adjustments to reconcile net
earnings (loss) to net cash
used in operating activities:
Amortization expense 7,911 51,933 59,844
Credit for lease losses (19,494) (127,964) (147,458)
Changes in assets and liabilities:
Accounts payable and accrued
expenses (4,674) (33,020) (37,694)
Lessee rental deposits (116) 450 334
Due to Management Company (15) (1,646) (1,661)
--------- --------- ----------
(28,809) (54,898) (83,707)
--------- --------- ----------
Cash flows from investing activities:
Purchases of lease receivables - (395,037) (395,037)
Principal collections on leases 69,610 1,121,813 1,191,423
Sale of leases (Note 4) 4,879 340,676 345,555
Diverted and Other Assets, net 57,031 374,371 431,402
Datronic Assets 5,300 34,788 40,088
--------- --------- ----------
136,820 1,476,611 1,613,431
--------- --------- ----------
Cash flows from financing activities:
Distributions to limited partners (a) (10,009) (778,806) (788,815)
Distributions to General Partner (859) (17,326) (18,185)
--------- --------- ----------
(10,868) (796,132) (807,000)
--------- --------- ----------
Net increase in cash and
cash equivalents 97,143 625,581 722,724
Cash and cash equivalents:
Beginning of year 320,268 1,801,421 2,121,689
--------- --------- ----------
End of first quarter $ 417,411 $2,427,002 $2,844,413
========= ========== ==========
<FN>
(a)Distributions during the period were $1.30 per unit for Liquidating Limited Partners and $15.41
per unit for Continuing Limited Partners.
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
------------------------------
March 31, 1996
--------------
(Unaudited)
NOTE 1 - ORGANIZATION:
- ----------------------
Datronic Finance Income Fund I, L.P., a Delaware Limited
Partnership (the "Partnership"), was formed on November 21, 1990
for the purpose of leasing both high- and low-technology equipment.
Reference is made to Notes 4, 6, 7 and 8 to the Partnership's
financial statements included in the 1995 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 1995 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 3 to the Partnership's financial
statements included in the 1995 Form 10-K.
Effective January 1, 1996 the Partnership adopted SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of." The adoption of SFAS 121 had no
effect on the Partnership's financial position or net loss.
NOTE 3 - LIMITED PARTNERSHIP DISTRIBUTIONS:
- -------------------------------------------
Distributions to Liquidating Limited Partners were suspended
after payment of the April 1, 1995 distribution and distributions
to Continuing Limited Partners were reduced from 12.5% annually
to an annual rate of 6% effective with the October 1, 1995
distribution.
NOTE 4 - LEASE PORTFOLIO SALES:
- -------------------------------
During the three months ended March 31, 1995, the Partnership,
Datronic Equipment Income Fund XVIII, L.P., Datronic Equipment
Income Fund XIX, L.P., and Datronic Equipment Income Fund XX, L.P.
each entered into separate lease purchase agreements with Southern
Pacific Thrift & Loan Association to sell equipment leases at
discount rates ranging from 10.75% to 11% which resulted in
aggregate net proceeds of approximately $2.6 million. The
Partnership's proceeds were approximately $346,000. Of this
amount, approximately $341,000 was allocable to Continuing Limited
Partners and has been invested in new leases.
NOTE 5 - SUBSEQUENT EVENT:
- --------------------------
On April 29, 1996, the United States District Court for the
Northern District of Illinois entered an order removing any claim
that one of the defendants in the class action litigation might
have had against the Partnership's Restricted Cash and Diverted and
Other Assets. See Notes 4, 5 and 6 to the Partnership's financial
statements included in the 1995 Form 10-K for a discussion of this
matter. Pursuant to the terms of the order, approximately $725,000
of Recovered Assets (the Partnership's interest therein is
approximately $104,000 and is included in Diverted and Other
Assets) will be held in escrow for the potential benefit of the
defendant pending the outcome of certain other Partnership
litigation. If the assets are ultimately transferred to the
defendant, the impact on the Partnership's financial position is
not expected to be material.
<PAGE>
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, 1995 through March 31, 1996. The
discussion and analysis of results of operations is for the three
month period ended March 31, 1996 as compared to the
corresponding period in 1995.
Financial Condition, Liquidity and Capital Resources
- ----------------------------------------------------
During the three months ended March 31, 1996, Partnership assets
continued to be converted to cash in order to pay Partnership
operating expenses and make distributions to the Continuing Limited
Partners and General Partner.
Net investment in direct financing leases decreased approximately
$765,000 during the three months ended March 31, 1996. This
decrease is primarily attributable to principal collections of
approximately $715,000 and a provision for lease losses of $50,000.
In the aggregate, partners' equity decreased approximately $652,000
during the three months ended March 31, 1996 due to a net
loss of approximately $274,000 and distributions to partners of
approximately $378,000.
During the three months ended March 31, 1996, the Partnership's
operating activities resulted in a use of $197,029 of cash. This
was due principally to a net loss of $273,966, decreases in
accounts payable and security deposits of $36,319 reduced by
non-cash expenses of $59,843 relating to amortization and $50,000
relating to provision for lease losses. During the period, cash
flows from investing activities aggregated $714,678 relating to
principal collections on leases. Cash flows used for financing
activities of $377,972, consisted of distributions to Continuing
Limited Partners of $373,829 and the General Partner of $4,143.
The Partnership's principal sources of liquidity on both a
long-term and short-term basis are receipts from leases and cash on
hand and Restricted Cash. In addition, the Partnership's sources
of liquidity on a long-term basis are expected to include proceeds
from the sale of Diverted Assets and portions of the Partnership's
lease portfolio which may be sold in bulk. Management believes
that its sources of liquidity in the short and long-term are
sufficient to meet its operating cash obligations. Distributions
to the Liquidating Limited Partners were suspended after payment of
the April 1, 1995 distribution. Distributions to the Continuing
Limited Partners were reduced to an annual rate of 6% effective
with the October 1, 1995 distribution. Distributions to the
Liquidating Limited Partners were suspended and distributions to
the Continuing Limited Partners were reduced to ensure that
sufficient cash will be available to pursue recoveries under
pending litigation with the Partnership's former accountants and to
liquidate the Partnership in an orderly manner.
Management expects sources of future liquidity to include proceeds
from the sale or disposition of other Partnership assets. In this
regard, the Partnership has Diverted and Other Assets (net) of
$1,166,353 of which, approximately $104,000 may be used to settle
the claims of a defendant of the Class Action Complaint (see Note
5 to the financial statements included in item 1).
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 realizability of
lease-related assets, Diverted and Other Assets, Datronic Assets,
litigation and the liquidation of the other Datronic Partnerships
(see Notes 4, 6 and 9 to the financial statement included in the
1995 Form 10-K). 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
not possible to predict the timing and availability of cash for
future distributions to Limited Partners. However, it is likely
that the amount of future distributions, if any, to the Limited
Partners will ultimately be significantly less than the amount of
Partner's Equity reflected in the March 31, 1996 Balance Sheets
(see financial statement included in Item 1).
The provisions of the Amended Partnership Agreement require the
Partnership to enter its liquidating phase if the full target
distributions are not met for four consecutive calendar quarters.
In addition, reinvestment activity is prohibited during the
liquidating phase and in any period in which full target
distributions have not been paid.
Results of Operations
- ---------------------
Lease income decreased approximately $96,000 for the three months
ended March 31, 1996 compared to the corresponding period in
1995. The decrease is primarily due to a decline in the lease
portfolios.
Management fees-New Era represent amounts paid New Era for managing
the Partnership on a day-to-day basis and for acquiring leases for
the Continuing Limited Partners. These fees amounted to
approximately $214,000 for the three months ended March 31, 1996 as
compared to $241,000 for the same period in 1995. See Note 8 to
the Partnership's financial statements included in the 1995 Form
10-K.
The General Partner's expense reimbursement represents the amount
paid to LRC in excess of LRC's 1% share of cash flow available for
distribution. Total amounts paid to LRC are primarily a function
of the amount of time LRC spends on the activities of the
Partnership and the timing of certain LRC expenses. Total amounts
paid to LRC for the three months ended March 31, 1996 were
approximately $56,000 ($52,000 representing the General Partner's
expense reimbursement and $4,000 representing LRC's 1% cash flow
available for distribution) as compared to $37,000 ($19,000
representing the General Partner's expense reimbursement and
$18,000 representing LRC's 1% of cash flow available for
distribution) for the three months ended March 31, 1995.
The provision (credit) for lease losses reflects Management's
ongoing assessment of potential losses inherent in the lease
portfolios and, in 1995, actual collections for certain leases in
excess of those anticipated in prior years.
PART II - OTHER INFORMATION
- ---------------------------
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
Reference is made to Item 3 - Legal Proceedings in the
Partnership's December 31, 1995 Form 10-K for a discussion of
material legal proceedings involving the Partnership.
Reference is made to Part I, Item 1, Note 5 for a discussion of legal
proceedings involving claims against Restricted Cash and Diverted and
Other Assets.
ITEM 2. CHANGES IN SECURITIES
- ------------------------------
None.
ITEM 3.
- -------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
None.
ITEM 5.
- -------
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
- -------------
See Exhibit Index.
(b) Reports on Form 8-K
- ------------------------
None.
<PAGE>
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 9th day of
May 1996.
DATRONIC FINANCE INCOME FUND I, L.P.
Registrant
By: DONALD D. TORISKY
Donald D. Torisky
Chairman and Chief Executive Officer
Lease Resolution Corporation
General Partner of
Datronic Finance Income Fund I, L.P.
By: DOUGLAS E. VAN SCOY
Douglas E. Van Scoy
Chief Financial Officer and Director
New Era Funding Corp.
Managing Agent of
Datronic Finance Income Fund I, L.P.
<PAGE>
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.
<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 qualifed in its entirety
by reference to such Report on Form 10-Q.
</LEGEND>
<CIK> 0000870255
<NAME> DATRONIC FINANCE INCOME FUND I, L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,688,935
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,317,745
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,900,522
<TOTAL-LIABILITY-AND-EQUITY> 8,317,745
<SALES> 0
<TOTAL-REVENUES> 195,443
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,742
<LOSS-PROVISION> 50,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (273,966)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
