<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, 1997 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
--- ---
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DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
FORM 10-Q
---------
FOR THE QUARTER ENDED MARCH 31, 1997
------------------------------------
PART I - FINANCIAL INFORMATION
Item 1.
- -------
<TABLE>
<S> <C>
Index to Financial Statements
Balance Sheets
March 31, 1997 (unaudited) 3
December 31, 1996 4
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 1997 5
For the three months ended March 31, 1996 6
Statements of Changes in Partners' Equity
For the three months ended March 31, 1997 7
(unaudited)
Statements of Cash Flows (unaudited)
For the three months ended March 31, 1997 8
For the three months ended March 31, 1996 9
Notes to Financial Statements (unaudited) 10
Item 2.
- -------
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 13
PART II - OTHER INFORMATION
Items 1-6. 14
- ----------
</TABLE>
2
<PAGE> 3
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
BALANCE SHEETS
--------------
March 31, 1997
--------------
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
ASSETS
------
Cash and cash equivalents $368,868 $1,241,286 $1,610,154
Net investment in direct
financing leases 3,983 2,596,393 2,600,376
Diverted and other assets, net 144,697 949,836 1,094,533
Datronic assets, net - - -
----------- ---------- ----------
$517,548 $4,787,515 $5,305,063
=========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable and
accrued expenses $ 1,552 $ 34,907 $ 36,459
Lessee rental deposits 18,519 165,524 184,043
----------- ---------- ----------
Total liabilities 20,071 200,431 220,502
Total partners' equity 497,477 4,587,084 5,084,561
----------- ---------- ----------
$517,548 $4,787,515 $5,305,063
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
BALANCE SHEETS
--------------
December 31, 1996
-----------------------
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
ASSETS
------
Cash and cash equivalents $ 388,154 $1,233,075 $1,621,229
Due from management company 3,725 33,628 37,353
Net investment in direct
financing leases 12,084 3,091,844 3,103,928
Diverted and other assets, net 144,697 949,836 1,094,533
Datronic assets, net - - -
----------- ---------- ----------
$ 548,660 $5,308,383 $5,857,043
=========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable and
accrued expenses $ 7,019 $ 56,404 $ 63,423
Lessee rental deposits 20,240 177,855 198,095
----------- ---------- ----------
Total liabilities 27,259 234,259 261,518
Total partners' equity 521,401 5,074,124 5,595,525
----------- ---------- ----------
$ 548,660 $5,308,383 $5,857,043
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
STATEMENTS OF REVENUE AND EXPENSES
----------------------------------
For the three months ended March 31, 1997
-----------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 195 $ 99,069 $ 99,264
Interest income 1,725 13,171 14,896
----------- ---------- ----------
1,920 112,240 114,160
----------- ---------- ----------
Expenses:
General Partner's
expense reimbursement 17,480 148,322 165,802
Professional fees 7,839 53,798 61,637
Other operating expenses 525 4,265 4,790
----------- ---------- ----------
25,844 206,385 232,229
----------- ---------- ----------
Net loss $ (23,924) $ (94,145) $ (118,069)
=========== ========== ==========
Net loss -
General Partner $ (239) $ (941) $ (1,180)
=========== ========== ==========
Net loss -
Limited Partners $ (23,685) $ (93,204) $ (116,889)
=========== ========== ==========
Net loss per limited
partnership unit $ (3.08) $ (1.84)
=========== ==========
Weighted average number
of limited partnership units
outstanding 7,699 50,535
=========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
STATEMENTS OF REVENUE AND EXPENSES
----------------------------------
For the three months ended March 31, 1996
-----------------------------------------
(Unaudited)
<TABLE>
<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
=========== ==========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
DATRONIC FINANCE INCOME FUND I, 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, 1996 $ (260,963)* $ 540,745 $5,315,743 $5,595,525
Distributions to partners (2,895) - (390,000) (392,895)
Net loss (1,180) (23,685) (93,204) (118,069)
Allocation of General
Partner's Equity 265,038 (19,583) (245,455) -
----------- ----------- ---------- ----------
Balance, March 31, 1997 $ - $ 497,477 $4,587,084 $5,084,561
=========== =========== ========== ==========
</TABLE>
* Balance as previously reported was $0 due to allocation of $19,344 and
$241,619 to Liquidating and Continuing Limited Partners' Equity,
respectively.
See accompanying notes to financial statements.
7
<PAGE> 8
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
For the three months ended March 31, 1997
-----------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (23,924) $ (94,145) $ (118,069)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Changes in assets and liabilities:
Accounts payable and accrued
expenses (5,467) (21,497) (26,964)
Lessee rental deposits (1,721) (12,331) (14,052)
Due to management company 3,725 33,628 37,353
----------- ---------- ----------
(27,387) (94,345) (121,732)
----------- ---------- ----------
Cash flows from investing activities:
Principal collections on leases 8,101 495,451 503,552
----------- ---------- ----------
Cash flows from financing activities:
Distributions to
Limited Partners - (390,000) (390,000)
Distributions to
General Partner - (2,895) (2,895)
----------- ---------- ----------
- (392,895) (392,895)
----------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents (19,286) 8,211 (11,075)
Cash and cash equivalents:
Beginning of year 388,154 1,233,075 1,621,229
----------- ---------- ----------
End of first quarter $ 368,868 $1,241,286 $1,610,154
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 9
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
For the three months ended March 31, 1996
-----------------------------------------
(Unaudited)
<TABLE>
<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
----------- ---------- ----------
Cash flows from financing activities:
Distributions to
Limited Partners - (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
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 10
DATRONIC FINANCE INCOME FUND I, L.P.
------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
March 31, 1997
--------------
(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 3, 4, 5 and 6 to
the Partnership's financial statements included in the 1996 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 1996 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 1996 Form 10-K.
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 suspended after payment of the April 1, 1997 distribution.
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,
1996 through March 31, 1997. The discussion and analysis of results of
operations is for the three month period ended March 31, 1997 as compared to
the corresponding period in 1996.
Financial Condition, Liquidity and Capital Resources
- ----------------------------------------------------
During the three months ended March 31, 1997, Partnership assets continued to
be converted to cash in order to, generally, pay Partnership operating expenses
and make distributions to limited partners.
Net investment in direct financing leases decreased approximately $504,000
during the three months ended March 31, 1997. This decrease is due to
principal collections on leases.
In the aggregate, partners' equity decreased approximately $511,000 during the
three months ended March 31, 1997 due to a net loss of approximately $118,000
and distributions to partners of approximately $393,000.
During the three months ended March 31, 1997, the Partnership's operating
activities resulted in a use of approximately $122,000 of cash. This was due
principally to a net loss of approximately $118,000, decreases in accounts
payable and lessee rental deposits of approximately $41,000, partially offset
by a decrease in due from management company of approximately $37,000. During
the period, cash flows from investing activities aggregated approximately
$504,000 relating to principal collections on leases. Cash flows used for
financing activities of approximately $393,000, consisted of distributions to
limited partners of $390,000 and the general partner of approximately $3,000.
The Partnership's sources of liquidity on both a long-term and short-term basis
are expected to come principally from cash-on-hand and cash receipts from
lessees under leases owned by the Partnership. In addition, the Partnership's
sources of liquidity on a long-term basis are expected to include proceeds from
the sale of other assets of the Partnership including, without limitation,
Diverted and other 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, provide for the ongoing pursuit of litigation and an orderly
liquidation of the Partnership. Distributions to the Liquidating Limited
Partners were suspended after payment of the April 1, 1995 distribution.
Distributions to the Continuing Limited Partners were suspended after the
April 1, 1997 distribution. It is unlikely that any additional distributions
will be made until all
11
<PAGE> 12
remaining assets are liquidated and the pending litigation has been resolved.
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 3, 5 and 9 to the Partnership's financial statement
included in the 1996 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 unlikely that any additional
distributions will be made until all remaining assets are liquidated and the
pending litigation is resolved, and the amount of future distributions, if
any, to the Limited Partners is likely to be significantly less than the
amount of partners' equity reflected in the March 31, 1997 Balance Sheets
(see financial statement included in Item 1).
Results of Operations
- ---------------------
Lease income decreased approximately $85,000 for the three months ended March
31, 1997 compared to the corresponding period in 1996. The decrease is
primarily due to a decline in the lease portfolio.
Amortization of organization and equipment acquisition costs decreased
approximately $60,000 due to these costs becoming fully amortized as of
September 1996.
Management fees-New Era represent amounts paid New Era for managing the
Partnership on a day-to-day basis pursuant to a Management Agreement which was
terminated effective June 30, 1996. Accordingly, fees paid to New Era amounted
to zero for the three months ended March 31, 1997 as compared to approximately
$214,000 for the same period in 1996. Subsequent to June 30, 1996 the General
Partner has assumed responsibility for day-to-day management of the Partnership
and the corresponding costs and expenses are included in General Partner's
expense reimbursement. See Note 8 to the Partnership's financial statements
included in the 1996 Form 10-K.
The General Partner's expense reimbursement represents the amount paid to LRC
in its capacity as general partner in excess of general partner distributions.
Total amounts paid to LRC for the three months ended March 31, 1997 were
approximately $169,000 ($166,000 representing the general partner's expense
reimbursement and $3,000 representing general partner distributions) as
compared to $56,000 ($52,000 representing the general partner's expense
reimbursement and $4,000 representing the general partner distributions) for
the three months ended March 31, 1996. The increase of approximately $113,000
results from expenses of approximately $123,000 incurred in 1997 to manage the
day-to-day operations of the Partnership due to the termination of the
Management Agreement with New Era as of June 30, 1996 (see Note 8 to the
Partnership's financial statements included
12
<PAGE> 13
in the 1996 Form 10-K), partially offset by an overall decrease in all other
expenses of approximately $10,000.
Professional fees decreased approximately $19,000 for the three month period
ended March 31, 1997 as compared to the corresponding period in 1996, primarily
due to decreased audit fees, consulting fees, and legal fees for collections,
and Partnership claims against former accountants and others.
The provision for lease losses for the period ended March 31, 1997 and 1996
reflects Management's ongoing assessment of potential losses inherent in the
lease portfolios.
13
<PAGE> 14
PART II - OTHER INFORMATION
- ---------------------------
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
Reference is made to Item 3 - Legal Proceedings in the Partnership's December
31, 1996 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.
14
<PAGE> 15
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 12th day of May 1997.
DATRONIC FINANCE INCOME FUND I, L.P.
Registrant
By: /s/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: /s/ROBERT P. SCHAEN
------------------------------
Robert P. Schaen
Vice-Chairman and Chief Financial Officer,
Lease Resolution Corporation,
General Partner of
Datronic Finance Income Fund I, L.P.
15
<PAGE> 16
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.
16
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,610,154
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,305,063
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,084,561
<TOTAL-LIABILITY-AND-EQUITY> 5,305,063
<SALES> 0
<TOTAL-REVENUES> 114,160
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,790
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (118,069)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
