<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, 2000 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> 2
DATRONIC FINANCE INCOME FUND I, L.P.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2000
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
March 31, 2000 (unaudited) 3
December 31, 1999 4
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 2000 5
For the three months ended March 31, 1999 6
Statements of Changes in Partners' Equity
For the three months ended March 31, 2000
(unaudited) 7
Statements of Cash Flows (unaudited)
For the three months ended March 31, 2000 8
For the three months ended March 31, 1999 9
Notes to Financial Statements (unaudited) 10
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 12
Item 3.
Quantitative and Qualitative Disclosures about
Market Risk 12
PART II - OTHER INFORMATION
Items 1-6. 13
- ----------
2
<PAGE> 3
DATRONIC FINANCE INCOME FUND I, L.P.
BALANCE SHEETS
March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
--------- ----------- ----------
ASSETS
<S> <C> <C> <C>
Cash and cash equivalents $ 193,929 $ 1,938,543 $ 2,132,472
Net investment in direct financing
leases - 125,124 125,124
Diverted and other assets, net 53,174 349,047 402,221
Datronic assets, net - - -
--------- ----------- -----------
$ 247,103 $ 2,412,714 $ 2,659,817
========= =========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 717 $ 6,961 $ 7,678
Lessee rental deposits 1,041 6,836 7,877
--------- ----------- -----------
Total liabilities 1,758 13,797 15,555
Total partners' equity 245,345 2,398,917 2,644,262
--------- ----------- -----------
$ 247,103 $ 2,412,714 $ 2,659,817
========= =========== ===========
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 4
DATRONIC FINANCE INCOME FUND I, 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 $ 190,285 $ 1,838,427 $ 2,028,712
Net investment in direct financing
leases - 199,057 199,057
Diverted and other assets, net 81,657 536,024 617,681
Datronic assets, net - - -
--------- ----------- -----------
$ 271,942 $ 2,573,508 $ 2,845,450
========= =========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 43 $ 3,178 $ 3,221
Lessee rental deposits 1,059 6,948 8,007
--------- ----------- -----------
Total liabilities 1,102 10,126 11,228
Total partners' equity 270,840 2,563,382 2,834,222
--------- ----------- -----------
$ 271,942 $ 2,573,508 $ 2,845,450
========= =========== ===========
</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, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
--------- ----------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ - $ 3,489 $ 3,489
Interest income 2,435 21,309 23,744
--------- ----------- -----------
2,435 24,798 27,233
--------- ----------- -----------
Expenses:
General Partner's expense
reimbursement 26,039 178,188 204,227
Professional fees 1,500 7,491 8,991
Other operating expenses 391 3,584 3,975
Credit for lease losses - - -
--------- ----------- -----------
27,930 189,263 217,193
--------- ----------- -----------
Net loss $ (25,495) $ (164,465) $ (189,960)
========= =========== ===========
Net loss - General Partner $ (255) (1,645) $ (1,900)
========= =========== ===========
Net loss - Limited Partners $ (25,240) $ (162,820) $ (188,060)
========= =========== ===========
Net loss per limited
partnership unit $ (3.28) $ (3.22)
========= ===========
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, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
--------- ----------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 286 $ 18,572 $ 18,858
Interest income 3,440 25,754 29,194
--------- ---------- ----------
3,726 44,326 48,052
--------- ---------- ----------
Expenses:
General Partner's expense
reimbursement 13,709 123,088 136,797
Professional fees 2,168 32,806 34,974
Other operating expenses 174 2,332 2,506
Credit for lease losses (223) (6,462) (6,685)
--------- ---------- ----------
15,828 151,764 167,592
--------- ---------- ----------
Net loss $ (12,102) $ (107,438) $ (119,540)
========= ========== ==========
Net loss - General Partner $ (121) $ (1,074) $ (1,195)
========= ========== ==========
Net loss - Limited Partners $ (11,981) $ (106,364) $ (118,345)
========= ========== ==========
Net loss per limited
partnership unit $ (1.56) $ (2.10)
========= ==========
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, 1999* $ - $ 270,840 $ 2,563,382 $ 2,834,222
Net loss (1,900) (25,240) (162,820) (189,960)
Allocation of General
Partner's Equity 1,900 (255) (1,645) -
--------- ----------- ----------- -----------
Balance, March 31, 2000 $ - $ 245,345 $ 2,398,917 $ 2,644,262
========= =========== =========== ===========
</TABLE>
* Balances are net of $20,931 and $252,933 of General Partner's equity
previously allocated to Liquidating and Continuing Limited Partners' Equity.
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, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
--------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (25,495) $ (164,465) $ (189,960)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Changes in assets and liabilities:
Accounts payable and
accrued expenses 674 3,783 4,457
Lessee rental deposits (18) (112) (130)
--------- ------------ -----------
(24,839) (160,794) (185,633)
---------- ----------- -----------
Cash flows from investing activities:
Distribution of Diverted and other
assets 28,483 186,977 215,460
Principal collections on leases - 73,933 73,933
--------- ----------- -----------
28,483 260,910 289,393
--------- ----------- -----------
Net increase in cash and
cash equivalents 3,644 100,116 103,760
Cash and cash equivalents:
Beginning of year 190,285 1,838,427 2,028,712
--------- ----------- -----------
End of first quarter $ 193,929 $ 1,938,543 $ 2,132,472
========= =========== ===========
</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, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
--------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (12,102) $ (107,438) $ (119,540)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (223) (6,462) (6,685)
Changes in assets and liabilities:
Judgement receivable, net 5,136 33,717 38,853
Accounts payable and
accrued expenses (1,531) (12,753) (14,284)
Lessee rental deposits (383) (2,513) (2,896)
--------- ----------- -----------
(9,103) (95,449) (104,552)
--------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 223 151,328 151,551
--------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents (8,880) 55,879 46,999
Cash and cash equivalents:
Beginning of year 325,257 2,604,451 2,929,708
--------- ----------- -----------
End of first quarter $ 316,377 $ 2,660,330 $ 2,976,707
========= =========== ===========
</TABLE>
See accompanying notes to financial statements
9
<PAGE> 10
DATRONIC FINANCE INCOME FUND I, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
--------------
(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. 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.
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, 1999
through March 31, 2000. The discussion and analysis of results of operations is
for the three month period ended March 31, 2000 as compared to the corresponding
period 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 three months ended March 31, 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 this period, Partnership
cash and cash equivalents increased by $104,000 to $2,133,000 at March 31, 2000
from $2,029,000 at December 31, 1999. This increase is primarily due to cash
used in operations of $186,000, partially offset by cash receipts from
collections on leases of $74,000 and a distribution of Diverted and other assets
of $216,000.
The General Partner has declared an additional distribution totaling $1.26
million, payable to Limited Partners who are owners of record on March 31, 2000.
This distribution will be allocated to the Limited Partners based on their
proportionate shares of total partners' capital attributable to their Class.
The Partnership's sources of future liquidity are expected to come from
cash-on-hand, cash receipts from leases owned by the Partnership and proceeds
from the sale of the remaining Diverted Assets (consisting of cash and an office
building in Schaumburg, Illinois). The lease portfolio is scheduled to be fully
liquidated by September 2000. The general partner expects that the building will
be sold 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 $402,000 (see Note 4 to the Partnership's financial statements included
in the 1999 Form 10-K). At March 1993, 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.
11
<PAGE> 12
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 a net loss of $190,000 for the three months ended March 31,
2000 in the aggregate for all classes of partners. This compares to a net loss
of $120,000 for the three months ended March 31, 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 three month period ended March 31, 2000 and 1999 include the
following:
Lease income:
Since October 1996, the Partnership has been in its Liquidating Phase which
prohibits investing in any new leases. Accordingly, the lease portfolio has
continued to decrease as collections are made, resulting in a continued decline
in lease income. This trend will continue as the Partnership liquidates its
remaining leases.
Interest income:
Interest income includes earnings on invested cash balances. Interest income for
2000 was lower than 1999 because the $978,000 cash distribution paid to Limited
Partners in April 1999 reduced average invested cash balances.
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 $88,000 of insurance premiums associated
with the final wrap up of Partnership affairs and its ultimate liquidation and
dissolution.
Professional fees:
Professional fees for the three months ended March 31, 2000 reflect a decreasing
level of professional services required as a result of the decrease in the
Partnership's lease portfolio and related activities.
Credit for lease losses:
This credit reflects recovery 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.
12
<PAGE> 13
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.
13
<PAGE> 14
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 11th day of May 2000.
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/JEFFREY T. MCREYNOLDS
Jeffrey T. McReynolds
Vice President and Controller,
(principal accounting and financial officer)
Lease Resolution Corporation,
General Partner of
Datronic Finance Income Fund I, L.P.
14
<PAGE> 15
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.
15
<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-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,132,472
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,659,817
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,644,262
<TOTAL-LIABILITY-AND-EQUITY> 2,659,817
<SALES> 0
<TOTAL-REVENUES> 27,233
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,975
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (189,960)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
