<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to ___________________.
Commission File Number: 33-69996
COMMONWEALTH INCOME & GROWTH FUND I
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2735641
(State or other jurisdiction of (I.R.S. Employer indentification No.)
incorporation or organization)
1160 West Swedesford Road
Berwyn, Pennsylvania 19312
(Address, including zip code, of principal executive offices)
(610) 647-6800
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports 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:
YES [X] NO [ ]
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
COMMONWEALTH INCOME & GROWTH FUND I
BALANCE SHEETS
(AUDITED)
SEPTEMBER 30, DECEMBER 31,
1996 1995
----------------------------
ASSETS
Cash and cash equivalents $ 593,090 $ 341,838
Lease income receivable 271,598 310,455
Other receivables and deposits 13,033 35,777
Computer equipment, at cost 19,277,927 17,149,693
Accumulated depreciation (7,351,332) (4,524,429)
----------------------------
11,926,595 12,625,264
Organization costs and deferred expenses, net of
accumulated amortization of $460,652
in 1996 and $278,108 in 1995 511,929 597,374
----------------------------
Total assets $13,316,245 $13,910,708
----------------------------
----------------------------
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 19,614 $ 76,127
Accounts payable - General Partner 135,030 83,874
Accounts payable - Commonwealth Capital Corp. - 22,222
Unearned lease income 287,482 242,353
Payable for computer equipment 399,172 537,251
Notes payable 3,762,276 3,305,310
----------------------------
Total liabilities 4,603,574 4,267,137
Partners' capital:
General partner 1,000 1,000
Limited partners 8,711,671 9,642,571
----------------------------
Total partners' capital 8,712,671 9,643,571
----------------------------
Total liabilities and partners' capital $13,316,245 $13,910,708
----------------------------
----------------------------
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
<CAPTION>
COMMONWEALTH INCOME & GROWTH FUND I
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME:
Lease $1,460,707 $ 948,692 $4,176,064 $2,626,560
Interest 13,785 47,647 33,402 133,985
Gain on sale of computer equipment 0 - 4,208 -
---------------------------------------------------
1,474,492 996,339 4,213,674 2,760,545
EXPENSES:
Operating, excluding depreciation 6,271 7,511 38,729 46,059
Equipment management fee - General Partner 73,035 47,435 208,803 131,328
Interest 73,908 72,360 235,071 126,938
Depreciation 1,209,885 815,218 3,473,084 2,219,332
Amortization of organization costs and deferred
expenses 77,408 51,928 232,283 143,779
---------------------------------------------------
1,440,507 994,452 4,187,970 2,667,436
---------------------------------------------------
Net income $ 33,985 $ 1,887 $ 25,704 $ 93,109
---------------------------------------------------
---------------------------------------------------
Net income per equivalent limited
partnership unit $ 0.05 $ 0.00 $ 0.04 $ 0.16
---------------------------------------------------
---------------------------------------------------
Weighted average number of equivalent limited
partnership units outstanding during the period 631,358 611,046 631,358 582,007
---------------------------------------------------
---------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
STATEMENT OF PARTNERS' CAPITAL
GENERAL LIMITED
PARTNER PARTNERS' TOTAL
----------------------------------------
Partners' capital - December 31, 1994 $ 1,000 $ 6,990,641 $ 6,991,641
Contributions - 4,352,169 4,352,169
Offering costs - (459,419) (459,419)
Net income (loss) 11,956 (57,191) (45,235)
Distributions (11,956) (1,183,629) (1,195,585)
----------------------------------------
Partners' capital - December 31, 1995 1,000 9,642,571 9,643,571
Net income 3,189 42,822 46,011
Distributions (3,189) (315,679) (318,868)
----------------------------------------
Partners' capital - March 31, 1996 1,000 9,369,714 9,370,714
Net income (loss) 3,189 (57,481) (54,292)
Distributions (3,189) (315,679) (318,868)
----------------------------------------
Partners' capital - June 30, 1996 1,000 8,996,554 8,997,554
Net income 3,189 30,796 33,985
Distributions (3,189) (315,679) (318,868)
----------------------------------------
Partners' capital - September 30, 1996 $ 1,000 $ 8,711,671 $ 8,712,671
----------------------------------------
----------------------------------------
SEE ACCOMPANYING NOTES.
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1996 and 1995
1996 1995
------------------------
OPERATING ACTIVITIES
Net income $ 25,704 $ 93,109
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,705,367 2,271,260
Gain on sale of computer equipment (4,208) -
Other noncash activities included in the
determination of net income (1,283,289) (839,884)
Changes in operating assets and liabilities:
Lease income receivable 38,857 7,842
Accounts receivable - affiliate - 74,139
Other receivables 22,744 70,700
Accounts payable (78,735) (23,072)
Accounts payable - General Partner 51,156 74,689
Equipment payable (138,079) 48,600
Unearned lease income 45,129 19,579
------------------------
Net cash provided by operating activities 2,384,646 1,796,962
INVESTING ACTIVITIES
Capital expenditures (858,088) (3,583,026)
Net proceeds from sale of computer equipment 227,308 -
Payment of computer equipment payable (399,172) -
Increase in organization costs and
deferred expenses (146,838) (199,297)
------------------------
Net cash used in investing activities (1,176,790) (3,782,323)
FINANCING ACTIVITIES
Partners' contributions - 4,352,169
Offering costs - (459,419)
Distributions to partners (956,604) (876,717)
------------------------
Net cash provided by financing activities (956,604) 3,016,033
------------------------
Net increase in cash and cash equivalents 251,252 1,030,672
Cash and cash equivalents at beginning of period 341,838 2,020,362
------------------------
Cash and cash equivalents at end of period $ 593,090 $3,051,034
------------------------
------------------------
SEE ACCOMPANYING NOTES.
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
BASIS OF PRESENTATION
The financial information presented as of any date other than December 31 has
been prepared from the books and records without audit. Financial
information as of December 31 has been derived from the audited financial
statements of Commonwealth Income & Growth Fund I (the "Partnership"), but
does not include all disclosures required by generally accepted accounting
principles. In the opinion of management, all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of the
financial information for the periods indicated have been included. For
further information regarding the Partnership's accounting policies, refer to
the financial statements and related notes included in the Partnership's
annual report on Form 10-K for the year ended December 31, 1995.
NET LOSS PER EQUIVALENT LIMITED PARTNERSHIP UNIT
The net loss per equivalent limited partnership unit is computed based upon
net loss allocated to the limited partners and the weighted average number of
equivalent units outstanding during the period.
RECLASSIFICATION
Certain balances in the prior period financial statements have been
reclassified to conform with the current period presentation.
<PAGE>
Commonwealth Income & Growth Fund I
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership satisfied its minimum offering requirements and commenced
operations on March 14, 1994. On that date, subscribers for 128,787 Units
were admitted as Limited Partners of the Partnership. On May 11,1995, the
Partnership terminated its offering of Units with 631,358 ($12,623,682) Units
sold.
The Partnership's primary source of capital for the nine month period ended
September 30, 1996 was cash from operations of $2,385,000 and net proceeds
from the sale of computer equipment of $227,000. The Partnership's primary
sources of capital for the nine month period ended September 30, 1995, were
from Partners' contributions of $4,352,000, and cash from operations of
$1,797,000. The primary uses of cash for the nine month period ended
September 30, 1996 and 1995 were for capital expenditures for new equipment
totaling $858,000 and $3,583,000, respectively, the payment of preferred
distributions to partners of $957,000 and $877,000, respectively, and the
payment of offering costs of $459,000 for the nine month period ended
September 30, 1995.
Currently, Partners' contributions and rental income from the Partnership's
leases are invested in money market accounts investing directly in treasury
obligations pending the Partnership's use of such funds to purchase
additional computer equipment, to pay Partnership expenses or to make
distributions to the Partners. At September 30, 1996 and December 31, 1995
the Partnership had approximately $593,000 and $342,000, respectively,
invested in these money market accounts.
Accounts payable included approximately $135,000 and $84,000, payable to the
General Partner for management, acquisition and finance fees on leases as of
September 30, 1996 and December 31, 1995, respectively. As of December 31,
1995, the Partnership had an additional payable of $22,000 to Com Cap Corp.
for the purchase of equipment from a third party, which was subsequently paid
in January 1996.
The Partnership's investment strategy of acquiring computer equipment and
generally leasing it under "triple-net leases" to operators who generally
meet specified financial standards minimizes the Partnership's operating
expenses. As of September 30, 1996, the Partnership had future minimum
rentals on noncancellable operating leases of $1,257,000 for the year ending
December 31, 1996 and $5,596,000, thereafter. During the nine month period
ended September 30, 1996, and 1995, the Partnership incurred debt in
connection with the purchase of computer equipment totaling $1,736,000 and
$1,548,000, respectively. At September 30, 1996, the outstanding debt was
$3,762,000, with interest rates ranging from 5.75% to 10%, and will be
payable through July 1999. The Partnership intends to continue purchasing
additional computer equipment with existing cash, as well as when future cash
becomes available. In addition, the Partnership may incur additional debt in
purchasing computer equipment in the future.
The Partnership's cash from operations is expected to continue to be adequate
to cover all operating expenses, liabilities, and preferred distributions to
Partners during the next 12 month period. If available Cash Flow or Net
Disposition Proceeds are insufficient to cover the Partnership expenses and
liabilities on a short and long term basis, the Partnership will attempt to
obtain additional funds by disposing of or refinancing Equipment, or by
borrowing within its permissible limits. The Partnership may also reduce the
distributions to its Partners if it deems necessary. Since the Partnership's
leases are on a "triple-net" basis, no reserve for maintenance and repairs
are deemed necessary.
<PAGE>
Commonwealth Income & Growth Fund I
RESULTS OF OPERATIONS
For the quarter ended September 30, 1996, the Partnership recognized income
of $1,474,000 and expenses of $1,440,000, resulting in a net income of
$34,000. For the quarter ended June 30, 1996, the Partnership recognized
income of $1,309,000 and expenses of $1,364,000, resulting in a net loss of
$54,000. For the quarter ended March 31, 1995, the Partnership recognized
income of $972,000 and expenses of $917,000 , resulting in net income of
$55,000.
Lease income increased by 54% from $949,000 for the quarter ended September
30, 1995 to $1,461,000 for the period ended September 30, 1996, primarily due
to utilizing cash available from Partners' contributions for the purchase of
Equipment, which in turn generated more lease income. During the nine months
ended September 30, 1996, the Partnership expended $858,000 in cash, and
assumed debt and accounts payable for equipment of $2,135,000 to acquire 7
leases, which generated approximately $266,000 in revenue.
Interest income decreased (71%) from $48,000 for the quarter ended September
30, 1995 to $14,000 for the quarter ended September 30, 1996, as a result of
utilizing cash (which primarily consisted of capital contributions which were
temporarily invested in money market accounts) for the purchase of Equipment.
Operating expenses, excluding depreciation, primarily consist of accounting,
legal, and outside service fees. The 25% decrease from approximately $8,000
for the quarter ended September 30, 1995 to $6,000 for the quarter ended
September 30, 1996 is attributable to a decrease in legal and outside service
fees.
The equipment management fee is equal to 5% of the gross lease revenue
attributable to equipment which is subject to operating leases. The equipment
management fee increased (55%) from approximately $47,000 for the quarter
ended September 30, 1995 to $73,000 for the quarter ended September 30, 1996,
which is consistent with the increase in lease income.
Interest expense increased (3%) from approximately $72,000 for the quarter
ended September 30, 1995 to $74,000 for the quarter ended September 30, 1996,
as a result of additional debt incurred for the purchase of Equipment.
Depreciation and amortization expenses consist of depreciation on computer
equipment, amortization of organizational costs, equipment acquisition fees,
and debt placement fees. The increase (48%) from approximately $867,000 for
the quarter ended September 30, 1995 to $1,287,000 for the quarter ended
September 30, 1996 is attributable to the purchase of approximately
$6,270,000 in additional equipment.
For the nine month period ended September 30, 1996, the Partnership generated
cash flows from operating activities of $2,385,000, which includes net
income of $26,000, and depreciation and amortization expenses of $3,705,000.
Other noncash activities included in the determination of net income includes
direct payments of lease income by lessees to banks of $1,279,000 and lease
income paid to original lessors in lieu of cash payments for computer
equipment of $4,000.
For the nine month period ended September 30, 1995, the Partnership generated
cash flows from operating activities of $1,797,000, which includes net income
of $93,000, and depreciation and amortization expenses of $2,271,000. Other
noncash activities included in the determination of net income includes
direct payments of lease income by lessees to banks of $786,000 and lease
income paid to original lessors in lieu of cash payments for computer
equipment of $54,000.
<PAGE>
COMMONWEALTH INCOME & GROWTH FUND I
PART II: OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
Inapplicable
Item 2. CHANGES IN SECURITIES.
Inapplicable
Item 3. DEFAULTS UPON SENIOR SECURITIES.
Inapplicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
Inapplicable
Item 5. OTHER INFORMATION.
Inapplicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits: None
b) Report on Form 8-K: None
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMMONWEALTH INCOME & GROWTH FUND I
BY: COMMONWEALTH INCOME & GROWTH
FUND, INC. GENERAL PARTNER
____________________ By:____________________
Date David A. Kintzer, CPA
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000913141
<NAME> CIGF-I
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 593,090
<SECURITIES> 0
<RECEIVABLES> 796,560
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,389,650
<PP&E> 19,277,927
<DEPRECIATION> 7,351,332
<TOTAL-ASSETS> 13,316,245
<CURRENT-LIABILITIES> 4,603,574
<BONDS> 0
0
0
<COMMON> 8,712,671
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,316,245
<SALES> 0
<TOTAL-REVENUES> 4,213,674
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,720,616
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 467,354
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 25,704
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,704
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0
</TABLE>
