<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 0-19466
- --------------------- --------------------------------
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
----------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 36-3684373
- -------------------- ----------------------------
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 EQUIPMENT INCOME FUND XIX, L.P.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
PART I - FINANCIAL INFORMATION
<TABLE>
<S> <C>
Item 1.
- -------
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 EQUIPMENT INCOME FUND XIX, 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 $1,393,662 $ 2,329,944 $ 3,723,606
Investments in commercial lease
paper, net 8,428 59,607 68,035
Net investment in direct
financing leases 2,463 4,708,970 4,711,433
Diverted and other assets, net 713,344 3,495,176 4,208,520
Datronic assets, net - - -
---------- ----------- -----------
$2,117,897 $10,593,697 $12,711,594
========== =========== ===========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and
accrued expenses $ 22,185 $ 130,512 $ 152,697
Lessee rental deposits 68,668 436,737 505,405
---------- ----------- -----------
Total liabilities 90,853 567,249 658,102
Total partners' equity 2,027,044 10,026,448 12,053,492
---------- ----------- -----------
$2,117,897 $10,593,697 $12,711,594
========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XIX, 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 $1,446,892 $ 2,130,637 $ 3,577,529
Due from management company 7,747 51,383 59,130
Investments in commercial
lease paper, net 10,035 74,458 84,493
Net investment in direct
financing leases 7,047 5,634,500 5,641,547
Diverted and other
assets, net 713,344 3,495,176 4,208,520
Datronic assets, net - - -
---------- ----------- -----------
$2,185,065 $11,386,154 $13,571,219
========== =========== ===========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and
accrued expenses $ 39,992 $ 226,286 $ 266,278
Lessee rental deposits 76,715 491,052 567,767
---------- ----------- -----------
Total liabilities 116,707 717,338 834,045
Total partners' equity 2,068,358 10,668,816 12,737,174
---------- ----------- -----------
$2,185,065 $11,386,154 $13,571,219
========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
DATRONIC EQUIPMENT INCOME FUND XIX, 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 $ 2,340 $ 194,407 $ 196,747
Interest income 4,828 35,439 40,267
--------- ---------- ----------
7,168 229,846 237,014
--------- ---------- ----------
Expenses:
General Partner's
expense reimbursement 54,400 311,865 366,265
Professional fees 15,240 89,260 104,500
Other operating expenses 3,250 17,498 20,748
Credit for lease losses (24,408) (49,592) (74,000)
--------- ----------- ----------
48,482 369,031 417,513
--------- ---------- ----------
Net loss $ (41,314) $ (139,185) $ (180,499)
========= ========== ==========
Net loss -
General Partner $ (413) $ (1,392) $ (1,805)
========= ========== =========
Net loss -
Limited Partners $ (40,901) $ (137,793) $(178,694)
========= ========== =========
Net loss per limited
partnership unit $(1.21) $ (.83)
====== =======
Weighted average number
of limited partnership units
outstanding 33,858 165,901
====== =======
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
DATRONIC EQUIPMENT INCOME FUND XIX, 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 $ 10,851 $ 388,116 $ 398,967
Interest income 8,896 55,578 64,474
--------- ---------- ----------
19,747 443,694 463,441
--------- ---------- ----------
Expenses:
Amortization of organization
and equipment acquisition costs 18,577 91,021 109,598
Management fees-New Era 47,365 387,482 434,847
General Partner's
expense reimbursement 30,973 151,759 182,732
Professional fees 22,501 113,265 135,766
Other operating expenses 4,172 34,043 38,215
--------- ---------- ----------
123,588 777,570 901,158
--------- ---------- ----------
Net loss $(103,841) $ (333,876) $ (437,717)
========= ========== ==========
Net loss -
General Partner $ (1,038) $ (3,339) $ (4,377)
========= ========== =========
Net loss -
Limited Partners $(102,803) $ (330,537) $(433,340)
========= ========== =========
Net loss per limited
partnership unit $(3.04) $ (1.99)
====== =======
Weighted average number
of limited partnership units
outstanding 33,858 165,901
====== =======
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENT 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 $(730,106)* $2,141,949 $11,325,331 $12,737,174
Distributions to partners (3,188) - (499,995) (503,183)
Net loss (1,805) (40,901) (137,793) (180,499)
Allocation of General
Partner's Equity 735,099 (74,004) (661,095) -
--------- ---------- ----------- -----------
Balance, March 31, 1997 $ - $2,027,044 $10,026,448 $12,053,492
========= ========== =========== ===========
</TABLE>
* Balance as previously reported was $0 due to allocation of $73,591 and
$656,515 to Liquidating and Continuing Limited Partners' Equity, respectively.
See accompanying notes to financial statements.
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XIX, 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 $ (41,314) $ (139,185) $ (180,499)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Credit for lease loss (24,408) (49,592) (74,000)
Changes in assets and
liabilities:
Accounts payable and
accrued expenses (17,807) (95,774) (113,581)
Lessee rental deposits (8,047) (54,315) (62,362)
Due from management
company 7,747 51,383 59,130
---------- ---------- ----------
(83,829) (287,483) (371,312)
---------- ---------- ----------
Cash flows from investing
activities:
Principal collections on
leases 28,992 975,122 1,004,114
Repayments of commercial
lease paper 1,607 14,851 16,458
--------- ---------- ----------
30,599 989,973 1,020,572
--------- ---------- ----------
Cash flows from financing
activities:
Distributions to
Limited Partners - (499,995) (499,995)
Distributions to
General Partner - (3,188) (3,188)
--------- ---------- ----------
- (503,183) (503,183)
--------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents (53,230) 199,307 146,077
Cash and cash equivalents:
Beginning of year 1,446,892 2,130,637 3,577,529
---------- ---------- ----------
End of first quarter $1,393,662 $2,329,944 $3,723,606
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 9
DATRONIC EQUIPMENT INCOME FUND XIX, 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 $ (103,841) $ (333,876) $ (437,717)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Amortization expense 18,577 91,021 109,598
Changes in assets and
liabilities:
Accounts payable and
accrued expenses (14,915) (91,199) (106,114)
Lessee rental deposits (9,999) (48,924) (58,923)
Due to management
company 102 (27,733) (27,631)
---------- ---------- ----------
(110,076) (410,711) (520,787)
---------- ---------- ----------
Cash flows from investing
activities:
Purchases of lease
receivables - (919,590) (919,590)
Principal collections
on leases 114,168 1,479,989 1,594,157
Sale of leases - 931,931 931,931
Repayments of commercial
lease paper 3,427 35,213 38,640
Principal collections on
installment contract
receivable 16,380 80,259 96,639
---------- ---------- ----------
133,975 1,607,802 1,741,777
---------- ---------- ----------
Cash flows from financing
activities:
Distributions to
Limited Partners - (2,143,118) (2,143,118)
Distributions to
General Partner - (14,374) (14,374)
---------- ---------- ----------
- (2,157,492) (2,157,492)
---------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents 23,899 (960,401) (936,502)
Cash and cash equivalents:
Beginning of year 1,219,379 2,056,790 3,276,169
---------- ---------- ----------
End of first quarter $1,243,278 $1,096,389 $2,339,667
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
NOTE 1 - ORGANIZATION:
Datronic Equipment Income Fund XIX, L.P., a Delaware Limited Partnership (the
"Partnership"), was formed on December 22, 1989 for the purpose of acquiring
and 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 October 1, 1995 distribution. Distributions to Continuing Limited Partners
were reduced to an annual rate of 9% effective with the February 1, 1996
distribution. The Partnership entered its Liquidating Phase in August 1996.
Accordingly, Continuing Limited Partners received their last reduced Target
Distribution on July 1, 1996 and received their first Liquidating Distribution
on October 1, 1996.
NOTE 4 - LEASE PORTFOLIO SALE:
During the three months ended March 31, 1996, the Partnership and Datronic
Equipment Income Fund XX, L.P. each entered into separate agreements to sell
equipment leases at a discount rate of 11.75% which resulted in aggregate net
proceeds of approximately $1.5 million. The Partnership's share of the
proceeds was approximately $932,000.
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.
Investment in commercial lease paper, net decreased an aggregate of
approximately $16,000 during the three months ended March 31, 1997 due to
scheduled principal collections.
Net investment in direct financing leases decreased approximately $930,000
during the three months ended March 31, 1997. This decrease is primarily
attributable to principal collections of approximately $1,004,000, partially
offset by a credit for lease loss of $74,000.
Accounts payable and accrued expenses decreased approximately $114,000 during
the three months ended March 31, 1997 primarily due to payment of accrued legal
fees and sales and use taxes.
Lessee rental deposits decreased approximately $62,000 for the three months
ended March 31, 1997 resulting from payments made to lessees.
In the aggregate, partners' equity decreased approximately $684,000 during the
three months ended March 31, 1997 due to a net loss of approximately $181,000
and distributions to partners of approximately $503,000.
During the three months ended March 31, 1997, the Partnership's operating
activities resulted in a use of approximately $371,000 of cash. This was due
principally to a net loss of approximately $180,000 and decreases in accounts
payable, accrued expenses and lessee rental deposits of approximately $176,000
and a non-cash credit for lease loss of $74,000, partially offset by a decrease
in due from management company of approximately $59,000. During the period,
cash flows from investing activities aggregated approximately $1,021,000
comprised of principal collections on leases of approximately $1,004,000 and
collections of commercial lease paper of approximately $16,000. Cash flows
used for financing activities of approximately $503,000, consisted of
distributions to limited partners of approximately $500,000 and the general
partner of approximately $3,000.
11
<PAGE> 12
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 the 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
portfolios 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 Liquidating Limited Partners
were suspended after the October 1, 1995 distribution. Distributions to the
Continuing Limited Partners will continue as long as cash is available. It is
unlikely that any additional distributions to Liquidating Limited Partners will
be made until all remaining assets are liquidated and the pending litigation is
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 statements
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 to Liquidating Limited Partners 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 statements included in Item 1).
Results of Operations
Lease income decreased approximately $202,000 for the three month period ended
March 31, 1997 as compared to the corresponding period in 1996 primarily due to
the declining lease portfolio.
Interest income decreased approximately $24,000 for the three month period
ended March 31, 1997 as compared to the corresponding period in 1996 primarily
due to an early payoff of an installment contract receivable in December, 1996
partially offset by additional interest earned as a result of increased cash
balances.
12
<PAGE> 13
Amortization of organization and equipment acquisition costs decreased
approximately $110,000 due to these costs becoming fully amortized as of June,
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 $435,000 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 amounts 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 $369,000 ($366,000 representing the general partner's expense
reimbursement and $3,000 representing general partner distributions) as
compared to $197,000 ($183,000 representing the general partner's expense
reimbursement and $14,000 representing general partner distributions) for the
three months ended March 31, 1996. The increase of approximately $172,000
results from expenses of approximately $206,000 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 in the 1996 Form 10-K), partially
offset by an overall decrease in all other expenses of approximately $34,000.
Professional fees decreased approximately $31,000 for the three month period
ended March 31, 1997 as compared to the corresponding period in 1996 primarily
due to decreased legal fees relating to Partnership claims against former
accountants and others, and audit fees.
Other operating expenses decreased approximately $17,000 for the three month
period ended March 31, 1997 as compared to the corresponding period in 1996
primarily due to reductions in bank charges, UCC filing fees, and miscellaneous
expenses partially offset by increases in printing and postage expenses.
Credit for lease losses reflects Management's ongoing assessment of potential
losses inherent in the lease portfolio and actual lease collections on certain
leases in excess of those anticipated in prior years.
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 EQUIPMENT INCOME FUND XIX, 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 XIX, L.P.
By: /s/ROBERT P. SCHAEN
------------------------
Robert P. Schaen
Vice-Chairman and Chief Financial Officer,
Lease Resolution Corporation
General Partner of
Datronic Equipment Income Fund XIX, L.P.
15
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
27 Financial Data Schedule, which is
submitted electronically to the
Securities and Exchange Commission
for information only and not filed.
</TABLE>
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> 3,723,606
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,711,594
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 12,053,492
<TOTAL-LIABILITY-AND-EQUITY> 12,711,594
<SALES> 0
<TOTAL-REVENUES> 237,014
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,748
<LOSS-PROVISION> (74,000)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (180,499)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
