<PAGE> 1
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 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 (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization
1300 E. Woodfield Road, Suite 312, Schaumburg, Illinois 60173
- ------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 240-6200
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
NONE NONE
------------------- ------------------
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
-------------------------------------
(Title of class)
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 report(s)), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
<PAGE> 2
PART I
ITEM 1 - BUSINESS
Datronic Equipment Income Fund XIX, L.P. (the "Partnership"), a Delaware Limited
Partnership, was formed on December 22, 1989. The Partnership offered Units of
Limited Partnership Interests (the "Units") during 1990 and early 1991 raising
$99,892,500 of limited partner funds.
As more fully described in Part II, Item 8, Notes 1, 5, and 8(a), during the
second calendar quarter of 1992, it was learned that Edmund J. Lopinski, Jr.,
the president, director and majority stockholder of Datronic Rental
Corp.("DRC"), the then general partner, in conjunction with certain other
parties, may have diverted approximately $13.3 million of assets from the
Datronic Partnerships and Transamerica Equipment Leasing Income Fund, L.P.
("TELIF") for his/their direct or indirect benefit. During 1992, a class action
lawsuit was filed and subsequently certified on behalf of the limited partners
in the Datronic Partnerships against DRC, various officers of DRC and various
other parties. On March 4, 1993, a settlement was approved to resolve certain
portions of the suit to enable the operations of the Datronic Partnerships to
continue while permitting the ongoing pursuit of claims against alleged
wrongdoers (the "Settlement"). In connection with the Settlement, DRC was
replaced by Lease Resolution Corporation ("LRC") as General Partner of the
Partnership.
The Partnership was formed to acquire a variety of low-technology,
high-technology and other equipment for lease to unaffiliated third parties
under full payout leases as well as to acquire equipment subject to existing
leases. The cash generated during the Partnership's Operating Phase from such
investments was used to pay the operating costs of the Partnership, make
distributions to the limited partners and the general partner (subject to
certain limitations) and reinvest in additional equipment for lease. During the
Partnership's Liquidating Phase, which began August 31, 1996, the cash generated
from such investments is used to pay the liquidating costs of the Partnership
and make cash distributions to the limited partners and the general partner
(subject to certain limitations). Concurrent with the commencement of the
Liquidation Phase, the Partnership ceased reinvestment in equipment and leases
and began the orderly liquidation of the Partnership's assets.
A presentation of information about industry segments, geographic regions, raw
materials or seasonality is not applicable and would not be material to an
understanding of the Partnership's business taken as a whole. Since the
Partnership ceased investing in leases during 1996 a discussion of sources and
availability of leases, backlog and competition is not material to an
understanding of the Partnership's future activity.
2
<PAGE> 3
The Partnership has no employees. LRC, the General Partner, employed 34 persons
at December 31, 1997 all of whom attend to the operations of the Datronic
Partnerships.
ITEM 2 - PROPERTIES
The Partnership's operations are located in leased premises of approximately
15,000 square feet in Schaumburg, Illinois.
LRC occupies approximately 3,800 square feet of office space in Schaumburg,
Illinois in a real estate property that is a Recovered Asset (see Part II, Item
8, Note 5) held for the benefit of the Datronic Partnerships.
ITEM 3 - LEGAL PROCEEDINGS
Reference is made to Part II, Item 8, Note 8 for a discussion of material legal
proceedings involving the Partnership.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of limited partners during the fourth
quarter of the fiscal year covered by this report through the solicitation of
proxies or otherwise.
3
<PAGE> 4
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP UNITS AND RELATED
LIMITED PARTNER AND GENERAL PARTNER MATTERS
Market Information
The Units are not listed on any exchange or national market system, and there is
no established public trading market for the Units. To the best of LRC's
knowledge, no trading market exists for the Units that would jeopardize the
Partnership's status for federal income tax purposes.
As of March 18, 1998, the Partnership estimates that there were approximately
6,809 record owners of Units.
Distributions
Reference is made to Part II, Item 8, Notes 7 and 10 for a discussion of Classes
of Limited Partners and distributions paid to limited partners and the general
partner.
ITEM 6 - SELECTED FINANCIAL DATA
The following table sets forth selected financial data as of December 31, 1997,
1996, 1995, 1994 and 1993 and for the five years then ended. The amounts
presented are aggregated for all Classes (A, B, and C) of Limited Partners,
unless otherwise noted. This information should be read in conjunction with the
financial statements included in Item 8 which also reflects amounts for each of
the classes of limited partners.
4
<PAGE> 5
Statement of Revenue and
Expenses Data
(in thousands, except for
Unit amounts)
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total revenue $ 762 $ 2,491 $ 3,372 $ 4,556 $ 6,359
Total expenses 1,278 4,076 5,621 6,153 6,442
----------- ----------- ----------- ----------- -----------
Net loss $ (516) $ (1,585) $ (2,249) $ (1,597) $ (83)
=========== =========== =========== =========== ===========
Net earnings (loss)
per Unit
Class A $ (3.98) $ (8.20) $ (10.82) $ (8.20) $ 1.48
=========== =========== =========== =========== ===========
Class B $ (2.27) $ (7.79) $ (11.21) $ (7.85) $ (.80)
=========== =========== =========== =========== ===========
Class C $ (2.27) $ (7.79) $ (11.21) $ (7.85) $ (.80)
=========== =========== =========== =========== ===========
Distributions per Unit
(per year)
Class A $ -- $ -- $ 28.17 $ 86.56 $ 111.55
=========== =========== =========== =========== ===========
Class B $ 12.05 $ 30.03 $ 64.08 $ 62.49 $ 62.72
=========== =========== =========== =========== ===========
Class C $ 17.65 $ 31.05 $ 64.08 $ 62.49 $ 62.72
=========== =========== =========== =========== ===========
Weighted average number
of Units outstanding
Class A 33,858 33,858 33,858 33,858 33,818
=========== =========== =========== =========== ===========
Class B 165,574 165,574 165,574 165,574 165,614
=========== =========== =========== =========== ===========
Class C 327 327 327 327 327
=========== =========== =========== =========== ===========
</TABLE>
Balance Sheet Data
(in thousands, except for
Unit amounts)
<TABLE>
<CAPTION>
As of December 31,
------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Total assets $ 10,561 $ 13,571 $ 21,061 $ 35,378 $ 50,037
========== ========== ========== ========== ==========
Total liabilities $ 358 $ 834 $ 1,527 $ 1,773 $ 1,365
========== ========== ========== ========== ==========
Partners' equity $ 10,203 $ 12,737 $ 19,534 $ 33,605 $ 48,672
========== ========== ========== ========== ==========
Book value per Unit
Class A $ 59.26 $ 63.25 $ 71.45 $ 109.49 $ 205.23
========== ========== ========== ========== ==========
Class B $ 53.93 $ 68.25 $ 107.18 $ 181.29 $ 252.87
========== ========== ========== ========== ==========
Class C $ 62.56 $ 76.88 $ 115.81 $ 189.92 $ 261.50
========== ========== ========== ========== ==========
</TABLE>
5
<PAGE> 6
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis presents information pertaining to the
Partnership's operating results and financial condition.
Results of Operations
The Partnership had a net loss of $516,000 in 1997 in the aggregate for all
classes of partners. This compares to aggregate net losses in 1996 and 1995 of
$1,585,000 and $2,249,000, respectively. Differences in operating results
between Liquidating and Continuing Limited Partners are attributable to lease
income, acquisition costs, and expenses associated with new 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 years ended December 31, 1997 include
the following:
Lease income:
Since August 1996, the Partnership has been in its Liquidation 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 over the three years ended December 31, 1997. This trend will
continue as the Partnership liquidates its remaining leases. An additional
factor affecting year-to-year comparisons was a $135,000 reduction of lease
income in 1996 due to the return of lease overpayments that were recognized as
revenue in earlier periods.
Settlement proceeds:
Settlement proceeds in 1995 reflect the settlement with the Datronic
Partnerships' former attorneys (see Note 8(a)(i) to the Partnership's financial
statements included in Item 8).
Interest income:
Interest income for all three years includes earnings on invested cash balances.
In addition, both 1995 and 1996 include interest earned on an installment
contract. 1996 interest on this contract also includes $918,000 of previously
unrecorded interest income received in December of that year from the early
payoff of the remaining balance due. 1996 interest income also includes the
recognition of $175,000 of interest previously earned on restricted cash
balances.
Amortization expense:
Amortization of organization and equipment acquisition costs ended as of June
1996 when these costs became fully amortized.
Management fees - New Era:
These fees were paid to New Era Funding for managing the day-to-day operations
of the Partnership under a Management Agreement that was terminated effective
June 30, 1996. Accordingly, 1997 reflects no New Era management fees and 1996
results reflect only six months of such fees plus $920,000 in termination and
non-compete fees. Effective July 1, 1996, LRC assumed responsibility for the
day-to-day management
6
<PAGE> 7
of the Partnership and the related expenses are included in General Partner's
expense reimbursement (see Note 9 to the Partnership's financial statements
included in Item 8).
General Partner's expense reimbursement:
General Partner's expense reimbursement includes payments to LRC for expenses it
incurred as general partner in excess of those covered by its partner
distributions. Effective July 1, 1996, these expenses included additional
expenses incurred by LRC in its management of the day-to-day operations of the
Partnership. As a result of these additional expenses, the General Partner's
expense reimbursement shows a year-to-year increase for the three years ended
December 31, 1997. Partially offsetting these increases are the effects of staff
reductions and other cost savings realized during 1997 and the second half of
1996. 1997 expenses also include $120,000 of insurance premiums for coverage
that extends through the ultimate liquidation of the Partnership and $66,000 of
one-time charges for relocating the former New Era staff to reduced office
space. See Note 10 to the Partnership's financial statements included in Item 8.
Professional fees - Litigation:
This represents fees paid in connection with the Partnership's litigation which
is described in Note 8 to the Partnership's financial statements included in
Item 8. The 1997 increase reflects fees paid in connection with the ongoing
litigation against the Partnership's former accountants which is presently
scheduled for trial in May of 1998. The 1995 expense includes fees paid in
connection with a settlement with the Partnership's former attorneys.
Professional fees - Other:
These fees show a year-to-year decrease for the three years ended December 31,
1997 because of the decreasing level of professional services required in such
areas as collections, consulting, accounting and auditing. These decreases are
the result of the decrease in the Partnership's lease portfolio and related
activities.
Other operating expenses:
This represents losses from equipment sales as well as general administrative
expenses. There has been a year-to-year decrease in such expenses as losses on
equipment sales become less frequent due to the declining size of the lease
portfolio.
Provision (credit) for lease loss:
This provision (credit) reflects Management's ongoing assessment of the
potential losses inherent in the lease portfolio and lease collections on
certain leases in excess of those anticipated.
Provision (credit) for loss on Diverted and other assets: This provision
(credit) reflects Management's ongoing assessment of the net realizable value of
various assets held for the benefit of this and the other Datronic Partnerships.
The credit in 1997 reflects a recovery of amounts previously reserved for loss
in 1995 in connection with a decrease in the estimated net realizable value of
one of the Diverted and other assets. Because of the fluctuating
7
<PAGE> 8
nature of real estate values and the inherent difficulty of estimating the
affects of future events, the amounts ultimately realized from these assets
could differ significantly from their recorded amounts.
Provision (credit) for Commercial lease paper:
This provision (credit) reflects Management's ongoing assessment of the
potential losses inherent in the commercial lease paper.
Liquidity and Capital Resources
During 1997, Partnership assets continued to be converted to cash in order to
pay Partnership operating expenses, liquidate Partnership liabilities, make
distributions to limited partners, and provide for the ultimate liquidation of
the Partnership.
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 leases
owned by the Partnership. The lease portfolio is scheduled to be substantially
run out by the end of 2000, unless it is determined that it is in the
Partnership's best interest to dispose of the remaining portfolio earlier
through a bulk sale. In addition, the Partnership's sources of liquidity on a
long-term basis include proceeds from the sale of Diverted and other assets.
Management believes that its sources of liquidity in the short and long-term are
sufficient to meet its operating cash requirements, provide for ongoing pursuit
of litigation, and an orderly liquidation of the Partnership.
During 1997, the Partnership's cash and cash equivalents decreased by $503,000
to $3,074,000 at December 31, 1997 from $3,577,000 at December 31, 1996. This
decrease is primarily due to the use of cash in operations of approximately
$1,590,000 and distributions to partners of $2,018,000, partially offset by cash
receipts from collections on leases of $3,011,000 (including approximately
$500,000 from leases that were fully reserved) and from commercial lease paper
of $94,000.
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. These issues make it difficult to predict the time and cost
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. The amount of future distributions, if any, to the
Limited Partners, in all likelihood, will be significantly less than the amount
of partners' equity reflected in the December 31, 1997 balance sheets (see
Partnership's financial statements included in Item 8).
8
<PAGE> 9
Impact of Inflation and Changing Prices
Inflation is not expected to have any significant direct, determinable effect on
the Partnership's business or financial condition.
Impact of Year 2000 Issue
LRC has conducted a comprehensive review of the computer systems used to support
the Partnership's operations to determine whether any systems could be affected
by the Year 2000 Issue. The Year 2000 Issue relates to computer programs that
use two digits rather than four to define the year. This could cause
date-sensitive software to recognize the digits "00" as the year 1900 rather
than 2000. LRC does not expect the Partnership to be affected by the Year 2000
Issue because the systems used to support the Partnership's operations are
already substantially able to meet the reduced operating requirements, if any,
of the Partnership in the Year 2000.
9
<PAGE> 10
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
Audited Financial Statements:
Independent Auditors' Report 11-12
Balance Sheets
In Total for All Classes of Limited Partners
at December 31, 1997 and 1996 13
By Class of Limited Partner
December 31, 1997 14
December 31, 1996 15
Statements of Revenue and Expenses
In Total for All Classes of Limited Partners
for the years ended December 31,
1997, 1996 and 1995 16
By Class of Limited Partner for the years ended
December 31, 1997 17
December 31, 1996 18
December 31, 1995 19
Statements of Changes in Partners' Equity
for the years ended December 31,
1997, 1996 and 1995 20
Statements of Cash Flows
In Total for All Classes of Limited Partners
for the years ended December 31,
1997, 1996 and 1995 21
By Class of Limited Partner for the years ended
December 31, 1997 22
December 31, 1996 23
December 31, 1995 24
Notes to Financial Statements 25-38
</TABLE>
10
<PAGE> 11
INDEPENDENT AUDITORS' REPORT
The Partners of Datronic
Equipment Income Fund XIX, L.P.
We have audited the accompanying balance sheets in total for all classes of
limited partners of DATRONIC EQUIPMENT INCOME FUND XIX, L.P. ( "the
Partnership") as of December 31, 1997 and 1996 and the related statements of
revenue and expenses in total for all classes of limited partners, of changes in
partners' equity and of cash flows in total for all classes of limited partners
for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Partnership as of December
31, 1997 and 1996, and the results of its operations in total for all classes of
limited partners and its cash flows in total for all classes of limited partners
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the Partnership's
financial statements taken as a whole. As described in Note 2, the accounting
records of the Partnership are maintained to reflect the interests of each of
the classes of limited partners. Additional information consisting of the
balance sheets by class of limited partner as of December 31, 1997 and 1996, the
statements of revenue and expenses by class of limited partner and the
statements of cash flows by class of limited partner for the three years in the
period ended December 31, 1997 have been prepared by management solely for the
information of the limited partners and are not a required part of the financial
statements. This additional information has been subjected to the auditing
procedures applied in the audit of the Partnership's financial statements and,
in our opinion, has been allocated to the respective classes of limited partners
in accordance with the terms of the Amended Partnership Agreement described in
Note 10 and is fairly stated in all material respects in relation to the
Partnership's financial statements taken as a whole.
11
<PAGE> 12
As explained more fully in Notes 1 and 5, the former President and Majority
Stockholder of Datronic Rental Corporation ("DRC"), the general partner of the
Partnership until March 4, 1993, and others are alleged to have diverted, for
their benefit, approximately $13 million from the Partnership and related
entities--Datronic Equipment Income Funds XVI, XVII, XVIII, XX, L.P., Datronic
Finance Income Fund I, L.P. and Transamerica Equipment Leasing Income Fund, L.P.
(collectively "the Partnerships"). Substantially all of the assets known to have
been improperly acquired with the diverted funds have been recovered for the
benefit of the Partnerships.
Altschuler, Melvoin and Glasser LLP
Chicago, Illinois
March 6, 1998
12
<PAGE> 13
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
BALANCE SHEETS
IN TOTAL FOR ALL CLASSES OF LIMITED PARTNERS
<TABLE>
<CAPTION>
December 31,
-----------------------------
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 3,074,377 $ 3,577,529
Due from management company -- 59,130
Investments in commercial lease
paper, net 25,011 84,493
Net investment in direct
financing leases 2,866,165 5,641,547
Diverted and other assets, net 4,595,144 4,208,520
Datronic assets, net -- --
----------- -----------
$10,560,697 $13,571,219
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and
accrued expenses $ 62,316 $ 266,278
Lessee rental deposits 295,634 567,767
----------- -----------
Total liabilities 357,950 834,045
Total partners' equity 10,202,747 12,737,174
----------- -----------
$10,560,697 $13,571,219
=========== ===========
</TABLE>
See accompanying notes to financial statements.
13
<PAGE> 14
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
BALANCE SHEETS
By Class of Limited Partner
<TABLE>
<CAPTION>
December 31, 1997
-----------------------------------------------
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $1,199,924 $ 1,874,453 $ 3,074,377
Investments in commercial lease
paper, net 2,072 22,939 25,011
Net investment in direct
financing leases -- 2,866,165 2,866,165
Diverted and other assets, net 778,877 3,816,267 4,595,144
Datronic assets, net -- -- --
---------- ----------- -----------
$1,980,873 $ 8,579,824 $10,560,697
========== =========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and
accrued expenses $ 6,814 $ 55,502 $ 62,316
Lessee rental deposits 41,971 253,663 295,634
---------- ----------- -----------
Total liabilities 48,785 309,165 357,950
Total partners' equity 1,932,088 8,270,659 10,202,747
---------- ----------- -----------
$1,980,873 $ 8,579,824 $10,560,697
========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 15
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
BALANCE SHEETS
By Class of Limited Partner
<TABLE>
<CAPTION>
December 31, 1996
-----------------------------------------------
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
ASSETS
<S> <C> <C> <C>
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.
15
<PAGE> 16
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF REVENUE AND EXPENSES
IN TOTAL FOR ALL CLASSES OF LIMITED PARTNERS
<TABLE>
<CAPTION>
For the years ended December 31,
-------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Lease income $ 603,615 $ 1,137,607 $ 2,462,620
Settlement proceeds -- -- 425,474
Interest income 158,200 1,353,138 483,508
----------- ----------- -----------
761,815 2,490,745 3,371,602
----------- ----------- -----------
Expenses:
Amortization of organization and
equipment acquisition costs -- 151,149 1,123,582
Management fees-New Era -- 1,707,482 2,167,135
General Partner's
expense reimbursement 1,263,139 708,463 213,674
Professional fees-Litigation 420,121 315,849 446,540
Professional fees-Other 195,691 277,860 277,160
Other operating expenses 55,849 89,163 244,674
Provision (credit) for lease
losses (235,412) 525,000 200,000
Provision (credit) for loss on
Diverted and other assets (386,624) 276,160 897,520
Provision (credit) for loss on
commercial lease paper (35,000) 25,000 50,000
----------- ----------- -----------
1,277,764 4,076,126 5,620,285
----------- ----------- -----------
Net loss $ (515,949) $(1,585,381) $(2,248,683)
=========== =========== ===========
Net loss-General Partner $ (5,160) $ (15,854) $ (22,487)
=========== =========== ===========
Net loss-Limited Partners $ (510,789) $(1,569,527) $(2,226,196)
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
16
<PAGE> 17
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF REVENUE AND EXPENSES
BY CLASS OF LIMITED PARTNER
For the year ended December 31, 1997
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Lease income $ 3,892 $ 599,723 $ 603,615
Interest income 21,859 136,341 158,200
----------- ----------- -----------
25,751 736,064 761,815
----------- ----------- -----------
Expenses:
General Partner's
expense reimbursement 177,572 1,085,567 1,263,139
Professional fees-Litigation 71,211 348,910 420,121
Professional fees-Other 24,017 171,674 195,691
Other operating expenses 9,064 46,785 55,849
Credit for lease losses (51,768) (183,644) (235,412)
Credit for loss on
Diverted and other assets (65,533) (321,091) (386,624)
Credit for loss on
commercial lease paper (2,542) (32,458) (35,000)
----------- ----------- -----------
162,021 1,115,743 1,277,764
----------- ----------- -----------
Net loss $ (136,270) $ (379,679) $ (515,949)
=========== =========== ===========
Net loss-General Partner $ (1,363) $ (3,797) $ (5,160)
=========== =========== ===========
Net loss-Limited Partners $ (134,907) $ (375,882) $ (510,789)
=========== =========== ===========
Net loss per limited
partnership unit $ (3.98) $ (2.27)
=========== ===========
Weighted average number
of limited partnership
units outstanding 33,858 165,901
=========== ===========
</TABLE>
See accompanying notes to the financial statements.
17
<PAGE> 18
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF REVENUE AND EXPENSES
BY CLASS OF LIMITED PARTNER
For the year ended December 31, 1996
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Lease income $ 10,096 $ 1,127,511 $ 1,137,607
Interest income 214,002 1,139,136 1,353,138
----------- ----------- -----------
224,098 2,266,647 2,490,745
----------- ----------- -----------
Expenses:
Amortization of organization and
equipment acquisition costs 25,620 125,529 151,149
Management fees-New Era 220,112 1,487,370 1,707,482
General Partner's
expense reimbursement 105,780 602,683 708,463
Professional fees-Litigation 53,536 262,313 315,849
Professional fees-Other 38,649 239,211 277,860
Other operating expenses 12,368 76,795 89,163
Provision for lease losses -- 525,000 525,000
Provision for loss on
Diverted and other assets 46,809 229,351 276,160
Provision for loss on
commercial lease paper 1,695 23,305 25,000
----------- ----------- -----------
504,569 3,571,557 4,076,126
----------- ----------- -----------
Net loss $ (280,471) $(1,304,910) $(1,585,381)
=========== =========== ===========
Net loss-General Partner $ (2,805) $ (13,049) $ (15,854)
=========== =========== ===========
Net loss-Limited Partners $ (277,666) $(1,291,861) $(1,569,527)
=========== =========== ===========
Net loss per limited
partnership unit $ (8.20) $ (7.79)
=========== ===========
Weighted average number
of limited partnership
units outstanding 33,858 165,901
=========== ===========
</TABLE>
See accompanying notes to the financial statements.
18
<PAGE> 19
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF REVENUE AND EXPENSES
BY CLASS OF LIMITED PARTNER
For the year ended December 31, 1995
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Lease income $ 142,742 $ 2,319,878 $ 2,462,620
Settlement proceeds 72,118 353,356 425,474
Interest income 68,382 415,126 483,508
----------- ----------- -----------
283,242 3,088,360 3,371,602
----------- ----------- -----------
Expenses:
Amortization of organization and
equipment acquisition costs 190,447 933,135 1,123,582
Management fees-New Era 189,776 1,977,359 2,167,135
General Partner's
expense reimbursement 36,218 177,456 213,674
Professional fees-Litigation 75,689 370,851 446,540
Professional fees-Other 45,286 231,874 277,160
Other operating expenses 35,729 208,945 244,674
Provision (credit) for lease losses (76,276) 276,276 200,000
Provision for loss on
Diverted and other assets 152,130 745,390 897,520
Provision for loss on
commercial lease paper 4,238 45,762 50,000
----------- ----------- -----------
653,237 4,967,048 5,620,285
----------- ----------- -----------
Net loss $ (369,995) $(1,878,688) $(2,248,683)
=========== =========== ===========
Net loss-General Partner $ (3,700) $ (18,787) $ (22,487)
=========== =========== ===========
Net loss-Limited Partners $ (366,295) $(1,859,901) $(2,226,196)
=========== =========== ===========
Net loss per limited partnership
unit $ (10.82) $ (11.21)
=========== ===========
Weighted average number
of limited partnership
units outstanding 33,858 165,901
=========== ===========
</TABLE>
See accompanying notes to the financial statements.
19
<PAGE> 20
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
For the three years ended December 31, 1997
<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, 1994 $ -- $ 3,685,593 $ 29,919,566 $ 33,605,159
Distributions to partners (235,994) (953,780) (10,632,735) (11,822,509)
Net loss (22,487) (366,295) (1,859,901) (2,248,683)
Allocation of
General Partner's
Equity 258,481 (16,689) (241,792) --
--------- ----------- ------------ ------------
Balance, December 31, 1995 -- 2,348,829 17,185,138) 19,533,967
--------- ----------- ------------ ------------
Distributions to partners (45,426) -- (5,165,986) (5,211,412)
Net loss (15,854) (277,666) (1,291,861) (1,585,381)
Allocation of
General Partner's
Equity 61,280 (2,805) (58,475) --
--------- ----------- ------------ ------------
Balance, December 31, 1996 -- 2,068,358 10,668,816 12,737,174
--------- ----------- ------------ ------------
Distributions to partners (18,338) -- (2,000,140) (2,018,478)
Net loss (5,160) (134,907) (375,882) (515,949)
Allocation of
General Partner's
Equity 23,498 (1,363) (22,135) --
--------- ----------- ------------ ------------
Balance, December 31, 1997 $ -- $ 1,932,088 $ 8,270,659 $ 10,202,747
========= =========== ============ ============
</TABLE>
See accompanying notes to financial statements.
20
<PAGE> 21
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF CASH FLOWS
IN TOTAL FOR ALL CLASSES OF LIMITED PARTNERS
<TABLE>
<CAPTION>
For the years ended December 31,
----------------------------------------
1997 1996 1995
----------- ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (515,949) $ (1,585,381) $ (2,248,683)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Amortization expense -- 151,149 1,123,582
Provision (credit) for lease
losses (235,412) 525,000 200,000
Provision (credit) for loss on
commercial lease paper (35,000) 25,000 50,000
Provision (credit) for loss on
Diverted and other assets (386,624) 276,160 897,520
Changes in assets and
liabilities:
Accounts payable and
accrued expenses (203,962) (62,288) (20,987)
Lessee rental deposits (272,133) (602,529) (235,800)
Due to/from management
company 59,130 (87,724) 11,086
----------- ------------ ------------
(1,589,950) (1,360,613) (223,282)
----------- ------------ ------------
Cash flows from investing activities:
Purchases of lease receivables -- (919,590) (10,273,666)
Principal collections on leases 3,010,794 4,965,454 10,236,407
Sales of leases -- 931,931 7,583,645
Distribution of Diverted and
other assets -- -- 1,658,816
Distribution of Datronic Assets -- -- 134,402
Release of Restricted cash -- 1,076,623 --
Repayments of commercial
lease paper 94,482 173,927 260,618
Principal collections on
installment contract
receivable -- 645,040 363,367
----------- ------------ ------------
3,105,276 6,873,385 9,963,589
----------- ------------ ------------
Cash flows from financing activities:
Distributions to Limited Partners (2,000,140) (5,165,986) (11,586,515)
Distributions to General Partner (18,338) (45,426) (235,994)
----------- ------------ ------------
(2,018,478) (5,211,412) (11,822,509)
----------- ------------ ------------
Net increase (decrease) in cash
and cash equivalents (503,152) 301,360 (2,082,202)
Cash and cash equivalents:
Beginning of year 3,577,529 3,276,169 5,358,371
----------- ------------ ------------
End of year $ 3,074,377 $ 3,577,529 $ 3,276,169
=========== ============ ============
</TABLE>
See accompanying notes to financial statements.
21
<PAGE> 22
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF CASH FLOWS
BY CLASS OF LIMITED PARTNER
For the year ended December 31, 1997
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (136,270) $ (379,679) $ (515,949)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Credit for lease losses (51,768) (183,644) (235,412)
Credit for loss on commercial
lease paper (2,542) (32,458) (35,000)
Credit for loss on
Diverted and other assets (65,533) (321,091) (386,624)
Changes in assets and liabilities:
Accounts payable and
accrued expenses (33,178) (170,784) (203,962)
Lessee rental deposits (34,744) (237,389) (272,133)
Due to/from management company 7,747 51,383 59,130
----------- ----------- -----------
(316,288) (1,273,662) (1,589,950)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 58,815 2,951,979 3,010,794
Repayments of commercial
lease paper 10,505 83,977 94,482
----------- ----------- -----------
69,320 3,035,956 3,105,276
----------- ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners -- (2,000,140) (2,000,140)
Distributions to General Partner -- (18,338) (18,338)
----------- ----------- -----------
-- (2,018,478) (2,018,478)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (246,968) (256,184) (503,152)
Cash and cash equivalents:
Beginning of year 1,446,892 2,130,637 3,577,529
----------- ----------- -----------
End of year $ 1,199,924 $ 1,874,453 $ 3,074,377
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
22
<PAGE> 23
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF CASH FLOWS
BY CLASS OF LIMITED PARTNER
For the year ended December 31, 1996
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (280,471) $(1,304,910) $(1,585,381)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Amortization expense 25,620 125,529 151,149
Provision for lease losses -- 525,000 525,000
Provision for loss on commercial
lease paper 1,695 23,305 25,000
Provision for loss on
Diverted and other assets 46,809 229,351 276,160
Changes in assets and liabilities:
Accounts payable and
accrued expenses (6,716) (55,572) (62,288)
Lessee rental deposits (97,087) (505,442) (602,529)
Due to/from management company (7,811) (79,913) (87,724)
----------- ----------- -----------
(317,961) (1,042,652) (1,360,613)
----------- ----------- -----------
Cash flows from investing activities:
Purchases of lease receivables -- (919,590) (919,590)
Principal collections on leases 243,358 4,722,096 4,965,454
Sales of leases -- 931,931 931,931
Release of Restricted cash 182,488 894,135 1,076,623
Repayments of commercial
lease paper 10,294 163,633 173,927
Principal collections on
installment contract receivable 109,334 535,706 645,040
----------- ----------- -----------
545,474 6,327,911 6,873,385
----------- ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners -- (5,165,986) (5,165,986)
Distributions to General Partner -- (45,426) (45,426)
----------- ----------- -----------
-- (5,211,412) (5,211,412)
----------- ----------- -----------
Net increase in cash and
cash equivalents 227,513 73,847 301,360
Cash and cash equivalents:
Beginning of year 1,219,379 2,056,790 3,276,169
----------- ----------- -----------
End of year $ 1,446,892 $ 2,130,637 $ 3,577,529
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
23
<PAGE> 24
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF CASH FLOWS
BY CLASS OF LIMITED PARTNER
For the year ended December 31, 1995
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (369,995) $ (1,878,688) $ (2,248,683)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Amortization expense 190,447 933,135 1,123,582
Provision (credit) for
lease losses (76,276) 276,276 200,000
Provision for loss on
commercial lease paper 4,238 45,762 50,000
Provision for loss on
Diverted and
other assets 152,130 745,390 897,520
Changes in assets and
liabilities:
Accounts payable and
accrued expenses 1,514 (22,501) (20,987)
Lessee rental deposits (49,177) (186,623) (235,800)
Due to/from
management company (40) 11,126 11,086
------------ ------------ ------------
(147,159) (76,123) (223,282)
------------ ------------ ------------
Cash flows from investing activities:
Purchases of lease receivables -- (10,273,666) (10,273,666)
Principal collections on leases 964,774 9,271,633 10,236,407
Sales of leases 36,512 7,547,133 7,583,645
Distribution of Diverted and
other assets 281,169 1,377,647 1,658,816
Distribution of
Datronic assets 22,781 111,621 134,402
Repayments of commercial
lease paper 24,916 235,702 260,618
Principal collections on
installment contract
receivable 61,591 301,776 363,367
------------ ------------ ------------
1,391,743 8,571,846 9,963,589
------------ ------------ ------------
Cash flows from financing activities:
Distributions to Limited Partners (953,780) (10,632,735) (11,586,515)
Distributions to General Partner (12,989) (223,005) (235,994)
------------ ------------ ------------
(966,769) (10,855,740) (11,822,509)
------------ ------------ ------------
Net increase (decrease) in cash and
cash equivalents 277,815 (2,360,017) (2,082,202)
Cash and cash equivalents:
Beginning of year 941,564 4,416,807 5,358,371
------------ ------------ ------------
End of year $ 1,219,379 $ 2,056,790 $ 3,276,169
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
24
<PAGE> 25
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1997
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. Through March 4, 1993, Datronic
Rental Corporation ("DRC") was the general partner of the Partnership and
Datronic Equipment Income Funds XVI, XVII, XVIII, XX and Datronic Finance Income
Fund I, (collectively, the "Datronic Partnerships") and was co-general partner
of Transamerica Equipment Leasing Income Fund, L.P. ("TELIF").
In 1992, it was alleged that the chairman of DRC (who was also its president and
majority stockholder), in conjunction with various other parties, had
misappropriated and commingled $13.3 million of funds belonging to this and the
other Datronic Partnerships and TELIF. The Partnership's portion of these funds
was $7.3 million. In connection with a partial settlement of a class action
lawsuit arising from these allegations, Lease Resolution Corporation ("LRC")
replaced DRC as general partner of this and the other Datronic Partnerships on
March 4, 1993. LRC is a Delaware non-stock corporation formed for the sole
purpose of acting as general partner of the Datronic Partnerships.
On August 31, 1996, the Partnership began its Liquidation Phase under which it
has ceased investing in new leases and began the orderly liquidation of its
assets.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF FINANCIAL STATEMENTS - The accounting records of the Partnership are
being maintained to reflect the interests of each of the classes of limited
partners (see Note 10). Each class of limited partner is not a separate legal
entity holding title to individual assets nor the obligor of individual
liabilities. Accordingly, assets allocated to a specific class of limited
partner are available to settle claims of the Partnership as a whole. Additional
information consisting of the balance sheets by class of limited partner as of
December 31, 1997 and 1996, the statements of revenue and expenses by class of
limited partner and the statements of cash flows by class of limited partner for
the three years ended December 31, 1997 have been prepared to present
allocations of the various categories of assets, liabilities, revenue, expenses
and cash flows of the Partnership to each of the classes of limited partners in
accordance with the Amended Partnership Agreement. In addition, the general
partner's equity has been allocated to each class of limited partner for
purposes of additional information because the equity attributable to the
general partner will be allocated to the limited partners upon final dissolution
of the Partnership. For purposes of this additional information, the interests
of the Class B and Class C Limited Partners have been combined as "Continuing
Limited Partners." At December 31, 1997, the amounts per Unit relating to these
two classes are identical
25
<PAGE> 26
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
with the exception that the per Unit value of Class C Limited Partners is $8.63
per Unit higher than the Class B Limited Partners because, in accordance with
the 1993 Settlement, Class Counsel fees and expenses related to the Settlement,
net of Datronic Assets, were not allocated to the Class C Limited Partners (see
Note 6).
CASH AND CASH EQUIVALENTS - Cash and cash equivalents consist principally of
overnight investments in high quality, short-term corporate demand notes
(commercial paper). Amounts due (to) from the general partner (LRC) and other
Datronic Partnerships are also included.
NET INVESTMENT IN DIRECT FINANCING LEASES - Net investment in direct financing
leases consists of the present value of future minimum lease payments and
residuals under non-cancelable lease agreements. Residuals are valued at the
estimated fair market value of the underlying equipment at lease termination.
Leases are classified as non-performing when it is determined that the only
remaining course of collection is litigation. All balances relating to the lease
are netted together and no further income is accrued when a lease is classified
as non-performing.
Lease income includes interest earned on the present value of lease payments and
residuals (recognized over the term of the lease to yield a constant periodic
rate of return), late fees, and other lease related items.
ALLOWANCE FOR LEASE LOSSES - An allowance is recorded to reflect estimated
losses inherent in the existing portfolio of leases. Additions to the allowance
are made by means of a provision for lease losses, which is charged to expense.
Recoveries of amounts previously reserved are reflected as credits to the
provision for lease loss. The amounts shown in the accompanying Statements of
Revenue and Expenses reflect the net effect of provisions and recoveries.
Write-offs are deducted from the allowance.
DUE (TO) FROM GENERAL PARTNER AND OTHER DATRONIC PARTNERSHIPS - In the ordinary
course of the Partnership's day-to-day operations, there are occasions when the
general partner and/or other Datronic Partnerships owe amounts to, and are owed
amounts from, the Partnership. It is the Partnership's policy not to charge
(credit) interest on these payable (receivable) balances and to include them as
cash equivalents.
NET EARNINGS (LOSS) PER LIMITED PARTNERSHIP UNIT - Net earnings (loss) per
unit is based on net earnings (loss) after giving effect to a 1% allocation to
the general partner. The remaining 99% of net earnings (loss) for each of the
Liquidating and Continuing Limited Partners is divided by the weighted-average
number of units outstanding to arrive at net earnings (loss) per limited
partnership unit for each class of limited partner.
26
<PAGE> 27
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
USE OF ESTIMATES - In preparing financial statements in conformity with
generally accepted accounting principles, Management makes estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 3 - COMMERCIAL LEASE PAPER:
At December 31, 1997 commercial lease paper consists of a non-performing note
receivable from one lease broker which has been placed on a non-accrual basis
whereby no interest income is currently being recorded. This non-performing note
is secured by leases which have been recovered and are being serviced by the
Partnership. Payments received on the underlying leases are applied to the note
balance as recoveries.
Commercial lease paper is shown net of an allowance for losses. The following
summarizes the changes in the allowance for the three years ended December 31,
1997.
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ---------
<S> <C> <C> <C>
Balance, beginning
of 1995 $ 13,470 $ 136,932 $ 150,402
Additions 4,238 45,762 50,000
Write-offs -- -- --
-------- --------- ---------
Balance, December 31, 1995 17,708 182,694 200,402
Additions 1,695 23,305 25,000
Write-offs 115 (1,955) (1,840)
-------- --------- ---------
Balance, December 31, 1996 19,518 204,044 223,562
Recoveries (2,542) (32,458) (35,000)
Write-offs (700) (3,430) (4,130)
-------- --------- ---------
Balance, December 31, 1997 $ 16,276 $ 168,156 $ 184,432
======== ========= =========
</TABLE>
27
<PAGE> 28
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
NOTE 4 - NET INVESTMENT IN DIRECT FINANCING LEASES:
The components of the net investment in direct financing leases at December 31,
1997 and 1996 are as follows:
<TABLE>
<CAPTION>
December 31, 1997
-----------------------------------------------
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Performing leases
Minimum lease payments
receivable $ -- $ 3,213,715 $ 3,213,715
Unearned Income -- (369,683) (369,683)
Estimated residuals -- 1,466 1,466
-------- ----------- -----------
Total Performing Leases -- 2,845,498 2,845,498
Non-performing leases 15,340 1,562,039 1,577,379
-------- ----------- -----------
Net investment in direct
financing leases
before allowance 15,340 4,407,537 4,422,877
Allowance for lease losses (15,340) (1,541,372) (1,556,712)
-------- ----------- -----------
Net investment in direct
financing leases $ -- $ 2,866,165 $ 2,866,165
======== =========== ===========
Amounts currently due
included in net investment
in direct financing leases: $ -- $ 61,471 $ 61,471
======== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
-----------------------------------------------
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Performing leases
Minimum lease payments
receivable $ 10,214 $ 6,810,508 $ 6,820,722
Unearned income (115) (971,008) (971,123)
Estimated residuals 1,569 9,155 10,724
-------- ----------- -----------
Total performing leases 11,668 5,848,655 5,860,323
Non-performing leases 65,081 1,771,808 1,836,889
-------- ----------- -----------
Net investment in direct
financing leases
before allowance 76,749 7,620,463 7,697,212
Allowance for lease losses (69,702) (1,985,963) (2,055,665)
-------- ----------- -----------
Net investment in direct
financing leases $ 7,047 $ 5,634,500 $ 5,641,547
======== =========== ===========
Amounts currently due
included in net investment
in direct financing leases: $ 7,576 $ 261,553 $ 269,129
======== =========== ===========
</TABLE>
28
<PAGE> 29
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
An analysis of the changes in the allowance for lease losses by Class of Limited
Partner for 1995, 1996 and 1997 is as follows:
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Balance, beginning
of 1995 $ 225,428 $ 1,733,421 $ 1,958,849
Additions(recoveries) (76,276) 276,276 200,000
Write-offs (53,218) (347,034) (400,252)
--------- ----------- -----------
Balance, end of 1995 95,934 1,662,663 1,758,597
Additions -- 525,000 525,000
Write-offs (26,232) (201,700) (227,932)
--------- ----------- -----------
Balance, end of 1996 69,702 1,985,963 2,055,665
Recoveries (51,768) (183,644) (235,412)
Write-offs (2,594) (260,947) (263,541)
--------- ----------- -----------
Balance, end of 1997 $ 15,340 $ 1,541,372 $ 1,556,712
========= =========== ===========
</TABLE>
The Partnership leases equipment with lease terms generally ranging from two to
five years. Minimum payments scheduled to be received on performing leases for
each of the succeeding five years ending after December 31, 1997 by Class of
Limited Partner are as follows:
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
1998 $ -- $1,845,319 $1,845,319
1999 -- 973,051 973,051
2000 -- 394,849 394,849
2001 -- 496 496
2002 -- -- --
---------- ---------- ----------
$ -- $3,213,715 $3,213,715
========== ========== ==========
</TABLE>
29
<PAGE> 30
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
NOTE 5 - DIVERTED AND OTHER ASSETS:
The $13.3 million of funds allegedly misappropriated from the Datronic
Partnerships and TELIF (collectively the "Partnerships") (see Notes 1 and 8)
were commingled by the alleged wrongdoers with $10.3 million of other funds and
used to acquire various assets. $20.7 million of such assets (collectively,
"Diverted and other assets" or "Recovered Assets") were subsequently recovered
for the benefit of the Partnerships and each Partnership was assigned an
undivided pro-rata interest in them.
Since 1993, LRC has been liquidating these assets and distributing available
funds to the Partnerships. The Partnership's undivided interest in the Diverted
and other assets, and related distributions, is approximately 55.2% of the
total. The Partnership's remaining interest in the Diverted and other assets is
reflected in the accompanying Balance Sheets at estimated net realizable value
which is equal to cost, less allowances to reflect Management's estimates of
current market value and future costs to be incurred. At December 31, 1997,
these assets consisted primarily of real estate and cash.
The following tables summarize the activity related to Diverted and other
assets, both in total and for the Partnership's interest therein, for the three
years ended December 31, 1997.
<TABLE>
<CAPTION>
Diverted and other assets
---------------------------------
Partnership's
Total Share
------------ -------------
<S> <C> <C>
Balance at December 31, 1994 $ 12,747,945 $ 7,041,016
Distribution to the Partnerships (3,000,000) (1,658,816)
Provision for loss (1,625,000) (897,520)
------------ -----------
Balance at December 31, 1995 8,122,945 4,484,680
Provision for loss (500,000) (276,160)
------------ -----------
Balance at December 31, 1996 7,622,945 4,208,520
Credit for recovery
of assets 700,000 386,624
------------ -----------
Balance at December 31, 1997 $ 8,322,945 $ 4,595,144
============ ===========
</TABLE>
30
<PAGE> 31
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
Diverted and other assets at December 31, 1997 consisted of the following:
<TABLE>
<S> <C>
Office building (at adjusted cost) $ 4,178,666
Cash 3,693,607
Amount due from settlement 700,000
Allowance for carrying and
disposition costs (249,328)
-----------
$ 8,322,945
===========
</TABLE>
The 1995 loss provision of $1,625,000 (Partnership's share was $897,520)
primarily represents the write-off of the Datronic Partnerships' interest in a
real estate development limited partnership. $700,000 (Partnership's share was
$386,624) of this was recovered in 1997 and is reflected as a credit for
recovery of assets. The 1996 loss provision of $500,000 (Partnership's share was
$276,160) primarily reflects a settlement of claims against Diverted and other
assets.
LRC is continuing its efforts to liquidate the remaining Diverted and other
assets and will make additional distributions to the Partnerships as funds
become available. Due to the fluctuating nature of real estate values, the
ultimate net realizable value of the office building cannot be predicted.
NOTE 6 - DATRONIC ASSETS:
In accordance with a 1993 Court approved Settlement, substantially all of DRC's
assets, net of related debt, were transferred to LRC as nominee and agent for
the Datronic Partnerships for the benefit of the Class A and B Limited Partners.
The Partnership was assigned an undivided, pro-rata interest in the Datronic
Assets equal to 34.3% of the total. Proceeds from the liquidation of these
assets have been and will be, if additional amounts are realized, used to
reimburse the Class A and Class B Limited Partners for legal fees paid in
connection with the 1993 partial settlement of class action litigation (see
Notes 2 and 8(a)(i)). During 1995, $393,013 was distributed to the Datronic
Partnerships (the Partnership's share was $134,402).
At December 31, 1996 and 1997, the remaining Datronic Assets consisted of
$800,892 of cash, less a corresponding reserve for claims against Datronic
assets including a claim made by a former DRC creditor (see Note 8(b)).
31
<PAGE> 32
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
NOTE 7 - PARTNERS' EQUITY:
Distributions per Unit to the Limited Partners for the years 1995, 1996 and 1997
were:
<TABLE>
<CAPTION>
Class A Class B Class C
--------- --------- ---------
<S> <C> <C> <C>
1995 $ 28.17 $ 64.08 $ 64.08
1996 $ - $ 30.03 $ 31.05
1997 $ - $ 12.05 $ 17.65
</TABLE>
The Partnership began its Liquidation Phase on August 31, 1996. Pursuant to the
Amended Partnership Agreement, all distributions made before that date were paid
on a per-unit basis and all subsequent distributions were based on the positive
Capital Account balances of each limited partner within each Class. See Note 10.
At December 31, 1997, 1996 and 1995, there were 33,858 Class A Units, 165,574
Class B Units, 327 Class C Units, and one General Partner Unit outstanding.
Funds raised by each Class and cumulative distributions to limited partners by
class from the Partnership's formation through December 31, 1997 are:
<TABLE>
<CAPTION>
Funds Cumulative
Raised Distributions
----------- -------------
<S> <C> <C>
Class A $16,929,575 $11,747,537
Class B 82,790,118 58,367,136
Class C 159,807 116,426
----------- -----------
Total $99,879,500 $70,231,099
=========== ===========
</TABLE>
NOTE 8 - LITIGATION:
(a) At December 31, 1997, the Partnerships and/or the limited partners of the
Datronic Partnerships were plaintiffs in the following matters:
(i) Claims against professionals
During 1992, a class action lawsuit ("Class Action") was certified on behalf of
the limited partners in the Datronic Partnerships ("the Class") against DRC,
various officers of DRC and various other parties. The Class Action was
subsequently amended to add, as defendants, Siegan, Barbakoff, Gomberg & Kane
(the Datronic Partnerships' former securities counsel) ("Siegan"), Weiss and
Company, (the Datronic Partnerships' independent accountants prior to
32
<PAGE> 33
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
1990) ("Weiss") and Price Waterhouse (the Datronic Partnerships' independent
accountants during 1990 and 1991). During 1993, the Datronic Partnerships filed
cross-claims against Siegan, Weiss and Price Waterhouse (collectively
"Defendants") alleging professional negligence, breach of contract, violations
of Section 11 of the Securities Act of 1933 (as to Weiss and Price Waterhouse
only) and breach of fiduciary duty (as to Siegan).
During 1995, the Court dismissed all Class claims against Price Waterhouse.
Class Counsel intends to appeal the dismissal order in accordance with Court
rules at the appropriate time. The Court also ruled it did not have jurisdiction
with respect to the Datronic Partnerships' cross-claims against Price Waterhouse
and Weiss. As a result, the cross-claims, excluding those alleging violations of
the Securities Act of 1933, were refiled and are pending in the Circuit Court of
Cook County, Illinois.
As plaintiffs in the above claims against Price Waterhouse and Weiss, the
Datronic Partnerships allege, among other things, that the actions of the
Defendants contributed to the improper payment of fees and expense
reimbursements to DRC. If fees and expenses were inappropriately paid, the
Datronic Partnerships might be deemed to have had a receivable from DRC for any
such payments. Since all of the assets of DRC were transferred to LRC for the
benefit of the Datronic Partnerships in connection with the Settlement (see Note
6) and DRC had subsequently ceased operations, such receivables would be
uncollectible.
During 1995, the Court approved a settlement of all Class claims and all
cross-claims against Siegan, whereby Siegan paid an aggregate amount of
$1,775,000 ($425,474 for the Partnership).
(ii) Other Claims
During 1996, the Court entered an order removing any claim that one of the
defendants of the class action had against the Partnership's Recovered Assets
and certain cash accounts. Pursuant to the terms of the order, approximately
$725,000 of Recovered Assets (the Partnership's interest therein is
approximately $398,000 and is included in Diverted and other assets at a net
amount of $0) will be held in escrow for the potential benefit of the defendant
pending the outcome of the litigation discussed below.
During 1994, a suit was filed on behalf of certain of the Datronic Partnerships
(including the Partnership) arising out of their 1990 acquisition of a lease
portfolio. The suit charges fraud and breach of contract against the original
owner. During 1995, the Court dismissed the claim for lack of jurisdiction
without ruling on its merits. LRC, on behalf of the affected partnerships, filed
a revised complaint in the Circuit Court of Cook County, Illinois for fraud and
breach of contract in the amount of $5.5 million plus punitive damages and
interest. This action remains pending.
33
<PAGE> 34
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
(iii) Litigation Costs, Expenses and Fees
Future costs, expenses and fees of the Class Action and any subsequent Class
litigation will be paid in such amounts and from such sources as the Court shall
determine. Future fees and costs relating to the cross-claims and other
litigation undertaken on behalf of the Partnership will be paid by the
Partnership subject to the approval of LRC. It is anticipated that the Datronic
Partnerships will continue to expend funds in the future in pursuit of claims
described herein. Counsel for the Datronic Partnerships (same as Class Counsel)
is charging rates which are less than their normal rates and have a right to
receive a contingent fee equal to a percentage of the proceeds, if any,
resulting from the cross-claims against professionals.
(b) At December 31, 1997, the Partnership's General Partner, LRC, was a
defendant in the following matter:
Secured Lender Litigation
During 1993, in connection with the liquidation of a Recovered Asset, a secured
lender filed suit against LRC for an approximate $175,000 loss incurred by the
secured lender (see Note 6). The suit was dismissed by the Court during 1995 for
failure to state a claim. Upon appeal, a portion of the suit was remanded to the
lower court for trial. LRC believes the suit is without merit and is vigorously
contesting it.
Due to the uncertainty of the outcome of the pending litigation, no assets have
been recorded in the Partnership's financial statements relating to the pending
litigation discussed above.
NOTE 9 - PARTNERSHIP MANAGEMENT:
Since July 1, 1996, LRC has directly managed the day-to-day operations of the
Datronic Partnerships. The cost of the day-to-day management services is
allocated to each partnership based on the level of services performed for each
partnership. These expenses are reimbursed to LRC pursuant to the terms of the
Amended Partnership Agreement (see Note 10).
Prior to July 1, 1996, the Datronic Partnerships were managed by New Era Funding
under the direction of LRC pursuant to a Management Agreement. Effective June
30, 1996, this agreement was terminated and, pursuant to the Management
Termination Agreement, New Era was paid a $3.2 million dollar termination fee
(plus accrued interest) and the three principals of New Era were paid a total of
$1.0 million (plus accrued interest) for their agreement not to compete with the
business of the Datronic Partnerships for two years. The Partnership's share of
these payments was $919,902, which is included in the 1996 Statement of Revenue
and Expenses as part of the Management fees - New Era. Under the terms of the
Management
34
<PAGE> 35
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
Agreement, New Era and its principals were entitled to minimum aggregate annual
compensation of $2 million plus all operating expenses incurred in connection
with the management of all Partnerships.
As part of the Management Termination Agreement, two of New Era's principals
have been retained as consultants to the Datronic Partnerships through March 31,
1999 for an annual fee of $200,000 each. These payments are allocated to each of
the Datronic Partnerships based on the services performed for each Partnership
and are included in the accompanying Statement of Revenue and Expenses as part
of General Partner's expense reimbursement.
NOTE 10 - PARTNERSHIP AGREEMENT:
As part of the 1993 Settlement each limited partner elected to become a Class A,
B or C Limited Partner.
Class A Limited Partners
This class elected to begin liquidating their interest in the Partnership as of
the Settlement date. Accordingly, each Class A Limited Partner is entitled to
receive cash distributions equal to their pro rata share of the net proceeds
from the disposition of assets owned by the Partnership on the Settlement Date,
plus their pro rata interest in the net proceeds from the disposition of
Datronic Assets, Diverted and other assets, and temporary investments. In
addition, Class A Limited Partners participate in the Class Action.
Class B Limited Partners
This class elected not to begin liquidation of their interest in the Partnership
as of the Settlement Date. Until the Liquidating Phase of the Partnership began
on August 31, 1996, each Class B Limited Partner received cash distributions
equal to 12.5% annually of their Adjusted Capital Contributions (as that term is
defined in the amended Partnership Agreement). Available cash in excess of that
required to pay these distributions was invested in equipment and equipment
leases ("New Investments") and temporary investments on behalf of the Class B
Limited Partners. In addition, Class B Limited Partners participate in the Class
Action.
Class C Limited Partners
This class elected not to participate in the Class Action. Therefore, each Class
C Limited Partner: (i) preserved their individual claims against DRC and the
other defendants, (ii) does not participate in the Class Action, and (iii) did
not participate in the Settlement. In all other respects, including
distributions from the Partnership, Class C Limited Partners are the same as
Class B Limited Partners.
Distributions to Class A Limited Partners were suspended after payment of the
October 1, 1995 distribution and to Class B and C Limited Partners after payment
of the January 1, 1998 distribution. If the
35
<PAGE> 36
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
Partnership obtains funds from pending litigation or cash is otherwise available
after providing for the orderly liquidation of the Partnership, additional
distributions will be made at the appropriate time.
Concurrent with the beginning of the Liquidating Phase on August 31, 1996, the
Partnership ceased making New Investments and the General Partner (LRC) began
the orderly liquidation of Partnership assets. Pursuant to this, cash reserves
are to be maintained sufficient to satisfy all liabilities of the Partnership
and provide for future contingencies. Cash available after satisfying such
requirements ("Cash Flow Available for Distribution") will be distributed to the
General and Limited Partners as described below.
During the Liquidating Phase, net Partnership proceeds from all sources, less
cash reserves needed to satisfy Partnership liabilities and provide for future
contingencies will be apportioned among the Class A, B and C Limited Partners,
each class as a group, in accordance with each class' interest in each type of
asset. Then, Liquidating Distributions will be made to the Limited Partners
within each class in accordance with the positive Capital Account balance of
each Limited Partner until all Limited Partners' Capital Account balances are
zero, and thereafter, pro rata based on the number of units outstanding.
The amended Partnership Agreement provides for the General Partner (LRC) to
receive quarterly distributions equal to 1% of the Cash Flow Available for
Distribution. In addition, LRC receives reimbursement for expenses incurred in
excess of those covered by the 1% distribution. These expense reimbursements are
paid one quarter in advance and are adjusted based on LRC's actual expenses. LRC
allocates its expenses to each of the Datronic Partnerships based on its
activities performed for each Partnership. Beginning July 1, 1996, LRC's expense
reimbursement includes expenses incurred in managing the day-to-day operations
of this and the other Datronic Partnerships. LRC is entitled to no other fees or
reimbursements from the Partnership.
The following summarizes the total of all payments to LRC during the three years
ended December 31, 1997:
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
1% Distribution $ 21,233 $ 104,304 $ 600,440
Expense Reimbursement in excess
of the 1% Distribution 5,369,846 2,955,260 1,261,078
---------- ---------- ----------
Total $5,391,079 $3,059,564 $1,861,518
========== ========== ==========
</TABLE>
36
<PAGE> 37
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
The Partnership's share of these payments were:
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------
1997 1996 1995
---------- -------- --------
<S> <C> <C> <C>
1% Distribution $ 18,338 $ 45,426 $235,994
Expense Reimbursement in excess
of the 1% Distribution 1,263,139 708,463 213,674
---------- -------- --------
Total $1,281,477 $753,889 $449,668
========== ======== ========
</TABLE>
NOTE 11 - CONCENTRATION OF CREDIT RISK:
Leasing activity is conducted throughout the United States, with emphasis in
certain states such as California, New York, and Texas. The cost of equipment
under lease typically ranges from $15,000 to $30,000. Such equipment includes,
but is not limited to: machine tool equipment, printing and graphic processing
equipment, general purpose plant/office equipment, computers and terminals for
management information systems, medical equipment, and automotive repair
equipment. At December 31, 1997, there are no significant concentrations of
business activity in any industry or with any one debtor. The Partnership
maintains a security interest in all equipment until the lessee's obligations
are fulfilled.
Of the Partnership's investment in commercial lease paper, one debtor represents
100% of the amount outstanding (see Note 3).
37
<PAGE> 38
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO THE FINANCIAL STATEMENTS - CONCLUDED
NOTE 12 - INCOME TAXES:
The Partnership is not subject to Federal income taxes and, accordingly, no
provision or credit for such taxes is reflected in the accompanying financial
statements. Instead, the tax effects of the Partnership's activities are
includable in the individual tax returns of its partners. The following table
reconciles the Partnership's net operating results determined in accordance with
generally accepted accounting principles with those reported for Federal income
tax purposes in total for all Partners and by Class of Partner for the year
ended December 31, 1997.
<TABLE>
<CAPTION>
Liquidating Continuing
General Limited Limited
Partner Partners Partners Total
-------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net loss per accompanying
statements $ (5,160) $(134,906) $ (375,883) $ (515,949)
Effect of leases treated as
operating leases for tax
purposes (648) (11,233) (52,886) (64,767)
Effect of principal repayments
treated as income for tax
purposes (862) (14,464) (70,871) (86,197)
Credit for lease losses (391) (3,210) (35,528) (39,129)
Provision for recovery of
Diverted and other assets (16,955) (284,512) (1,394,025) (1,695,492)
Provision for Class Counsel
fees and expenses, net -- (62,128) (303,821) (365,949)
Other, net (432) (5,117) (37,638) (43,187)
-------- --------- ----------- -----------
Loss for Federal income tax
purposes in total $(24,448) $(515,570) $(2,270,652) $(2,810,670)
======== ========= =========== ===========
</TABLE>
38
<PAGE> 39
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no changes in accountants or disagreements with accountants on
accounting and financial disclosure.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership has no employees or directors. LRC was formed in December 1992
in contemplation of the Settlement for the sole purpose of acting as the general
partner for each of the Datronic Partnerships. LRC became general partner in
1993. LRC has a nominal net worth. The directors and executive officers of LRC,
together with pertinent information concerning each of them are as follows:
Directors and Executive Officers of Lease Resolution Corp.
LRC, as a non-stock, not-for-profit corporation, does not have stockholders. The
executive officers of LRC are also the members of the Board of Directors of LRC.
None of the executive officers of LRC were previously affiliated with Datronic.
While LRC's duration is perpetual, it is anticipated that it will liquidate and
dissolve following the liquidation and dissolution of the last remaining
Datronic Partnership.
LRC's Board of Directors and executive officers, together with certain pertinent
information regarding their background, are set forth below:
<TABLE>
<CAPTION>
Director
Name Position and Office Since
---- ------------------- -----
<S> <C> <C>
Donald D. Torisky Chairman of the Board and
Chief Executive Officer 12/92
Robert P. Schaen Vice-Chairman of the Board and
Chief Financial Officer 12/92
Arthur M. Mintz Vice-Chairman of the Board and
General Counsel 12/92
</TABLE>
Donald D. Torisky, age 59, has been associated with LRC since its
inception in 1992. Mr. Torisky is also President of Barrington
Management and Consulting, Inc. where, prior to March 1993, he
coordinated management consulting opportunities for national and
international Fortune 500 finance companies. From 1987 to 1990, Mr.
Torisky worked with the TransAmerica Corporation as an Executive Vice-
President and board member of the TransAmerica Finance Group. Mr.
Torisky also served as the President and Chief Executive Officer of
TransAmerica Commercial Finance Corporation. With TransAmerica, Mr.
Torisky managed and directed a diversified financial service portfolio
of $4.6 billion with branches in the United States, Canada, the United
39
<PAGE> 40
Kingdom and Australia. From 1962 to 1987, Mr. Torisky was with the Borg-Warner
Corporation. In 1983 he became President and Chief Executive Officer of
Borg-Warner Financial Services and an officer of Borg-Warner Corp. Mr. Torisky
has completed the Advanced Management Program at the Harvard Graduate School of
Business Administration. Mr. Torisky served honorably in the United States
Marine Corps, and holds a license in life, accident, and health insurance and a
Series 6 NASD license.
Robert P. Schaen, age 71, has been associated with LRC since its inception in
1992. Prior to his association with LRC, Mr. Schaen retired from Ameritech in
1991 after 39 years of service with the Bell System and Ameritech. At his
retirement he was the Vice-President and Comptroller of Ameritech. He started
his Bell System career with New York Telephone Company in 1952, was promoted and
transferred to AT&T in 1962, and thereafter, promoted and transferred to
Illinois Bell Telephone Company in 1965 where he managed personnel, accounting,
data systems and general operations prior to being elected Comptroller and
Assistant Secretary. In 1983, Mr. Schaen was named Vice-President and
Comptroller of Ameritech. Mr. Schaen served as a naval officer in the Pacific
Theater during World War II and retired from the Naval Reserve Intelligence
Service in 1968 with the rank of Commander. He graduated from Hobart College in
Geneva, New York in 1948 and after graduation remained there as a mathematics
and statistics instructor. In 1967 Mr. Schaen completed the Advanced Management
Program at the Harvard Graduate School of Business Administration.
Arthur M. Mintz, age 61, has been associated with LRC since its inception in
1992. Mr. Mintz is also Chairman of the Board of Olicon Imaging Systems, Inc.,
which was founded in 1991. Olicon Imaging Systems, Inc. is a teleradiology
company serving approximately 800 hospitals nationwide. Since 1987, he has also
served as President of AMRR Leasing Corporation and Vice President and General
Counsel of Mobile M.R. Venture, Ltd. In 1983, Mr. Mintz was a founder of
Diasonics, Incorporated and served as its Corporate Counsel. Diasonics was
listed on the New York Stock Exchange prior to its acquisition by Elsinth in
1995. In 1957, Mr. Mintz obtained a Bachelor of Arts Degree from Northwestern
University and in 1959, obtained his J.D. from Northwestern University School of
Law. Thereafter, Mr. Mintz served in the United States Army and was honorably
discharged. From 1965 to 1982, Mr. Mintz was a principal with the law firms of
Mintz, Raskin, Rosenberg, Lewis & Cohen (1965-1975), Mintz, Raskin and Lewis
(1975-1979), and Arthur M. Mintz, Ltd., P.C. (1979-1982).
Any change in the compensation of a director of LRC must be approved by the
other two non-interested members of the Board of Directors.
40
<PAGE> 41
ITEM 11 - MANAGEMENT REMUNERATION
The Partnership has no officers or directors and instead is managed by the
general partner, LRC.
The Partnership Agreement, as amended, provides for LRC to receive reimbursement
for its operating expenses incurred in relation to its functions as General
Partner of the Datronic Partnerships. These reimbursements are detailed in Note
10 to the Partnership's financial statements included in Item 8.
Compensation paid to the Chief Executive Officer of LRC during 1997 was as
follows:
<TABLE>
<CAPTION>
Chairman of the
Board and Chief All Other
Executive Officer Salary Compensation(b)
----------------- ------ ---------------
<S> <C> <C>
Donald D. Torisky $458,644 $3,200(a)
</TABLE>
(a) Represents the value of LRC's contribution to LRC's Savings and
Retirement Plan allocable to Mr. Torisky for services rendered during
1997.
(b) Information concerning Bonus, Other Annual Compensation, Restricted
Stock Award, Option/SARs and LTIP Payouts is Not Applicable.
This compensation was included in LRC's operating expenses reimbursed by all
Datronic Partnerships. The Partnership's share of such expense reimbursements,
including the 1% of Cash Flow Available for Distribution, was 23.77%.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
None.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has no officers or directors and instead is managed by the
general partner, LRC.
The Partnership Agreement, as amended, provides for LRC to receive reimbursement
for its operating expenses incurred in relation to its functions as General
Partner of the Datronic Partnerships. These reimbursements are detailed in Note
10 to the Partnership's financial statements included in Item 8.
41
<PAGE> 42
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements
See Index to Financial Statements located in Item 8 of this
Report.
(2) Financial Statement Schedules
None.
(3) Exhibits
The Exhibits listed in the Exhibit Index immediately following
the signature page are filed as a part of this report.
(b) Reports on Form 8-K
None.
42
<PAGE> 43
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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 on the 27th day of March
1998.
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
March 27, 1998 By: Lease Resolution Corporation,
General Partner
By: /s/ Donald D. Torisky
--------------------------------------
Donald D. Torisky
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated and on the dates indicated.
By: /s/ Donald D. Torisky March 27, 1998
------------------------------
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 March 27, 1998
------------------------------
Robert P. Schaen
Vice-Chairman and
Chief Financial Officer,
Lease Resolution Corporation,
General Partner of Datronic
Equipment Income Fund XIX, L.P.
By: /s/ Arthur M. Mintz March 27, 1998
------------------------------
Arthur M. Mintz
Vice-Chairman and General Counsel,
Lease Resolution Corporation,
General Partner of Datronic
Equipment Income Fund XIX, L.P.
43
<PAGE> 44
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>
44
<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-K.
</LEGEND>
<CIK> 0000859072
<NAME> DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,074,377
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,560,697
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,202,747
<TOTAL-LIABILITY-AND-EQUITY> 10,560,697
<SALES> 0
<TOTAL-REVENUES> 761,815
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 55,849
<LOSS-PROVISION> (657,036)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (515,949)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
