<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, 1998 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, 1998
PART I - FINANCIAL INFORMATION
<TABLE>
<S> <C>
Item 1.
- -------
Index to Financial Statements
Balance Sheets
March 31, 1998 (unaudited) 3
December 31, 1997 4
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 1998 5
For the three months ended March 31, 1997 6
Statements of Changes in Partners' Equity
For the three months ended March 31, 1998 7
(unaudited)
Statements of Cash Flows (unaudited)
For the three months ended March 31, 1998 8
For the three months ended March 31, 1997 9
Notes to Financial Statements (unaudited) 10 - 11
Item 2.
- -------
Management's Discussion and Analysis of
Financial Condition and Results of Operations 12 - 13
PART II - OTHER INFORMATION
Items 1-6. 14
- ----------
</TABLE>
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
BALANCE SHEETS
March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $1,131,263 $1,613,449 $2,744,712
Investments in commercial lease
paper, net 1,223 13,969 15,192
Net investment in direct
financing leases - 2,305,939 2,305,939
Diverted and other assets, net 778,877 3,816,267 4,595,144
Datronic assets, net - - -
---------- ---------- ----------
$1,911,363 $7,749,624 $9,660,987
========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and
accrued expenses $ 6,291 $ 51,016 $ 57,307
Lessee rental deposits 41,254 222,869 264,123
---------- ---------- ----------
Total liabilities 47,545 273,885 321,430
Total partners' equity 1,863,818 7,475,739 9,339,557
---------- ---------- ----------
$1,911,363 $7,749,624 $9,660,987
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
BALANCE SHEETS
December 31, 1997
<TABLE>
<CAPTION>
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.
4
<PAGE> 5
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the three months ended March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 263 $ 98,676 $ 98,939
Interest income 4,655 32,007 36,662
----------- ---------- ----------
4,918 130,683 135,601
----------- ---------- ----------
Expenses:
General Partner's
expense reimbursement 32,499 221,292 253,791
Professional fees 40,478 202,270 242,748
Other operating expenses 2,783 14,643 17,426
Credit for lease losses (2,572) (12,602) (15,174)
----------- ---------- ----------
73,188 425,603 498,791
----------- ---------- ----------
Net loss $ (68,270) $ (294,920) $ (363,190)
=========== ========== ==========
Net loss -
General Partner $ (683) $ (2,949) $ (3,632)
=========== ========== ==========
Net loss -
Limited Partners $ (67,587) $ (291,971) $ (359,558)
=========== ========== ==========
Net loss per limited
partnership unit $(2.00) $ (1.76)
====== =======
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, 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.
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, 1997* $ - $ 1,932,088 $8,270,659 $10,202,747
Distributions to partners - - (500,000) (500,000)
Net loss (3,632) (67,587) (291,971) (363,190)
Allocation of General
Partner's Equity 3,632 (683) (2,949) -
--------- ----------- ---------- -----------
Balance, March 31, 1998 $ - $ 1,863,818 $7,475,739 $ 9,339,557
========= =========== ========== ===========
</TABLE>
* Balances are net of $74,954 and $678,650, of General Partner's equity
previously allocated to Liquidating and Continuing Limited Partners'
Equity.
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, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net loss $ (68,270) $ (294,920) $ (363,190)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Credit for lease losses (2,572) (12,602) (15,174)
Changes in assets and
liabilities:
Accounts payable and
accrued expenses (523) (4,486) (5,009)
Lessee rental deposits (717) (30,794) (31,511)
----------- ---------- ----------
(72,082) (342,802) (414,884)
----------- ---------- ----------
Cash flows from investing
activities:
Principal collections
on leases 2,572 572,828 575,400
Repayments of commercial
lease paper 849 8,970 9,819
----------- ---------- ----------
3,421 581,798 585,219
----------- ---------- ----------
Cash flows from financing
activities:
Distributions to
Limited Partners - (500,000) (500,000)
----------- ---------- ----------
Net decrease in cash and
cash equivalents (68,661) (261,004) (329,665)
Cash and cash equivalents:
Beginning of year 1,199,924 1,874,453 3,074,377
----------- ---------- ----------
End of first quarter $ 1,131,263 $1,613,449 $2,744,712
=========== ========== ==========
</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, 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.
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
(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. See Notes 5, 8, and 10 to
the Partnership's financial statements included in the 1997 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 1997 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 1997 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 suspended after payment of the January 1, 1998 distribution.
NOTE 4 - SUBSEQUENT EVENT: SETTLEMENT OF LITIGATION:
On May 5, 1998, Lease Resolution Corporation (LRC), on behalf of Datronic
Equipment Income Funds XVI, XVII, XVIII, XIX, XX and Datronic Finance Income
Fund I, reached an agreement to settle all claims of the aforementioned
partnerships against Weiss & Co. ("Settlement Agreement"). (See Note 8 to the
financial statements included in the Partnership's 1997 Form 10-K). The
Settlement Agreement is contingent upon subsequent approval by the United
States District Court dismissing Weiss & Co. as a party defendant. Pursuant to
the terms of the Settlement Agreement, Weiss & Co. has agreed to pay LRC, on
behalf of the aforementioned partnerships, $2.4 million. LRC will determine
how these proceeds, net of contingent attorneys fees of $600,000, will be
distributed among the partnerships upon completion of the trial currently in
process against Price Waterhouse. The Settlement Agreement provides for Weiss
& Co. to transfer $2.4 million to an escrow account. This amount will be
transferred to LRC no later than 30 days following the United States District
Court entering an order of
10
<PAGE> 11
dismissal of Weiss & Co. for which no date has yet been set. All limited
partners will be notified of the date once it has been scheduled.
11
<PAGE> 12
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,
1997 through March 31, 1998. The discussion and analysis of results of
operations is for the three month period ended March 31, 1998 as compared to
the corresponding period in 1997.
Liquidity and Capital Resources
During the three months ended March 31, 1998, 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.
During the three months ended March 31, 1998, the Partnership's cash and cash
equivalents decreased by $330,000 to $2,745,000 at March 31, 1998 from
$3,074,000 at December 31, 1997. This decrease is primarily due to the use of
cash in operations of $415,000 and distributions to partners of $500,000,
partially offset by cash receipts from collections on leases of $575,000 and
from commercial lease paper of $10,000.
The Partnership's sources of liquidity on both a long-term and short-term basis
are expected to come principally from cash-on-hand and cash receipts from
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.
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 costs
necessary to operate and liquidate the Partnership in an orderly manner. As a
result of these uncertainties, it is unlikely that any additional distributions
will be made until all remaining assets are liquidated and the pending
12
<PAGE> 13
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 March 31, 1998 balance sheets (see
Partnership's financial statements included in Item 1).
Results of Operations
The Partnership had a net loss of $363,000 for the three months ended March 31,
1998 in the aggregate for all classes of partners. This compares to an
aggregate net loss for the same period in 1997 of $180,000. 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 two periods
ended March 31, 1998 and 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 for the three months ended March 31, 1998 as compared to the
corresponding period in 1997.
Interest income:
Interest income decreased for the three months ended March 31, 1998 as compared
to the corresponding period in 1997 as a result of decreased invested cash
balances.
General Partner's expense reimbursement:
The decrease in first quarter 1998 expense is primarily due to D&O insurance
and reductions in staff and related costs. Through the first quarter 1997,
insurance premiums were paid on an annual basis; however, in September 1997 a
one-time premium was paid that extended coverage through the ultimate
liquidation date of the Partnership.
Professional fees:
The 1998 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. This increase is partially offset by the decreasing
level of professional services required in such areas as collections,
consulting and auditing. These decreases are the result of the decrease in the
Partnership's lease portfolio and related activities.
Credit for lease losses:
This credit reflects Management's ongoing assessment of the potential losses
inherent in the lease portfolio and collections on previously reserved
balances.
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, 1997 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 15th day of May 1998.
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
-------------
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and not filed.
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet and the Statements of Revenue and Expenses and is qualified in its
entirety by reference to such Report on Form 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,744,712
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,660,987
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,339,557
<TOTAL-LIABILITY-AND-EQUITY> 9,660,987
<SALES> 0
<TOTAL-REVENUES> 135,601
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,426
<LOSS-PROVISION> (15,174)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (363,190)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
