<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
September 30, 1999 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 SEPTEMBER 30, 1999
----------------------------------------
PART I - FINANCIAL INFORMATION
Item 1.
- -------
Index to Financial Statements
Balance Sheets
September 30, 1999 (unaudited) 3
December 31, 1998 4
Statements of Revenue and Expenses (unaudited)
For the three months ended September 30, 1999 5
For the three months ended September 30, 1998 6
For the nine months ended September 30, 1999 7
For the nine months ended September 30, 1998 8
Statements of Changes in Partners' Equity
For the nine months ended September 30, 1999
(unaudited) 9
Statements of Cash Flows (unaudited)
For the nine months ended September 30, 1999 10
For the nine months ended September 30, 1998 11
Notes to Financial Statements (unaudited) 12
Item 2.
- -------
Management's Discussion and Analysis of
Financial Condition and Results of Operations 13 - 14
Item 3.
- -------
Quantitative and Qualitative Disclosures about
Market Risk 14
PART II - OTHER INFORMATION
Items 1-6. 15
- ----------
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
BALANCE SHEETS
September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -------------
<S> <C> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 347,555 $ 3,364,725 $ 3,712,280
Investments in commercial lease
paper, net - - -
Net investment in direct financing
leases - 497,835 497,835
Diverted and other assets, net 402,546 1,972,358 2,374,904
Datronic assets, net - - -
---------- ----------- -------------
$ 750,101 $ 5,834,918 $ 6,585,019
========== =========== =============
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and accrued
expenses $ 2,467 $ 25,262 $ 27,729
Lessee rental deposits 20,071 98,340 118,411
---------- ----------- -------------
Total liabilities 22,538 123,602 146,140
Total partners' equity 727,563 5,711,316 6,438,879
---------- ----------- -------------
$ 750,101 $ 5,834,918 $ 6,585,019
========== =========== =============
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
BALANCE SHEETS
December 31, 1998
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 1,476,467 $ 4,489,249 $ 5,965,716
Judgment receivable, net 22,590 110,684 133,274
Investments in commercial lease
paper, net - - -
Net investment in direct financing
leases - 1,175,310 1,175,310
Diverted and other assets, net 402,546 1,972,358 2,374,904
Datronic assets, net - - -
------------ ------------ ------------
$ 1,901,603 $ 7,747,601 $ 9,649,204
============ ============ ============
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Accounts payable and accrued
expenses $ 8,520 $ 61,588 $ 70,108
Lessee rental deposits 30,091 151,539 181,630
------------ ------------ ------------
Total liabilities 38,611 213,127 251,738
Total partners' equity 1,862,992 7,534,474 9,397,466
------------ ------------ ------------
$ 1,901,603 $ 7,747,601 $ 9,649,204
============ ============ ============
</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 September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 290 $ 21,665 $ 21,955
Interest income 3,962 37,104 41,066
--------- ---------- ----------
4,252 58,769 63,021
--------- ---------- ----------
Expenses:
General Partner's expense
reimbursement 30,309 194,189 224,498
Professional fees 3,062 25,013 28,075
Other operating expenses 1,416 7,031 8,447
Credit for lease losses (1,426) (46,991) (48,417)
--------- ---------- ----------
33,361 179,242 212,603
--------- ---------- ----------
Net loss $ (29,109) $ (120,473) $ (149,582)
========= ========== ==========
Net loss - General Partner $ (291) $ (1,205) $ (1,496)
========= ========== ==========
Net loss - Limited Partners $ (28,818) $ (119,268) $ (148,086)
========= ========== ==========
Net loss per limited
partnership unit $ (0.85) $ (0.72)
========= ===========
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 September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 407 $ 58,835 $ 59,242
Interest income 4,778 29,080 33,858
--------- ---------- ----------
5,185 87,915 93,100
--------- ---------- ----------
Expenses:
General Partner's expense
reimbursement 30,866 223,467 254,333
Professional fees 2,897 22,357 25,254
Other operating expenses 1,077 5,339 6,416
Credit for lease losses (2,192) (10,737) (12,929)
--------- ---------- ----------
32,648 240,426 273,074
--------- ---------- ----------
Net loss $ (27,463) $ (152,511) $ (179,974)
========= ========== ==========
Net loss - General Partner $ (275) $ (1,525) $ (1,800)
========= ========== ==========
Net loss - Limited Partners $ (27,188) $ (150,986) $ (178,174)
========= ========== ==========
Net loss per limited
partnership unit $ (0.80) $ (0.91)
========= ==========
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.
STATEMENTS OF REVENUE AND EXPENSES
For the nine months ended September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Lease income $ 7,307 $ 149,260 $ 156,567
Interest income 18,069 130,039 148,108
----------- ---------- ----------
25,376 279,299 304,675
----------- ---------- ----------
Expenses:
General Partner's expense
reimbursement 92,580 599,204 691,784
Professional fees 16,137 114,418 130,555
Other operating expenses 4,663 23,548 28,211
Credit for lease losses (11,198) (195,871) (207,069)
Credit for loss on
commercial lease paper (719) (7,592) (8,311)
----------- ---------- ----------
101,463 533,707 635,170
----------- ---------- ----------
Net loss $ (76,087) $ (254,408) $ (330,495)
========== ========== ==========
Net loss - General Partner $ (761) $ (2,544) $ (3,305)
========== ========== ==========
Net loss - Limited Partners $ (75,326) $ (251,864) $ (327,190)
========== ========== ==========
Net loss per limited
partnership unit $ (2.22) $ (1.52)
========== ==========
Weighted average number of limited
partnership units outstanding 33,858 165,901
========== ==========
</TABLE>
See accompanying notes to financial statements
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF REVENUE AND EXPENSES
For the nine months ended September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- -----------
<S> <C> <C> <C>
Revenue:
Lease income $ 926 $ 241,560 $ 242,486
Interest income 14,030 88,597 102,627
---------- ---------- -----------
14,956 330,157 345,113
---------- ---------- -----------
Expenses:
General Partner's expense
reimbursement 93,024 648,611 741,635
Professional fees 104,058 531,480 635,538
Other operating expenses 6,049 35,089 41,138
Credit for lease losses (6,695) (32,801) (39,496)
---------- ---------- -----------
196,436 1,182,379 1,378,815
---------- ---------- -----------
Net loss $ (181,480) $ (852,222) $(1,033,702)
========== ========== ===========
Net loss - General Partner $ (1,815) $ (8,522) $ (10,337)
========== ========== ===========
Net loss - Limited Partners $ (179,665) $ (843,700) $(1,023,365)
========== ========== ===========
Net loss per limited
partnership unit $ (5.31) $ (5.09)
========== ==========
Weighted average number of limited
partnership units outstanding 33,858 165,901
========== ==========
</TABLE>
See accompanying notes to financial statements
8
<PAGE> 9
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
General Limited Limited Total
Partner's Partners' Partners' Partners'
Equity Equity Equity Equity
--------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1998* $ - $ 1,862,992 $ 7,534,474 $ 9,397,466
Distibutions to partners - (1,059,342) (1,568,750) (2,628,092)
Net loss (3,305) (75,326) (251,864) (330,495)
Allocation of General
Partner's Equity 3,305 (761) (2,544) -
--------- ------------ ------------ ------------
Balance, September 30, 1999 $ - $ 727,563 $ 5,711,316 $ 6,438,879
========= ============ ============ ============
</TABLE>
* Balances are net of $75,645 and $681,012 of General Partner's equity
previously allocated to Liquidating and Continuing Limited Partners' Equity.
See accompanying notes to financial statements
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (76,087) $ (254,408) $ (330,495)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (11,198) (195,871) (207,069)
Credit for loss on
commercial lease paper (719) (7,592) (8,311)
Changes in assets and liabilities:
Judgment receivable, net 22,590 110,684 133,274
Accounts payable and
accrued expenses (6,053) (36,326) (42,379)
Lessee rental deposits (10,020) (53,199) (63,219)
----------- ----------- -----------
(81,487) (436,712) (518,199)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 11,198 873,346 884,544
Repayments of commercial lease paper 719 7,592 8,311
----------- ----------- -----------
11,917 880,938 892,855
----------- ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners (1,059,342) (1,568,750) (2,628,092)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (1,128,912) (1,124,524) (2,253,436)
Cash and cash equivalents:
Beginning of year 1,476,467 4,489,249 5,965,716
----------- ----------- -----------
End of third quarter $ 347,555 $ 3,364,725 $ 3,712,280
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
10
<PAGE> 11
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (181,480) $ (852,222) $(1,033,702)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (6,695) (32,801) (39,496)
Changes in assets and liabilities:
Accounts payable and
accrued expenses (692) (4,792) (5,484)
Lessee rental deposits (8,964) (87,834) (96,798)
----------- ----------- -----------
(197,831) (977,649) (1,175,480)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 6,695 1,459,422 1,466,117
Repayments of commercial lease
paper 1,855 19,601 21,456
----------- ----------- -----------
8,550 1,479,023 1,487,573
----------- ----------- -----------
Cash flows from financing activities:
Distributions to limited partners - (500,000) (500,000)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (189,281) 1,374 (187,907)
Cash and cash equivalents:
Beginning of year 1,199,924 1,874,453 3,074,377
----------- ----------- -----------
End of third quarter $ 1,010,643 $ 1,875,827 $ 2,886,470
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
11
<PAGE> 12
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
---------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 1999
------------------
(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 1998 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 1998 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
1998 Form 10-K.
NOTE 3 - LIMITED PARTNERSHIP DISTRIBUTIONS:
- -------------------------------------------
In early April 1999, the Partnership made a cash distribution to Limited
Partners who were owners of record on December 31, 1998. This distribution
consisted of two components: (i) the net proceeds from the Price Waterhouse and
Weiss & Company legal actions ($97,000 and $476,000 for Liquidating and
Continuing Limited Partners, respectively), and (ii) residual cash resulting
from the net cash flows of the Partnership ($962,000 and $1,093,000 for
Liquidating and Continuing Limited Partners, respectively). The portion of the
distribution attributable to legal action proceeds was allocated to each Limited
Partner based on the number of units held at the rate of $2.87 per unit. See
Note 8 to the Partnership's financial statements included in the 1998 Form 10-K.
Pursuant to the Partnership Agreement, residual cash was allocated to each
Limited Partner based on their proportionate share of total partners' capital
attributable to their Class.
12
<PAGE> 13
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, 1998
through September 30, 1999. The discussion and analysis of results of operations
is for the three and nine month periods ended September 30, 1999 as compared to
the corresponding periods in 1998. Any capitalized term not defined herein has
been defined or discussed in the Partnership's 1998 Form 10-K.
Liquidity and Capital Resources
- -------------------------------
During the nine months ended September 30, 1999, Partnership assets continued to
be converted to cash in order to pay Partnership operating expenses and provide
for the ultimate liquidation of the Partnership. During this period, the
Partnership's cash and cash equivalents decreased by $2,253,000 to $3,712,000 at
September 30, 1999 from $5,966,000 at December 31, 1998. This decrease is
primarily due to distributions paid to Limited Partners of $2,628,000 (see
below) and by cash used in operations of $518,000, partially offset by cash
receipts from collections on leases of $885,000 and from commercial lease paper
of $8,000.
In early April 1999, the Partnership made a cash distribution to Limited
Partners who were owners of record on December 31, 1998. This distribution
consisted of two components: (i) the net proceeds from the Price Waterhouse and
Weiss & Company legal actions ($97,000 and $476,000 for Liquidating and
Continuing Limited Partners respectively), and (ii) residual cash resulting from
the net cash flows of the Partnership ($962,000 and $1,093,000 for Liquidating
and Continuing Limited Partners respectively). The portion of the distribution
attributable to legal action proceeds was allocated to each Limited Partner
based on the number of units held at the rate of $2.87 per unit. See Note 8 to
the Partnership's financial statements included in the 1998 Form 10-K. Pursuant
to the Partnership Agreement, residual cash was allocated to each Limited
Partner based on their proportionate share of total partners' capital
attributable to their Class.
The Partnership's sources of future liquidity are expected to come from
cash-on-hand, cash receipts from leases owned by the Partnership and the
disposition of the remaining Diverted Assets (consisting primarily of an office
building in Schaumburg, Illinois). The lease portfolio is scheduled to be fully
liquidated by December 2000. The general partner expects that the building will
be sold sometime during 2000. The proceeds will be included in the next
distribution to the Limited Partners sometime during 2000. After all assets are
disposed of and the proceeds distributed to the Limited Partners, the
13
<PAGE> 14
Partnership will be required to file final reports with the Securities and
Exchange Commission and the Internal Revenue Service. The general partner
expects this to occur sometime during the year 2001.
Results of Operations
- ---------------------
The Partnership had net losses of $150,000 and $330,000 for the three and nine
months ended September 30, 1999 in the aggregate for all classes of partners.
This compares to aggregate net losses of $180,000 and $1,034,000 for the three
and nine months ended September 30, 1998. Differences in operating results
between Liquidating and Continuing Limited Partners are attributable to lease
income 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 and nine month periods ended September 30, 1999 and 1998
include the following:
Lease income:
Since August 1996, the Partnership has been in its Liquidating Phase which
prohibits investing in any new leases. Accordingly, the lease portfolio has
continued to decrease as collections are made, resulting in a continued decline
in lease income. This trend will continue as the Partnership liquidates its
remaining leases.
Interest income:
Interest income includes earnings on invested cash balances. Interest income for
1999 was higher than 1998 because of higher average invested cash balances.
General Partner's expense reimbursement:
General Partner's expense reimbursement includes payments to LRC for expenses it
incurred as general partner. These expenses include expenses incurred by LRC in
its management of the day-to-day operations of the Partnership.
Professional fees:
Professional fees for the three and nine months ended September 30, 1999 reflect
a decreasing level of professional services required as a result of the decrease
in the Partnership's lease portfolio and related activities. Included in the
1998 amount are fees paid in connection with the litigation against the
Partnership's former accountants.
Credits for lease losses and commercial lease paper:
These credits reflect recoveries of previously reserved amounts.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------------------------------------------------------------------
The information called for in this disclosure is not applicable to the
Registrant.
14
<PAGE> 15
PART II - OTHER INFORMATION
- ---------------------------
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
Reference is made to Item 3 - Legal Proceedings in the Partnership's December
31, 1998 Form 10-K for a discussion of material legal proceedings involving the
Partnership.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
- --------------------------------------------------
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- -----------------------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
None.
ITEM 5. OTHER INFORMATION
- --------------------------
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
- -------------
See Exhibit Index.
- ------------------
(b) Reports on Form 8-K
- ------------------------
None.
15
<PAGE> 16
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 4th day of November 1999.
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.
16
<PAGE> 17
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.
17
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,712,280
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,585,019
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,438,879
<TOTAL-LIABILITY-AND-EQUITY> 6,585,019
<SALES> 0
<TOTAL-REVENUES> 304,675
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 28,211
<LOSS-PROVISION> (207,069)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (330,495)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
