<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, 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 MARCH 31, 1999
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
March 31, 1999 (unaudited) 3
December 31, 1998 4
Statements of Revenue and Expenses (unaudited)
For the three months ended March 31, 1999 5
For the three months ended March 31, 1998 6
Statements of Changes in Partners' Equity
For the three months ended March 31, 1999
(unaudited) 7
Statements of Cash Flows (unaudited)
For the three months ended March 31, 1999 8
For the three months ended March 31, 1998 9
Notes to Financial Statements (unaudited) 10
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 12
PART II - OTHER INFORMATION
Items 1-6. 13
</TABLE>
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
BALANCE SHEETS
March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 1,462,611 $ 4,717,629 $ 6,180,240
Investments in commercial lease
paper, net -- -- --
Net investment in direct financing
leases -- 935,051 935,051
Diverted and other assets, net 402,546 1,972,358 2,374,904
Datronic assets, net -- -- --
------------ ------------ ------------
$ 1,865,157 $ 7,625,038 $ 9,490,195
============ ============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 6,066 $ 49,714 $ 55,780
Lessee rental deposits 26,852 135,227 162,079
------------ ------------ ------------
Total liabilities 32,918 184,941 217,859
Total partners' equity 1,832,239 7,440,097 9,272,336
------------ ------------ ------------
$ 1,865,157 $ 7,625,038 $ 9,490,195
============ ============ ============
</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 March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Lease income $ 1,777 $ 68,953 $ 70,730
Interest income 9,471 56,338 65,809
------------ ------------ ------------
11,248 125,291 136,539
------------ ------------ ------------
Expenses:
General Partner's expense
reimbursement 36,069 232,957 269,026
Professional fees 7,593 47,065 54,658
Other operating expenses 494 2,920 3,414
Credit for lease losses (1,676) (58,212) (59,888)
Credit for loss on
commercial lease paper (479) (5,062) (5,541)
------------ ------------ ------------
42,001 219,668 261,669
------------ ------------ ------------
Net loss $ (30,753) $ (94,377) $ (125,130)
============ ============ ============
Net loss - General Partner $ (307) $ (944) $ (1,251)
============ ============ ============
Net loss - Limited Partners $ (30,446) $ (93,433) $ (123,879)
============ ============ ============
Net loss per limited
partnership unit $ (0.90) $ (0.56)
============ ============
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, 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
6
<PAGE> 7
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
Net loss (1,251) (30,446) (93,433) (125,130)
Allocation of General
Partner's Equity 1,251 (307) (944) --
------------ ------------ ------------ ------------
Balance, March 31, 1999 $ -- $ 1,832,239 $ 7,440,097 $ 9,272,336
============ ============ ============ ============
</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
7
<PAGE> 8
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (30,753) $ (94,377) $ (125,130)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (1,676) (58,212) (59,888)
Credit for loss on
commercial lease paper (479) (5,062) (5,541)
Changes in assets and liabilities:
Judgment receivable, net 22,590 110,684 133,274
Accounts payable and
accrued expenses (2,454) (11,874) (14,328)
Lessee rental deposits (3,239) (16,312) (19,551)
------------ ------------ ------------
(16,011) (75,153) (91,164)
------------ ------------ ------------
Cash flows from investing activities:
Principal collections on leases 1,676 298,471 300,147
Repayments of commercial lease paper 479 5,062 5,541
------------ ------------ ------------
2,155 303,533 305,688
------------ ------------ ------------
Net increase (decrease) in cash and
cash equivalents (13,856) 228,380 214,524
Cash and cash equivalents:
Beginning of year 1,476,467 4,489,249 5,965,716
------------ ------------ ------------
End of first quarter $ 1,462,611 $ 4,717,629 $ 6,180,240
============ ============ ============
</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, 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
9
<PAGE> 10
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 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.
10
<PAGE> 11
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of liquidity and capital resources covers
material changes in the Partnership's financial condition from December 31, 1998
through March 31, 1999. The discussion and analysis of results of operations is
for the three month period ended March 31, 1999 as compared to the corresponding
period 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 three months ended March 31, 1999, Partnership assets continued to be
converted to cash in order to pay Partnership operating expenses and for the
ultimate liquidation of the Partnership. During the three months ended March 31,
1999, the Partnership's cash and cash equivalents increased by $214,000 to
$6,180,000 at March 31, 1999 from $5,966,000 at December 31, 1998. This increase
is primarily due to cash receipts from collections on leases of $300,000 and
from commercial lease paper of $6,000 partially offset by the use of cash in
operations of $91,000.
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
remaining cash-on-hand after the April 1999 distribution, the cash receipts from
leases owned by the Partnership as well as the disposition of 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 the Diverted Assets to be converted to cash during 1999 thereby
enabling the Partnership to pay an additional distribution in early 2000. After
all assets are disposed of and the proceeds are distributed to the limited
partners, the Partnership will be required
11
<PAGE> 12
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 a net loss of $125,000 for the three months ended March 31,
1999 in the aggregate for all classes of partners. This compares to an aggregate
net loss of $363,000 for the three months ended March 31, 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 periods ended March 31, 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 in excess of those covered by its partner
distributions. 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 months ended March 31, 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.
12
<PAGE> 13
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
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.
13
<PAGE> 14
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 10th day of May 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.
<PAGE> 15
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>
<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>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 6,180,240
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,490,195
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,272,336
<TOTAL-LIABILITY-AND-EQUITY> 9,490,195
<SALES> 0
<TOTAL-REVENUES> 136,539
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,414
<LOSS-PROVISION> (65,429)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (125,130)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
