<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
June 30, 2000 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 JUNE 30, 2000
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
<TABLE>
Balance Sheets
<S> <C>
June 30, 2000 (unaudited) 3
December 31, 1999 4
Statements of Revenue and Expenses (unaudited)
For the three months ended June 30, 2000 5
For the three months ended June 30, 1999 6
For the six months ended June 30, 2000 7
For the six months ended June 30, 1999 8
Statements of Changes in Partners' Equity
For the six months ended June 30, 2000
(unaudited) 9
Statements of Cash Flows (unaudited)
For the six months ended June 30, 2000 10
For the six months ended June 30, 1999 11
Notes to Financial Statements (unaudited) 12
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 13 - 15
Item 3.
Quantitative and Qualitative Disclosures about
Market Risk 15
PART II - OTHER INFORMATION
Items 1-6. 16
</TABLE>
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
BALANCE SHEETS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 155,357 $ 1,588,342 $ 1,743,699
Investments in commercial lease
paper, net -- -- --
Net investment in direct financing
leases -- 141,497 141,497
Diverted and other assets, net 262,119 1,284,305 1,546,424
Datronic assets, net -- -- --
-------------- -------------- --------------
$ 417,476 $ 3,014,144 $ 3,431,620
============== ============== ==============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 1,664 $ 24,472 $ 26,136
Lessee rental deposits 12,268 60,112 72,380
-------------- -------------- --------------
Total liabilities 13,932 84,584 98,516
Total partners' equity 403,544 2,929,560 3,333,104
-------------- -------------- --------------
$ 417,476 $ 3,014,144 $ 3,431,620
============== ============== ==============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
BALANCE SHEETS
December 31, 1999
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 292,607 $ 3,247,374 $ 3,539,981
Investments in commercial lease
paper, net -- -- --
Net investment in direct financing
leases -- 391,584 391,584
Diverted and other assets, net 402,546 1,972,358 2,374,904
Datronic assets, net -- -- --
-------------- -------------- --------------
$ 695,153 $ 5,611,316 $ 6,306,469
============== ============== ==============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 2,229 $ 22,163 $ 24,392
Lessee rental deposits 14,172 69,439 83,611
-------------- -------------- --------------
Total liabilities 16,401 91,602 108,003
Total partners' equity 678,752 5,519,714 6,198,466
-------------- -------------- --------------
$ 695,153 $ 5,611,316 $ 6,306,469
============== ============== ==============
</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 June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Lease income $ 1,380 $ 13,244 $ 14,624
Interest income 3,439 47,378 50,817
------------ ------------ ------------
4,819 60,622 65,441
------------ ------------ ------------
Expenses:
General Partner's expense
reimbursement 43,800 202,093 245,893
Professional fees 4,011 22,510 26,521
Other operating expenses 3,808 18,709 22,517
Credit for lease losses (1,357) (30,649) (32,006)
------------ ------------ ------------
50,262 212,663 262,925
------------ ------------ ------------
Net loss $ (45,443) $ (152,041) $ (197,484)
============ ============ ============
Net loss - General Partner $ (455) $ (1,520) $ (1,975)
============ ============ ============
Net loss - Limited Partners $ (44,988) $ (150,521) $ (195,509)
============ ============ ============
Net loss per limited
partnership unit $ (1.33) $ (0.91)
============ ============
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 June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Lease income $ 5,240 $ 58,642 $ 63,882
Interest income 4,636 36,597 41,233
------------ ------------ ------------
9,876 95,239 105,115
------------ ------------ ------------
Expenses:
General Partner's expense
reimbursement 26,202 172,058 198,260
Professional fees 5,482 42,340 47,822
Other operating expenses 2,753 13,597 16,350
Credit for lease losses (8,096) (90,668) (98,764)
Credit for loss on
commercial lease paper (240) (2,530) (2,770)
------------ ------------ ------------
26,101 134,797 160,898
------------ ------------ ------------
Net loss $ (16,225) $ (39,558) $ (55,783)
============ ============ ============
Net loss - General Partner $ (162) $ (396) $ (558)
============ ============ ============
Net loss - Limited Partners $ (16,063) $ (39,162) $ (55,225)
============ ============ ============
Net loss per limited
partnership unit $ (0.47) $ (0.24)
============ ============
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 six months ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Lease income $ 4,474 $ 47,917 $ 52,391
Interest income 5,732 83,196 88,928
------------ ------------ ------------
10,206 131,113 141,319
------------ ------------ ------------
Expenses:
General Partner's expense
reimbursement 137,324 672,289 809,613
Professional fees 7,948 63,252 71,200
Other operating expenses 5,266 26,747 32,013
Credit for lease losses (5,547) (64,180) (69,727)
------------ ------------ ------------
144,991 698,108 843,099
------------ ------------ ------------
Net loss $ (134,785) $ (566,995) $ (701,780)
============ ============ ============
Net loss - General Partner $ (1,348) $ (5,670) $ (7,018)
============ ============ ============
Net loss - Limited Partners $ (133,437) $ (561,325) $ (694,762)
============ ============ ============
Net loss per limited
partnership unit $ (3.94) $ (3.38)
============ ============
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 six months ended June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Lease income $ 7,017 $ 127,595 $ 134,612
Interest income 14,107 92,935 107,042
------------ ------------ ------------
21,124 220,530 241,654
------------ ------------ ------------
Expenses:
General Partner's expense
reimbursement 62,271 405,015 467,286
Professional fees 13,075 89,405 102,480
Other operating expenses 3,247 16,517 19,764
Credit for lease losses (9,772) (148,880) (158,652)
Credit for loss on
commercial lease paper (719) (7,592) (8,311)
------------ ------------ ------------
68,102 354,465 422,567
------------ ------------ ------------
Net loss $ (46,978) $ (133,935) $ (180,913)
============ ============ ============
Net loss - General Partner $ (470) $ (1,339) $ (1,809)
============ ============ ============
Net loss - Limited Partners $ (46,508) $ (132,596) $ (179,104)
============ ============ ============
Net loss per limited
partnership unit $ (1.37) $ (0.80)
============ ============
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 Partner's Partners' Partners'
Equity Equity Equity Equity
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1999* $ -- $ 678,752 $ 5,519,714 $ 6,198,466
Distributions to partners -- (140,423) (2,023,159) (2,163,582)
Net loss (7,018) (133,437) (561,325) (701,780)
Allocation of General
Partner's Equity 7,018 (1,348) (5,670) --
------------ ------------ ------------ ------------
Balance, June 30, 2000 $ -- $ 403,544 $ 2,929,560 $ 3,333,104
============ ============ ============ ============
</TABLE>
* Balances are net of $76,894 and $685,472 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 six months ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
--------------- --------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (134,785) $ (566,995) $ (701,780)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (5,547) (64,180) (69,727)
Changes in assets and liabilities:
Accounts payable and
accrued expenses (565) 2,309 1,744
Lessee rental deposits (1,904) (9,327) (11,231)
--------------- --------------- ---------------
(142,801) (638,193) (780,994)
--------------- --------------- ---------------
Cash flows from investing activities:
Principal collections on leases 5,547 314,267 319,814
Distribution of Diverted and
other assets 140,427 688,053 828,480
--------------- --------------- ---------------
145,974 1,002,320 1,148,294
--------------- --------------- ---------------
Cash flows from financing activities:
Distributions to Limited Partners (140,423) (2,023,159) (2,163,582)
--------------- --------------- ---------------
Net decrease in cash and
cash equivalents (137,250) (1,659,032) (1,796,282)
Cash and cash equivalents:
Beginning of year 292,607 3,247,374 3,539,981
--------------- --------------- ---------------
End of second quarter $ 155,357 $ 1,588,342 $ 1,743,699
=============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 11
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (46,978) $ (133,935) $ (180,913)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (9,772) (148,880) (158,652)
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 (6,123) (37,649) (43,772)
Lessee rental deposits (9,130) (48,834) (57,964)
------------- ------------- -------------
(50,132) (266,206) (316,338)
------------- ------------- -------------
Cash flows from investing activities:
Principal collections on leases 9,772 631,629 641,401
Repayments of commercial lease paper 719 7,592 8,311
------------- ------------- -------------
10,491 639,221 649,712
------------- ------------- -------------
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 (1,098,983) (1,195,735) (2,294,718)
Cash and cash equivalents:
Beginning of year 1,476,467 4,489,249 5,965,716
------------- ------------- -------------
End of second quarter $ 377,484 $ 3,293,514 $ 3,670,998
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 12
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(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 1999 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 1999 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
1999 Form 10-K.
NOTE 3 - LIMITED PARTNERSHIP DISTRIBUTIONS:
During June 2000, the Partnership made a cash distribution to Limited Partners
who were owners of record on March 31, 2000. This distribution was made from
residual cash, which is cash available for distribution after satisfying current
Partnership liabilities and setting aside reserves against potential future
Partnership liabilities. The total distribution paid to Continuing and
Liquidating Limited Partners was $2,023,000 and $140,000, respectively. Pursuant
to the Partnership Agreement, these amounts were allocated among the Limited
Partners based on each partner's 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, 1999
through June 30, 2000. The discussion and analysis of results of operations is
for the three and six month periods ended June 30, 2000 as compared to the
corresponding periods in 1999. Any capitalized term not defined herein has been
defined or discussed in the Partnership's 1999 Form 10-K.
Liquidity and Capital Resources
During the six months ended June 30, 2000, 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 $1,796,000 to $1,744,000 at
June 30, 2000 from $3,540,000 at December 31, 1999. This decrease is primarily
due to a distribution paid to Limited Partners of $2,163,000 (see below) and by
cash used in operations of $781,000, partially offset by cash receipts from
collections on leases of $320,000 and $828,000 from a distribution of Diverted
and other assets.
During June 2000, the Partnership made a cash distribution to Limited Partners
who were owners of record on March 31, 2000. This distribution was made from
residual cash, which is cash available for distribution after satisfying current
Partnership liabilities and setting aside reserves against potential future
Partnership liabilities. The total distribution paid to Continuing and
Liquidating Limited Partners was $2,023,000 and $140,000, respectively. Pursuant
to the Partnership Agreement, these amounts were allocated among the Limited
Partners based on each partner's 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
proceeds from the sale of the remaining Diverted Assets (consisting of cash and
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 during 2000 and the proceeds included in a subsequent
distribution to Limited Partners.
13
<PAGE> 14
The Partnership's interest in the Schaumburg office building is carried on its
books at $1.5 million (see Note 5 to the Partnership's financial statements
included in the 1999 Form 10-K). At March 1993, the date LRC was appointed
general partner, the building was approximately 40% occupied. Since then,
occupancy has increased to more than 80% and the base rental rates have
increased by 75%. Accordingly, the general partner believes that the value of
the building has increased and that this value will be realized when the
building is sold. The amount to be realized from the sale of the building,
however, cannot be determined until it is sold.
After all assets are disposed of and the proceeds distributed to the Limited
Partners, the 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 2001.
Results of Operations
The Partnership had net losses of $197,000 and $702,000 for the three and six
months ended June 30, 2000 in the aggregate for all classes of partners. This
compares to net losses of $56,000 and $181,000 for the three and six months
ended June 30, 1999. Differences in operating results between Liquidating and
Continuing Limited Partners are attributable to lease income and expenses
associated with 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 six month periods ended June 30, 2000 and 1999 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
decreased for the six month period ended June 30, 2000 and increased for the
three month period ended June 30, 2000 as compared to the corresponding periods
in 1999. The decrease for the six months resulted from lower average invested
cash balances, partially offset by an increase in interest rates. The increase
for the three months resulted from higher average invested cash balances because
of the Diverted Asset proceeds received in mid-March, as well as an increase in
interest rates.
14
<PAGE> 15
General Partner's expense reimbursement:
General Partner's expense reimbursement includes payments to LRC for expenses it
incurred as general partner. These expenses represent expenses incurred by LRC
in its management of the day-to-day operations of the Partnership. Included in
the first quarter 2000 expense are $302,000 of insurance premiums associated
with the final wrap up of Partnership affairs and its ultimate liquidation and
dissolution.
Professional fees:
Professional fees for the six months ended June 30, 2000 reflect a decreasing
level of professional services required as a result of the decrease in the
Partnership's lease portfolio and related activities.
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.
15
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3 - Legal Proceedings in the Partnership's December
31, 1999 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.
16
<PAGE> 17
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 14th day of August 2000.
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/JEFFREY T. MCREYNOLDS
------------------------
Jeffrey T. McReynolds
Vice President and Chief Financial Officer,
Lease Resolution Corporation
General Partner of
Datronic Equipment Income Fund XIX, L.P.
17
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule, which is submitted electronically to
the Securities and Exchange Commission for information only and
not filed.
</TABLE>
