<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, 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 SEPTEMBER 30, 2000
PART I - FINANCIAL INFORMATION
Item 1.
Index to Financial Statements
Balance Sheets
September 30, 2000 (unaudited) 3
December 31, 1999 4
Statements of Revenue and Expenses (unaudited)
For the three months ended September 30, 2000 5
For the three months ended September 30, 1999 6
For the nine months ended September 30, 2000 7
For the nine months ended September 30, 1999 8
Statements of Changes in Partners' Equity
For the nine months ended September 30, 2000
(unaudited) 9
Statements of Cash Flows (unaudited)
For the nine months ended September 30, 2000 10
For the nine months ended September 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
2
<PAGE> 3
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
BALANCE SHEETS
September 30, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ---------- ----------
ASSETS
Cash and cash equivalents $ 121,245 $ 1,544,816 $ 1,666,061
Net investment in direct financing
leases - 29,209 29,209
Diverted and other assets, net 262,119 1,284,305 1,546,424
Datronic assets, net - - -
--------- ----------- -----------
$ 383,364 $ 2,858,330 $ 3,241,694
========= =========== ===========
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued
expenses $ 1,512 $ 24,145 $ 25,657
Lessee rental deposits 10,010 49,044 59,054
--------- ----------- -----------
Total liabilities 11,522 73,189 84,711
Total partners' equity 371,842 2,785,141 3,156,983
--------- ----------- -----------
$ 383,364 $ 2,858,330 $ 3,241,694
========= =========== ===========
See accompanying notes to financial statements
3
<PAGE> 4
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
BALANCE SHEETS
December 31, 1999
Liquidating Continuing
Limited Limited
Partners Partners Total
------------ ----------- ---------
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
========= =========== ===========
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, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ---------
Revenue:
Lease income $ 906 $ 11,962 $ 12,868
Interest income 398 26,889 27,287
--------- ---------- ---------
1,304 38,851 40,155
--------- ---------- ---------
Expenses:
General Partner's expense
reimbursement 30,226 148,100 178,326
Professional fees 2,381 15,306 17,687
Other operating expenses 702 3,439 4,141
Provision (credit) for lease losses (303) 16,425 16,122
--------- ---------- ---------
33,006 183,270 216,276
--------- ---------- ---------
Net loss $ (31,702) $ (144,419) $(176,121)
========= ========== =========
Net loss - General Partner $ (317) $ (1,444) $ (1,761)
========= ========== =========
Net loss - Limited Partners $ (31,385) $ (142,975) $(174,360)
========= ========== =========
Net loss per limited
partnership unit $ (0.93) $ (0.86)
========= ==========
Weighted average number of limited
partnership units outstanding 33,858 165,901
========= ==========
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, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ---------
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
========= ==========
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, 2000
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ---------- ---------
Revenue:
Lease income $ 5,380 $ 59,879 $ 65,259
Interest income 6,130 110,085 116,215
---------- ---------- ----------
11,510 169,964 181,474
---------- ---------- ----------
Expenses:
General Partner's expense
reimbursement 167,550 820,389 987,939
Professional fees 10,329 78,558 88,887
Other operating expenses 5,968 30,186 36,154
Credit for lease losses (5,850) (47,755) (53,605)
---------- ---------- ----------
177,997 881,378 1,059,375
---------- ---------- ----------
Net loss $ (166,487) $ (711,414) $ (877,901)
========== ========== ==========
Net loss - General Partner $ (1,665) $ (7,114) $ (8,779)
========== ========== ==========
Net loss - Limited Partners $ (164,822) $ (704,300) $ (869,122)
========== ========== ==========
Net loss per limited
partnership unit $ (4.87) $ (4.25)
========== ==========
Weighted average number of limited
partnership units outstanding 33,858 165,901
========== ==========
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, 1999
(Unaudited)
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- ----------
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
========= =========
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, 1999* $ -- $ 678,752 $ 5,519,714 $ 6,198,466
Distributions to partners -- (140,423) (2,023,159) (2,163,582)
Net loss (8,779) (164,822) (704,300) (877,901)
Allocation of General
Partner's Equity 8,779 (1,665) (7,114) --
----------- ----------- ----------- -----------
Balance, September 30, 2000 $ -- $ 371,842 $ 2,785,141 $ 3,156,983
=========== =========== =========== ===========
</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 nine months ended September 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Liquidating Continuing
Limited Limited
Partners Partners Total
----------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (166,487) $ (711,414) $ (877,901)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Credit for lease losses (5,850) (47,755) (53,605)
Changes in assets and liabilities:
Accounts payable and
accrued expenses (717) 1,982 1,265
Lessee rental deposits (4,162) (20,395) (24,557)
----------- ----------- -----------
(177,216) (777,582) (954,798)
----------- ----------- -----------
Cash flows from investing activities:
Principal collections on leases 5,850 410,130 415,980
Distribution of Diverted and
other assets 140,427 688,053 828,480
----------- ----------- -----------
146,277 1,098,183 1,244,460
----------- ----------- -----------
Cash flows from financing activities:
Distributions to Limited Partners (140,423) (2,023,159) (2,163,582)
----------- ----------- -----------
Net decrease in cash and
cash equivalents (171,362) (1,702,558) (1,873,920)
Cash and cash equivalents:
Beginning of year 292,607 3,247,374 3,539,981
----------- ----------- -----------
End of third quarter $ 121,245 $ 1,544,816 $ 1,666,061
=========== =========== ===========
</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, 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>
11
<PAGE> 12
DATRONIC EQUIPMENT INCOME FUND XIX, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
NOTE 1 - 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.
NOTE 2 - LITIGATION
In connection with the 1992 Ventre class action, the United States District
Court for the Northern District of Illinois entered an order on September 27,
2000 finding that Edmund J. Lopinski, Jr. had caused the Datronic Partnerships
to sustain losses of $20.0 million. Against this amount, the Court offset $10.9
million that has already been realized on behalf of the Partnerships through the
sale of Diverted and Other Assets and insurance settlements. The Court also
found that Lopinski is entitled to offset the remaining $9.1 million loss with
the proceeds previously received from the other defendants in the Ventre action
and the appraised value of the Schaumburg office building. Proceeds received
from the other defendants totaled $4.9 million, leaving $4.2 million to be
recovered from the building. During the third quarter 2000, the General Partner
received appraisals for the building indicating that its value substantially
exceeds this amount. Accordingly, the losses assessed against Lopinski have been
fully mitigated.
With this ruling, the Ventre, et al v. Datronic Rental Corp., et al class action
is closed.
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 September 30, 2000. The discussion and analysis of results of operations
is for the three and nine month periods ended September 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 nine months ended September 30, 2000, the Partnership continued to
liquidate its assets and use its cash to pay Partnership operating expenses, pay
a distribution to Limited Partners and provide for the ultimate liquidation of
the Partnership. During this period, the Partnership's cash and cash equivalents
decreased by $1,874,000 to $1,666,000 at September 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
$955,000, partially offset by cash receipts from collections on leases of
$416,000 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 principal sources of future liquidity are expected to come
from cash-on-hand and proceeds from the sale of the remaining Diverted Assets
(consisting of cash and an office building in Schaumburg, Illinois). In
addition, nominal cash is expected to be received from the remaining scheduled
lease portfolio and from delinquent lessees under payment plan arrangements. The
general partner expects that the building will be sold during the first quarter
of 2001 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%. An appraisal received during the third quarter 2000 indicates
that the building's value has increased substantially over its book value.
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 $176,000 and $878,000 for the three and nine
months ended September 30, 2000 in the aggregate for all classes of partners.
This compares to net losses of $150,000 and $330,000 for the three and nine
months ended September 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 nine month periods ended September 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 for
2000 was less than 1999 because of lower average invested cash balances,
partially offset by an increase in interest rates.
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.
14
<PAGE> 15
Professional fees:
Professional fees for the nine months ended September 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.
Provision (credits) for lease losses and commercial lease paper:
This provision reflects Management's ongoing assessment of the potential losses
inherent in the lease portfolio and commercial lease paper partially offset by
collections in excess of previously reserved balances.
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 November 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
-------------
EXHIBIT NO. DESCRIPTION
----------- -----------
27 Financial Data Schedule, which is
submitted electronically to the
Securities and Exchange Commission
for information only and not filed.
18
