10-Q 1 e10-q.txt QUARTERLY REPORT 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 --- --- 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 Balance Sheets 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

2 3 DATRONIC EQUIPMENT INCOME FUND XIX, L.P. BALANCE SHEETS June 30, 2000 (Unaudited)

See accompanying notes to financial statements. 3 4 DATRONIC EQUIPMENT INCOME FUND XIX, L.P. BALANCE SHEETS December 31, 1999

See accompanying notes to financial statements. 4 5 DATRONIC EQUIPMENT INCOME FUND XIX, L.P. STATEMENTS OF REVENUE AND EXPENSES For the three months ended June 30, 2000 (Unaudited)

See accompanying notes to financial statements. 5 6 DATRONIC EQUIPMENT INCOME FUND XIX, L.P. STATEMENTS OF REVENUE AND EXPENSES For the three months ended June 30, 1999 (Unaudited)

See accompanying notes to financial statements. 6 7 DATRONIC EQUIPMENT INCOME FUND XIX, L.P. STATEMENTS OF REVENUE AND EXPENSES For the six months ended June 30, 2000 (Unaudited)

See accompanying notes to financial statements. 7 8 DATRONIC EQUIPMENT INCOME FUND XIX, L.P. STATEMENTS OF REVENUE AND EXPENSES For the six months ended June 30, 1999 (Unaudited)

See accompanying notes to financial statements. 8 9 DATRONIC EQUIPMENT INCOME FUND XIX, L.P. STATEMENTS OF CHANGES IN PARTNERS' EQUITY (Unaudited)

* 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 10 DATRONIC EQUIPMENT INCOME FUND XIX, L.P. STATEMENTS OF CASH FLOWS For the six months ended June 30, 2000 (Unaudited)

See accompanying notes to financial statements. 10 11 DATRONIC EQUIPMENT INCOME FUND XIX, L.P. STATEMENTS OF CASH FLOWS For the six months ended June 30, 1999 (Unaudited)

See accompanying notes to financial statements. 11 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 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 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 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 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 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 18 EXHIBIT INDEX

DATRONIC EQUIPMENT INCOME FUND XIX L P 10-Q