SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549-1004
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1996
Commission File Number 0-19021
Cypress Equipment Fund, Ltd.
(Exact name of Registrant as specified in its charter)
Florida 59-2927387
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
880 Carillon Parkway, St. Petersburg, Florida 33716
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (813) 573-3800
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.
YES X NO
Number of Units at
Title of Each Class September 30, 1996
Units of Limited Partnership
Interest: $1,000 per unit 24,054
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II, 1995 Form 10-K, filed with the
Securities and Exchange Commission of June 4, 1996
Parts III and IV - Form S-1 Registration Statement
and all amendments and supplements thereto
File No. 33-27741<PAGE>
PART I - Financial Information
Item 1. Financial Statements
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
BALANCE SHEETS
September 30, December 31,
1996 1995
------------ ------------
ASSETS (Unaudited) (Audited)
Leased Equipment, at Cost $ 16,676,555 $ 19,418,955
Less: Accumulated Depreciation (9,889,060) (10,208,588)
------------ ------------
6,787,495 9,210,367
Equipment Held for Sale 1,400,931 1,579,963
Rent Receivable 827,617 438,358
Prepaid Expenses 9,420 0
Deferred Debt Costs (Net of
Accumulated Amortization of
$131,133 and $121,662,
Respectively) 3,766 10,237
Cash and Cash Equivalents 1,342,454 828,343
------------ ------------
Total Assets $ 10,371,683 $ 12,067,268
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Interest Payable $ 51,936 $ 43,082
Payable to: General Partners 243,174 69,587
Others 0 101,589
Notes Payable 1,373,677 2,647,239
Unearned Revenue 0 43,687
------------ ------------
Total Liabilities 1,668,787 2,905,184
------------ ------------
Partners' Equity:
Limited Partners (24,054 units
outstanding at September 30, 1996,
and December 31, 1995) 8,825,558 9,280,155
General Partners (122,662) (118,071)
------------ ------------
Total Partners' Equity 8,702,896 9,162,084
------------ ------------
Total Liabilities and
Partners' Equity $ 10,371,683 $ 12,067,268
============ ============
The accompanying notes are an integral part
of these financial statements.<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
------------ ------------
Revenues:
Rental Income $ 2,424,476 $ 3,641,217
Interest Income 52,836 88,047
Gain on Sale of Equipment 1,111,023 1,712,021
------------ ------------
Total Revenues 3,588,335 5,441,285
------------ ------------
Operating Expenses:
Loss on Sale of Equipment
Held for Sale 14,713 0
Management Fees - General Partners 100,792 124,606
Incentive Fees - General Partners 103,074 37,150
Resale Fees - General Partner 210,000 0
General and Administrative:
Affiliates 36,025 33,655
Other 107,865 136,588
Interest Expense 121,754 286,290
Depreciation and Amortization 1,026,679 1,825,975
------------ ------------
Total Operating Expenses 1,720,902 2,444,264
------------ ------------
Net Income $ 1,867,433 $ 2,997,021
============ ============
Allocation of Net Income:
Limited Partners $ 1,848,759 $ 2,967,051
General Partners 18,674 29,970
------------ ------------
$ 1,867,433 $ 2,997,021
============ ============
Net Income Per $1,000 Limited
Partnership Unit $ 76.86 $ 123.35
============ ============
Number of Limited Partnership Units 24,054 24,054
============ ============
The accompanying notes are an integral part
of these financial statements.<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1996 1995
------------ ------------
Revenues:
Rental Income $ 844,298 $ 919,022
Interest Income 22,017 35,292
Gain on Sale of Equipment 0 1,535,296
------------ ------------
Total Revenues 866,315 2,489,610
------------ ------------
Operating Expenses:
Loss on Sale of Equipment 471 0
Management Fees - General Partners 50,607 27,855
Incentive Fees - General Partners 84,549 35,947
Resale Fees - General Partner 210,000 0
General and Administrative:
Affiliates 13,585 13,959
Other 33,354 16,070
Interest Expense 31,361 77,993
Depreciation and Amortization 326,371 531,089
------------ ------------
Total Operating Expenses 750,298 702,913
------------ ------------
Net Income $ 116,017 $ 1,786,697
============ ============
Allocation of Net Income:
Limited Partners $ 114,857 $ 1,768,830
General Partners 1,160 17,867
------------ ------------
$ 116,017 $ 1,786,697
============ ============
Net Income Per $1,000 Limited
Partnership Unit $ 4.77 $ 73.54
============ ============
Number of Limited Partnership Units 24,054 24,054
============ ============
The accompanying notes are an integral part
of these financial statements.<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
------------ ------------
Cash Flows from Operating Activities:
Net Income $ 1,867,433 $ 2,997,021
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
(Gain) Loss on Sale of
Equipment (1,111,023) (1,712,021)
Depreciation and Amortization 1,026,679 1,825,975
Changes in Operating Assets
and Liabilities:
(Increase) Decrease in
Equipment Held for Sale 179,032 0
(Increase) Decrease in
Rent Receivable (389,259) (470,765)
(Increase) Decrease in
Prepaid Expenses (9,420) 18,387
Increase (Decrease) in
Interest Payable 8,854 35,048
Increase (Decrease) in
Payable to:
General Partners 173,587 (37,630)
Others (101,589) 119,477
Affiliates 0 (4,410)
Affiliates - Residual Proceeds 0 413,727
Increase (Decrease) in
Unearned Revenue (43,687) 121,926
------------ ------------
Net Cash Provided by
Operating Activities 1,600,607 3,306,735
------------ ------------
Cash Flows from Investing Activities:
Proceeds from Sale of Equipment 2,516,687 4,916,073
------------ ------------
Net Cash Provided by
Investing Activities 2,516,687 4,916,073
------------ ------------
Cash Flows from Financing Activities:
Payment of Notes Payable (1,273,562) (2,307,164)
(Increase) Decrease in
Deferred Debt Costs (3,000) (7,000)
Distributions to Limited
Partners (2,303,356) (4,413,213)
Distributions to General
Partners (23,265) (44,578)
------------ ------------
Net Cash (Used by)
Financing Activities (3,603,183) (6,771,955)
------------ ------------ <PAGE>
Increase (Decrease) in Cash 514,111 1,450,853
Cash and Cash Equivalents at
Beginning of Period 828,343 1,966,392
------------ ------------
Cash and Cash Equivalents at
End of Period $ 1,342,454 $ 3,417,245
============ ============
Supplemental Cash Flow Information:
Interest Paid $ 112,900 $ 251,242
============ ============
The accompanying notes are an integral part
of these financial statements.<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 1996
NOTE 1 - ORGANIZATION
Cypress Equipment Fund, Ltd. (the "Partnership"), a Florida
limited partnership, was formed March 3, 1989, for the purpose of
acquiring and leasing transportation, manufacturing, industrial,
and other equipment. The Partnership commenced operations on
December 1, 1989, and will terminate on December 31, 2010, or
sooner, in accordance with the terms of the Limited Partnership
Agreement. The Partnership has received Limited and General
Partner capital contributions of $24,054,000 and $2,000,
respectively.
Cypress Equipment Management Corporation, a California
corporation and a wholly-owned subsidiary of Cypress Leasing
Corporation, is the Managing General Partner; RJ Leasing - 2,
Inc., a Florida corporation and a second-tier subsidiary of
Raymond James Financial, Inc., is the Administrative General
Partner; and Raymond James Partners, Inc., a Florida corporation
and a wholly-owned subsidiary of Raymond James Financial, Inc.,
is the other General Partner.
Cash distributions, subject to payment of the equipment
management fees, and profits and losses of the Partnership are
allocated 99% to the Limited Partners and 1% to the General
Partners. The General Partners are being paid an incentive
management fee equal to 3.4593% of the cash available for
distribution to the extent that an individual Limited Partner's
share of such distribution causes that individual Limited
Partner's cumulative cash distributions to exceed that Limited
Partner's capital contribution. After each Limited Partner has
received cumulative cash distributions equal to his capital
contributions plus an amount equal to 8% of adjusted capital
contributions per annum, the General Partners receive an
incentive management fee equaling 23.4593% of cash available for
distributions and an equipment resale fee for the lesser of one
half of any brokerage fee paid for services in connection with
the sale of equipment or up to 3% of the sales price of the
equipment.
NOTE 2 - NOTES PAYABLE
A significant amount of the property acquired by the
Partnership was pledged at time of purchase as collateral for the
notes payable.<PAGE>
NOTE 3 - COMPENSATION AND REIMBURSEMENTS TO GENERAL PARTNERS AND
AFFILIATES
The General Partners and their affiliates are entitled to
the following types of compensation and reimbursements for costs
and expenses incurred for the Partnership for the nine months
ended September 30, 1996:
Equipment Management Fees $ 100,792
Incentive Fees 103,074
Resale Fees 210,000
General and Administrative Costs 36,025
General Partner Distributions 23,265
NOTE 4 - BASIS OF PREPARATION
The unaudited financial statements presented herein have
been prepared in accordance with the instructions to Form 10-Q
and do not include all of the information and note disclosures
required by generally accepted accounting principles. These
statements should be read in conjunction with the financial
statements and notes thereto included with the Partnership's Form
10-K for the year ended December 31, 1995. In the opinion of
management, these financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to
summarize fairly the Partnership's financial position and results
of operations. The results of operations for the current period
may not be indicative of the results to be expected for the year.
NOTE 5 - CASH AND CASH EQUIVALENTS
It is the Partnership's policy to include short-term
investments with an original maturity of three months or less in
Cash and Cash Equivalents. These short-term investments are
comprised of money market mutual funds and a repurchase
agreement. All of the Partnership's securities included in Cash
and Cash Equivalents are considered held-to-maturity. The
balance of $1,342,454 at September 30, 1996, represents cash of
$12,791, a repurchase agreement of $1,055,000, and money market
mutual funds of $274,663. <PAGE>
NOTE 6 - CONTINGENCIES
Pursuant to an agreement entered into between the
Partnership and the seller of the initial specified equipment,
the Partnership agreed to pay the seller fifteen percent (15%) of
all residual proceeds in excess of $7,094,795 with respect to the
initial specified equipment. The original cost of the applicable
initial specified equipment owned by the Partnership at September
30, 1996, was $92,576. Residual proceeds means all sums received
with respect to the initial specified equipment in the form of
(i) re-lease proceeds, (ii) sale proceeds, and (iii) other
payments made or consideration received pursuant to the terms of
the leases underlying the initial specified equipment following
the end of the initial lease terms less rebuilding costs and
disposition expense. At September 30, 1996, residual proceeds of
the initial specified equipment had exceeded $7,094,795 and the
agreed percentage of all applicable proceeds has been paid to the
seller. The agreed percentage of all remaining proceeds, if any,
will be paid to Cypress Leasing Corporation, the current owner of
the seller's right to receive those excess residual proceeds,
upon remarketing of the remaining initial specified equipment.
NOTE 7 - SUBSEQUENT EVENTS
On October 31, 1996, the Partnership paid distributions of
$430,085 to the Limited Partners and $4,344 to the General
Partners and incentive management fees to the General Partners of
$51,512.<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Nine Months Ended September 30, 1996, Compared to Nine
Months Ended September 30, 1995
Rental income decreased from $3,641,217 for the nine months
ended September 30, 1995, to $2,424,476 for the nine months ended
September 30, 1996. This decrease resulted from rental equipment
which was on lease during the nine months ending September 30,
1995, was sold in the intervening period and provided less or no
rental income in the nine months ending September 30, 1996, and
equipment which came off lease after September 30, 1995, provided
less or no rental income in 1996 than it had in 1995. Interest
income decreased for the nine months ended September 30, 1996, as
compared to the nine months ended September 30, 1995, due to a
lower average cash balance available for investment.
Interest expense decreased from $286,290 for the nine months
ended September 30, 1995, to $121,754 for the nine months ended
September 30, 1996. This decrease resulted from a lower average
level of debt during the period. Depreciation expense decreased
for the nine months ended September 30, 1996 versus the same
period in 1995 because the Partnership had a lower depreciable
basis of equipment as a result of sales during the last twelve
months.
Management fee expense decreased due to lower rental income
for the nine months ended September 30, 1996. Incentive fees
increased from $37,150 for the nine months ended September 30,
1995 to $103,074 for the nine months ended September 30, 1996.
Incentive fees increased because cumulative limited partner
distributions surpassed the level which causes a higher incentive
fee rate.
Equipment Resale fees of $210,000 were accrued in September
1996. The Equipment Resale Fee was deferred, without interest,
until the Limited Partners began receiving cumulative cash
distributions equal to payout plus an amount equal to 8% of
adjusted capital contributions per annum cumulative from each
limited partner's closing date.
During the nine months ended September 30, 1995, Rental
Equipment with an original cost of $6,605,773 was sold for a gain
of $1,712,021. During the nine months ended September 30, 1996,
Equipment with an original cost of $2,742,400 was sold for a gain
of $1,111,023. Rental Equipment Held for Sale with a net book
value of $179,033 was sold at a loss of $14,713.<PAGE>
The net effect of the above revenue and expense items
resulted in net income of $1,867,433 for the nine months ended
September 30, 1996, compared to net income of $2,997,021 for the
nine months ended September 30, 1995.
Notes payable decreased during the nine months ended
September 30, 1996, due to $1,273,562 of principal payments on
notes.
Three Months Ended September 30, 1996, Compared to Three
Months Ended September 30, 1995
Rental income decreased from $919,022 for the three months
ended September 30, 1995, to $844,298 for the three months ended
September 30, 1996. This decrease resulted from rental equipment
that provided $211,120 of rental income in the third quarter of
1995 being sold in the intervening period and providing no rental
income in the third quarter of 1996. This was offset by
additional revenues of $136,396 for equipment that was off lease.
Interest income decreased for the three months ended September
30, 1996, as compared to the three months ended September 30,
1995, due to a lower average cash balance available for
investment.
Interest expense decreased from $77,993 for the three months
ended September 30, 1995, to $31,361 for the three months ended
September 30, 1996. This decrease resulted from a lower average
level of debt during the period. Depreciation expense decreased
for the three months ended September 30, 1996 versus the same
period in 1995 because the Partnership had a lower depreciable
basis of equipment as a result of sales during the last twelve
months.
Management fee expense increased from $27,855 for the three
months ended September 30, 1995 to $50,607 for the three months
ended September 30, 1996. This increase was primarily due to a
recalculation of management fees on revenues determined to be
subject to management fees. This recalculation increased
management fees by $21,819. Incentive fees increased from
$35,947 for the three months ended September 30, 1995 to $84,549
for the three months ended September 30, 1996. Incentive Fees
increased because cumulative limited partner distributions
surpassed the level which causes a higher incentive fee rate.
Equipment Resale fees of $210,000 were accrued in September
1996. The Equipment Resale Fee was deferred, without interest,
until the Limited Partners began receiving cumulative cash
distributions equal to payout plus an amount equal to 8% of
adjusted capital contributions per annum cumulative from each
limited partner's closing date. <PAGE>
During the three months ended September 30, 1995, Rental
Equipment with an original cost of $2,040,167 was sold for a gain
of $1,535,296.
The net effect of the above revenue and expense items
resulted in net income of $116,017 for the three months ended
September 30, 1996, compared to net income of $1,786,697 for the
three months ended September 30, 1995.
Notes payable decreased during the three months ended
September 30, 1996, due to $433,582 of principal payments on
notes.
Liquidity and Capital Resources
The primary source of funds for the nine months ended
September 30, 1996, was $2,424,476 from leasing revenues and
$2,516,687 from sales proceeds. These funds were used to make
$1,273,562 of notes payments and $2,326,621 of distributions and
to pay operating expenses. As of September 30, 1996, the
Partnership had $1,342,454 of Cash and Cash Equivalents.
In the opinion of the General Partners there are no material
trends, favorable or unfavorable, in the Partnership's capital
resources, and the resources will be sufficient to meet the
Partnership's needs for the foreseeable future.
Short-term liquidity requirements consist of funds needed to
meet administrative expenses, debt retirement, and cash
distributions. These short term needs will be funded by Cash and
Cash Equivalents at December 31, 1995, rental income, and
proceeds from sales during 1996.
In the opinion of the General Partners, the Partnership has
sufficient funds or sources of funds to remain liquid for the
expected life of the Partnership. The General Partners are not
aware of any trends that significantly affect the Partnership's
liquidity.
Cash and Cash Equivalents at September 30, 1996, was
$1,342,454. The Partnership had net income of $1,867,433 for the
nine months ended September 30, 1996. After adjusting for
depreciation and amortization and the changes in operating assets
and liabilities, net cash provided by operating activities was
$1,600,607. Cash provided by investing activities was $2,516,687
from the sale of equipment. Cash used in financing activities
totaled $3,603,183, which was primarily payments on notes payable
of $1,273,562 and distributions of $2,326,621.
Actual cash distributions for the nine months ended
September 30, 1996 and 1995, were $2,326,621 and $4,457,791,
respectively.<PAGE>
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - None.
b) Reports on Form 8-K - None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Cypress Equipment Fund, Ltd.
RJ Leasing - 2, Inc.
A General Partner
Date: November 21, 1996 By: /s/J. Davenport Mosby, III
--------------------------
J. Davenport Mosby, III
President
Date: November 21, 1996 By: /s/John M. McDonald
--------------------------
John M. McDonald
Vice President
Date: November 21, 1996 By: /s/Christa Kleinrichert
--------------------------
Christa Kleinrichert
Secretary and Treasurer<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,342,454
<SECURITIES> 0
<RECEIVABLES> 827,617
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 19,905,817
<DEPRECIATION> 11,717,391
<TOTAL-ASSETS> 10,371,683
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,702,896
<TOTAL-LIABILITY-AND-EQUITY> 10,371,683
<SALES> 0
<TOTAL-REVENUES> 3,588,335
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,599,148
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121,754
<INCOME-PRETAX> 1,867,433
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,867,433
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,867,433
<EPS-PRIMARY> 76.86<F2>
<EPS-DILUTED> 76.86<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET IMCOME PER $1,000 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
