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 June 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 June 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 on 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
June 30, December 31,
1996 1995
(Unaudited) (Audited)
ASSETS
Leased Equipment, at Cost $ 16,676,555 $ 19,418,955
Less: Accumulated
Depreciation (9,565,846) (10,208,588)
7,110,709 9,210,367
Equipment Held for Sale 1,400,931 1,579,963
Rent Receivable 697,473 438,358
Prepaid Expenses 14,415 0
Deferred Debt Costs (Net of
Accumulated Amortization of
$127,976 and $121,662,
Respectively) 5,423 10,237
Cash and Cash Equivalents 2,873,082 828,343
Total Assets $ 12,102,033 $ 12,067,268
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Interest Payable $ 49,147 $ 43,082
Payable to: General Partners 42,510 69,587
Others 0 101,589
Notes Payable 1,807,259 2,647,239
Unearned Revenue 0 43,687
Total Liabilities 1,898,916 2,905,184
Partners' Equity:
Limited Partners (24,054 units
outstanding at June 30, 1996,
and December 31, 1995) 10,310,777 9,280,155
General Partners (107,660) (118,071)
Total Partners' Equity 10,203,117 9,162,084
Total Liabilities and
Partners' Equity $ 12,102,033 $ 12,067,268
The accompanying notes are an integral part
of these financial statements.
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30,
1996 1995
Revenues:
Rental Income $ 1,580,178 $ 2,722,195
Interest Income 30,819 52,755
Gain on Sale of Equipment 1,111,494 176,725
Total Revenues 2,722,491 2,951,675
Operating Expenses:
Loss on Sale of Equipment
Held for Sale 14,713 0
Management Fees - General
Partners 50,185 96,751
Incentive Fees - General
Partners 18,525 1,203
General and Administrative:
Affiliates 22,440 19,696
Other 74,511 120,518
Interest Expense 90,393 208,297
Depreciation and Amortization 700,308 1,294,886
Total Operating Expenses 971,075 1,741,351
Net Income $ 1,751,416 $ 1,210,324
Allocation of Net Income:
Limited Partners $ 1,733,902 $ 1,198,221
General Partners 17,514 12,103
$ 1,751,416 $ 1,210,324
Net Income Per $1,000 Limited
Partnership Unit $ 72.08 $ 49.81
Number of Limited Partnership
Units 24,054 24,054
The accompanying notes are an integral part
of these financial statements.
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED JUNE 30,
1996 1995
Revenues:
Rental Income $ 724,298 $ 1,310,129
Interest Income 22,849 29,116
Gain on Sale of Equipment 0 176,725
Total Revenues 747,147 1,515,970
Operating Expenses:
Loss on Sale of Equipment
Held for Sale 9,162 0
Loss on Sale of Equipment 5,833 0
Management Fees - General
Partners 13,465 46,077
Incentive Fees - General
Partners 18,525 1,203
General and Administrative:
Affiliates 12,482 11,810
Other 46,983 88,797
Interest Expense 40,649 94,218
Depreciation and Amortization 326,246 633,199
Total Operating Expenses 473,345 875,304
Net Income $ 273,802 $ 640,666
Allocation of Net Income:
Limited Partners $ 271,064 $ 634,259
General Partners 2,738 6,407
$ 273,802 $ 640,666
Net Income Per $1,000 Limited
Partnership Unit $ 11.27 $ 26.37
Number of Limited Partnership
Units 24,054 24,054
The accompanying notes are an integral part
of these financial statements.
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30,
1996 1995
Cash Flows from Operating Activities:
Net Income $ 1,751,416 $ 1,210,324
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
(Gain) Loss on Sale of
Equipment (1,111,494) (176,725)
Depreciation and
Amortization 700,308 1,294,886
Changes in Operating Assets
and Liabilities:
(Increase) Decrease in
Equipment Held for Sale 179,032 0
(Increase) Decrease in
Rent Receivable (259,115) (307,602)
(Increase) Decrease in
Prepaid Expenses (14,415) 13,815
Increase (Decrease) in
Interest Payable 6,065 22,435
Increase (Decrease) in
Payable to:
General Partners (27,077) (22,805)
Affiliates 0 (4,410)
Others (101,589) 27,367
Increase (Decrease) in
Unearned Revenue (43,687) 0
Net Cash Provided by
Operating Activities 1,079,444 2,057,285
Cash Flows from Investing Activities:
Proceeds from Sale of
Equipment 2,517,158 2,589,632
Net Cash Provided by
Investing Activities 2,517,158 2,589,632
Cash Flows from Financing Activities:
Payment of Notes Payable (839,980) (1,864,284)
(Increase) Decrease in
Deferred Debt Costs (1,500) (4,000)
Distributions to Limited
Partners (703,280) (1,081,240)
Distributions to General
Partners (7,103) (10,921)
Net Cash (Used In)
Financing Activities (1,551,863) (2,960,445) <PAGE>
Increase (Decrease) in Cash 2,044,739 1,686,472
Cash and Cash Equivalents at
Beginning of Period 828,343 1,966,392
Cash and Cash Equivalents at
End of Period $ 2,873,082 $ 3,652,864
Supplemental Cash Flow Information:
Interest Paid $ 84,328 $ 185,862
The accompanying notes are an integral part
of these financial statements.
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 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 shall be
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. When 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 will 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>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
June 30, 1996
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 six months ended June
30, 1996:
Equipment Management Fees $ 50,185
Incentive Fees 18,525
General and Administrative Costs 22,440
General Partner Distributions 7,103
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.
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
June 30, 1996
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
$2,873,082 at June 30, 1996, represents cash of $21,089, repurchase
agreement of $2,536,000, and money market mutual funds of $315,993.
At June 30, 1996, the estimated market value of the repurchase
agreement was $2,536,000, resulting in no unrealized gain or loss.
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 June 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 June 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 will be paid to Cypress Leasing
Corporation upon remarketing of the remaining initial specified
equipment.
NOTE 7 - SUBSEQUENT EVENTS
On July 31, 1996, the Partnership paid distributions of
$1,600,076 to the Limited Partners and $16,162 to the General
Partners and incentive management fees to the General Partners of
$84,549.<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
Six Months Ended June 30, 1996, Compared to Six Months Ended
June 30, 1995
Rental income decreased from $2,722,195 for the six months
ended June 30, 1995, to $1,580,178 for the six months ended June 30,
1996. This decrease resulted from equipment that provided
$1,016,710 of rental income in 1995 being sold in the intervening
period and providing $131,583 of income in 1996 and equipment that
provided $256,890 income in 1995 being off lease during 1996 and
providing no rental income in 1996. Gain on sale of equipment
increased from $176,725 for the six months ended June 30, 1995 to
$1,111,494 for the six months ended June 30, 1996. Interest income
decreased for the six months ended June 30, 1996, as compared to the
six months ended June 30, 1995, due to a lower average cash balance
available for investment.
Interest expense decreased from $208,297 for the six months
ended June 30, 1995, to $90,393 for the six months ended June 30,
1996. This decrease primarily resulted from a lower average level
of debt during the period. Management fee expense decreased due to
lower rental income. Depreciation expense decreased for the six
months ended June 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.
The net effect of the above revenue and expense items resulted
in a net income of $1,751,416 for the six months ended June 30,
1996, compared to a net income of $1,210,324 for the six months
ended June 30, 1995.
Notes payable decreased during the six months ended June 30,
1996, due to $839,980 of principal payments on notes.
Three Months Ended June 30, 1996, Compared to Three Months Ended
June 30, 1995.
Rental income decreased from $1,310,129 for the three months
ended June 30, 1995, to $724,298 for the three months ended June 30,
1996. This decrease resulted from equipment that provided $457,386
of rental income in 1995 being sold in the intervening period and
providing no rental income in 1996 and equipment that provided
$128,445 of rental income in 1995 being off lease during 1996 and
providing no rental income in 1996. Interest income decreased for
the three months ended June 30, 1996, as compared to the three
months ended June 30, 1995, due to a lower average cash balance
available for investment.<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Results of Operations (Continued)
Three Months Ended June 30, 1996, Compared to Three Months Ended
June 30, 1995
Interest expense decreased from $94,218 for the three months
ended June 30, 1995, to $40,649 for the three months ended June 30,
1996. This decrease primarily resulted from a lower average level
of debt during the period. Management fee expense decreased due to
lower rental income. Depreciation expense decreased for the three
months ended June 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.
The net effect of the above revenue and expense items resulted
in a net income of $273,802 for the three months ended June 30,
1996, compared to a net income of $640,666 for the three months
ended June 30, 1995.
Notes payable decreased during the three months ended June 30,
1996, due to $424,457 of principal payments on notes.
Liquidity and Capital Resources
The primary source of funds for the six months ended June 30,
1996, were $1,580,178 from leasing revenues and $2,517,158 of
proceeds from the sale of equipment. These funds were used to make
$839,980 of notes payments and $710,383 of distributions and to pay
operating expenses. As of June 30, 1996, the Partnership had
$2,873,082 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 June 30, 1996, and 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.
<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Liquidity and Capital Resources (Continued)
The cash balance at June 30, 1996, was $2,873,082. The
Partnership had net income of $1,751,416 for the six months ended
June 30, 1996. After adjusting for depreciation and amortization
and the changes in operating assets and liabilities, net cash
provided by operating activities was $1,079,444. Cash provided by
investing activities was $2,517,158 from the sale of equipment.
Cash used in financing activities totaled $1,551,862 which was
primarily payments on notes payable of $839,980 and distributions of
$710,383.
Actual cash distributions for the six months ended June 30,
1996 and 1995, were $710,383 and $1,092,161, respectively.
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - None.
b) Reports on Form 8-K -
Sale of two oil storage tank Date Filed: May 31, 1996
facilities and two parcels of
real property.
<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: August 14, 1996 By: /s/J. Davenport Mosby, III
J. Davenport Mosby, III
President
Date: August 14, 1996 By: /s/John M. McDonald
John M. McDonald
Vice President
Date: August 14, 1996 By: /s/Christa Kleinrichert
Christa Kleinrichert
Secretary and Treasurer
<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 JUNE 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 2,873,082
<SECURITIES> 0
<RECEIVABLES> 694,473
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 19,905,817
<DEPRECIATION> 11,394,177
<TOTAL-ASSETS> 12,102,033
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,203,117
<TOTAL-LIABILITY-AND-EQUITY> 12,102,053
<SALES> 0
<TOTAL-REVENUES> 2,722,491
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 880,682
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90,393
<INCOME-PRETAX> 1,751,416
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,751,416
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,751,416
<EPS-PRIMARY> 72.08<F2>
<EPS-DILUTED> 72.08<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET INCOME PER $1,000 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
