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 March 31, 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 March 31, 1996
Units of Limited Partnership
Interest: $1,000 per unit 24,054
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II, 1994 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>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
INDEX
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets -
As of March 31, 1996 and December 31, 1995 3
Statements of Operations -
For the Three Months Ended March 31, 1996 and 1995 4
Statements of Cash Flows -
For the Three Months Ended March 31, 1996 and 1995 5-6
Notes to Financial Statements 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
BALANCE SHEETS
March 31, December 31,
1996 1995
ASSETS
(Unaudited) (Audited)
Rental Equipment, at Cost $ 16,676,555 $ 19,418,955
Less: Accumulated
Depreciation (9,242,632) (10,208,588)
7,433,923 9,210,367
Rental Equipment Held for Sale 1,440,242 1,579,963
Deferred Debt Costs (Net of
Accumulated Amortization of
$124,944 and $121,662,
Respectively) 8,455 10,237
Accounts Receivable - Sales 2,369,616 0
Rent Receivable 567,329 438,358
Cash and Cash Equivalents 783,961 828,343
Total Assets $ 12,603,526 $ 12,067,268
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Notes Payable $ 2,231,716 $ 2,647,239
Interest Payable 46,195 43,082
Payable to: General Partners 41,925 69,587
Others 0 101,589
Unearned Revenue 0 43,687
Total Liabilities 2,319,836 2,905,184
Partners' Equity:
Limited Partners (24,054 units
outstanding at March 31, 1996,
and December 31, 1995) 10,390,545 9,280,155
General Partners (106,855) (118,071)
Total Partners' Equity 10,283,690 9,162,084
Total Liabilities and
Partners' Equity $ 12,603,526 $ 12,067,628
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 MARCH 31,
1996 1995
Revenues:
Rental Income $ 855,880 $ 1,412,066
Interest Income 7,970 23,639
Gain on Sale of Rental
Equipment 1,117,327 0
Total Revenues 1,981,177 1,435,705
Operating Expenses:
Interest Expense 49,744 114,079
Management Fees - General Partners 36,720 50,674
General and Administrative:
Affiliate 9,958 7,886
Other 27,528 31,721
Depreciation and Amortization 374,062 661,687
Loss on Sale of Rental
Equipment Held for Sale 5,551 0
Total Operating Expenses 503,563 866,047
Net Income $ 1,477,614 $ 569,658
Allocation of Net Income:
Limited Partners $ 1,462,838 $ 563,961
General Partners 14,776 5,697
$ 1,477,614 $ 569,658
Net Income Per $1,000 Limited
Partnership Unit $ 60.81 $ 23.45
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 THREE MONTHS ENDED MARCH 31,
1996 1995
Cash Flows from Operating Activities:
Net Income $ 1,477,614 $ 569,658
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
(Gain) Loss on Sale of
Equipment (1,117,327) 0
Depreciation and
Amortization 374,062 661,687
Changes in Operating Assets
and Liabilities:
(Increase) Decrease in
Rent Receivable (128,971) (197,045)
(Increase) Decrease in
Rental Equipment Held
for Sale 139,721 0
(Increase) Decrease in
Prepaid Expenses 0 (3,707)
Increase (Decrease) in
Interest Payable 3,113 11,296
Increase (Decrease) in
Payable to:
General Partners (27,662) (26,120)
Others (101,589) 2,036
Increase (Decrease) in
Unearned Revenue (43,687) 125,158
Net Cash Provided by
Operating
Activities 575,274 1,142,963
Cash Flows from Investing Activities:
Proceeds from Sale of Equipment 2,522,991 0
(Increase) Decrease in
Accounts Receivable-Sales (2,369,616) 0
Net Cash Provided by
Investing
Activities 153,375 0 <PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31,
1996 1995
Cash Flows from Financing Activities:
(Increase) Decrease in
Deferred Debt Costs (1,500) (2,750)
Payment of Notes Payable (415,523) (798,600)
Distributions to Limited
Partners (352,448) (601,350)
Distributions to General
Partners (3,560) (6,074)
Net Cash Provided by
(Used in) Financing
Activities (773,031) (1,408,774)
(Decrease) in Cash (44,382) (265,811)
Cash and Cash Equivalents at
Beginning of Period 828,343 1,966,392
Cash and Cash Equivalents at
End of Period $ 783,961 $ 1,700,581
Supplemental Cash Flow Information:
Interest Paid $ 49,744 $ 102,783
The accompanying notes are an integral part
of these financial statements.<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 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 wholly-owned
subsidiary of Cypress Leasing Corporation, is the Managing General
Partner; RJ Leasing - 2, Inc., a wholly-owned subsidiary of RJ
Leasing, Inc., is the Administrative General Partner; and Raymond
James Partners, Inc., 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 3.4659% 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 a management fee equaling
23.4659% 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 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
(Unaudited)
March 31, 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 three months ended
March 31, 1996:
Equipment Management Fees $ 28,273
Incentive Fees 8,447
General and Administrative Costs 9,958
General Partner Distributions 3,560
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.<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
March 31, 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 commercial paper. All of
the Partnership's securities included in Cash and Cash Equivalents
are considered held-to-maturity. The balance of $783,961 at March
31, 1996, represents cash of $9,138, cost plus accreted interest
income on commercial paper of $448,569, and money market mutual
funds of $326,254. At March 31, 1996, the estimated market value of
the commercial paper was $448,569, 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 March 31, 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 March 31, 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. (See Note 3 - Compensation and Reimbursements to General
Partners and Affiliates)
NOTE 7 - SUBSEQUENT EVENTS
On April 30, 1996, the Partnership paid distributions of
$350,833 to the Limited Partners and $3,543 to the General Partners
and incentive management fee to the General Partners of $10,078.
During April 1996, the Partnership sold equipment with an original
cost of $93,188 for proceeds of $30,150.
On May 8, the Partnership received $2,369,616 as payment of
the Accounts Receivable-Sales.<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Rental income decreased from $1,412,066 for the three months ended March
31, 1995, to $855,880 for the three months ended March 31, 1996. This decrease
resulted because rental equipment which was on lease during the first period was
sold in the intervening period and provided no rental income in 1996 and rental
equipment which was on lease during the first period came off lease in the
intervening period and provided no rental income in 1996. Interest income
decreased for the three months ended March 31, 1996, as compared to the three
months ended March 31, 1995, due to less cash available for short term
investments. There was a net gain on sale of equipment for $1,111,776 for the
quarter ended March 31, 1996.
Interest expense decreased from $114,079 for the three months ended March
31, 1995, to $49,744 for the three months ended March 31, 1996. This decrease
primarily resulted from a decreased average level of debt during the period.
Management fee expense decreased due to lower rental income. Depreciation
expense decreased for the three months ended March 31, 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 $1,477,614 for the three months ended March 31, 1996, compared to
a net income of $569,658 for the three months ended March 31, 1995.
Notes payable decreased during the three months ended March 31, 1996, due
to $415,523 of principal payments on notes.
Liquidity and Capital Resources
The primary source of funds for the three months ended March 31, 1996, was
$855,880 from leasing revenues. These funds and Cash and Cash Equivalents at
December 31, 1995, were used to make $415,523 of notes payments and $356,008 of
distributions, and to pay operating expenses. As of March 31, 1996, the
Partnership had $783,961 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,
and rental income and proceeds from sales during 1996.<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)
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.
The cash balance at March 31, 1996 was $783,961. The Partnership had net
income of $1,477,614 for the three months ended March 31, 1996. After adjusting
for depreciation and amortization and the changes in operating assets and
liabilities, net cash provided by operating activities was $575,274. Cash
flows provided by investing activities were $153,375 from the sale of
equipment. Cash used in financing activities totaled $773,031, which was
primarily payments on notes payable of $415,523 and distributions of $356,008.
Actual cash distributions for the three months ended March 31, 1996 and
1995, were $356,008 and $607,424, respectively.
<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none.
(b) Reports on Form 8-K - No Forms 8-K were filed during the quarter.
<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: June 19, 1996 By: /s/J. Davenport Mosby, III
J. Davenport Mosby, III
President
Date: June 19, 1996 By: /s/John M. McDonald
John M. McDonald
Vice President
Date: June 19, 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 ENDING MARCH 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 783,961
<SECURITIES> 0
<RECEIVABLES> 2,936,945
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 19,999,005
<DEPRECIATION> 11,124,840
<TOTAL-ASSETS> 12,603,526
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,283,690
<TOTAL-LIABILITY-AND-EQUITY> 12,603,526
<SALES> 0
<TOTAL-REVENUES> 1,981,177
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 453,819
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,744
<INCOME-PRETAX> 1,477,614
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,477,614
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,477,614
<EPS-PRIMARY> 60.81<F2>
<EPS-DILUTED> 60.81<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET INCOME PER $1,000 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
