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, 1997
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, 1997
Units of Limited Partnership
Interest: $1,000 per unit 24,054
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II, 1996 Form 10-K, filed with the
Securities and Exchange Commission on March 27, 1997
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,
1997 1996
(Unaudited) (Audited)
ASSETS
Rental Equipment, at Cost $ 768,054 $ 10,470,886
Less: Accumulated
Depreciation (36,574) (6,613,785)
------------ ------------
731,480 3,857,101
------------ ------------
Rental Equipment Held for Sale 0 3,558,111
Rent Receivable 0 385,129
Sales Receivable 677,000 0
Prepaid Expenses 570 4,425
Deferred Debt Costs (Net of
Accumulated Amortization of
$140,231 and $135,298,
Respectively) 1,250 859
Cash and Cash Equivalents 1,378,325 947,493
------------ ------------
Total Assets $ 2,788,625 $ 8,753,118
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Interest Payable $ 0 $ 8,106
Payable to: General Partners 0 265,503
Affiliates 0 5,446
Others 62,125 40,271
Notes Payable 0 452,427
------------ ------------
Total Liabilities 62,125 771,753
------------ ------------
Partners' Equity:
Limited Partners (24,054 units
outstanding at September 30,
1997, and December 31, 1996) 2,908,925 8,111,242
General Partners (182,425) (129,877)
------------ ------------
Total Partners' Equity 2,726,500 7,981,365
------------ ------------
Total Liabilities and
Partners' Equity $ 2,788,625 $ 8,753,118
============ ============
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,
1997 1996
------------ ------------
Revenues:
Rental Income $ 392,346 $ 2,424,476
Interest Income 42,380 52,836
Gain on Sale of Equipment 1,802,731 1,111,023
------------ ------------
Total Revenues 2,237,457 3,588,335
------------ ------------
Operating Expenses:
Loss on Sale of Equipment
Held for Sale 264,912 14,713
Management Fees - General
Partners 13,959 100,792
Incentive Fees - General
Partners 880,325 103,074
Resale Fees - General Partners 351,196 210,000
General and Administrative:
Affiliates 24,957 36,025
Other 233,987 107,865
Interest Expense 1,621 121,754
Depreciation and Amortization 41,507 1,026,679
------------ ------------
Total Operating Expenses 1,812,464 1,720,902
------------ ------------
Net Income $ 424,993 $ 1,867,433
============ ============
Allocation of Net Income:
Limited Partners $ 420,743 $ 1,848,759
General Partners 4,250 18,674
------------ ------------
$ 424,993 $ 1,867,433
============ ============
Net Income Per $1,000 Limited
Partnership Unit $ 17.49 $ 76.86
============ ============
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,
1997 1996
------------ ------------
Revenues:
Rental Income $ 25,000 $ 844,298
Interest Income 12,668 22,017
------------ ------------
Total Revenues 37,668 866,315
------------ ------------
Operating Expenses:
Loss on Sale of Equipment
Held for Sale 69,047 0
Loss on Sale of Equipment 0 471
Management Fees - General
Partners (2,098) 50,607
Incentive Fees - General
Partners 201,346 84,549
Resale Fees - General Partner 0 210,000
General and Administrative:
Affiliates 7,592 13,585
Other 135,553 33,354
Interest Expense 0 31,361
Depreciation and Amortization 37,664 326,371
------------ -----------
Total Operating Expenses 449,104 750,298
------------ -----------
Net Income (Loss) $ (411,436) $ 116,017
============ ===========
Allocation of Net Income (Loss):
Limited Partners $ (407,322) $ 114,857
General Partners (4,114) 1,160
------------ -----------
$ (411,436) $ 116,017
============ ===========
Net Income Per $1,000 Limited
Partnership Unit $ (16.93) $ 4.77
============ ===========
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,
1997 1996
------------ ------------
Cash Flows from Operating Activities:
Net Income $ 424,993 $ 1,867,433
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
(Gain) Loss on Sale of
Equipment (1,802,731) (1,111,023)
Depreciation and
Amortization 41,507 1,026,679
Changes in Operating Assets
and Liabilities:
(Increase) Decrease in
Equipment Held for Sale 3,558,111 179,032
(Increase) Decrease in
Rent Receivable 385,129 (389,259)
(Increase) Decrease in
Prepaid Expenses 3,855 (9,420)
Increase (Decrease) in
Interest Payable (8,106) 8,854
Increase (Decrease) in
Payable to:
General Partners (265,503) 173,587
Affiliates (5,446) 0
Others 21,854 (101,589)
Increase (Decrease) in
Unearned Revenue 0 (43,687)
------------ ------------
Net Cash Provided by
Operating Activities 2,353,663 1,600,607
------------ ------------
Cash Flows from Investing Activities:
(Increase) Decrease in
Sales Receivable (677,000) 0
Purchase of Equipment (768,054) 0
Proceeds from Sale of
Equipment 5,659,831 2,516,687
------------ ------------
Net Cash Provided by
Investing Activities 4,214,777 2,516,687
------------ ------------ <PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1997 1996
------------ ------------
Cash Flows from Financing Activities:
Payment of Notes Payable (452,427) (1,273,562)
(Increase) Decrease in
Deferred Debt Costs (5,324) (3,000)
Distributions to Limited
Partners (5,623,059) (2,303,356)
Distributions to General
Partners (56,798) (23,265)
------------ ------------
Net Cash (Used In)
Financing Activities (6,137,608) (3,603,183)
------------ ------------
Increase (Decrease) in Cash 430,832 514,111
Cash and Cash Equivalents at
Beginning of Period 947,493 828,343
------------ ------------
Cash and Cash Equivalents at
End of Period $ 1,378,325 $ 1,342,454
============ ============
Supplemental Cash Flow Information:
Interest Paid $ 9,727 $ 112,900
============ ============
The leasing of equipment previously held for sale resulted in a non-cash
reclassification in August 1997 causing an increase in Rental Equipment of
$768,054 and a decrease in Rental Equipment Held for Sale of $768,054.
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, 1997
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
As of September 30, 1997, the Partnership has no outstanding notes
payable.
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, 1997:
Equipment Management Fees $ 13,959
Incentive Fees 880,325
Resale Fees 351,196
General and Administrative Costs 24,957
General Partner Distributions 56,798
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, 1996. 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
$1,378,325 at September 30, 1997, represents cash of $6,332, a repurchase
agreement of $1,370,000, and money market mutual funds of $1,993.
NOTE 6 - SUBSEQUENT EVENTS
On October 31, 1997, the Partnership paid distributions of $558,072 to
the Limited Partners and $5,636 to the General Partners and incentive
management fees to the General Partners of $165,201.<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, 1997, Compared to Nine Months Ended
September 30, 1996
Rental income decreased from $2,424,476 for the nine months ended
September 30, 1996, to $392,346 for the nine months ended September 30,
1997. The Partnership is winding down its operations. The remaining
asset, a Metro III commuter aircraft, is now on lease. The final lease
payments of $367,346 are for three leases that provided $2,172,893 of
rental income for the nine months ended September 30, 1996. The additional
$25,000 is for the first month's lease payment for the Fund's remaining
asset. Interest income remained about the same for the nine months ended
September 30, 1997, as compared to the nine months ended September 30,
1996.
Interest expense decreased from $121,754 for the nine months ended
September 30, 1996, to $1,621 for the nine months ended September 30, 1997.
This decrease primarily resulted from all debt being retired during the
intervening period. Depreciation expense decreased for the nine months
ended September 30, 1997 versus the same period in 1996, 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, 1997. Incentive fees increased from
$103,074 for the nine months ended September 30, 1996 to $880,325 for the
nine months ended September 30, 1997. Incentive fees increased because
cumulative limited partner distributions surpassed the level which causes a
higher incentive fee rate.
Equipment resale fees increased from $210,000 for the nine months
ended September 30, 1996 to $351,196 for the nine months ended September
30, 1997. 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, 1996 Rental Equipment with
an original cost of $2,742,200 was sold for a gain of $1,111,023 and Rental
Equipment Held for Sale with an original cost of $424,373 was sold at a
loss of $14,713. During the nine months ended September 30, 1997 Rental
Equipment with an original cost of $10,470,886 was sold for a gain of
$1,802,731 and Rental Equipment Held for Sale with an original cost of
$7,391,859 was sold at a loss of $264,912.
The net effect of the above revenue and expense items resulted in a
net income of $424,993 for the nine months ended September 30, 1997,
compared to a net income of $1,867,433 for the nine months ended September
30, 1996.
All Notes payable were paid off during the nine months ended September
30, 1997.
Three Months Ended September 30, 1997, Compared to Three Months Ended
September 30, 1996.
Rental income decreased from $844,298 for the three months ended
September 30, 1996, to $25,000 for the three months ended September 30,
1997. This decrease resulted from equipment that provided rental income in
the third quarter of 1996 being sold or coming off lease in the intervening
period. The income for the quarter was a lease payment for the new lease
of the Fund's sole remaining asset, a Metro III commuter aircraft.
Interest income decreased for the three months ended September 30, 1997, as
compared to the three months ended September 30, 1996, due to a lower
average cash balance available for investment.
Interest expense decreased from $31,361 for the three months ended
September 30, 1996, to $0 for the three months ended September 30, 1997.
This decrease resulted from all debt having been paid off. Management fee
expense decreased for the three months due to an overaccrual in prior
periods. Depreciation expense decreased for the three months ended
September 30, 1997 versus the same period in 1996 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 loss of $411,436 for the three months ended September 30, 1997,
compared to a net income of $116,017 for the three months ended September
30, 1996.
Liquidity and Capital Resources
The primary source of funds for the nine months ended September 30,
1997, were $392,346 from leasing revenues and $5,659,831 from sale
proceeds. These funds were principally used to pay notes payable of
$452,427 to pay distributions of $5,679,857. As of September 30, 1997, the
Partnership had $1,378,325 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 and cash distributions. These short term needs
will be funded by Cash and Cash Equivalents at September 30, 1997 and
proceeds from sales during 1997.
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, 1997, was $1,378,325. The
Partnership had net income of $424,993 for the nine months ended September
30, 1997. After adjusting for depreciation and amortization and the
changes in operating assets and liabilities, net cash provided by operating
activities was $2,353,663. Cash provided by investing activities was
$4,214,777 primarily from the sale of equipment. Cash used in financing
activities totaled $6,137,608, which was primarily payments on notes
payable of $452,427 and distributions of $5,679,857.
Actual cash distributions for the nine months ended September 30, 1997
and 1996, were $5,679,857 and $2,326,621, respectively.<PAGE>
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 one Boeing Model 737-2H4 Aircraft
Date Filed: January 31, 1997
Sale of one Fairchild Corp. Model SA227-AC Aircraft
Date Filed: May 22, 1997
Sale of one Shorts 360-200 Aircraft
Date Filed: May 30, 1997
Sale of one Shorts Model S3-60 Aircraft
Date Filed: September 26, 1997
<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 13, 1997 By: /s/ J. Davenport Mosby, III
J. Davenport Mosby, III
President
Date: November 13, 1997 By: /s/John M. McDonald
John M. McDonald
Vice President
Date: November 13, 1997 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, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,378,325
<SECURITIES> 0
<RECEIVABLES> 677,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 768,054
<DEPRECIATION> 36,574
<TOTAL-ASSETS> 2,788,625
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,726,500
<TOTAL-LIABILITY-AND-EQUITY> 2,788,625
<SALES> 0
<TOTAL-REVENUES> 2,237,457
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,810,843
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,621
<INCOME-PRETAX> 424,993
<INCOME-TAX> 0
<INCOME-CONTINUING> 424,993
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 424,993
<EPS-PRIMARY> 17.49<F2>
<EPS-DILUTED> 17.49<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET INCOME PER $1,000 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
