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, 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 June 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
--------------
June 30, December 31,
1997 1996
---------- ------------
(Unaudited) (Audited)
ASSETS
Rental Equipment, at Cost $ 0 $ 10,470,886
Less: Accumulated
Depreciation 0 (6,613,785)
------------ ------------
0 3,857,101
------------ ------------
Rental Equipment Held for Sale 1,669,995 3,558,111
Rent Receivable 0 385,129
Sales Receivable 704,000 0
Prepaid Expenses 54,015 4,425
Deferred Debt Costs (Net of
Accumulated Amortization of
$139,141 and $135,298,
Respectively) 2,340 859
Cash and Cash Equivalents 1,515,947 947,493
------------ ------------
Total Assets $ 3,946,297 $ 8,753,118
============ ============
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Liabilities:
Interest Payable $ 0 $ 8,106
Payable to: General Partners 17,863 265,503
Affiliates 0 5,446
Others 19,965 40,271
Notes Payable 0 452,427
------------ ------------
Total Liabilities 37,828 771,753
------------ ------------
Partners' Equity:
Limited Partners (24,054 units
outstanding at June 30, 1997,
and December 31, 1996) 4,079,075 8,111,242
General Partners (170,606) (129,877)
------------ ------------
Total Partners' Equity 3,908,469 7,981,365
------------ ------------
Total Liabilities and
Partners' Equity $ 3,946,297 $ 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 SIX MONTHS ENDED JUNE 30,
1997 1996
------------ ------------
Revenues:
Rental Income $ 367,346 $ 1,580,178
Interest Income 29,712 30,819
Gain on Sale of Equipment 1,802,731 1,111,494
------------ ------------
Total Revenues 2,199,789 2,722,491
------------ ------------
Operating Expenses:
Loss on Sale of Equipment
Held for Sale 195,865 14,713
Management Fees - General
Partners 16,057 50,185
Incentive Fees - General
Partners 678,979 18,525
Resale Fees - General Partners 351,196 0
General and Administrative:
Affiliates 17,365 22,440
Other 98,434 74,511
Interest Expense 1,621 90,393
Depreciation and Amortization 3,843 700,308
------------ ------------
Total Operating Expenses 1,363,360 971,075
------------ ------------
Net Income $ 836,429 $ 1,751,416
============ ============
Allocation of Net Income:
Limited Partners $ 828,065 $ 1,733,902
General Partners 8,364 17,514
------------ ------------
$ 836,429 $ 1,751,416
============ ============
Net Income Per $1,000 Limited
Partnership Unit $ 34.43 $ 72.08
============ ============
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 JUNE 30,
1997 1996
------------ ------------
Revenues:
Rental Income $ 290,321 $ 724,298
Interest Income 9,963 22,849
------------ ------------
Total Revenues 300,284 747,147
------------ ------------
Operating Expenses:
Loss on Sale of Equipment
Held for Sale 179,675 9,162
Loss on Sale of Equipment 0 5,833
Management Fees - General
Partners 14,516 13,465
Incentive Fees - General
Partners 0 18,525
General and Administrative:
Affiliates 14,045 12,482
Other 64,046 46,983
Interest Expense 0 40,649
Depreciation and Amortization 2,462 326,246
------------ ------------
Total Operating Expenses 274,744 473,345
------------ ------------
Net Income $ 25,540 $ 273,802
============ ============
Allocation of Net Income:
Limited Partners $ 25,285 $ 271,064
General Partners 255 2,738
------------ ------------
$ 25,540 $ 273,802
============ ============
Net Income Per $1,000 Limited
Partnership Unit $ 1.05 $ 11.27
============ ============
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 SIX MONTHS ENDED JUNE 30,
1997 1996
------------ ------------
Cash Flows from Operating Activities:
Net Income $ 836,429 $ 1,751,416
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
(Gain) Loss on Sale of
Equipment (1,802,731) (1,111,494)
Depreciation and
Amortization 3,843 700,308
Changes in Operating Assets
and Liabilities:
(Increase) Decrease in
Equipment Held for Sale 1,888,116 179,032
(Increase) Decrease in
Rent Receivable 385,129 (259,115)
(Increase) Decrease in
Prepaid Expenses (49,590) (14,415)
Increase (Decrease) in
Interest Payable (8,106) 6,065
Increase (Decrease) in
Payable to:
General Partners (247,640) (27,077)
Affiliates (5,446) 0
Others (20,306) (101,589)
Increase (Decrease) in
Unearned Revenue 0 (43,687)
------------ ------------
Net Cash Provided by
Operating Activities 979,698 1,079,444
------------ ------------
Cash Flows from Investing Activities:
Increase from Sales Receivable (704,000) 0
Proceeds from Sale of
Equipment 5,659,831 2,517,158
------------ ------------
Net Cash Provided by
Investing Activities 4,955,831 2,517,158
------------ ------------
<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS (continued)
------------------------------------
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30,
1997 1996
------------ ------------
Cash Flows from Financing Activities:
Payment of Notes Payable (452,427) (839,980)
(Increase) Decrease in
Deferred Debt Costs (5,324) (1,500)
Distributions to Limited
Partners (4,860,231) (703,280)
Distributions to General
Partners (49,093) (7,103)
------------ ------------
Net Cash (Used In)
Financing Activities (5,367,075) (1,551,863)
------------ ------------
Increase (Decrease) in Cash 568,454 2,044,739
Cash and Cash Equivalents at
Beginning of Period 947,493 828,343
------------ ------------
Cash and Cash Equivalents at
End of Period $ 1,515,947 $ 2,873,082
============ ============
Supplemental Cash Flow Information:
Interest Paid $ 9,727 $ 84,328
============ ============
The accompanying notes are an integral part
of these financial statements.<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
June 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 June 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 six months ended June 30, 1997:
Equipment Management Fees $ 16,057
Incentive Fees 678,979
Resale Fees 351,196
General and Administrative Costs 17,365
General Partner Distributions 49,093
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
$1,515,947 at June 30, 1997, represents cash of $6,978, a repurchase
agreement of $1,507,000, and money market mutual funds of $1,969.
NOTE 6 - SUBSEQUENT EVENTS
On July 31, 1997, the Partnership paid distributions of $762,828 to
the Limited Partners and $7,705 to the General Partners and incentive
management fees to the General Partners of $201,346. These funds were
provided by the cash profits received from the sale of one Fairchild Metro
III commuter aircraft previously leased to Mesaba Aviation and one Shorts
360 commuter aircraft previously on lease to Lynrise Air Lease.
<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, 1997, Compared to Six Months Ended
June 30, 1996
Rental income decreased from $1,580,178 for the six months ended June
30, 1996, to $367,346 for the six months ended June 30, 1997. The
Partnership is winding down its operations and the remaining equipment is
now off lease. The final lease payments of $367,346 are for three leases
that provided $1,558,283 of rental income for the six months ended June 30,
1996. Interest income remained about the same for the six months ended
June 30, 1997, as compared to the six months ended June 30, 1996.
Interest expense decreased from $90,393 for the six months ended June
30, 1996, to $1,621 for the six months ended June 30, 1997. This decrease
primarily resulted from all debt being retired during the intervening
period. Depreciation expense decreased for the six months ended June 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
six months ended June 30,1997. Incentive fees increased from $18,525 for
the six months ended June 30, 1996 to $678,979 for the six months ended
June 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 $0 for the six months ended June
30, 1996 to $351,196 for the six months ended June 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 six months ended June 30, 1996 Rental Equipment with an
original cost of $2,742,200 was sold for a gain of $1,111,494 and Rental
Equipment Held for Sale with an original cost of $424,373 was sold at a
loss of $14,713. During the six months ended June 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
$4,426,309 was sold at a loss of $195,865.
The net effect of the above revenue and expense items resulted in a
net income of $836,429 for the six months ended June 30, 1997, compared to
a net income of $1,751,416 for the six months ended June 30, 1996.
All Notes payable were paid off during the six months ended June 30,
1997.<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Three Months Ended June 30, 1997, Compared to Three Months Ended
June 30, 1996.
Rental income decreased from $724,298 for the three months ended June
30, 1996, to $290,321 for the three months ended June 30, 1997. This
decrease resulted primarily from equipment that provided $462,154 of rental
income in the second quarter of 1996 being sold in the intervening period.
The income for the quarter was final payments for lessees that kept their
equipment beyond the original lease term. Interest income decreased for
the three months ended June 30, 1997, as compared to the three months ended
June 30, 1996, due to a lower average cash balance available for
investment.
Interest expense decreased from $40,649 for the three months ended
June 30, 1996, to $0 for the three months ended June 30, 1997. This
decrease resulted from all debt having been paid off. Management fee
expense remained about the same due to the final lease payments.
Depreciation expense decreased for the three months ended June 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 income of $25,540 for the three months ended June 30, 1997, compared to
a net income of $273,802 for the three months ended June 30, 1996.
Liquidity and Capital Resources
The primary source of funds for the six months ended June 30, 1997,
were $367,346 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 $4,909,324. As of June 30, 1997, the Partnership had
$1,515,947 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 June 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.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Liquidity and Capital Resources (Continued)
Cash and Cash Equivalents at June 30, 1997, was $1,515,947. The
Partnership had net income of $836,429 for the six months ended June 30,
1997. After adjusting for depreciation and amortization and the changes in
operating assets and liabilities, net cash provided by operating activities
was $979,698. Cash provided by investing activities was $4,955,831 from
the sale of equipment. Cash used in financing activities totaled
$5,367,075, which was primarily payments on notes payable of $452,427 and
distributions of $4,909,324.
Actual cash distributions for the six months ended June 30, 1997 and
1996, were $4,909,324 and $710,383, 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
<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 27, 1997 By: /s/ Davenport Mosby, III
J. Davenport Mosby, III
President
Date: August 27, 1997 By: /s/John M.McDonald
John M. McDonald
Vice President
Date: August 27, 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 JUNE 30, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 556,387
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 4,837,486
<DEPRECIATION> 3,167,491
<TOTAL-ASSETS> 3,946,297
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,908,469
<TOTAL-LIABILITY-AND-EQUITY> 3,946,297
<SALES> 0
<TOTAL-REVENUES> 2,199,789
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,361,739
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,621
<INCOME-PRETAX> 836,429
<INCOME-TAX> 0
<INCOME-CONTINUING> 836,429
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 836,429
<EPS-PRIMARY> 33.37<F2>
<EPS-DILUTED> 33.37<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET INCOME PER $1,000 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
