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, 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 March 31, 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
--------------
March 31, December 31,
1997 1996
----------- ------------
ASSETS (Unaudited) (Audited)
------
Rental Equipment, at Cost $ 0 $ 10,470,886
Less: Accumulated Depreciation 0 (6,613,785)
------------ ------------
0 3,857,101
------------ ------------
Rental Equipment Held for Sale 3,334,121 3,558,111
Rent Receivable 0 385,129
Prepaid Expense 1,710 4,425
Deferred Debt Costs (Net of
Accumulated Amortization of
$136,679 and $ 135,298
Respectively) 3,302 859
Cash and Cash Equivalents 556,387 947,493
------------ ------------
Total Assets $ 3,895,520 $ 8,753,118
============ ============
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Liabilities:
Interest Payable $ 0 $ 8,106
Payable to: General Partners 12,590 265,503
Affiliates 0 5,446
Others 0 40,271
Notes Payable 0 452,427
------------ ------------
Total Liabilities 12,590 771,753
------------ ------------
Partners' Equity:
Limited Partners (24,054 units
outstanding at March 31, 1997,
and December 31, 1996) 4,053,791 8,111,242
General Partners (170,861) (129,877)
------------ ------------
Total Partners' Equity 3,882,930 7,981,365
------------ ------------
Total Liabilities and
Partners' Equity $ 3,895,520 $ 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 THREE MONTHS ENDED MARCH 31,
1997 1996
------------ ------------
Revenues:
Rental Income $ 77,025 $ 855,880
Interest Income 19,749 7,970
Gain on Sale of Equipment 1,802,731 1,117,327
------------ ------------
Total Revenues 1,899,505 1,981,177
------------ ------------
Operating Expenses:
Loss on Sale of Rental Equipment
Held for Sale 16,190 5,551
Management Fees - General
Partners 1,541 36,720
Incentive Fees - General
Partners 678,979 0
Resale Fees - General
Partners 351,196 0
General and Administrative:
Affiliates 3,320 9,958
Other 34,388 27,528
Interest Expense 1,621 49,744
Depreciation and Amortization 1,381 374,062
------------ ------------
Total Operating Expenses 1,088,616 503,563
------------ ------------
Net Income $ 810,889 $ 1,477,614
============ ============
Allocation of Net Loss:
Limited Partners $ 802,780 $ 1,462,838
General Partners 8,109 14,776
------------ ------------
$ 810,889 $ 1,477,614
============ ============
Net Income Per $1,000 Limited
Partnership Unit $ 33.37 $ 60.81
============ ============
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,
1997 1996
------------ ------------
Cash Flows from Operating Activities:
Net Income (Loss) $ 810,889 $ 1,477,614
Adjustments to Reconcile Net
Income (Loss) to Net Cash Provided
by (Used in) Operating Activities:
(Gain) Loss on Sale of
Equipment (1,802,731) (1,117,327)
Depreciation and
Amortization 1,381 374,062
Changes in Operating Assets
and Liabilities:
Decrease in Rental Equipment
Held for Sale 223,990 139,721
(Increase) Decrease in
Rent Receivable 385,129 (128,971)
(Increase) Decrease in
Prepaid Expenses 2,715 0
Increase (Decrease) in
Interest Payable (8,106) 3,113
Increase (Decrease) in
Payable to:
General Partners (252,913) (27,662)
Affiliates (5,446) 0
Others (40,271) (101,589)
Increase (Decrease) in
Unearned Revenue 0 (43,687)
------------- ------------
Net Cash Provided by (Used In)
Operating Activities (685,363) 575,274
------------- ------------
Cash Flows from Investing Activities:
Proceeds from Sale of Equipment 5,659,832 2,522,991
(Increase) Decrease in
Sales Receivable 0 (2,369,616)
-------------- -----------
Net Cash Provided by (Used In)
Investing Activities 5,659,832 153,375
-------------- -----------
Cash Flows from Financing Activities:
(Increase) Decrease in
Deferred Debt Costs (3,824) (1,500)
Payment of Notes Payable (452,427) (415,523)
Distributions to Limited
Partners (4,860,231) (352,448)
Distributions to General
Partners (49,093) (3,560)
-------------- -----------
Net Cash (Used in)
Financing Activities (5,365,575) (773,031)
-------------- -----------
<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS (Continued)
-----------------------------------
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31,
1997 1996
------------ ------------
(Decrease) in Cash (391,106) (44,382)
Cash and Cash Equivalents at
Beginning of Period 947,493 828,343
------------ ------------
Cash and Cash Equivalents at
End of Period $ 556,387 $ 783,961
============ ============
Supplemental Cash Flow Information:
Interest Paid $ 9,727 $ 46,631
============ ============
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, 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 March 31, 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 three months ended March 31, 1997:
Equipment Management Fees $ 1,541
Incentive Fees 678,979
Resale Fees 351,196
General and Administrative Costs 3,320
General Partner Distributions 49,093
<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
March 31, 1997
--------------
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
$556,387 at March 31, 1997 represents cash of $48,574, a repurchase
agreement of $506,000, and money market mutual funds of $1,813.
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. 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.
As of March 31, 1997, residual proceeds of the initial specified equipment
had exceeded $7,094,795, all initial specified equipment had been sold, and
the agreed percentage of all applicable proceeds had been paid to the
seller.
NOTE 7 - OTHER EVENTS
All equipment leases have expired. The partnership is winding down
its operation pending the sale of the off lease equipment.
<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
Rental income decreased from $855,880 for the three months ended March
31, 1996, to $77,025 for the three months ended March 31, 1997. This
decrease resulted because rental equipment which was on lease during the
first period was sold in the intervening period and provied no rental
income in 1997 and equipment which was on lease during the first period
came off lease in the intervening period and provided no rental income in
1997. Interest income increased for the three months ended March 31, 1997,
as compared to the three months ended March 31, 1996, due to a higher
average cash balance available for investment.
Interest expense decreased from $49,744 for the three months ended
March 31, 1996, to $1,621 for the three months ended March 31, 1997. This
decrease primarily resulted from all debt being retired during the
intervening period. Depreciation expense decreased for the three months
ended March 31, 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
three months ended March 31, 1997. Incentive fees increased from $0 for
the three months ended March 31, 1996 to $678,979 for the three months
ended March 31, 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 three months ended
March 31, 1996 to $351,196 for the three months ended March 31, 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 three months ended March 31, 1996, Rental Equipment with an
original cost of $2,742,400 was sold for a gain of $1,117,327. During the
three months ended March 31, 1997, Rental Equipment with an original cost
of $10,470,886 was sold for a gain of $1,802,731. Rental Equipment Held
for Sale with a net book value of $223,990 was sold at a loss of $16,190.
The net effect of the above revenue and expense items resulted in a
net income of $810,889 for the three months ended March 31, 1997, compared
to a net income of $1,477,614 for the three months ended March 31, 1996.
All notes payable were paid off during the three months ended March
31, 1997.
<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
(a Limited Partnership)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources
The primary source of funds for the three months ended March 31, 1997,
was $5,659,832 from sales proceeds and $77,025 from leasing revenues.
These funds were used to make $452,427 of notes payments and $4,909,324 of
distributions, and to pay operating expenses. As of March 31, 1997, the
Partnership had $556,387 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 December 31, 1996, 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.
The cash balance at March 31, 1997 was $556,387. The Partnership had
net income of $810,889 for the three months ended March 31, 1997. After
adjusting for depreciation and amortization and the changes in operating
assets and liabilities, net cash used in operating activities was $685,363.
Cash provided by investing activities were $5,659,832 from the sale of
equipment. Cash used in financing activities totaled $5,365,575, which was
primarily payments on notes payable of $452,427 and distributions of
$4,909,324.
Actual cash distributions for the three months ended March 31, 1997
and 1996, were $4,909,324 and $356,008, 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
<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: May 20, 1997 By: /s/J. Davenport Mosby, III
----------------------------
J. Davenport Mosby, III
President
Date: May 20, 1997 By: /s/John M. McDonald
--------------------
John M. McDonald
Vice President
Date: May 20, 1997 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 MARCH 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 556,387
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 9,171,219
<DEPRECIATION> 5,837,098
<TOTAL-ASSETS> 3,895,520
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,882,930
<TOTAL-LIABILITY-AND-EQUITY> 3,895,520
<SALES> 0
<TOTAL-REVENUES> 1,899,505
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,086,995
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,621
<INCOME-PRETAX> 810,899
<INCOME-TAX> 0
<INCOME-CONTINUING> 810,899
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 810,899
<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>
