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, 1998
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, 1998
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, 1998
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,
1998 1997
(Unaudited) (Audited)
ASSETS
Rental Equipment, at Cost $ 0 $ 0
Less: Accumulated
Depreciation 0 0
------------ ------------
0 0
------------ ------------
Rental Equipment Held for Sale 0 984,166
Investment in Sales Type Lease 834,081 0
Rent Receivable 30 0
Cash and Cash Equivalents 441,461 1,440,050
------------ ------------
Total Assets $ 1,275,572 $ 2,424,216
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Interest Payable $ 0 $ 0
Unearned Interest-Sales
Type Lease 138,647 208,503
Payable to: General Partners 7,535 202,175
Affiliates 0 0
Others 0 0
Payable To Euro-Continental
Reserve 53,552 11,552
Payable to Euro-Continental
Deposit 59,950 59,950
Commissions Payable 26,000 32,000
Notes Payable 0 0
------------ -----------
Total Liabilities 285,684 514,180
------------ -----------
Partners' Equity:
Limited Partners (24,054 units
outstanding at June 30, 1998,
and December 31, 1997) 1,189,677 2,100,625
General Partners (199,789) (190,589)
------------ -----------
Total Partners' Equity 989,888 1,910,036
------------ -----------
Total Liabilities and
Partners' Equity $ 1,275,572 $ 2,424,216
============ ============
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,
1998 1997
Revenues:
Rental Income $ 0 $ 367,346
Income from Sales Type Lease 69,856 0
Interest Income 11,877 29,712
Gain on Sale of Equipment 0 1,802,731
------------ ------------
Total Revenues 81,733 2,199,789
------------ ------------
Operating Expenses:
Loss on Sale of Equipment
Held for Sale 0 195,865
Management Fees - General Partners 7,504 16,057
Incentive Fees - General Partners 227,996 678,979
Resale Fees - General Partners 0 351,196
General and Administrative:
Affiliates 5,137 17,365
Other 17,360 98,434
Interest Expense 0 1,621
Depreciation and Amortization 0 3,843
------------ ------------
Total Operating Expenses 257,977 1,363,360
------------ ------------
Net Income (Loss) $ (176,264) $ 836,429
============ ============
Allocation of Net Income (Loss):
Limited Partners $ (174,501) $ 828,065
General Partners (1,763) 8,364
------------ ------------
$ (176,264) $ 836,429
============ ============
Net Income (loss) Per $1,000
Limited Partnership Unit $ (7.25) $ 34.43
============ ============
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,
1998 1997
Revenues:
Rental Income $ 0 $ 290,321
Income from Sales Type Lease 33,993 0
Interest Income 4,138 9,963
------------ ------------
Total Revenues 38,131 300,284
------------ ------------
Operating Expenses:
Loss on Sale of Equipment
Held for Sale 0 179,675
Management Fees - General Partners 3,750 14,516
Incentive Fees - General Partners 0 0
General and Administrative:
Affiliates 3,750 14,045
Other 11,746 64,046
Depreciation and Amortization 0 2,462
------------ ------------
Total Operating Expenses 19,246 274,744
------------ ------------
Net Income $ 18,885 $ 25,540
============ ============
Allocation of Net Income:
Limited Partners $ 18,696 $ 25,285
General Partners 189 255
------------ ------------
$ 18,885 $ 25,540
============ ============
Net Income Per $1,000 Limited
Partnership Unit $ .78 $ 1.05
============ ============
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,
1998 1997
Cash Flows from Operating Activities:
Net Income $ (176,264) $ 836,429
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
(Gain) Loss on Sale of
Equipment 0 (1,802,731)
Depreciation and Amortization 0 3,843
Changes in Operating Assets
and Liabilities:
(Increase) Decrease in
Equipment Held for Sale 0 1,888,116
(Increase) Decrease in
Rent Receivable (30) 385,129
(Increase) Decrease in
Prepaid Expenses 0 (49,590)
(Increase) Decrease in Unearned
Interest - Sales Type Lease (69,856) 0
Increase (Decrease) in
Interest Payable 0 (8,106)
Increase (Decrease) in
Commissions Payable (6,000) 0
Increase (Decrease) in Payable to:
General Partners (194,641) (247,640)
Affiliates 0 (5,446)
Others 0 (20,306)
Increase (Decrease) in Payable
Euro-Continental Reserve 42,000 0
----------- -----------
Net Cash Provided by
Operating Activities (404,791) 979,698
----------- -----------
Cash Flows from Investing Activities:
Increase in Sales Receivable 0 (704,000)
Decrease in Investment
In Sales Type Lease 150,085 0
Proceeds from Sale of
Equipment 0 5,659,831
----------- -----------
Net Cash Provided by
Investing Activities 150,085 4,955,831
----------- -----------
Cash Flows from Financing Activities:
Payment of Notes Payable 0 (452,427)
(Increase) Decrease in
Deferred Debt Costs 0 (5,324)
Distributions to Limited
Partners (736,445) (4,860,231)
Distributions to General
Partners (7,438) (49,093)
----------- ------------
Net Cash (Used In)
Financing Activities (743,883) (5,367,075)
----------- ------------
Increase (Decrease) in Cash (998,589) 568,454
Cash and Cash Equivalents at
Beginning of Period 1,440,050 947,493
----------- ------------
Cash and Cash Equivalents at
End of Period $ 441,461 $ 1,515,947
=========== ============
Supplemental Cash Flow Information:
Interest Paid $ 0 $ 9,727
=========== ============
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, 1998
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, 1998, 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, 1998:
Equipment Management Fees $ 7,504
Incentive Fees 227,996
General and Administrative Costs 5,137
General Partner Distributions 7,438
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, 1997. 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
$441,461 at June 30, 1998, represents cash of $2,394, a repurchase
agreement of $437,000, and money market mutual funds of $2,067.
NOTE 6 - SUBSEQUENT EVENTS
During June 1998 the Partnership sold its last asset with an original
cost of $1,872,000 for net proceeds of $614,575.
<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, 1998, Compared to Six Months Ended
June 30, 1997
Rental income decreased from $367,346 for the six months ended June
30, 1997 to $0 for the six months ended June 30, 1998. The final lease
payments of $367,346 were for three leases for the six months ended June
30, 1997. Income from Sales Type Lease increased from $0 for the six months
ended June 30, 1997 to $69,856 for the six months ended June 30, 1998.
This income is due to income received from the lease of the last remaining
asset, classified as Investment in Sales Type lease on the balance sheet.
The Partnership is winding down its operations and the last remaining asset
has now been sold. Interest income decreased for the six months ended June
30, 1998, as compared to the six months ended June 30, 1997 due to a lower
average cash balance available for investment. 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.
Management Fee expense decreased due to lower rental income for the
six months ended June 30, 1998. Incentive fees decreased from $678,979 for
the six months ended June 30, 1997 to $227,996 for the six months ended
June 30, 1998. Incentive fees decreased as the limited partner
distributions were less in 1998 than in 1997.
Interest expense decreased from $1,621 for the six months ended June
30, 1997, to $0 for the six months ended June 30, 1998. This decrease
resulted from all debt being retired during the intervening period.
Depreciation expense was $0 for the six months ended June 30, 1998 and
1997.
Equipment resale fees decreased from $351,196 for the six months ended
June 30, 1997 to $0 for the six months ended June 30, 1998. The Equipment
resale fee was deferred last year, 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.
The net effect of the above revenue and expense items resulted in a
net loss of $176,264 for the six months ended June 30, 1998, compared to a
net income of $836,429 for the six months ended June 30, 1997.
All Notes payable were paid off during the six months ended June 30,
1997.
Three Months Ended June 30, 1998, Compared to Three Months Ended
June 30, 1997.
Rental income decreased from $290,321 for the three months ended June
30, 1997, to $0 for the three months ended June 30, 1998. This decrease
was a result of equipment that provided rental income in the second quarter
of 1997 being sold in the intervening period. Income from Sales Type Lease
increased from $0 for the three months ended June 30, 1997 to $33,993 for
the three months ended June 30, 1998. This income is due to income
received from the lease of the last remaining asset, classified as
Investment in Sales Type lease on the balance sheet. Interest income
decreased for the three months ended June 30, 1998, as compared to the
three months ended June 30, 1997, due to a lower average cash balance
available for investment. Management fee expense decreased due to lower
rental income.
The net effect of the above revenue and expense items resulted in a
net income of $18,885 for the three months ended June 30, 1998, compared to
a net income of $25,540 for the three months ended June 30, 1997.
Liquidity and Capital Resources
The primary source of funds for the six months ended June 30, 1998,
was $69,856 from income from Sales Type Lease. As of June 30, 1998, the
Partnership had $441,461 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, 1998 and proceeds
from sales during 1998.
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 June 30, 1998, was $441,461. The
Partnership had a net loss of $176,264 for the six months ended June 30,
1998. After adjusting for depreciation and amortization and the changes in
operating assets and liabilities, net cash used in operating activities was
$404,791. Cash provided by investing activities was $150,085 from the
Investment in Sales Type Lease. Cash used in financing activities totaled
$743,883, used for distributions.
Actual cash distributions for the six months ended June 30, 1998 and
1997, were $743,883 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 -
<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, 1998 By: /s/ J. Davenport Mosby, III
J. Davenport Mosby, III
President
Date: August 14, 1998 By: /s/John M. McDonald
John M. McDonald
Vice President
Date: August 14, 1998 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, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 441,461
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,275,572
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 989,888
<TOTAL-LIABILITY-AND-EQUITY> 1,275,572
<SALES> 0
<TOTAL-REVENUES> 81,733
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 257,977
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (176,264)
<INCOME-TAX> 0
<INCOME-CONTINUING> (176,264)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (176,264)
<EPS-PRIMARY> (7.25)<F2>
<EPS-DILUTED> (7.25)<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET LOSS PER $1,000 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
