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, 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 September 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.
BALANCE SHEETS
September 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 0
Net Investment in Sales Type Lease 0 984,166
Rent Receivable 0 0
Prepaid Expense 0 0
Deferred Debt Costs (Net of Accumulated
Amortization of $139,141 and $135,298,
Respectively) 0 0
Cash and Cash Equivalents 1,031,911 1,440,050
------------ ------------
Total Assets $ 1,031,911 $ 2,424,216
============= =============
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Interest Payable $ 0 $ 0
Unearned Interest-Short Term Lease 0 208,503
Payable to: General Partners 73,981 202,175
Affiliates 0 0
Others 0 0
Payable to Euro-Continental Reserve 0 11,552
Payable to Euro-Continental Deposit 0 59,950
Commissions Payable 0 32,000
Notes Payable 0 0
------------- -------------
Total Liabilities 73,981 514,180
------------- -------------
Partners' Equity:
Limited Partners (24,054 units outstanding
at September 30, 1998 and December 31, 1,158,039 2,100,625
1997) (200,109) (190,589)
General Partners ------------- -------------
957,930 1,910,036
Total Partners' Equity ------------- -------------
$ 1,031,911 $ 2,424,216
Total Liabilities and Partners' Equity ============= =============
The accompanying notes are an integral part of these financial statements.
<PAGE>
CYPRESS EQUIPMENT FUND, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1998 1997
---- ----
Revenues:
Rental Income $ 0 $ 392,346
Interest Income-S.T. Lease 79,432 0
Interest Income 20,989 42,380
Gain on Other 32,513 0
Gain on Sale of Equipment 0 1,802,731
------------ ------------
Total Revenues 132,934 2,237,457
------------ ------------
Operating Expenses:
Loss on Sale of Rental
Equipment Held for Sale 0 264,912
Management Fees-General
Partners 7,503 13,959
Incentive Fees-General
Partners 227,996 880,325
Resale Fees-General Partners 73,981 351,196
General Administrative:
Affiliates 9,191 24,957
Other 22,485 233,987
Interest Expense 0 1,621
Depreciation and Amortization 0 41,507
----------- -----------
Total Operating Expenses 341,156 1,812,464
----------- -----------
Net Income (Loss) $ (208,222) $ 424,993
============ ============
Allocation of Net Income
(Loss):
Limited Partners $ (206,140) $ 420,743
General Partners (2,082) 4,250
------------ ------------
$ (208,222) $ 424,993
============ ============
Net Income per $1,000 Limited
Partnership Unit Outstanding $ (8.57) $ 17.49
============ ============
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.
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1998 1997
---- ----
Revenues:
Rental Income $ 0 $ 25,000
Interest Income-S.T. Lease 9,576 0
Interest Income 9,112 12,668
Gain on Other 32,513 0
------------ ------------
Total Revenues 51,201 37,668
------------ ------------
Operating Expenses:
Loss on Sale of Rental
Equipment Held for Sale 0 69,047
Loss on Sale of Other 0 0
Management Fees-General
Partners 0 (2,098)
Incentive Fees-General
Partners 0 201,346
Resale Fees-General Partners 73,981 0
General Administrative:
Affiliates 4,054 7,592
Other 5,125 135,553
Interest Expense 0 0
Depreciation and Amortization 0 37,664
----------- -----------
Total Operating Expenses 83,160 449,104
----------- -----------
Net Income (Loss) $ (31,959) $ (411,436)
============ ============
Allocation of Net Income
(Loss):
Limited Partners $ (31,639) $ (407,322)
General Partners (320) (4,114)
------------ ------------
$ (31,959) $ (411,436)
============ ============
Net Income per $1,000 Limited
Partnership Unit Outstanding $ (1.32) $ (16.93)
============ ============
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.
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1998 1997
---- ----
Cash Flows from Operating
Activities:
Net Income (Loss) $ (208,222) $ 424,993
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Provided by (Used in) Operating
Activities:
(Gain) Loss on Sale of Equipment 0 (1,802,731)
Depreciation and Amortization 0 41,507
Changes in Operating Assets
and Liabilities:
Decrease in Rental Equipment
Held for Sale 0 3,558,111
(Increase) Decrease in Rent
Receivable 0 385,129
(Increase) Decrease in Unearned
Interest-S.T. Lease (208,503) 0
Decrease in Interest Payable 0 (8,106)
Increase (Decrease) in Prepaid
Expense 0 3,855
Increase (Decrease) in
Commissions Payable (32,000) 0
Increase (Decrease) in
Payable to:
General Partners (128,195) (265,503)
Affiliates 0 (5,446)
Other 0 21,854
Decrease in Payable - Euro-
Continental Reserve & Deposit (71,502) 0
------------ ------------
Net Cash Provided by (Used
In) Operating Activities (648,422) 2,353,663
------------ ------------
Cash Flows from Investing
Activities:
Increase in Sales Receivable 0 (677,000)
Purchase of Equipment 0 (768,054)
Decrease in Investment in Sales
Type Lease 984,166 0
Proceeds from Sales of Equipment 0 5,659,831
----------- ------------
Net Cash Provided by (Used
In) Investing Activities 984,166 4,214,777
----------- ------------
Cash Flows from Financing
Activities:
(Increase) Decrease in Deferred
Debt Costs 0 (5,324)
Payment of Notes Payable 0 (452,427)
Distributions to Limited Partners (736,445) (5,623,059)
Distributions to General Partners (7,438) (56,798)
----------- -----------
Net Cash Provided by (Used
In) Financing Activities (743,883) (6,137,608)
----------- -----------
Increase (Decrease) in Cash
and Cash Equivalents (408,139) 430,832
Cash and Cash Equivalents at
Beginning of Period 1,440,050 947,493
----------- -----------
Cash and Cash Equivalents at End
of Period $ 1,031,911 $ 1,378,325
=========== ===========
Supplemental Cash Flow Information:
Interest Paid $ 0 $ 9,727
============ ===========
Supplemental Schedule of Non-Cash Investing Activities:
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, 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 September 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 nine months ended September 30, 1998:
Equipment Management Fees $ 7,503
Incentive Fees 227,996
Resale Fees 73,981
General and Administrative Costs 9,191
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
$1,031,911 at September 30, 1998, represents cash of $2,092, a repurchase
agreement of $1,013,000, and money market mutual funds of $16,819.
NOTE 6 - SUBSEQUENT EVENTS
The General Partner is making its final distribution in November, 1998
of $704,464 to the Limited Partners. The General Partners will receive an
incentive management fee totaling $225,211. After all expenses are paid
the Fund will terminate operations.
<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, 1998, Compared to Nine Months Ended
September 30, 1997
Rental income decreased from $392,346 for the nine months ended
September 30, 1997 to $0 for the nine months ended September 30, 1998. The
final lease payments of $367,346 were for three leases for the nine months
ended September 30, 1997 and $25,000 for the lease of the Fund's last
remaining asset. Income from Sales Type Lease increased from $0 for the
nine months ended September 30, 1997 to $79,432 for the nine months ended
September 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 nine months ended September 30, 1998, as compared to the nine months
ended September 30, 1997 due to a lower average cash balance available for
investment. 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.
Management Fee expense decreased due to lower rental income for the
nine months ended September 30, 1998. Incentive fees decreased from
$880,325 for the nine months ended September 30, 1997 to $227,996 for the
nine months ended September 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 nine months ended
September 30, 1997, to $0 for the nine months ended September 30, 1998.
This decrease resulted from all debt being retired during the intervening
period. Depreciation expense was $0 for the nine months ended September
30, 1998 and 1997.
Equipment resale fees decreased from $351,196 for the nine months
ended September 30, 1997 to $73,981 for the nine months ended September 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 $208,222 for the nine months ended September 30, 1998, compared
to a net income of $424,993 for the nine months ended September 30, 1997.
All Notes payable were paid off during the nine months ended September
30, 1997.
Three Months Ended September 30, 1998, Compared to Three Months Ended
September 30, 1997.
Rental income decreased from $25,000 for the three months ended
September 30, 1997, to $0 for the three months ended September 30, 1998.
This decrease was a result of equipment that provided rental income in the
third quarter of 1997 being sold in the intervening period. Income from
Sales Type Lease increased from $0 for the three months ended September 30,
1997 to $9,576 for the three months ended September 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 September 30, 1998, as
compared to the three months ended September 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 loss of $31,959 for the three months ended September 30, 1998, compared
to a net loss of $411,436 for the three months ended September 30, 1997.
Liquidity and Capital Resources
The primary source of funds for the nine months ended September 30,
1998, was $79,432 from income from Sales Type Lease. As of September 30,
1998, the Partnership had $1,031,911 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, 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 September 30, 1998, was $1,031,911. The
Partnership had a net loss of $208,222 for the nine months ended September
30, 1998. After adjusting for depreciation and amortization and the
changes in operating assets and liabilities, net cash used in operating
activities was $648,422. Cash provided by investing activities was
$984,166 from the Investment in Sales Type Lease. Cash used in financing
activities totaled $743,883, used for distributions.
Actual cash distributions for the nine months ended September 30, 1998
and 1997, were $743,883 and $5,679,857, 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: November 11, 1998 By:/s/ Davenport Mosby, III
J. Davenport Mosby, III
President
Date: November 11, 1998 By:/s/John M. McDonald
John M. McDonald
Vice President
Date: November 11, 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 SEPTEMBER 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,031,911
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,031,911
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 957,930
<TOTAL-LIABILITY-AND-EQUITY> 1,031,911
<SALES> 0
<TOTAL-REVENUES> 132,932
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 341,156
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (208,222)
<INCOME-TAX> 0
<INCOME-CONTINUING> (208,222)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (208,222)
<EPS-PRIMARY> (8.57)<F2>
<EPS-DILUTED> (8.57)<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET LOSS PER $1,000 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
