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, 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 March 31, 1998
Units of Limited Partnership
Interest: $1,000 per unit 24,054
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II, 1998 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
March 31, December 31,
1998 1997
ASSETS (Unaudited) (Audited)
Rental Equipment, at Cost $ 0 $ 0
Less: Accumulated Depreciation 0 0
------------ ------------
0 0
Rental Equipment Held for Sale 0 0
Investment in Sales Type Lease 909,081 984,166
Rent Receivable 15 0
Cash and Cash Equivalents 354,723 1,440,050
------------ ------------
Total Assets $ 1,263,819 $ 2,424,216
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Interest Payable $ 0 $ 0
Unearned Interest-Sales Term Lease 172,641 208,503
Payable to: General Partners 3,785 202,175
Affiliates 0 0
Others 0 0
Payable To Euro-Continental Reserve 27,440 11,552
Payable to Euro-Continental Deposit 59,950 59,950
Commissions Payable 29,000 32,000
Notes Payable 0 0
------------ -----------
Total Liabilities 292,816 514,180
Partners' Equity:
Limited Partners (24,054 units
outstanding at March 31, 1998,
and December 31, 1997) 1,170,982 2,100,625
General Partners (199,979) (190,589)
------------ ------------
Total Partners' Equity 971,003 1,910,036
Total Liabilities and
Partners' Equity $ 1,263,819 $ 2,424,216
============ ============
The accompanying notes are an integral part
of these financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31,
1998 1997
Revenues:
Rental Income $ 0 $ 77,025
Income from Sales Type Lease 35,863 0
Interest Income 7,739 19,749
Gain on Sale of Equipment 0 1,802,731
------------ ------------
Total Revenues 43,602 1,899,505
Operating Expenses:
Loss on Sale of Rental Equipment
Held for Sale 0 16,190
Management Fees - General Partners 3,754 1,541
Incentive Fees - General Partners 227,996 678,979
Resale Fees - General Partners 0 351,196
General and Administrative:
Affiliates 1,387 3,320
Other 5,614 34,388
Interest Expense 0 1,621
Depreciation and Amortization 0 1,381
------------ -----------
Total Operating Expenses 238,751 1,088,616
------------ -----------
Net Income (Loss) $ (195,149) $ 810,889
============ ============
Allocation of Net Loss:
Limited Partners $ (193,198) $ 802,780
General Partners (1,951) 8,109
------------ ------------
$ (195,149) $ 810,889
============ ============
Net Income Per $1,000 Limited
Partnership Unit $ (8.03) $ 60.81
============ ============
Number of Limited Partnership
Units 24,054 24,054
============ ============
The accompanying notes are an integral part
of these financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31,
1998 1997
Cash Flows from Operating Activities:
Net Income (Loss) $ (195,149) $ 310,227
Adjustments to Reconcile Net
Income (Loss) to Net Cash Provided
by (Used in) Operating Activities:
(Gain) Loss on Sale of
Rental Equipment 0 0
Depreciation and Amortization 0 1,190,585
Changes in Operating Assets
and Liabilities:
Decrease in Rental Equipment
Held for Sale 0 20,043
(Increase) Decrease in
Rent Receivable (15) (36,180)
(Increase) Decrease in
Accounts Receivable - Other 0 3,309
(Increase) Decrease in
Prepaid Expenses 0 (72,963)
(Increase) Decrease in Unearned
Interest - Sales Type Lease (35,862) 0
Increase (Decrease) in
Interest Payable 0 11,681
Increase (Decrease) in Payable to:
General Partners (198,390) (165,027)
Affiliates 0 5,109
Other 12,888 (102,058)
Increase (Decrease) in
Unearned Revenue 0 691,891
----------- -----------
Net Cash Provided by (Used In)
Operating Activities (416,528) 1,988,487
----------- -----------
Cash Flows from Investing Activities:
Purchases of Rental Equipment 0 (1,061,551)
Escrow Deposit 0 (8,908)
Decrease in Investment
In Sales Type Lease 75,085 0
(Increase) Decrease in Sales
Receivable 0 1,483
----------- -----------
Net Cash Provided by (Used In)
Investing Activities 75,085 (1,068,976)
----------- -----------
Cash Flows from Financing Activities:
(Increase) Decrease in Deferred Debt Costs 0 (1,167,635)
Payment of Notes Payable 0 (2,355)
Distribution to Limited Partners (736,445) (911,725)
Distributions to General Partners (7,439) (9,208)
----------- -----------
Net Cash (Used in)
Financing Activities (743,884) (2,090,923)
----------- -----------
Increase (Decrease) in Cash
and Cash Equivalents (1,085,327) (1,171,412)
Cash and Cash Equivalents at
Beginning of Period 1,440,050 5,671,367
----------- -----------
Cash and Cash Equivalents at
End of Period $ 354,723 $ 4,499,955
============ ============
Supplemental Cash Flow Information:
Interest Paid $ 0 $ 387,286
============ ============
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, 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 March 31, 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 three months ended March 31, 1998:
Equipment Management Fees $ 3,754
Incentive Fees 227,996
General and Administrative Costs 1,387
General Partner Distributions 7,439
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
$354,723 at March 31, 1998 represents cash of $2,681, a repurchase
agreement of $350,000, and money market mutual funds of $2,042.
NOTE 6 - OTHER EVENTS
The partnership will terminate its operations after the sale of its
last remaining equipment asset.
<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 $77,025 for the three months ended March
31, 1997, to $0 for the three months ended March 31, 1998. This decrease
resulted because rental equipment which was on lease during the first
period was sold in the intervening periods and provided no rental income in
1998. Income from Sales Type Lease is the result of the lease of equipment
reported on the balance sheet as Investment in Sales Type Lease and not
classified as an operating lease. Interest income decreased for the three
months ended March 31, 1998 as compared to the three months ended March 31,
1997, due to a lower average cash balance available for investment.
Interest expense decreased from $1,621 for the three months ended
March 31, 1997, to $0 for the three months ended March 31, 1998. This
decrease resulted from all debt being retired during the intervening
period.
Incentive fees decreased from $678,979 for the three months ended
March 31, 1997 to $227,996 for the three months ended March 31, 1998.
Incentive fees decreased because cumulative limited partner distributions
decreased during this same period.
Equipment resale fees decreased from $351,196 for the three months
ended March 31, 1997 to $0 for the three months ended March 31, 1998. 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 which occurred in 1997.
The net effect of the above revenue and expense items resulted in a
net loss of $195,149 for the three months ended March 31, 1998, compared to
a net income of $810,889 for the three months ended March 31, 1997.
Liquidity and Capital Resources
The primary source of funds for the three months ended March 31, 1998,
was $35,863 from income from the Sales Type Lease. These funds were used to
pay operating expenses. As of March 31, 1998, the Partnership had $354,723
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, 1997, 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.
The cash balance at March 31, 1998 was $354,723. The Partnership had
a net loss of $195,149 for the three months ended March 31, 1998. After
adjusting for the changes in operating assets and liabilities, net cash
used in operating activities was $416,528. Cash provided by investing
activities was $75,085 from the decrease in Investment in Sales Type Lease.
Cash used in financing activities totaled $743,884, which was distributions
of $743,884.
Actual cash distributions for the three months ended March 31, 1998
and 1997, were $743,884 and $920,933, 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 - None
<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 6, 1998 By: /s/J. Davenport Mosby, III
J. Davenport Mosby, III
President
Date: August 6, 1998 By: /s/John M. McDonald
John M. McDonald
Vice President
Date: August 6, 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 MARCH 31, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 354,723
<SECURITIES> 0
<RECEIVABLES> 15
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,263,819
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 971,003
<TOTAL-LIABILITY-AND-EQUITY> 1,263,819
<SALES> 0
<TOTAL-REVENUES> 43,602
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 238,751
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (195,149)
<INCOME-TAX> 0
<INCOME-CONTINUING> (195,149)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (195,149)
<EPS-PRIMARY> (8.03)<F2>
<EPS-DILUTED> (8.03)<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET LOSS PER $1,000 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
