SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549-1004
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file number 0-21256
CYPRESS EQUIPMENT FUND II, LTD.
(Exact name of Registrant as specified in its charter)
Florida 59-3082723
(State or other jurisdiction or (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
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: 50,000
Title of Each Class
Units of Limited Partnership Interest
$1,000 per unit
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x
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 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 shares outstanding of each of Registrant's classes of securities:
Number of Units
Title of Each Class at December 31, 1996
- ---------------------- --------------------
Units of Limited Partnership 36,469
Interest: $1,000 per unit
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Parts III and IV - Form S-1 Registration Statement
and all amendments and Supplements thereto
File No. 33-44119<PAGE>
PART I
Item 1. BUSINESS
General Development of Business -
The Registrant is a Florida limited partnership (the "Partnership")
composed of Cypress Equipment Management Corporation II, a California
corporation and a wholly-owned subsidiary of Cypress Leasing Corporation,
as the Managing General Partner; RJ Leasing - 2, Inc., a Florida
corporation and a second-tier subsidiary of Raymond James Financial, Inc.,
as the Administrative General Partner; Raymond James Partners, Inc., a
Florida corporation and a wholly-owned subsidiary of Raymond James
Financial, Inc., as the other General Partner; and purchasers of
partnership units as Limited Partners.
Financial Information about Industry Segments -
The Registrant is engaged in only one industry segment, to acquire
transportation, manufacturing, industrial and other capital equipment (the
"Equipment") and lease the Equipment to third parties.
Narrative Description of Business -
The Partnership's business is to acquire and lease equipment,
primarily through full payout and operating leases expected to generate
income over the useful life of the Equipment, and to generate cash
distributions to the Limited Partners from leasing revenues and proceeds
from the sale or other disposition of the Equipment owned by the
Partnership.
The Registrant has no direct employees. The General Partners have
full and exclusive discretion in management and control of the Partnership.
The equipment leasing industry is highly competitive and offers to
users an alternative to the purchase of nearly every type of equipment. In
seeking lessees, the Partnership will compete with manufacturers of
equipment who provide leasing programs and with established leasing
companies and equipment brokers. In addition, there are numerous other
potential investors, including limited partnerships, organized and managed
similarly to the Partnership, seeking to purchase equipment subject to
leases, some of which have greater financial resources and more experience
than the Partnership or the General Partners.
Item 2. PROPERTIES
The Registrant commenced operations in June 1992, and as of December
31, 1996, the original cost of Equipment owned by the Partnership was
$49,984,701, all of which are located within the United States. Equipment
and related information consist of the following:
FUTURE REVENUE
LEASE OF REMAINING
MATURITIES ACQUISITION LEASE TERM AT
EQUIPMENT AT 12/31/96 COST 12/31/96
- -------------------------- ------------- -------------- ----------------
Aircraft March 1997 $ 1,537,519 $ 85,720
Tank Barges December 1997 3,623,484 988,251
Locomotives November 1998 1,745,717 666,976
Self Unloading Bulk November 1998 8,773,564 2,015,891
Carrier
Recovery Boiler Facility July 1999 10,331,910 5,502,779
Electronic Banking October 1997 10,336,844 5,903,473
Equipment -August 2000
Offlease:
3 Aircraft (5) 5,438,086
Aircraft (1) 1,519,874
Peak Power Generating
Units (2) 4,100,606
Tank Cars (3) 36,137
Hopper Cars (4) 2,540,960
------------ --------------
TOTAL $ 49,984,701 $ 15,163,090
============ ==============
(1) Equipment was placed on a 7 year lease subsequent to year end.
(2) The lessee has exercised its option to purchase the equipment. See
"Legal Proceedings".
(3) Equipment was sold subsequent to year end.
(4) Equipment is subject to a dispute with the lessee. See "Legal
Proceedings".
(5) Letter of intent to lease was received subsequent to year end.
The lessees and the percentages of total equipment owned are as
follows:
Federal Paper Board, Inc. 21%
Oglebay Norton Company 18%
Hughes Network Systems, Inc. 16%
Dow Chemical Company 7%
Affiliated Computer Services, Inc. 5%
Skywest Airlines, Inc. 3%
Southern Pacific
Transportation Company 3%
Equipment Pending Re-lease 14%
Equipment Held for Sale 13%
----
100%
====
The Partnership owns three Options, purchased for an acquisition cost
of $3,033,618, to buy rail equipment at various lease expiration dates from
July 1997 through January 2000. The Partnership paid $3,109,549 for the
right to obtain title to certain equipment on December 30, 2002, at the
expiration of the lease.
Item 3. LEGAL PROCEEDINGS
The Illinois Central Gulf Railroad transaction was purchased in
September 1992. In 1994 a total of 234 of the original 398 hopper cars
were declared casualtied by the lessee and the casualty proceeds as
required under the lease were paid to the Partnership. The Partnership has
brought a legal action against the lessee for damages associated with the
return condition of the remaining 162 cars subject to the lease. The cars
are currently stored on the Illinois Central tracks pending resolution of
the dispute.
The Pennsylvania Power and Light Company lease expired in May 1996.
Under the lease, the lessee is entitled to purchase the equipment at fair
market value, determined by an appraisal, at the expiration of the lease if
the lessee has given 180 days prior notice to the Partnership. The lessee
provided this notification. Subsequently the lessee brought a legal action
against the Partnership seeking to have their exercise of the purchase
option revoked or to have the court define "fair market value." This
action has been dismissed by the court. The equipment is currently located
on the lessee's premises, pending resolution under the appraisal mechanism
of the price to be paid for the equipment.
Varilease, the seller of the Hughes transaction to the Partnership,
has initiated legal action against the partnership for enforcement of
certain provision in the sales agreement. At this time management does not
believe that there is any material liability.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of 1996.<PAGE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S SECURITIES AND RELATED SECURITY
HOLDER MATTERS
(a)The Registrant's limited partnership interests are not
publicly traded. There is no market for the Registrant's limited
partnership interests and it is unlikely that any will develop.
(b)Approximate number of equity security holders:
Number of Record Holders
Title of Each Class as of December 31, 1996
Units of Limited Partnership Interest 1,894
General Partner Interests 3
<PAGE>
Item 6. SELECTED FINANCIAL DATA
1996 1995 1994 1993 1992*
Total
Revenues $10,873,477 $7,119,741 $8,672,375 $ 5,170,123 $ 1,503,784
Net Income $4,472,073 $1,550,265 $3,199,088 $ 845,361 $ 190,937
Total Assets $50,451,896 $39,309,444 $36,771,147 $34,343,968 $21,246,728
Notes Payable $19,781,263 $9,900,879 $4,799,168 $ 9,492,116 $11,744,562
Distributions
to Limited
Partners Per
Weighted
Average
Limited
Partnership
Unit
Outstanding $ 100.00 $ 109.21 $ 91.45 $ 78.46 $ 19.94
Earnings Per
Weighted
Average
Limited
Partnership
Unit
Outstanding $ 121.40 $ 42.08 $ 90.75 $ 47.07 $ 26.70
* The Registrant's operations commenced June 22, 1992, and therefore,
the earnings for 1992 do not reflect a full year of operations.
The selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this report.
This statement is not covered by the auditor's opinion included elsewhere
in this report.
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Rental income increased from $6,573,823 for the year ended December
31, 1995, to $7,759,575 for the year ended December 31, 1996. Equipment
which came off-lease or was sold during 1996 provided $1,213,921 less
revenue in 1996 than in 1995 and equipment purchased in 1996 provided
$2,399,673 more revenue in 1996 than in 1995. Equipment with a book value
of $240,202 was sold for a gain of $198,081 during the year ended December
31, 1996. There were additional insurance proceeds of $912,756 on units
previously declared as casualties. Interest income decreased during the
year ended December 31, 1996, as compared to the year ended December 31,
1995, because the Partnership had a lower average balance of cash for
investment and no interest income was received from the Note Receivable
which originated and ended in 1995.
Interest expense increased from $639,213 for the year ended December
31, 1995, to $1,255,689 for the year ended December 31, 1996. This
increase primarily resulted from a increased average level of debt during
the period. Management fee expense decreased due to the calculations on two
leases being based on the cash received by the Partnership instead of the
revenues recognized by the Partnership. Depreciation and amortization
expense increased $731,807 for the year ended December 31, 1996 versus the
year ended December 31, 1995, due to an average higher depreciable basis of
equipment during 1996.
The net effect of the above revenue and expense items resulted in a
net income of $4,472,073 for the year ended December 31, 1996, compared to
a net income of $1,550,265 for the year ended December 31, 1995.
During the year ended December 31, 1996, the Partnership acquired
$14,555,650 of equipment and sold equipment with an original cost of
$3,803,141 for a net increase in equipment of $10,752,509.
Notes payable increased $9,880,384 during the year ended December 31,
1996, due to $12,828,904 of additional borrowing, a non-cash
reclassification increase of $3,037,097, deferred interest of $495,617, and
$6,481,234 of principal payments on notes.
Liquidity and Capital Resources
The primary sources of funds for the year ended December 31, 1996 were
$11,836,048 from operating activities, $12,828,904 from additional
borrowing, and $1,351,038 of sales proceeds. These sources were used to
make $10,335,806 of equipment purchases, $3,109,549 of advance forward
purchases, $6,481,234 of notes payments, and $3,683,732 of distributions.
As of December 31, 1996, the Partnership had $5,671,367 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. The General Partners expect to make additional
equipment purchases which will be funded from Cash and Cash Equivalents at
December 31, 1996, and additional borrowings.
Short-term liquidity requirements consist of funds needed to purchase
equipment, make distributions, and meet administrative expenses and debt
retirement. These short-term needs will be funded by cash from 1997
operations and Cash and Cash Equivalents at December 31, 1996.
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 December 31, 1996, was $5,671,367. The
Partnership had income of $4,472,073 and after adjusting for depreciation
and amortization and gain on sale and the changes in operating assets and
liabilities, net cash provided by operating activities was $11,836,048.
Cash used in investing activities totaled $11,980,804. Cash provided by
financing activities consisted primarily of additional borrowing of
$12,828,904, cash used in financing activities was primarily to make
payments of notes payable of $6,481,234 and distributions of $3,683,732.
Actual cash distributions were $3,683,732 in 1996 and $4,023,005 in
1995.
The Partnership anticipates that funds from operations in 1997 will be
adequate to cover all 1997 operating contingencies.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Cypress Equipment Fund II, Ltd.
We have audited the accompanying balance sheets of Cypress Equipment
Fund II, Ltd. as of December 31, 1996 and 1995, and the related statements
of operations, partners' equity and cash flows for each of the three years
in the period ended December 31, 1996. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Cypress
Equipment Fund II, Ltd. as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted
accounting principles.
/s/Spence, Marston, Bunch, Morris & Co.
SPENCE, MARSTON, BUNCH, MORRIS & CO.
Certified Public Accountants
Clearwater, Florida
May 2, 1997
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CYPRESS EQUIPMENT FUND II, LTD.
BALANCE SHEETS
DECEMBER 31,
1996 1995
------------ ------------
ASSETS
Leased Equipment, at Cost $ 43,306,997 $ 33,358,046
Less: Accumulated Depreciation (9,611,491) (5,972,307)
------------ ------------
33,695,506 27,385,739
Equipment Held for Sale 4,125,116 3,607,031
Residual Participations 0 134,396
Deposit on Equipment 3,109,549 0
Options 3,033,618 3,038,114
Deferred Debt Costs (Net of Accumulated Amortization
of $179,112 and $144,300 respectively) 82,876 83,135
Rents and Sales Proceeds Receivable 659,999 871,216
Accounts Receivable - Interest 0 63,752
Accounts Receivable - Residual Participation 0 914,066
Prepaid Expenses 73,866 25,257
Cash and Cash Equivalents 5,671,367 3,186,738
------------ ------------
Total Assets $ 50,451,897 $ 39,309,444
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Notes Payable $ 19,781,263 $ 9,900,879
Payable to: General Partners 386,367 99,187
Affiliates 11,393 0
Other 102,058 61,573
Interest Payable 210,289 56,182
Unearned Revenue 90,403 109,840
------------ ------------
Total Liabilities 20,581,773 10,227,661
------------ ------------
Partners' Equity:
Limited Partners (36,469 units outstanding
at December 31, 1996 and 1995) 29,890,358 29,109,906
General Partners (20,234) (28,123)
------------ ------------
Total Partners' Equity 29,870,124 29,081,783
------------ ------------
Total Liabilities and Partners' Equity $ 50,451,897 $ 39,309,444
============ ============
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CYPRESS EQUIPMENT FUND II, LTD.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
1996 1995 1994
------------ ------------------------
Revenues:
Rental Income $ 7,759,575 $ 6,573,823$ 6,846,703
Interest Income 362,482 439,766 251,092
Gain on Sale of Equipment 198,081 106,152 1,574,580
Gain on Sale of Equipment
Held for Sale 1,640,583 0 0
Insurance Proceeds 912,756 0 0
------------ -------------------------
Total Revenues 10,873,477 7,119,741 8,672,375
------------ -------------------------
Operating Expenses:
Interest Expense 1,255,689 639,213 418,607
Management Fees - General Partners 223,432 284,795 368,087
General and Administrative:
Affiliate 73,286 49,063 51,807
Other 565,488 294,703 190,174
Depreciation and Amortization 4,283,509 3,551,702 4,444,612
Write Down of Rental Equipment
Held for Sale 0 750,000 0
------------ ------------------------
Total Operating Expenses 6,401,404 5,569,476 5,473,287
------------ ------------------------
Net Income $ 4,472,073 $ 1,550,265$ 3,199,088
============ ========================
Allocation of Net Income -
Limited Partners $ 4,427,352 $ 1,534,762$ 3,167,097
General Partners 44,721 15,503 31,991
------------ ------------------------
$ 4,472,073 $ 1,550,265$ 3,199,088
============ ========================
Per Weighted Average $1,000 Limited
Partnership Unit Outstanding - $ 121.40 $ 42.08$ 90.75
============ ========================
Weighted Average Number of Limited
Partnership Units Outstanding 36,469 36,469 34,900
============ ========================
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CYPRESS EQUIPMENT FUND II, LTD.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Limited General Total
Partners' Partners' Partners'
Equity (Deficit) Equity
------------ ---------- ------------
Balance at December 31, 1993 $22,506,073 $ (3,154) $22,502,919
Capital Contributions in 1994 10,314,000 0 10,314,000
Offering and Commission Costs (1,237,680) 0 (1,237,680)
Net Income - 1994 3,167,097 31,991 3,199,088
Distributions - 1994 (3,191,567) (32,237) (3,223,804)
----------- ----------- -----------
Balance at December 31, 1994 31,557,923 (3,400) 31,554,523
Net Income - 1995 1,534,762 15,503 1,550,265
Distributions - 1995 (3,982,779) (40,226) (4,023,005)
----------- ----------- -----------
Balance at December 31, 1995 29,109,906 (28,123) 29,081,783
Net Income - 1996 4,427,352 44,721 4,472,073
Distributions - 1996 (3,646,900) (36,832) (3,683,732)
------------ ----------- ------------
Balance at December 31, 1996 $29,890,358 $ (20,234) $29,870,124
=========== =========== ===========
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CYPRESS EQUIPMENT FUND II, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
1996 1995 1994
------------ ------------------------
Cash Flows from Operating Activities:
Net Income $ 4,472,073 $ 1,550,265$ 3,199,088
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used in) Operating Activities:
(Gain) on Sale of Equipment (198,081) (106,152) (1,574,580)
Depreciation and Amortization 4,283,509 3,551,702 4,444,612
Deferred Interest on Notes Payable 495,617 231,078 0
Write Down of Rental Equipment
Held for Sale 0 750,000 0
Purchase of Equipment Held for Sale 0 (2,290,270) 0
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Equipment
Held for Sale 3,174,558 0 0
(Increase) Decrease in Rents
Receivable 102,200 1,391,905 (1,107,949)
(Increase) Decrease in Accounts Receivable:
Interest 472 (63,752) 0
Other 289 (3,598) 0
(Increase) Decrease in
Prepaid Expenses (48,898) 54,329 (8,971)
Increase (Decrease) in Payable to:
General Partners 287,179 (41,686) 7,219
Affiliates 11,393 (5,381) 5,381
Other 40,485 61,573 0
Increase (Decrease) in
Interest Payable 147,445 (26,306) 7,310
Increase (Decrease) in Unearned
Revenue (19,437) (78,874) (171,632)
------------ ------------------------
Net Cash Provided by Operating
Activities 12,748,804 4,974,833 4,800,478
------------ ------------------------
Cash Flows from Investing Activities:
Purchases of Leased Equipment (10,335,806) (10,284,106) (5,154,947)
Deposit on Equipment (3,109,549) 0 0
Purchase of Options 0 (3,038,114) 0
Purchase of Residual Participations 0 (134,396) 0
Purchase of Accounts Receivable -
Residual Participations 0 (914,066) 0
Proceeds from Sale of Equipment 438,282 3,288,957 8,713,268
Proceeds from Casualty of Option 4,496 16,083 0
Payments Received on Note Receivable 0 306,927 319,081
(Increase) Decrease in Sales
Proceeds Receivable 109,017 (110,500) 0
(Increase) Decrease in Note Receivable 0 0 (626,008)
Increase (Decrease) in Payable to:
General Partners 0 0 (48,374)
Other 0 0
(1,731,381)
------------ ------------------------
Net Cash Provided by (Used in)
Investing Activities (12,893,560) (10,869,215) 1,471,639
------------ ------------------------
Cash Flows from Financing Activities:
Capital Contributions 0 0 10,314,000
Offering and Commission Costs 0 0 (1,237,680)
Proceeds from Notes Payable 12,828,904 8,313,460 664,630
Payment of Notes Payable (6,481,234) (3,442,827) (5,357,578)
(Increase) Decrease in Deferred
Debt Costs (34,553) (97,249)
(7,250)
Distributions to Partners (3,683,732) (4,023,005) (3,223,804)
------------ ------------------------
Net Cash Provided by Financing
Activities 2,629,385 750,379 1,152,318
------------ ------------------------
Increase (Decrease) in Cash 2,484,629 (5,144,003) 7,424,435
Cash and Cash Equivalents at
Beginning of Period 3,186,738 8,330,741 906,306
------------ ------------------------
Cash and Cash Equivalents at
End of Period $ 5,671,367 $ 3,186,738$ 8,330,741
============ ========================
Supplemental Cash Flow Information:
Interest Paid $ 612,627 $ 434,441$ 411,297
============ ========================
Non-Cash Activities:
In 1995, Rental Equipment with a cost of $3,015,223 and a net book value of
$1,498,108 was transferred to Rental Equipment Held for Sale.
An option purchased in 1993 at a cost of $584,736 was exercised during
1995. This cost less casualty proceeds received of $16,083 was transferred
to Rental Equipment Held for Sale.
Notes Payable in 1995 were increased by $231,078 the amount of Deferred
Interest on Notes Payable.
The 1996 transfer of ownership from equipment previously under option
resulted in increases of: Leased Equipment by $4,155,501; Notes Payable by
$3,037,097; and Interest Payable by $6,662; and decreases of: Residual
Participations by $134,396; Residual Participations Receivable by $914,066;
and Accounts Receivable - Interest by $63,280.
Notes Payable in 1996 increased in total to $495,617, the amount of
Deferred Interest on Notes Payable.
In 1996, Leased Equipment with a cost of $4,136,743 and a net book value of
$3,692,643 was transferred to Equipment Held for Sale.
The accompanying notes are an integral part
of these financial statements.
<PAGE>
CYPRESS EQUIPMENT FUND II, LTD.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE 1 - ORGANIZATION
Cypress Equipment Fund II, Ltd., (the "Partnership"), a Florida
limited partnership, was formed November 13, 1991, for the purpose of
acquiring and leasing transportation, manufacturing, industrial and other
capital equipment. The Partnership was funded with limited partner capital
contributions and commenced operations on June 22, 1992. The Partnership
will terminate on December 31, 2015, or sooner, in accordance with the
terms of the Limited Partnership Agreement.
Cypress Equipment Management Corporation II, 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. Once each Limited
Partner has received cumulative cash distributions equal to his capital
contributions, an incentive management fee equaling 4% of cash available
for distributions will be paid to the General Partners. 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, an incentive management fee equaling 23% of cash available for
distributions will be paid to the General Partners.
As of December 31, 1996, the Partnership has received Limited and
General Partner capital contributions of $36,469,000 and $2,000,
respectively.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The Partnership utilizes the accrual basis of accounting whereby
revenues are recognized when earned and expenses are recognized as
obligations are incurred.
Cash and Cash Equivalents
It is the Partnership's policy to include all money market funds with
an original maturity of three months or less in Cash and Cash Equivalents.
Concentration of Credit Risk
Financial instruments which potentially subject the Partnership to
concentrations of credit risk consist principally of cash investments and
rents receivable. The cash investments are placed in high credit quality
financial institutions and in a money market mutual fund that is managed by
a wholly-owned subsidiary of Raymond James Financial, Inc. The Partnership
receives rental income exclusively from lessees. Management does not
believe that significant credit risk exists in relation to these accounts
at December 31, 1996.
The Partnership maintains deposits in excess of federally insured
limits. Statement of Financial Accounting Standards No. 105 requires
disclosure regardless of the degree of risk.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates that affect
certain reported amounts and disclosures. These estimates are based on
management's knowledge and experience. Accordingly, actual results could
differ from these estimates.
Offering and Commission Costs
Offering and commission costs are charged against Limited Partners'
Equity upon admission of Limited Partners.
Leases
The Partnership accounts for all of its leases in accordance with the
operating method. Under the operating method of accounting, the leased
equipment is recorded as an asset at cost and depreciated on the declining
balance method using a ten to forty year life. Rental income is recognized
ratably over the term of the leases.
The Partnership's policy is to periodically review the estimated
future rental income including remarketing of its leased equipment ("Future
Revenues"). Should such review indicate that estimated Future Revenues
will not exceed expenses including depreciation in any future period, the
Partnership will revise its depreciation policy as appropriate. Future
equipment expenses including depreciation exceeded the estimated Future
Revenues resulting in an additional depreciation provision of $250,000 in
1994.
Equipment Held for Sale
The Partnership's policy is to transfer off-lease equipment that is
held for sale to Equipment Held for Sale at the lower of its net book value
or its market value. The net book value of equipment transferred exceeded
market value resulting in a write down of $750,000 for the year ended
December 31, 1995.
Options
In 1993, the Partnership purchased an option to acquire equipment at
the termination of the current lease. The cost of the Option was $584,736.
During 1995, the Partnership exercised the option and paid the strike price
of $2,290,270. Upon exercise, the equipment was transferred to Equipment
Held for Sale. This equipment was sold in 1996.
During 1995, the partnership purchased three options to acquire
equipment at the termination of the current leases. The Partnership
accounts for these options at costs of $749,893, $674,124, and $1,609,601.
The exercise dates are July 1997, August 1999, and January 2000 with
exercise prices of $572,516, $1,535,122, and $5,115,000, respectively. If
the options are not exercised, the option costs will be charged against
income.
During 1995, the Partnership purchased a residual interest to share in
the cash proceeds generated by a series of equipment leases. The portion
of the residual interest generated during the leases had a cost of
$914,066, based on the present value of the future cash stream. The
portion of the residual interest generated by subsequent leases or
equipment sales had a cost of $134,396. During 1996, the Partnership
purchased the equipment which had previously supported the residual
interest.
Deposit On Equipment
During 1996 the Partnership paid $3,109,549 for the right to obtain
title to certain equipment on December 31, 2002, at the expiration of the
lease.
Income Taxes
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the Partners in their
individual income tax returns. Accordingly, no provision for such taxes
has been made.
Per Unit Computations
Per unit computations are based on 36,469, 36,469 and 34,900 weighted
average number of $1,000 limited partnership units outstanding for 1996,
1995, and 1994, respectively.
Reclassification
For comparability, the 1995 and 1994 figures have been reclassified
where appropriate to conform to the financial statement presentation used
in 1996.
NOTE 3 - RELATED PARTY TRANSACTIONS
General Partners
The General Partners have contributed a total of $2,000 to the
Partnership.
In accordance with the terms of the offering prospectus, the
Administrative and Managing General Partners were paid $0, $0, and $412,560
(representing 4% of the Limited Partners' initial capital contributions)
for organization and offering expenses in 1996, 1995, and 1994,
respectively. Acquisition fees of $368,478, $254,125, and $137,968 for
services related to locating and leasing equipment (2.85% of the purchase
price); equipment management fees of $223,432, $284,795, and $368,087 (5%
of gross rentals from rental equipment subject to operating leases, 2% of
gross rentals from rental equipment subject to full payout leases, or 1% of
gross rentals from rental equipment subject to operating leases for which
the Administrative and Managing General Partners arrange for and actively
supervise the performance of services) were paid or accrued in 1996, 1995,
and 1994, respectively. Gross rentals for purposes of calculating
equipment management fees include cash revenues received by the Partnership
subsequent to the date of purchase including cash revenues that relate to
periods prior to the date of purchase. General Partner distributions were
$36,832, $40,226, and $32,237 for 1996, 1995, and 1994, respectively.
Affiliates of the General Partner
The following amounts were paid or accrued to affiliates of the
Administrative General Partner: (1) $0 in 1996, $0 in 1995, and $321,680
in 1994 for sales commissions (8% of original capital contributions) as
selling agents for the Limited Partnership units sold; and (2) $73,286 in
1996, $49,063 in 1995, and $51,807 in 1994 for reimbursement of general and
administrative expenses on an accountable basis.
NOTE 4 - LEASES
The initial lease terms of the equipment are generally 5 to 25 years.
Future minimum rentals to be received on these leases at December 31, 1996,
are as follows:
Year Ending
December 31, Amount
------------ ------------
1997 $ 7,132,105
1998 5,303,887
1999 2,653,082
2000 74,017
------------
$ 15,163,091
============
NOTE 5 - NOTES PAYABLE
Notes payable consist of the following:
December 31, December 31,
1996 1995
------------ ------------
Non-recourse notes payable secured
by equipment with fixed interest
rates of 5% to 16 5/8% and maturities
from 1997 to 1998. $ 4,941,784 $ 4,265,074
Non-recourse note payable secured by
equipment, original terms of 72 months
each, no payments for the first 48
months with the accruing interest
converted to additional principal,
then fully amortizing over the
remaining 24 months, with a fixed
interest rate of 7.85% and final
maturity in 1999. $135,845 is
expected to be converted
to principal. 3,182,618 1,307,217
Non-recourse note payable secured by
equipment, original term of 36 months,
no payments due until maturity with
the accruing interest converted to
additional principal, with fixed
interest rate of 10.23% and final
maturity in 1997. $82,120 is expected
to be converted to principal. 926,900 873,130
Recourse notes payable secured by
assets of the Partnership, original
terms of 28 to 53 months, no payments
due until maturity with the accruing
interest converted to additional
principal, with fixed interest rate
of 10% and final maturities from
1997 to 1999. $470,032 is expected
to be converted to principal. 1,747,528 1,591,458
Line of Credit secured by equipment
with a floating rate of LIBOR + 3.5%
with maturity in 1998. The interest
rate as of December 31, 1996, was
9.03125%. (See Note 10-Commitments
and Contingencies). 4,234,500 1,900,000
Recourse note secured by assets of
the Partnership with a floating rate
of commercial paper rate + 3.5% up to
and including 3/16/97, and thereafter
a floating rate of commercial paper
rate + 4% with a maturity in 1999.
The interest rate as of December 31, 1996
was 9.45%. 3,547,933 0
Non-recourse note payable secured
by residual proceeds after lease
termination in 2002 with fixed
interest rate of 7% 1,200,000 0
------------ ------------
TOTAL $ 19,781,263 $ 9,900,879
============ ============
The aggregate amounts of principal payments due in the years after December
31, 1996 are : 1997 - $6,368,113; 1998 - $8,516,816; 1999 - $3,646,587;
2000 - $49,747; 2001 - $0; and 2002 and thereafter - $1,200,000.
NOTE 6 - NOTE RECEIVABLE
During 1994, the Partnership sold equipment with an original cost of
approximately $4,800,000 for $6,470,345. Payments of $6,163,418 in 1994
and $306,927 in 1995 were received during the year, leaving a note
receivable balance of $0.
NOTE 7 - TAXABLE INCOME
The Partnership's taxable income differs from financial income
primarily due to depreciation which is recorded under the Modified
Accelerated Cost Recovery System (MACRS). The following is a
reconciliation between net income as reported and Partnership income (loss)
for tax purposes:
1996 1995 1994
------------ ------------------------
Net income per financial statements$ 4,472,073 $ 1,550,265 $ 3,199,088
Tax gain/loss in excess of (less than)
financial gain/loss on sale of equipment(71,918) 942,777 (465,676)
Tax depreciation in excess of
financial depreciation (1,286,344) (1,209,615) (829,631)
Financial write down of equipment
greater than tax write down 0 750,000 0
Adjustment from equity to schedule K-1
for interest in Partnership (434,304) 0 0
----------- ----------- -----------
Partnership taxable income $ 2,679,507 $ 2,033,427 $ 1,903,781
=========== =========== ===========
NOTE 8 - MAJOR LESSEE INFORMATION
Four leases accounted for $2,611,723, $1,078,034, $1,076,876 and
$988,251 for the year ended December 31, 1996. Four leases accounted for
$1,087,087, $1,078,034, $1,077,773 and $806,051 of rental income for the
year ended December 31, 1995. Four leases accounted for $1,823,066,
$1,498,398, $1,078,608 and $1,078,034 of rental income for the year ended
December 31, 1994.
NOTE 9 - LEASED EQUIPMENT
Leased equipment at December 31, 1996 includes equipment that was off
lease as of that date but was subsequently leased or comitted to be leased
to third parties. This offlease equipment had a cost of $6,957,960 and
accumulated depreciation of $3,142,632 at December 31, 1996. See Note 12,
Subsequent Events.
NOTE 10 - OTHER
During the year insurance proceeds of $912,746 were received as a result
of prior casualties to equipment.
In 1994, the lessee of hopper cars, Illinois Central Gulf Railroad
("Illinois Central"), declared a portion of the cars casualties as allowed
under the terms of the lease. Illinois Central paid the required casualty
proceeds to the Partnership. A loss of $706,522 was recognized in 1994 on
this transaction which was netted against the gains from disposition of other
equipment on the statement of operations. In 1996, the Partnership received
$912,756 in insurance proceeds relating to this casualty.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Partnership shall pay the General Partners an equipment resale fee
for arranging for the sale of equipment which will equal the lessor of (a)
3% of the sales price for each Item of Equipment sold, or (b) one-half of
the brokerage fee which would be paid for services that are reasonable,
customary and competitive. Payment of this fee shall be deferred until all
Limited Partners have received cumulative Cash Distributions in an amount
equal to the sum of Capital Contributions and the annual Priority Returns
attributable to all units of the Partnership.
On December 11, 1996, the Executive Committee voted to acquire machine
tools at a cost of approximately $1,000,000. A closing date was projected
for the first quarter of 1997.
The Partnership has received a commitment letter from a financial
institution for up to $5,000,000. The financing will be collaterized by
the self-unloading bulk carrier at an interest rate of LIBOR plus 4%,
interest payable monthly, and principal due November 1998. The Partnership
estimates that this transaction will be finalized in second quarter 1997.
The seller of certain equipment transferred to the Partnership in 1996
initiated legal proceedings against the Partnership for enforcement of
certain provisions of the purchase agreement. These provisions allowed the
seller to sell the title to the equipment to a third party. The Partnership
would retain its right to receive rents and residual proceeds. The original
suit was dismissed in Federal Court for lack of jurisdiction. The suit was
refiled in State Court. A motion to dismiss is pending due to lack of
jurisdiction. Management does not believe that the suit has merit or that it
will result in a material cash loss to the Partnership.
NOTE 12 - SUBSEQUENT EVENTS
On January 17, 1997, the Partnership sold equipment with an original
cost of $36,137 for $36,500.
On January 31, 1997, the Partnership paid distributions of $911,725 to
the Limited Partners and $9,208 to the General Partners.
On February 7, 1997, the Partnership purchased equipment with leases
in place for $1,051,162.
Subsequent to year end, the Partnership placed a Metro III aircraft on
a 7 year lease with a $15,000 monthly rental rate.
On April 30, 1997, the Partnership paid distributions of $911,725 to
Limited Partners and $9,208 to the General Partners.
Item 9. Disagreements on Accounting and Financial Disclosures
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or officers. The Partnership's
affairs are managed and controlled by the General Partners. The General
Partners make all decisions regarding acquisitions, financing and
refinancing, leases and sales of equipment.
Information regarding the officers and directors of the General
Partner is listed within the section captioned "Management" consisting of
pages 29 through 32 of the Prospectus which are incorporated herein by
reference.
Item 11. Executive Compensation
The Partnership has no directors or officers. See Item 13 for
compensation to the General Partners and affiliates.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The General Partners of Cypress Equipment Fund II, Ltd., as purchasers
of Partnership units, own 0 units of the outstanding securities of the
Partnership as of December 31, 1996. Directors and officers of the General
Partners of Cypress Equipment Fund II, Ltd. own 0 units of the outstanding
securities of the Partnership as of December 31, 1996.
The Registrant is a Limited Partnership and therefore does not have
voting securities. To the knowledge of the Partnership, no person owns of
record, or beneficially, more than 5% of the Partnership's outstanding
units.
Item 13. Certain Relationships and Related Transactions
The Partnership has no officers or directors. However, under the
terms of the public offering, various kinds of compensation and fees are
payable to the General Partners and their affiliates during the
organization and operations of the Partnership. The amounts and kinds of
compensation and fees are described on pages 19 through 23 of the
Prospectus under the caption "Management Compensation", which is
incorporated herein by reference. See Note 3 of Notes to Financial
Statements in Item 8 of this Annual Report on Form 10-K for amounts accrued
or paid to the General Partners and their affiliates during the years ended
December 31, 1996 and 1995, and 1994.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K
a. (1) Financial Statements
(2) Exhibit Index -
Table
Number Page
2 Plan of liquidation, organization,
arrangement, liquidation, or
succession ***
3 Articles of incorporation and by-laws *
4 Instruments defining the rights of
security holders, including
debentures *
9 Voting Trust Agreement ***
10 Material Contracts ***
11 Computation of per share earnings ***
12 Computation of ratios ***
13 Annual report to security holders ***
18 Letter re: change in accounting
principles ***
19 Previously unfiled documents ***
22 Subsidiaries of the Registrant ***
23 Published report regarding matters
submitted to vote of security holders ***
24 Consents of experts and counsel ***
25 Power of Attorney *
28 Additional Exhibits
28.01 OPTION AGREEMENT dated as of February
1, 1993 between BLC Corporation
("Optionor") and Cypress Equipment
Fund II, Ltd. ("Optionee") **
28.02 TRUST AGREEMENT dated as of February
1, 1993 between First Security Bank
of Utah, National Association
("Owner-Trustee") and BLC Corporation
("Trustor") **
28.03 SECURITY AGREEMENT-TRUST DEED dated
as of February 1, 1993 between First
Security Bank of Utah, National
Association as Owner-Trustee under
BLC Trust No. 92-1 and State Street
Bank and Trust Company of
Connecticut, National Association **
28.04 SECURITY AGREEMENT-TRUST DEED
SUPPLEMENT NO. 1 dated February,
1993, between First Security Bank of
Utah, National Association ("Owner-
Trustee") under BLC Trust No. 92-1
and State Street Bank and Trust
Company of Connecticut, National
Association ("Security Trustee") **
28.05 NOTE PURCHASE AGREEMENT dated as of
February 1, 1993 re: BLC Trust No.
92.1 among BLC Corporation Trustor"),
First Security Bank of Utah, National
Association ("Owner-Trustee"),
Hitachi Credit America Corporation
("Note Purchaser") and State Street
Bank and Trust Company of
Connecticut, National Association
("Security Trustee") **
28.06 ACKNOWLEDGEMENT OF ASSIGNMENT AND
AGREEMENT dated as of February 25,
1993 among Southern Pacific
Transportation Company, BLC
Corporation, First Security Bank of
Utah, National Association and State
Street Bank and Trust Company of
Connecticut, National Association **
28.07 BILL OF SALE executed as of February
24, 1993 between BLC Corporation and
First Security Bank of Utah, National
Association **
28.08 PURCHASE AND SALE AGREEMENT dated as
of June 22, 1993 by and between BLC
Corporation and Cypress Equipment
Fund II, Ltd. re: BLC Trust No. 92-1. **
28.09 ASSIGNMENT AND ASSUMPTION AGREEMENT
made and entered into as of June 22,
1993 by BLC Corporation, a Utah
corporation ("Assignor") and Cypress
Equipment Fund II, Ltd., a Florida
limited partnership ("Assignee") **
28.10 TRANSFER AND ASSUMPTION AGREEMENT
("Agreement"), entered into as of
June 19, 1993 by and between Twenty-
Sixth HFC Leasing Inc., a Delaware
Corporation ("Assignor") and Cypress
Equipment Fund II, Ltd., a Florida
limited partnership ("Assignee") **
28.11 EQUIPMENT LEASE dated as of June 1,
1980 between The Connecticut Bank and
Trust Company, As Trustee under
I.C.G. Trust No. 80-4 ("Lessor") and
Illinois Central Gulf Railroad
Company ("Lessee") **
28.12 SECURITY AGREEMENT-TRUST DEED dated
as of June 1, 1980 from The
Connecticut Bank and Trust Company,
As Trustee under I.C.G. Trust No. 80-
4 ("Debtor") to Mercantile-Safe
Deposit and Trust Company ("Secured
Party") **
28.13 TRUST AGREEMENT dated as of June 1,
1980 between The Connecticut Bank and
Trust Company ("Trustee") and Twenty-
Sixth HFC Leasing Corporation
("Trustor") **
28.14 ESCROW AGREEMENT 902 dated December
31, 1994 by and among Continental
Bank, N.A. (the "Transferor"),
Cypress Equipment Fund II, Ltd. (the
"Transferee") and Continental Bank,
National Association, Corporate Trust
Services (the "Escrow Agent"). **
28.15 TRANSFER AGREEMENT 902 dated as of
December 31, 1994 between Continental
Bank, N.A. (the "Transferor"), and
Cypress Equipment Fund II, Ltd. (the
"Transferee"). **
28.16 TRANSFEROR'S INTERESTS ASSIGNMENT AND
ASSUMPTION AGREEMENT 902 dated
December 31, 1994 between Continental
Bank, N.A. (the "Transferor"), and
Cypress Equipment Fund II, Ltd. (the
"Transferee"). **
28.17 ASSIGNMENT AND ASSUMPTION AGREEMENT
902 dated December 31, 1994 between
The Kinsman Marine Transit Company
(the "Assignor") and Pringle Transit
Company (the "Assignee"). **
28.18 KINSMAN AGREEMENT dated as of
December 31, 1994 by The Kinsman
Marine Transit Company. **
28.19 REVOLVING CREDIT AGREEMENT dated
December 31, 1994 by and between
Cypress Equipment Fund II, Ltd.
("Borrower") and First Union National
Bank of Florida ("Lender"). **
28.20 SECURITY AGREEMENT dated December 31,
1994 by and between Cypress Equipment
Fund II, Ltd. ("Debtor") and First
Union National Bank of Florida
("Secured Party"). **
28.21 COLLATERAL ASSIGNMENT OF RIGHTS UNDER
TRUST AGREEMENT dated December 31,
1994 by and between Cypress Equipment
Fund II, Ltd. ("Assignor") and First
Union National Bank of Florida
("Assignee"). **
28.22 LEASE AGREEMENT dated as of March 30,
1988 between Capital Associates
International, Inc. ("Lessor") and
Comair, Inc. ("Lessee"). **
28.23 PURCHASE AGREEMENT ("Agreement")
dated as of August 31, 1994, by and
between Capital Associates
International, Inc. ("Seller") and
First Security Bank of Utah, National
Association not in its individual
capacity but as owner trustee
pursuant to that certain Trust dated
August 31, 1994 between itself and
Cypress Equipment Fund II ("Buyer").**
28.24 BILL OF SALE dated August 31, 1994
between Capital Associates
International, Inc. ("Seller") and
First Security Bank of Utah, National
Association not in its individual
capacity but as owner trustee
pursuant to that certain Trust dated
August 31, 1994 between itself and
Cypress Equipment Fund II, Ltd.
("Buyer"). **
28.25 TRUST AGREEMENT dated as of August
31, 1994 between Cypress Equipment
Fund II, Ltd. ("Owner Participant")
and First Security Bank of Utah,
National Association ("Owner
Trustee"). **
28.26 ASSIGNMENT OF LEASE dated August 31,
1994, between Capital Associates
International, Inc. ("Assignor") and
First Security Bank of Utah not in
its individual capacity but as owner
trustee pursuant to that certain
Trust dated August 31, 1994 between
itself and Cypress Equipment Fund II
("Assignee"). **
28.27 SECURITY AGREEMENT dated as of August
31, 1994 between First Security Bank
of Utah, National Association, solely
as Owner Trustee under Trust
Agreement dated as of August 31, 1994
and not in its individual capacity
("Trustee") and First Union National
Bank of Florida, a national banking
association ("Secured Party"). **
28.28 TRUST AGREEMENT dated as of April 1,
1970 among Union Bank ("Trustor") and
W. H. Ruskaup and Ben Maushardt
("Trustees") and United States
Leasing International, Inc. ("Agent
for Trustees"). **
28.29 LEASE OF RAILROAD EQUIPMENT dated as
of April 1, 1970 among W. H. Ruskaup
and Ben Maushardt ("Trustees") and
United States Leasing International,
Inc. ("Agent for Trustees") and Union
Carbide Corporation ("Lessee"). **
28.30 ASSIGNMENT AGREEMENT (Residual
Interest) dated as of September 30,
1994 by and between United States
Leasing International, Inc., a
Delaware corporation ("Assignor") and
Cypress Equipment Fund II, Ltd.
("Assignee"). **
28.31 TRANSFER AND ASSUMPTION AGREEMENT
dated as of September 30, 1994, by
and between Union Bank, a California
state chartered bank ("Assignor") and
Cypress Equipment Fund II, Ltd.
("Assignee). **
28.32 AGREEMENT TO ACQUIRE AND LEASE dated
as of April 1, 1970 among W. H.
Ruskaup and Ben Maushardt
("Trustees") and United States
Leasing International, Inc. ("Agent")
and Union Carbide Corporation
("Lessee"). **
28.33 SECURITY AGREEMENT - TRUST DEED dated
as of June 1, 1970 from W. H. Ruskaup
and Ben Maushardt ("Debtor") to Wells
Fargo Bank, N.A. ("Secured Party"). **
28.34 PURCHASE AGREEMENT made as of July
25, 1994, by and among Trust Company
for USL, Inc., an Illinois trust
company as successor trustee to W.H.
Ruskaup and Ben Maushardt, and United
States Leasing International, Inc. as
agent for successor trustee
("Seller") and Cypress Equipment Fund
II, L.P., a Florida limited
partnership, with its principal place
of business at 880 Carillon Parkway,
St. Petersburg, Florida 33716 as the
beneficial owner of the Trust Estate
("Beneficial Owner") and Union
Carbide Corporation, a New York
corporation ("Purchaser"), with its
principal place of business at 39 Old
Ridgebury Rd., E-1, Danbury,
Connecticut 06817 **
28.35 PURCHASE AGREEMENT dated as of
February 1, 1995, between Cypress
Equipment Fund II, Ltd., a Florida
limited partnership ("Seller"), and
Helm-Atlantic Associates Limited
Partnership, a Delaware limited
partnership ("Purchaser"). (This
Purchase Agreement pertains to
seventeen (17) of the nineteen (19)
sold locomotives.) **
28.36 ASSIGNMENT AND ASSUMPTION AGREEMENT
dated as of June 1, 1995, by and
between Cypress Equipment Fund II,
Ltd., a Florida limited partnership
("Seller"), and Helm-Atlantic
Associates Limited Partnership, a
Delaware limited partnership
("Purchaser"). **
28.37 ASSIGNMENT OF LEASE dated as of June
1, 1995, by and between Cypress
Equipment Fund II, Ltd., a Florida
limited partnership ("Seller"), and
Helm-Atlantic Associates Limited
Partnership, a Delaware limited
partnership ("Purchaser"). **
28.38 PURCHASE AGREEMENT dated as of
February 1, 1995, between Cypress
Equipment Fund II, Ltd., a Florida
limited partnership ("Seller"), and
Helm-Atlantic Associates Limited
Partnership, a Delaware limited
partnership ("Purchaser"). (This
Purchase Agreement pertains to two
(2) of the nineteen (19) sold
locomotives.) **
28.39 Purchase Agreement dated as of April
17, 1995, between Varilease
Corporation, a Michigan corporation
("Seller"), and Cypress Equipment
Fund II, Ltd., a Florida limited
partnership ("Buyer"). **
28.40 Bill of Sale and Assignment dated
April 28, 1995, between Varilease
Corporation, a Michigan corporation
"Seller"), and Cypress Equipment Fund
II, Ltd., a Florida limited
partnership ("Buyer"). **
28.41 Consent and Agreement dated April 28,
1995, between IBJ Schroder Leasing
Corporation, a New York corporation
("Schroder"), and Cypress Equipment
Fund II, Ltd. ("Cypress"). **
28.42 Escrow Agreement dated April 17,
1995, between Varilease Corporation,
a Michigan corporation ("Seller"),
Cypress Equipment Fund II, Ltd., a
Florida limited partnership
("Buyer"), and Griffinger, Freed,
Heinemann, Cook & Foreman ("Escrow
Agent"). **
28.43 Bill of Sale and Assignment
(Remaining Interest) dated January 1,
1996, between Varilease Corporation,
a Michigan corporation ("Seller"),
and Cypress Equipment Fund II, Ltd.,
a Florida limited partnership
("Buyer"). **
28.44 Assignment and Assumption Agreement,
dated as of December 30, 1996 (this
"Agreement"), between NTFC Capital
Corporation, a Delaware corporation
(the "Seller"), and Cypress
Equipment Fund, II, Ltd., a Florida
limited partnership (the "Buyer"). **
28.45 Amended and Restated Purchase
Agreement No. 2 dated as of March
13, 1996, between NTFC Capital
Corporation (formerly named Northern
Telecom Acceptance Corporation), the
Seller, and Cypress Equipment Fund
II, Ltd, the Buyer. **
28.46 Promissory Note for Value Received
dated as of December 30, 1996,
between Cypress Equipment Fund II,
Ltd., a Florida limited partnership
("Maker") promises and agrees to pay
to the order of NTFC Capital
Corporation, its successors, assigns
or any subsequent holder of this
Note (the "Holder") at its offices
located at 220 Athens Way,
Nashville, Tennessee, 37228-1314, or
at such other place as may be
designated in writing by Holder, in
lawful money of the United States of
America in immediately available
funds, the principal amount of Two
Million Six Hundred Eight Three
Thousand Four Hundred Thirty Five
($2,683,435) together with interest
thereon and other amounts due as
provided below. **
28.47 Amended and Restated Security
Agreement ("Security Agreement"),
dated as of March 13, 1996, and made
by Cypress Equipment Fund II, Ltd.,
a Florida limited partnership, with
offices located at One Sansome
Street, Suite 1900, San Francisco,
California, 94104, 415-951-4605
(facsimile) (the "Debtor"), in favor
of NTFC Capital Corporation, a
Delaware corporation, with offices
located at 220 Athens Way,
Nashville, Tennessee 37228 ("Secured
Party"). **
28.48 Participation Agreement dated as of
July 15, 1982 among Federal Paper
Board Company, Inc., Lessee,
Riegelwood, Inc., Secured Note
Issuer, The Bank of New York,
individually and as Owner Trustee,
North Carolina National Bank, as
Indenture Trustee, Teachers
Insurance and Annuity Association of
America, Sun Life Assurance Company
of Canada, Sun Life Assurance
Company of Canada (U.S.), The North
Atlantic Life Insurance Company of
America, and Northern Life Insurance
Company, Loan Participants, and EFH
Leasing Corporation, BNY Leasing,
Inc., and Northern Telecom
Acceptance Corporation, as Owner
Participants. **
29 Information from reports furnished to
state insurance regulatory
authorities ***
* Included with Form S-1, Registration No. 33-
27741 previously filed with the Securities and
Exchange Commission.
** Included with Form 8-K, as amended,
previously filed with the Securities and
Exchange Commission.
*** Exhibits were omitted as not required, not
applicable, or the information required to
be shown therein is included elsewhere in
this report.
b. Reports filed on Form 8-K - None.
c. Exhibits filed with this report - 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 II, Ltd.
RJ Leasing - 2, Inc.
A General Partner
Date: June 16, 1997 By: /s/J. Davenport Mosby, III
--------------------------------
J. Davenport Mosby, III
President
Date: June 16, 1997 By: /s/John M. McDonald
---------------------------------
John M. McDonald
Vice President
Date: June 16, 1997 By: /s/Christa Kleinrichert
---------------------------------
Christa Kleinrichert
Secretary and Treasurer
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 II, Ltd.
RJ Leasing - 2, Inc.
A General Partner
ATTEST:
/s/Christa Kleinrichert By: /s/J. Davenport Mosby, III
- -------------------------------- -----------------------------------
Christa Kleinrichert J. Davenport Mosby, III
Secretary and Treasurer President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(b) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 947,493
<SECURITIES> 0
<RECEIVABLES> 385,129
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 19,905,817
<DEPRECIATION> 12,490,605
<TOTAL-ASSETS> 8,753,118
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,981,365
<TOTAL-LIABILITY-AND-EQUITY> 8,753,118
<SALES> 0
<TOTAL-REVENUES> 4,272,279
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,552,546
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 139,402
<INCOME-PRETAX> 1,580,331
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,580,331
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,580,331
<EPS-PRIMARY> 65.04<F2>
<EPS-DILUTED> 65.04<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET INCOME PER $1,000 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
