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, 1997
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, 1997
- ---------------------- --------------------
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, 1997, the original cost of Equipment owned by the Partnership was
$40,876,233. Equipment and related information consist of the following:
FUTURE REVENUE
LEASE OF REMAINING
MATURITIES ACQUISITION LEASE TERM AT
EQUIPMENT AT 12/31/97 COST 12/31/97
- -------------------------- ------------- ---------------- ------------
Tank Barges December 1998 3,623,484 988,251
Locomotives November 1998 1,745,717 318,988
Self Unloading Bulk
Carrier November 1998 8,773,564 940,749
Electronic Banking October 1999
Equipment -August 2002 10,336,844 4,550,811
3 Aircraft December 2001 5,438,086 1,793,229
Aircraft (3) February 2004 1,718,374 0
Machine Tools August 1999 -
September 2001 1,061,079 553,008
Offlease:
Aircraft 1,537,519
Peak Power Generating
Units (1) 4,100,606
Hopper Cars (2) 2,540,960
------------ -----------
$ 40,876,233 $ 9,145,036
============ ============
(1) The lessee has exercised its option to purchase the equipment. See
"Legal Proceedings"
(2) Equipment is subject to a dispute with the lessee. See "Legal
Proceedings".
(3) On December 31, 1997, the Fund was notified that its Metro III
commuter aircraft on lease to Aerosur, S.A. experienced a casualty event.
The aircraft is currently being inspected to determine the extent of its
damage. In the event the aircraft is declared a total loss, the Fund is
expected to receive insurance proceeds in an amount sufficient to protect
its investment and targeted return on its investment.
The lessees and the percentages of total equipment owned are as
follows:
Oglebay Norton Company 21%
Hughes Network Systems, Inc. 20%
Lonestar Airlines 13%
Dow Chemical Company 9%
Affiliated Computer Services, Inc. 6%
Southern Pacific 4%
Aerosur, S.A. 4%
Alliant Technology 3%
Equipment Pending Re-lease 4%
Equipment Held for Sale 16%
----
100%
====
The Partnership owns two Options, purchased for an acquisition cost of
$2,282,246, to buy rail equipment at lease expiration dates of August 1999
and January 2000. The Partnership paid $3,118,969 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.
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 1997.
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, 1997
Units of Limited Partnership Interest 1,995
General Partner Interests 3
Item 6. SELECTED FINANCIAL DATA
1997 1996 1995 1994 1993
Total
Revenues $ 6,606,199 $10,605,555 $ 7,119,741 $ 8,672,375 $ 5,170,123
Net Income $ 1,479,260 $ 4,472,073 $ 1,550,265 $ 3,199,088 $ 845,361
Total Assets $47,348,906 $49,121,339 $39,309,444 $36,771,147 $34,343,968
Notes Payable $19,084,905 $18,628,741 $ 9,900,879 $ 4,799,168 $ 9,492,116
Distributions
to Limited
Partners Per
Weighted
Average
Limited
Partnership
Unit
Outstanding $ 100.00 $ 100.00 $ 109.21 $ 91.45 $ 78.46
Earnings Per
Weighted
Average
Limited
Partnership
Unit
Outstanding $ 40.16 $ 121.40 $ 42.08 $ 90.75 $ 47.07
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 decreased from $7,491,653 for the year ended December
31, 1996, to $5,770,536 for the year ended December 31, 1997. Equipment
which came off-lease or was sold during 1997 provided $1,575,930 less
revenue in 1997 than in 1996 and equipment purchased in 1997 provided
$460,527 more revenue in 1997 than in 1996. Additionally, there was a
decrease of $605,715 in revenues of leases that were in place. Interest
income decreased during the year ended December 31, 1997, as compared to
the year ended December 31, 1996, because the Partnership had a lower
average balance of cash for investment.
Interest expense increased from $1,231,062 for the year ended December
31, 1996, to $1,557,497 for the year ended December 31, 1997. This
increase primarily resulted from a increased average level of debt during
the period. Management fee expense increased even though rental revenues
decreased due to management fees being paid on the distribution of revenues
from the Federal Paper Board Partnership. Depreciation and amortization
expense decreased $737,319 for the year ended December 31, 1997 versus the
year ended December 31, 1996, due to an average depreciable basis of
equipment of $40,127,000 during 1996 versus an average of $34,518,000
during 1997.
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 $1,479,260 for the year ended December 31, 1997.
During the year ended December 31, 1997, Equipment Held for Sale with
a net book value of $20,042 was sold for $36,500 resulting in a gain on
sale of $16,458. During 1997 the Partnership acquired Equipment, a Direct
Financing Lease and Investment in Partnerships of $4,127,406. 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 $456,164 during the year ended December 31,
1997, due to $8,658,151 of additional borrowing, deferred interest of
$606,257, and $8,808,244 of principal payments on notes.
Liquidity and Capital Resources
The primary sources of funds for the year ended December 31, 1997 were
$4,772,153 from operating activities, $8,658,151 from additional borrowing,
$751,372 from the sale of options and $868,175 in distributions from other
partnerships. These sources were used to make $2,585,641 of equipment
purchases, $1,541,565 for a 50% interest in a partnership, $8,808,244 of
notes payments, and $3,683,732 of distributions. As of December 31, 1997,
the Partnership had $4,480,112 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 make
distributions, meet administrative expenses, and debt retirement. These
short-term needs will be funded by cash from 1998 operations and Cash and
Cash Equivalents at December 31, 1997.
In the opinion of the General Partners, the Partnership has sufficient
funds or sources of funds to remain liquid for the expected life of the
Partnership. The General Partners are not aware of any trends that
significantly affect the Partnership's liquidity.
The cash balance at December 31, 1997, was $4,480,112. The
Partnership had net income of $1,479,260 and after adjusting for
depreciation and amortization and the changes in operating assets and
liabilities, net cash provided by operating activities was $5,231,114.
Cash used in investing activities totaled $2,515,796. Cash provided by
financing activities consisted primarily of additional borrowing of
$8,658,151, cash used in financing activities was primarily to make
payments of notes payable of $8,808,244 and distributions of $3,683,732.
Actual cash distributions were $3,683,732 in 1997 and $3,683,732 in
1996.
The Partnership anticipates that funds from operations in 1998 will be
adequate to cover all 1998 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, 1997 and 1996, and the related statements
of operations, partners' equity and cash flows for each of the three years
in the period ended December 31, 1997. 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, 1997 and 1996, and the results
of its operations and its cash flows for each of the three years in the
period ended December 1997, in conformity with generally accepted
accounting principles.
SPENCE, MARSTON, BUNCH, MORRIS & CO.
Certified Public Accountants
Clearwater, Florida
May 4, 1998
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CYPRESS EQUIPMENT FUND II, LTD.
BALANCE SHEETS
DECEMBER 31,
1997 1996
---- ----
ASSETS
Rental Equipment, at Cost $ 34,234,667 $ 32,975,087
Less: Accumulated Depreciation (12,630,987) (9,403,837)
------------- -------------
21,603,680 23,571,250
Rental Equipment Held for Sale 4,105,073 4,125,116
Deposit on Equipment 3,118,969 3,109,549
Options 2,282,246 3,033,618
Investment In Partnerships 10,009,477 8,793,698
Net Investment in Direct Financing Lease 867,100 0
Deferred Debt Costs (Net of Accumulated
Amortization of $290,498 and $179,112,
Respectively) 44,238 82,876
Rent and Sales Proceeds Receivable 737,603 659,999
Accounts Receivable - Other 12,000 3,309
Prepaid Expense 88,408 70,557
Cash and Cash Equivalents 4,480,112 5,671,367
------------ ------------
Total Assets $ 47,348,906 $ 49,121,339
============= =============
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Notes Payable $ 19,084,905 $ 18,628,741
Payable to: General Partners 187,943 386,367
Affiliates 0 11,393
Others 268,626 102,058
Interest Payable 141,780 122,469
Unearned Revenue 0 187
------------- -------------
Total Liabilities 19,683,254 19,251,215
------------- -------------
Partners' Equity:
Limited Partners (36,469 units outstanding
at December 31, 1997 and 1996) 27,707,925 29,890,358
General Partners (42,273) (20,234)
------------- -------------
Total Partners' Equity 27,665,652 29,870,124
------------- -------------
Total Liabilities and Partners' Equity $ 47,348,906 $ 49,121,339
============= =============
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,
1997 1996 1995
---- ---- ----
Revenues:
Rental Income $ 5,770,536 $ 7,491,653 $ 6,573,823
Interest Income 270,617 362,482 439,766
Gain on Sale of Equipment 0 198,081 106,152
Gain on Sale of Rental
Equipment Held for Sale 565,046 1,640,583 0
Insurance Proceeds 0 912,756 0
------------ ------------ ------------
Total Revenues 6,606,199 10,605,555 7,119,741
------------ ------------ ------------
Operating Expenses:
Management Fees-General 288,328 223,432 284,795
Partners
General Administrative: 69,281 73,286 49,063
Affiliate 415,486 565,488 294,703
Other 1,557,497 1,231,062 639,213
Interest Expense 3,338,536 4,075,855 3,551,702
Depreciation and Amortization
Write Down of Rental Equipment 0 0 750,000
Held for Sale ------------ ------------ ------------
5,669,128 6,169,123 5,569,476
Total Operating Expenses ------------ ------------ ------------
Net Income Before Equity in 937,071 4,436,432 1,550,265
Income of Partnerships
Equity in Income of 542,189 35,641 0
Partnerships ------------ ------------ ------------
$ 1,479,260 $ 4,472,073 $ 1,550,265
Net Income ============ ============ ============
Allocation of Net Income: $ 1,464,467 $ 4,427,352 $ 1,534,762
Limited Partners 14,793 44,721 15,503
General Partners ------------ ------------ ------------
$ 1,479,260 $ 4,472,073 $ 1,550,265
============ ============ ============
Net Income per $1,000 Limited $ 40.16 $ 121.40 $ 42.08
Partnership Unit Outstanding ============ ============ ============
Number of Limited Partnership 36,469 36,469 36,469
Units ============ ============ ============
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, 1997, 1996 AND 1995
Limited General Total
Partners' Partners' Partners'
Equity Deficit Equity
-------- -------- --------
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
Net Income - 1997 1,464,467 14,793 1,479,260
Distributions - 1997 (3,646,900) (36,832) (3,683,732)
------------ --------- ------------
Balance at December 31, 1997 $27,707,925 $ (42,273) $27,665,652
============ =========== ============
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,
1997 1996 1995
---- ---- ----
Cash Flows from Operating
Activities:
Net Income $ 1,479,260 $ 4,472,073 $ 1,550,265
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
(Gain) on Sale of Equipment 0 (198,081) (106,152)
Depreciation and Amortization 3,338,536 4,075,855 3,551,702
Deferred Interest on Notes
Payable 606,257 495,617 231,078
Write Down of Rental Equipment
Held for Sale 0 0 750,000
Purchase of Equipment Held for
Sale 0 0 (2,290,270)
Equity in Income of Investment
In Partnerships (542,189) (35,641) 0
Changes in Operating Assets
and Liabilities:
Decrease in Rental Equipment
Held for Sale 20,043 3,174,558 0
(Increase) Decrease in Rent
Receivable (79,087) 102,200 1,391,905
(Increase) Decrease in
Prepaid Expenses (17,851) (48,898) 54,329
Increase (Decrease) in
Interest Payable 19,311 59,625 (26,306)
(Increase) Decrease in
Accounts Receivable:
Interest 0 472 (63,752)
Other (8,691) 289 (3,598)
Increase (Decrease) in
Payable to:
General Partners (198,424) 287,179 (41,686)
Affiliates (11,393) 11,393 (5,381)
Other 166,568 40,485 61,573
Decrease in Unearned Revenue (187) (109,653) (78,874)
------------ ------------ ------------
Net Cash Provided by
Operating Activities 4,772,153 12,327,473 4,974,833
------------ ------------ ------------
Cash Flows from Investing
Activities:
Purchases of Leased Equipment (1,259,580) (3,896) (10,284,106)
Deposit on Equipment (9,420) (3,109,549) 0
Purchase of Direct Financing
Lease (867,100) 0 0
Investment in Partnerships (1,541,765) (8,859,010) 0
Distributions Received 868,175 100,953 0
(Purchase) Sale of Options 748,406 0 (3,038,114)
Purchase of Residual 0
Participations 0 0 (134,396)
Purchase of Accounts Receivable
- - Residual Participations 0 0 (914,066)
Proceeds from Sale of Equipment 0 438,282 3,288,957
Proceeds from Casualty of
Option 2,966 4,496 16,083
Payments Received on Note
Receivable 0 0 306,927
(Increase) Decrease in Sales
Proceeds Receivable 1,483 109,017 (110,500)
----------- ----------- -----------
Net Cash (Used In) Investing
Activities (2,056,835) (11,319,707) (10,869,215)
----------- ----------- -----------
Cash Flows from Financing
Activities:
Proceeds from Notes Payable 8,658,151 7,899,999 8,313,460
Payment of Notes Payable (8,808,244) (2,704,851) (3,442,827)
(Increase) in Deferred Debt
Costs (72,748) (34,553) (97,249)
Distributions to Partners (3,683,732) (3,683,732) (4,023,005)
----------- ----------- -----------
Net Cash (Used In) Provided
by Financing Activities (3,906,573) 1,476,863 750,379
----------- ----------- -----------
Increase (Decrease) in Cash (1,191,255) 2,484,629 (5,144,003)
Cash and Cash Equivalents at
Beginning of Period 5,671,367 3,186,738 8,330,741
----------- ----------- -----------
Cash and Cash Equivalents at End
of Period $ 4,480,112 $ 5,671,367 $ 3,186,738
=========== =========== ===========
Supplemental Cash Flow Information:
Interest Paid $ 931,930 $ 612,627 $ 434,441
============ =========== ===========
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 were increased by $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.
Notes Payable in 1997 were increased by $606,257, the amount of Deferred
Interest on Notes Payable.
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, 1997, 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, 1997.
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
Operating
The Partnership accounts for 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.
In March 1995, the Financial Accounting Standards Board (FASB) issued
statement No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of" (SFAS 121). In accordance with
SFAS 121, the Fund reviews the carrying value of its equipment at least
annually in relation to expected future market conditions for the purpose
of assessing the recoverability of the recorded amounts. If projected
undiscounted cash flows (future lease revenue plus residual values) are
less than the carrying value of the equipment, a loss on revaluation is
recorded. There were no write-downs required during 1997 or 1996.
Direct Financing Lease
The Partnership owns one direct financing lease. The Investment in
Direct Financing Lease is reported at the present value of the sum of the
minimum lease payments, using the interest rate implicit in the lease as
the discount factor. The difference between the sum of the minimum lease
payments and the present value of the sum of the minimum lease payments is
reported as unearned income, which is amortized over the remaining lease
term using the interest method.
Investment In Partnerships
The Partnership accounts for its investments in partnerships using the
equity method of accounting because the Partnership does not have a
majority control of the major operating and financial policies of the
partnerships in which it invests. Under the equity method, the investment
is carried at cost, adjusted for the Partnership's share of income or loss
of the partnership in which it has invested, and additional investments and
cash distributions from the partnership.
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.
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 of $1,000 limited partnership
units outstanding for 1997, 1996, and 1995, respectively.
Reclassification
For comparability, the 1996 and 1995 figures have been reclassified
where appropriate to conform to the financial statement presentation used
in 1997. The following amounts on the 1996 Balance Sheet have been
reclassified to Investment in Partnerships: Leased Equipment $10,331,910;
Unearned Revenue $90,209; and Accumulated Depreciation $207,654. In
addition, the following amounts on the 1996 Statement of Operations have
been reclassified to Equity in Income of Partnerships: Lease Revenue
$267,922; Interest Expense $24,627; and Depreciation $207,654. These
reclassifications had no effect on net income or partners' capital for the
year.
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 Limited Partnership Agreement, the
Administrative and Managing General Partners were paid acquisition fees of
$116,352, $368,478, and $254,125 in 1997, 1996, and 1995 respectively, for
services related to locating and leasing equipment (2.85% of the purchase
price); equipment management fees of $288,328, $223,432, and $284,795 (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 1997, 1996,
and 1995, 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, $36,832, and $40,226 for 1997, 1996, and 1995, respectively.
Affiliates of the General Partner
The following amounts were paid or accrued to affiliates of the
Administrative General Partner: $69,281 in 1997, $73,286 in 1996, and
$49,063 in 1995 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 from the operating leases at December
31, 1997, are as follows:
Year Ending
December 31, Amount
------------ ------------
1998 $ 5,247,174
1999 2,680,670
2000 682,251
2001 534,942
------------
$ 9,145,037
============
Direct Financing Lease
The components of the Partnership's Investment in Direct Financing
Lease at December 31, 1997 are as follows:
Total Minimum Lease
Payments to be Received $ 1,326,061
Unearned Income (458,961)
Net Investment in -----------
Direct Financing Lease $ 867,100
===========
Future minimum rentals to be received on this lease at December 31,
1997, are as follows:
Year Ending December 31,
1998 $ 251,399
1999 251,399
2000 251,399
2001 251,399
2002 320,465
----------
Total $1,326,061
==========
NOTE 5 - 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. In July 1997 the Partnership exercised the option and paid the
strike price of $566,686. The equipment was immediately sold and the
partnership realized a net gain of $548,588.
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.
NOTE 6 - 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.
NOTE 7 - INVESTMENT IN PARTNERSHIPS
During 1997 the Partnership acquired a 50% interest in a Limited
Partnership which purchased intermodal marine containers and chassis for
approximately $1.7 million. These containers and chassis are on lease to
Transamerica Leasing for a term of three years.
During 1996 the Partnership acquired a 40% interest in a partnership
which owns a recovery boiler facility used in the production of wood pulp
and on lease to International Paper. The purchase price was approximately
$10,290,000.
The following is a summary of the Investment in Partnerships:
December 31, 1997 December 31, 1996
----------------- -----------------
Investment in Federal Paper Board $ 8,859,010 $ 8,859,010
Cumulative Distributions (969,128) (100,953)
Cumulative Equity in Income 586,579 35,641
------------ ------------
Net Investment $ 8,476,461 $ 8,793,698
============ ============
Investment in Cypress Access
Container $ 1,461,197 $ 0
Acquisition Expense 80,568 0
Cumulative Equity in Loss (8,749) 0
------------ ------------
Net Investment $ 1,533,016 $ 0
============ ============
Total Investment in Partnerships $ 10,009,477 $ 8,793,698
============= =============
<PAGE>
SUMMARIZED BALANCE SHEET:
CYPRESS ACCESS CONTAINER PARTNERS DECEMBER 31, 1997
- --------------------------------- -----------------
ASSETS:
Rent Receivable $ 283,160
Other receivable 136,412
Containers, net of accumulated
depreciation 2,473,525
Organization costs, net of
accumulated amortization 11,799
------------
Total Assets $ 2,904,896
============
LIABILITIES AND PARTNERS' EQUITY:
Partner's Equity - Access $ 1,452,448
Partner's Equity - Cypress 1,452,448
------------
Total Liabilities and Partners'
Equity $ 2,904,896
============
SUMMARIZED STATEMENT OF OPERATIONS:
Depreciation expense $ 17,297
Amortization expense 200
----------
Net Loss $ 17,497
==========
Other Partner's Share of Net Loss $ 8,748
Cypress' Share of Net Loss 8,749
----------
$ 17,497
==========
<PAGE>
SUMMARIZED BALANCE SHEET:
FEDERAL PAPER BOARD DECEMBER 31, 1997 DECEMBER 31, 1996
------------------ ----------------- -----------------
ASSETS:
Equipment, net of accumulated
depreciation $ 8,476,461 $ 8,651,356
Other Assets 0 97,895
----------- -----------
Total Assets $ 8,476,461 $ 8,749,251
============ ============
LIABILITIES AND PARTNERS' EQUITY:
Notes Payable $ 0 $ 2,881,294
Accrued Interest 0 212,092
------------ ------------
0 3,093,386
Partners' Equity - Cypress 8,476,461 8,793,698
Partners' Equity - Other 0 (3,146,833)
------------ ------------
Total Liabilities and Partners'
Equity $ 8,476,461 $ 8,749,251
============ ============
SUMMARIZED STATEMENT OF OPERATIONS:
Rental income $ 5,412,569 $ 5,412,570
Depreciation expense 1,557,578 207,654
Interest expense 139,746 608,335
97,895 132,280
------------ ------------
Net Income $ 3,617,350 $ 4,464,301
============ ============
Other partners' share of Net $ 3,066,412 $ 4,428,660
Income 550,938 35,641
Cypress' share of Net Income ------------ ------------
$ 3,617,350 $ 4,464,301
============ ============
NOTE 8 - NOTES PAYABLE
Notes payable consist of the following:
December 31, December 31,
1997 1996
----------- ------------
Non-recourse notes payable secured by
equipment with fixed interest rates of 5% to
16 5/8% and maturities from 1998 to 1999. $ 1,754,742 $ 3,789,262
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 2000. 3,113,556 3,182,618
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. 0 926,900
Recourse notes payable secured by assets of
the Partnership, original terms of 52 to 56
months, no payments due until maturity with
the accruing interest converted to
additional principal, with fixed interest
rate of 10% and final maturity in 1999.
$310,016 is expected to be converted to
principal. 1,539,278 1,747,528
Line of Credit secured by equipment with a
floating rate of LIBOR + 3.5% with maturity
in 1998. The line of credit was paid off in
1997. (See Note 12-Commitments and
Contingencies). 0 4,234,500
Line of Credit secured by equipment with a
floating rate of LIBOR + 3.25% with maturity
in 1999. The interest rate at December 31,
1997 was 9.4375%. 4,234,500 0
Line of Credit secured by equipment with a
floating rate of LIBOR + 4% with maturity in
1998. The interest rate at December 31,
1997 was 10.1875%. 3,600,000 0
Recourse note secured by assets of the
Partnership with a floating rate of
commercial paper rate + 3.5% up to and
including 3/16/98, and thereafter a floating
rate of commercial paper rate + 4% with a
maturity in 1999. The interest rate as of
December 31, 1997 was 9.53%. 2,885,760 3,547,933
Non-revolving line of credit secured by
equipment with a floating rate of "Prime
Rate" + .75% with maturity in 2002. 649,103 0
Non-recourse note payable secured by
residual proceeds after lease termination in
2002 with fixed interest rate of 7% 1,307,966 1,200,000
----------- -----------
TOTAL $19,084,905 $18,628,741
=========== ===========
The aggregate amounts of principal payments due in the years after December
31, 1997 are : 1998 - $8,552,038; 1999 - $7,537,955; 2000 - $1,458,347:
2001 - $140,177; 2002 - $88,396 and 2003 and thereafter - $1,307,966.
NOTE 9 - TAXABLE INCOME
The Partnership's taxable income/(loss) 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:
1997 1996 1995
---- ---- ----
Net income per financial
statements $ 1,479,260 $ 4,472,073 $ 1,550,265
Tax gain in excess of (less
than) financial gain on sale of
equipment (3,774) (71,918) 942,777
Additional tax depreciation (960,164) (1,286,344) (1,209,615)
Financial write down of equip-
ment greater than tax write 0 0 750,000
down
Adjustment to Direct Financing
Lease from tax to financial 42,541 0 0
statements
(6,496) 0 0
Other Adjustments
Additional taxable losses from (830,585) (434,304) 0
Investment in Partnerships ------------ ------------ ------------
Partnership income (loss) for $ (279,218) $ 2,679,507 $ 2,033,427
tax purposes ============ ============ ============
NOTE 10 - MAJOR LESSEE INFORMATION
Four leases accounted for $2,012,983, $1,075,911, $988,251 and
$609,534 for the year ended December 31, 1997. 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.
NOTE 11 - OTHER EVENTS
On December 31, 1997, the Fund was notified that its Metro III
commuter aircraft on lease to Aerosur, S.A. experienced a casualty event.
The aircraft is currently being inspected to determine the extent of its
damage. In the event the aircraft is declared a total loss, the Fund is
expected to receive insurance proceeds in an amount sufficient to protect
its investment and targeted return on its investment.
NOTE 12 - 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.
NOTE 13 - SUBSEQUENT EVENTS
On January 31, 1998, the Partnership paid distributions of $911,725 to
the Limited Partners and $9,208 to the General Partners.
On April 30, 1998, 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, 1997. 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, 1997.
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, 1997, 1996, and 1995.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K
a. (1) Financial Statements - see accompanying index to
financial statements, Item 8.
All other schedules are omitted because they
are not applicable or not required, or because the
required information is shown in the financial
statements or in the notes thereto.
(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: July 13, 1998 By: /s/J. Davenport Mosby, III
-----------------------------------
J. Davenport Mosby, III
President
Date: July 13, 1998 By: /s/John M. McDonald
---------------------------------
John M. McDonald
Vice President
Date: July 13, 1998 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 ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE ANNUAL PERIOD ENDED DECEMBER 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,480,112
<SECURITIES> 0
<RECEIVABLES> 749,603
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 34,234,667
<DEPRECIATION> 12,630,987
<TOTAL-ASSETS> 47,348,906
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 27,665,652
<TOTAL-LIABILITY-AND-EQUITY> 47,348,906
<SALES> 0
<TOTAL-REVENUES> 6,606,199
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,111,631
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,557,497
<INCOME-PRETAX> 1,479,260
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,479,260
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,479,260
<EPS-PRIMARY> 40.16<F2>
<EPS-DILUTED> 40.16<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET.
<F2>EPS IS NET INCOME PER $1,000 LIMITED PARTNERSHIP UNIT.
</FN>
</TABLE>
