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, 2002
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 (727) 567-4830
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 state-
ments 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, 2002
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
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.
The Partnership is winding down its operations.
Item 2. PROPERTIES
The Registrant commenced operations in June 1992, and as of December 31, 2002, the only asset is a right to obtain title to a specialty tug and barge. These vessels are the "Energy Ammonia" and "Energy Altair."
The Partnership paid $3,118,969 for the right to obtain title to a specialty tug and barge on December 30, 2002, at the expiration of the lease. This item was written down to $2,410,000 during the year ended December 31, 2001 to its lower end market value.
Subsequent to December 31, 2002, all right, title and interest in these vessels were officially conveyed and accepted by the Partnership on January 10, 2003. On May 28, 2003, these vessels were sold for a gross sales price of $3,425,000. These proceeds were immediately used to pay off the note payable with accrued interest of $1,898,110. This left the Partnership with $1,526,890 to pay expenses and to make the final distribution.
Item 3. LEGAL PROCEEDINGS
As of December 31, 2002 there are no legal proceedings pending.
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 2002.
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, 2002
Units of Limited Partnership Interest 2,260
General Partner Interests 3
Item 6. SELECTED FINANCIAL DATA
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1998 |
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Net Income(Loss) |
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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.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Partnership is winding down its operations. The Partnership has sold significant assets, as discussed below. The remaining asset is a deposit for the right to obtain title to a specialty tug and barge on December 31, 2002, at the expiration of the lease.
Rental income decreased from $111,007 for the year ended December 31, 2001, to $77,008 for the year ended December 31, 2002. The decrease in rental revenue was primarily from one lease generating approximately $45,000 in lease revenue for the twelve months ending December 31, 2001 and only $10,500 for three months for the year ending December 31, 2002. Interest income also decreased during the year ended December 31, 2002 as compared to the prior year because of lower average balances of cash for investment and lower interest rates.
Interest expense increased from $114,517 for the year ended December 31, 2001, to $122,674 for the year ended December 31, 2002. This increase resulted from increased expenses for a balloon loan. Depreciation expense decreased for year ended December 31, 2002 versus the same period in 2001 because the Partnership had a lower depreciable basis of equipment as a result of sales of rental equipment during the year ended December 31, 2002. Management fee expense decreased from $8,765 for the year ended December 31, 2001, to $4,801 for the year ended December 31, 2002 due to decreased rental revenues. General and Administrative expenses increased from $199,237 for the year ended December 31, 2001, to $770,134 for the year ended December 31, 2002. There were $152,760 and $673,760 of legal expenses for the period ending December 31, 2001 and December 31, 2002, respectively. Legal expenses began to climb in 2001 due to the specialty tug barge transaction. The Partnership initiated
litigation against the charterer and the guarantor in connection with the maintenance of the specialty tug barge. In response the charterer counter-sued the Partnership claiming tortious interference. The legal expenses continued to escalate in 2002. In December 2002 both actions were dismissed by Federal District Court.
The 4% incentive management fee was earned with the August 10, 1999, distribution as each Limited Partner has received cumulative cash distributions equal to his capital contribution. The 19% incentive management fee was earned in total with the April 2000 distribution as all Limited Partners began receiving cumulative cash distributions equal to payout plus an amount equal to 8% of adjusted capital contributions per annum cumulative from each limited partner's closing date. Incentive management fees decreased from $381,266 for the year ended December 31, 2001 to $0 for the year ended December 31, 2002 as there were no distributions for the year end December 31, 2002. Equipment resale fee expense increased from $0 for the year ended December 31, 2001, to $18,462 for the year ended December 31, 2002. The Equipment resale fee was deferred without interest until the Limited Partners began receiving cumulative cash distributions equal to payout plus an amount equal to 8% of adju
sted capital contributions per annum cumulative from each limited partner's closing date. The first equipment resale fees were paid to the general partner concurrently with the April 2000 distribution.
During the year ended December 31, 2002, rental equipment with a book value of $303,347 plus expenses of $5,718, was sold for $176,446 resulting in a loss on sale of $132,619. During the year ended December 31, 2001, no rental equipment was sold.
During the year ended December 31, 2002, the Partnership had other income of $2,376 from the final creditor distribution from a bankrupt airline. During the year ended December 31, 2001, the Partnership had other income of $6,242 from the sale of aircraft parts.
During the year ended December 31, 2001, the Partnership had a loss of $708,969 in the write down of Deposit on Equipment. Due to the appraisals
it was decided to write down the equipment to a lower end market value.
Depreciation expense decreased $18,053 for the year ended December 31, 2002 versus the year ended December 31, 2001, due to an average depreciable basis of equipment of $340,412 during 2002 versus an average of $680,825 during 2001.
The net effect of the above revenue and expense items resulted in a net loss of $1,001,086 for the year ended December 31, 2002, compared to a net loss of $1,154,625 for the year ended December 31, 2001.
Notes payable increased $122,674 during the year ended December 31, 2002, due to deferred interest of $122,674.
Liquidity and Capital Resources
The primary sources of funds for the year ended December 31, 2002, were: $77,008 from rental income, $60,049 in distributions from other partnerships, $170,728 from the sale of equipment and $93,935 from the sale of a Partnership interest. These sources and cash available were used primarily to meet expenses. As of December 31, 2002, the Partnership had $278,694 of Cash and Cash Equivalents.
In the opinion of the General Partners there are no material trends, favorable or unfavorable, in the Partnership's capital resources and the resources will be sufficient to meet the Partnership's needs for the foreseeable future.
Short-term liquidity requirements consist of funds needed to meet administrative expenses and to make the final distribution. Cash from 2003 operations and Cash and Cash Equivalents at December 31, 2002, will fund these short-term needs.
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, 2002, was $278,694. The Partnership had a net loss of $1,001,086 and after adjusting for depreciation and amortization and the changes in operating assets and liabilities, net cash used in operating activities was $489,931. Cash provided by investing activities totaled $324,712.
Actual cash distributions were $0 in 2002 and $1,276,416 in 2001.
The Partnership expects to dissolve its operations in 2003. The Partnership anticipates that funds from operations in 2003 and cash reserves will be adequate to cover all 2003 operating contingencies and make a final distribution.
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, 2002 and 2001, and the related statements of operations, partners' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2002. 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 auditing standards generally accepted in the United States of America. 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, 2002 and 2001, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 9, the Partnership is winding down its operation.
SPENCE, MARSTON, BUNCH, MORRIS & CO.
Certified Public Accountants
Clearwater, Florida
May 30, 2003
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CYPRESS EQUIPMENT FUND II, LTD.
BALANCE SHEETS
DECEMBER 31,
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2002 |
2001 |
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ASSETS |
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The accompanying notes are an integral part
of these financial statements.
CYPRESS EQUIPMENT FUND II, LTD.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
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2002 |
2001 |
2000 |
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Revenues: |
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The accompanying notes are an integral part
of these financial statements.
CYPRESS EQUIPMENT FUND II, LTD.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
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Limited |
General |
Total |
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Balance at December 31, 1999 |
$10,801,153 |
$(213,044) |
$10,588,109 |
The accompanying notes are an integral part
of these financial statements.
CYPRESS EQUIPMENT FUND II, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
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2002 |
2001 |
2000 |
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Cash Flows from Operating Activities: |
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Interest Paid |
$ 0 |
$ 0 |
$ 0 |
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Non-Cash Activities:
Notes Payable in 2000 were increased by $106,903 the amount of Deferred Interest on Notes Payable.
Notes Payable in 2001 were increased by $114,517 the amount of Deferred Interest on Notes Payable.
In 2001, the Deposit on Equipment was written down to $2,410,000.
Notes Payable in 2002 were increased by $122,674 the amount of Deferred Interest on Notes Payable.
The accompanying notes are an integral part
of these financial statements.
Cypress Equipment Fund II, Ltd.
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
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 incentive 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, 2002, 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 and Repurchase Agreements in Cash and Cash Equivalents.
Concentration of Credit Risk
Financial instruments that potentially subject the Partnership to concentrations of credit risk consist principally of cash investments. 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, 2002.
The Partnership maintains deposits in excess of federally insured limits. Generally accepted accounting principles 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.
Leases
The Partnership accounts for qualifying 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. No rental equipment is owned as of December 31, 2002.
Write-Down of Assets
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. In addition to equipment the Fund also reviews the carrying value of other assets. The Fund reviews the values of the underlying equipment in these other assets. Write downs of $708,969 were required in 2001. There were no write downs in 2002.
Investment In Partnership
The Partnership accounts for its investment in partnership using the equity method of accounting because the Partnership does not have a majority control of the major operating and financial policies of the partnership 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. In 2002, the Partnership sold its investment in partnership for $93,935.
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 2002, 2001, and 2000, respectively.
Reclassifications
For comparability, the 2000 figures have been reclassified, where appropriate, to conform with the financial statement presentation used in 2002.
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 or had accrued for equipment management fees of $4,801, $8,765, and $59,893, (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); incentive management fees of $0, $381,266, and $638,690, resale fees of $18,462, $0, and $151,752 in 2002, 2001, and 2000, 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 $0, $12,765, and $61,767 for 2002, 2001, and 2000, respectively.
Affiliates of the General Partner
The following amounts were paid or accrued to affiliates of the General Partners: $10,467 in 2002, $21,856 in 2001, and $38,771 in 2000 for reimbursement of general and administrative expenses on an accountable basis.
NOTE 4 - 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. The partnership has reviewed the appraisals of the underlying values of this asset. Upon review of these appraisals the Partnership wrote this transaction down to $2,410,000 during 2001.
Subsequent to December 31, 2002, all right, title and interest in these vessels were officially conveyed and accepted by the Partnership on January 10, 2003. On May 28, 2003, these vessels were sold for a gross sales price of $3,425,000. These proceeds were immediately used to pay off the note payable with accrued interest of $1,898,110. This left the Partnership with $1,526,890 to pay expenses and to make the final distribution. See Note 11 - Subsequent Events.
NOTE 5 - INVESTMENT IN PARTNERSHIP
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. The Partnership sold its interest in this Limited Partnership on September 20, 2002.
The following is a summary of the Investment in Partnership:
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12/31/2001 |
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Investment In Cypress Access Container |
$ 1,483,879 |
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Cumulative Equity in Income |
861,750 95,184 48,506 $ 143,690 |
CYPRESS ACCESS CONTAINER PARTNERS
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For the Nine |
For the Twelve Months ended December 31, 2001 |
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Net Income |
$ 54,556 |
$ 394,462 |
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The Cypress Partnership Equity differs from the Investment in Partnership before acquisition expenses primarily due to the differences in the accounting treatment of miscellaneous items. |
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NOTE 6 - NOTES PAYABLE Notes payable consist of the following: |
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December 31,2002 |
December 31, 2001 |
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Non-recourse note payable secured |
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TOTAL |
$1,845,015 |
$1,722,341 |
The aggregate amounts of principal payments due in the years after December 31, 2002 are : 2003 - $1,845,015.
NOTE 7 - TAXABLE INCOME (Loss)
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 reconciliation between net loss as reported and Partnership income (loss) for tax purposes:
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2002 |
2001 |
2000 |
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Net loss per financial statements Partnership income (loss) for tax purposes |
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NOTE 8 - MAJOR LESSEE INFORMATION
Two leases accounted for $66,000 and $10,500 of the rental income for the year ended December 31, 2002. Two leases accounted for $66,000 and $45,007 of the rental income for the year ended December 31, 2001.
NOTE 9 - OTHER
The Partnership is winding down its operations. Dissolution will occur after the Partnership's last asset is sold. See Note 11 - Subsequent Events.
NOTE 10 - SELECTED QUARTERLY FINANCIAL DATA (unaudited)
Year 2002 Quarter 1 Quarter 2 Quarter 3 Quarter 4
3/31/2002 6/30/2002 9/30/2002 12/31/2002
Total
Revenues $ 27,637 $ 34,353 $ 18,881 $ 725
Net Income
(Loss) $ (92,869) $ (344,599) $ (170,207) $ (393,411)
Earnings
(Loss) Per
Weighted
Average
Limited
Partnership
Unit
Outstanding $ (2.52) $ (9.36) $ (4.62) $ (10.68)
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Year 2001 Quarter 1 Quarter 2 Quarter 3 Quarter 4
3/31/2001 6/30/2001 9/30/2001 12/31/2001
Total
Revenues $ 44,032 $ 30,357 $ 31,773 $ 28,464
Net Income
(Loss) $(407,258) $ (47,062) $ 65,758 $(766,063)
Distributions
To Limited
Partners Per
Weighted
Average
Limited
Partnership
Unit
Outstanding $ 34.65 $ 0 $ 0 $ 0
Earnings
(Loss) Per
Weighted
Average
Limited
Partnership
Unit
Outstanding $ (11.06) $ (1.28) $ 1.79 $ (20.79)
NOTE 11 - SUBSEQUENT EVENTS
On January 10, 2003, the Partnership accepted all right, title and interest in the Vessels "Energy Ammonia" and "Energy Altair". On May 28, 2003, these vessels were sold for a gross sales price of $3,425,000. These proceeds were immediately used to pay off the note payable with accrued interest of $1,898,110. This left the Partnership with $1,526,890 to pay expenses and to make the final distribution from this transaction.
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, 2002. 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, 2002.
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, 2002, 2001, and 2000.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports 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. **
28.53 This Purchase and Sale Agreement is entered
into as of January 7, 2000 by and between
Cypress Equipment Fund II, Ltd., a Florida
limited partnership ("Seller") and GATX
Third Aircraft Corporation, a Delaware
Corporation ("Buyer"). **
28.54 This Purchase and Sale Agreement is entered
into as of February 4, 2000 by and between
Cypress Equipment Fund II, Ltd., a Florida
limited partnership ("Seller") and GATX
Third Aircraft Corporation, a Delaware
Corporation ("Buyer"). **
28.55 Offer to Purchase Agreement between
Aviation Services of American ("Buyer")
and Cypress Equipment Fund II, Ltd.,
Owner AC703 ("Seller") dated May 29, 2000.
28.56 This Purchase and Sale Agreement (this
"Agreement") is made and entered into
this the 29th day of December, by and
between First Security Bank NA, not in
its own capacity, but solely as Owner
Trustee for the Cypress Equipment Fund
II, Ltd. ("Seller") and Inter Air Lease
LLC, a Delaware Limited Liability
Corporation, (hereafter "Buyer").
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.
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.
Date: June 25, 2003 By: /s/Stephen R. Harwood
Stephen R. Harwood
President of the Managing Partner
Cypress Equipment Management Corp. II
Date: June 25, 2003 By: /s/ Carol Georges
Carol Georges
Director of Accounting
Partnership Administration
Raymond James and Associates
CERTIFICATIONS*
I, Stephen R. Harwood, certify that:
1. I have reviewed this quarterly report on Form 10-K of Cypress Equipment Fund II, Ltd.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information include in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: June 25, 2003 By: /s/Stephen R. Harwood
Stephen R. Harwood
President of the Managing Partner
Cypress Equipment Management Corp. II
I, Carol Georges, certify that:
1. I have reviewed this quarterly report on Form 10-K of Cypress Equipment Fund II, Ltd.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information include in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: June 25, 2003 By: /s/ Carol Georges
Carol Georges
Director of Accounting
Partnership Administration
Raymond James and Associates