-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LJ0BxR7Ft3OkF+iw7Xj2z8GyPdlD+AEmPdzD6Ib+wGe8on+vbOeK66zEz+07SRLU 2c1wKGc5bQlHRzVLAktWsA== 0000950144-99-010140.txt : 19990816 0000950144-99-010140.hdr.sgml : 19990816 ACCESSION NUMBER: 0000950144-99-010140 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CERES FUND LP CENTRAL INDEX KEY: 0000869711 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES [6200] IRS NUMBER: 621444129 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-37802 FILM NUMBER: 99688722 BUSINESS ADDRESS: STREET 1: 50 NORTH FRONT STREET STREET 2: SUITE 1300 CITY: MEMPHIS STATE: TN ZIP: 38103 BUSINESS PHONE: 9015438076 MAIL ADDRESS: STREET 1: 50 N FRONT ST STREET 2: STE 1300 CITY: MEMPHIS STATE: TN ZIP: 38103 10-Q 1 CERES FUND, L.P. 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 033-37802 CERES FUND, L.P. ------------------------------------- (State of incorporation) - Tennessee (I.R.S. Employer Identification No.) - 62-1444129 889 Ridge Lake Blvd., Memphis, Tennessee 38120 (901)577-2229 ----------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] 2 CERES FUND, L.P. CONTENTS
PAGE ---- PART I. Financial Information ITEM 1. Financial Statements (unaudited) Statements of Financial Condition June 30, 1999, and December 31, 1998............................ 4 Statements of Operations Three and Six Months Ended June 30, 1999 and 1998............... 5 Statements of Cash Flows Six Months Ended June 30, 1999 and 1998......................... 6 Notes to Financial Statements................................... 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................... 10 PART II. Other Information ............................................................ 11
FORWARD-LOOKING STATEMENTS Statements contained in this Report, which are not historical in nature, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding liquidity and capital resources. Such forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from anticipated results. These risks and uncertainties include regulatory constraints, competition from other companies, changes in the Partnership's operation or expansion strategy, the general economy of the United States and the specific markets in which the Partnership operates and other factors as may be identified from time to time in the Partnership's filings with the Securities and Exchange Commission or in the Partnership's press releases. 3 CERES FUND, L.P. PART I - FINANCIAL INFORMATION Item 1. Financial Statements The accompanying interim consolidated financial statements have been prepared in accordance with the accounting policies in effect as of December 31, 1998, as set forth in the annual consolidated financial statements of Ceres Fund, L.P. as of such date. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated condensed financial statements have been included and all such adjustments were of a normal recurring nature. The results of operations for the six-month and three-month period ended June 30, 1999 are not necessarily indicative of the results to be expected for the full year. 4 CERES FUND, L.P. (A Tennessee Limited Partnership) Statements of Financial Condition June 30, 1999 and December 31, 1998 (Unaudited)
June 30, December 31, 1999 1998 ----------- ----------- Assets: Cash $ 26,534 $ 140,972 U. S. Treasury obligations at cost plus accrued interest 5,766,588 5,322,469 Equity in commodity trading account: Cash 26,381 452,502 Unrealized loss on open futures contracts (102,050) (466,699) Market value of open option contracts 6,875 51,875 Other assets 472 2,973 ----------- ----------- $ 5,724,800 $ 5,504,092 =========== =========== Liabilities and Partners' Capital Liabilities: Accrued management fees $ 17,967 $ 17,191 Other accrued expenses 21,218 63,429 Redemptions payable 155,413 137,884 ----------- ----------- Total liabilities 194,598 218,504 ----------- ----------- Partners' capital: General partners 313,369 283,263 Limited partners 5,216,833 5,002,325 ----------- ----------- Total partners' capital 5,530,202 5,285,588 ----------- ----------- $ 5,724,800 $ 5,504,092 =========== ===========
See accompanying notes to financial statements. 5 CERES FUND, L.P. (A Tennessee Limited Partnership) Statements of Operations (Unaudited)
Six Months Ended June 30, Three Months Ended June 30, 1999 1998 1999 1998 -------- ----------- --------- --------- Income: Net gains on trading of commodity futures and option contracts: Realized gain on closed positions $261,464 $ 1,271,320 $ 224,127 $ 717,148 Change in unrealized gains (losses) on open positions 392,461 (618,305) (121,236) (825,881) Interest 122,917 176,418 64,038 93,287 -------- ----------- --------- --------- Income (loss) from operations $776,842 $ 829,433 $ 166,929 $ (15,446) -------- ----------- --------- --------- Expenses: Brokerage commissions, exchange, clearing fees and NFA charges 180,435 449,289 87,882 256,237 Management fee allocations 108,995 135,824 55,043 71,472 Incentive fee allocations -- 13,932 -- -- Professional and administrative expenses 36,000 36,000 18,000 18,000 -------- ----------- --------- --------- 325,430 635,045 160,925 345,709 -------- ----------- --------- --------- Net income (loss) $451,412 $ 194,388 $ 6,004 $(361,155) ======== =========== ========= ========= Aggregate income (loss) allocated to general partners $ 30,106 18,639 $ 3,300 $( 14,723) Aggregate income (loss) allocated to limited partners $421,306 $ 175,749 $ 2,704 $(346,432) Net income (loss) per limited partnership unit $ 12.56 $ 5.30 $ .08 $ (10.26)
See accompanying notes to financial statements. 6 CERES FUND, L.P. (A Tennessee Limited Partnership) Statements of Cash Flows (Unaudited)
Six Months Ended June 30, 1999 1998 --------- ----------- Cash flows from operating activities: Net income $ 451,412 $ 194,388 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Net unrealized gain (loss) on open contracts 392,461 (618,305) (Increase) decrease in assets: U. S. Treasury obligations (444,119) (645,682) Cash in commodities trading account 426,121 (660,597) Unrealized gain (loss) on open futures and options contracts (757,110) 1,270,230 Market value of open option contracts 45,000 23,718 Other assets 2,501 492 Increase (decrease) in liabilities: Accrued management fees 776 2,221 Accrued incentive fees -- (1,662) Other accrued expenses (42,211) (21,206) Amounts received for future subscriptions -- 6 Redemptions payable 17,529 (26,173) --------- ----------- Net cash from (used in) in operating activities 92,360 (482,570) Cash flows from (used in) financing activities: Net proceeds from sale of limited partnership units 33,400 722,559 Redemption of limited partnership units (240,198) (179,376) --------- ----------- Net (decrease) in cash (114,438) (60,613) Cash at the beginning of the year 140,972 155,155 --------- ----------- Cash at the end of the quarter $ 26,534 $ 215,768 ========= ===========
See accompanying notes to financial statements. 7 CERES FUND, L.P. (A Tennessee Limited Partnership) Notes to Financial Statements June 30, 1999 (1) Summary of Significant Accounting Policies Organization Ceres Fund, L.P. (the Partnership) is a Tennessee limited partnership organized on September 19, 1990 to engage in the speculative trading of commodities futures contracts and other commodity interests. Randell Commodity Corporation ("Randell") and RanDelta Capital Partners, L.P. ("RanDelta") are the general partners. Randell serves as the managing general partner and RanDelta serves as the financial general partner. Randell will act as commodity trading advisor with respect to the Partnership. The Partnership solicited subscriptions for a maximum of 100,000 units of limited partnership interest at $105 per unit. During the initial offering period 13,471.6805 units were sold and the Partnership commenced trading commodity futures contracts on December 1, 1991. The Partnership continues to sell units as of the end of each month at the then average net asset value per unit plus a selling commission of 4% in accordance with the terms of the Limited Partnership Agreement, and can continue selling units until the maximum number of units offered have been sold. At June 30, 1999 a total of 62,054.7392 units have been sold, 1,861.9400 units have been distributed in lieu of a cash distribution, and 31,019.0435 units have been redeemed, leaving an outstanding balance at June 30, 1999, of 32,897.6357 units. The general partners agreed to make a capital contribution of the lesser of $100,000 or 3% of total partnership capitalization and made an initial capital contribution of $45,000 at the close of the initial offering and have made additional capital contributions to date of $55,000 to meet its investment commitment in the Partnership. In no event will the general partners' interest in the Partnership be less than 1% of total partnership capitalization. Income and expenses of the Partnership (excluding the Management Allocation and Incentive Allocation) will be allocated pro rata among the partners based on their respective capital accounts as of the beginning of the month in which the items of income and expense accrue, except that limited partners have no liability for partnership obligations in excess of his or her capital account, including earnings. The Management Allocation and Incentive Allocation are allocated to the Limited Partners only in accordance with the terms of the Limited Partnership Agreement. The Partnership is not liable for any organizational and offering expenses in connection with the issuance and distribution of the units. Refco, Inc., the Partnership's commodity broker, paid the organizational expenses of the Partnership and the expenses of offering the units to the public. The Partnership will not reimburse Refco, Inc. for any portion of the costs so incurred and will not be liable for any such costs at any time. Units may not be redeemed during the first six months after they are purchased. Thereafter, limited partners may redeem their units at the redemption net asset value per unit as of the end of any calendar quarter upon ten days written notice to the managing general partner. The redemption charge will be based on the redemption net asset value on all units redeemed as more fully described in the offering prospectus. 8 Under the terms of the partnership agreement, the Partnership will terminate on the earlier of December 31, 2020, or the occurrence of certain events as more fully described in the Limited Partnership Agreement. Valuation of Futures Contracts Open commodity futures contracts are valued at market daily and unrealized gains and losses are reflected in income. Income Taxes No provision for income taxes has been made in the accompanying financial statements since, as a partnership, income and losses for tax purposes are allocated to the partners for inclusion in their respective tax returns. (2) Management Agreement The Partnership has entered into a Management Agreement in consideration of and as compensation for the services to be rendered by the General Partners and trading advisors. The Partnership will pay to the general partners a monthly Management Allocation equal to 1/3 of 1% (4% per annum) of the adjusted net asset value of units at month end, plus a quarterly Incentive Allocation of 15% of any net new appreciation in the adjusted net asset value of units for the quarter. During the six months ended June 30, 1999, management fees totaled $108,995 and incentive fees totaled $0. (3) Customer Agreement with Refco, Inc. The Partnership entered into a customer agreement with Refco, Inc. (Refco), pursuant to which the Partnership deposits its assets in a commodity trading account with Refco who executes trades on behalf of the Partnership. The Partnership agrees to pay such brokerage and commission charges and fees as Refco may establish and charge from time to time. During 1999, Refco charged the Partnership commissions on commodity trades at the rate of $32.50 per round-turn. Total commissions charged to the Partnership by Refco during this six-month period of 1999 were $172,511. The Partnership earns interest on 80% of the average daily equity maintained as cash in the Partnership's trading account at a rate equal to the average yield on 13-week United States Treasury Bills. Total interest earned by the Partnership from this source during this six-month period amounted to $122,917. (4) Related Parties The sole shareholder of the parent of the managing General Partner is an active partner in the law firm which is the counsel to the Partnership, the General Partners, the Memphis branch of Refco and the Partnership's commodity broker. (5) Calculation of Net Income (Loss) per Limited Partnership Unit The Net Income per Limited Partnership Unit for the period from January 1, 1999, through June 30, 1999 of $12.56 was calculated by dividing the Aggregate Income Allocated to Limited Partners of $421,306 by the Average Units outstanding between December 31, 1998 and June 30, 1999 (33,552.2438 Units). 9 The Net Income per Limited Partnership Unit for the period from January 1, 1998 through June 30, 1998 of $5.30 was calculated by dividing the Aggregate Income Allocated to Limited Partners of $175,749 by the Average Units outstanding between December 31, 1997 and June 30, 1998 (33,157.7667 Units). The Net Income per Limited Partnership Unit for the period from April 1, 1999 through June 30, 1999 of $.08 was calculated by dividing the Aggregate Income Allocated to Limited Partners of $2,704 by the Average Units outstanding between March 31, 1999 and June 30, 1999 (33,310.1728 Units). The Net Income (Loss) per Limited Partnership Unit for the period from April 1, 1998 through June 30, 1998 of ($10.26) was calculated by dividing the Aggregate Income (Loss) Allocated to Limited Partners of ($346,432) by the Average Units outstanding between March 31, 1998 and June 30, 1998 (33,751.7810 Units). (6) Recent Pronouncements In June 1998, SFAS No. 133, as amended by SFAS No. 137, "Accounting for Derivative instruments and Hedging Activities" was issued. This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. This statement is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. The partnership intends to comply with this statement in 2001. (7) Year 2000 The Partnership relies on the General Partners to provide the Partnership with certain calculations and reports, so if the Year 2000 Issue is material to the General Partners, then it may impact the Partnership. However, the Year 2000 issue is not material for the General Partners since the administration software is generally "off-the- shelf" and the General Partners have been advised by the vendors of such software that it is Year 2000 compliant . In addition, the Partnership utilizes computer systems and applications maintained by its commodity broker for trading activities and recordkeeping. The General Partners have been advised by the operators of these systems that conversion and implementation activities for mission critical systems are in process of being implemented and tested. Neither the software replacement nor the compliance review is expected to be material or to yield noncompliance issues that are material. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management's discussion should be read in conjunction with the Financial Statements and the discussion of Ceres Fund, L.P.'s (the "Partnership") business and other detailed information appearing elsewhere herein. All information is based on the Partnership's fiscal quarter ended June 30. RESULTS OF OPERATIONS The Three Months and Six Months Ended June 30, 1999, compared to the Three and Six Months Ended June 30, 1998. Trading results were more profitable during the three months ended June 30, 1999, as compared to the same period in 1998. The Partnership had income from trading activities of $166,929 for the three months ended June 30, 1999, as compared to a loss from trading activities of $15,446 for the three months ended June 30, 1998. The income during this period is primarily attributable to gains in connection with the trading of grain contracts. In addition, the Partnership had a decrease in expenses from $345,709 for the three months ended June 30, 1998 to $160,925 for the three months ended June 30, 1999. The decrease in total expenses was primarily attributable to a decrease in brokerage commissions due to fewer trades during the period. Brokerage commissions, exchange, clearing fees and NFA charges were $87,882 for the three months ended June 30, 1999, as compared to $256,237 for the three months ended June 30, 1998. As a result of the foregoing, the Partnership had a net income of $6,004 for the three months ended June 30, 1999, compared to net loss of $361,155 for the same period in 1998; and a net income per limited partnership Unit of $.08 for the three months ended June 30, 1999, compared to a net loss per limited partnership Unit of $10.26 for the same period in 1998. Trading results were profitable during the six months ended June 30, 1999, as compared to the same period in 1998. The Partnership had income from trading activities of $776,842 for the six months ended June 30, 1999, compared to profits from trading activities of $829,433 for the six months ended June 30, 1998. The income during this period was primarily attributable to gains in connection with the trading of grain contracts. In addition, the Partnership had a decrease in expenses from $635,045 for the three months ended June 30, 1998, as compared to $451,412 for the three months ended June 30, 1999. The decrease in total expenses was primarily attributable to a reduction in brokerage commissions due to fewer trades during the period. Brokerage commissions, exchange, clearing fees and NFA charges were $180,435 for the six months ended June 30, 1999, as compared to $449,289 for the six months ended June 30, 1998. As a result of the foregoing, the Partnership had a net income of $451,412 for the six months ended June 30, 1999, compared to net income of $194,388 for the same period in 1998, and a net gain per limited partnership Unit of $12.56 for the six months ended June 30, 1999, compared to a net gain per limited partnership Unit of $5.30 for the same period in 1998. 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. A. The registration statement became effective on March 9, 1991 at which time the Partnership began offering the securities for sale. The offering was extended for 60 days, and sales of 13,471.6805 Units for $1,413,296.45 were consummated by November 30, 1991 at which time the initial offering period ended and the continuous offering period commenced. The Partnership commenced operations December 1, 1991. The Partnership continues to offer Units for sale. During the period of January 1, 1999, through June 30, 1999, 207.1064 additional Units were sold and 1,516.3225 Units were redeemed. B. The Units were offered by the Partnership through members of the National Association of Securities Dealers, Inc. on a best efforts basis. C. These securities were registered under the Securities Act of 1933. D. (1) Units of Limited Partnership interest outstanding at April 30, 1999 - 33,789.4475 (2) Units of Limited Partnership interest outstanding at May 31, 1999 - 33,849.5490 (3) Units of Limited Partnership interest outstanding at June 30, 1999 - 32,897.6357 12 E. Issuance of Limited Partnership Units for cash in the following amounts and on the following dates:
Dates Units Amount April 1, 1999 66.7377 $ 10,577 May 1, 1999 60.1015 9,615 June 1, 1999 28.6521 4,808
F. Redemption of Limited Partnership Units for cash in the following amounts and on the following dates:
Dates Units Amount June 30, 1999 980.5654 $155,413
Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. (27) Financial Data Schedule (for SEC use only). (b) Reports on Form 8-K. 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 of the undersigned thereunto duly authorized. Date: August 13, 1999 CERES FUND, L.P. By: Randell Commodity Corporation Managing General Partner By: /s/Frank L. Watson, Jr. ---------------------------------- Frank L. Watson, Jr. Chairman EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 26,534 5,697,794 472 0 0 5,724,800 0 0 5,724,800 194,598 0 0 0 5,530,202 0 5,724,800 653,925 776,842 0 325,430 0 0 0 0 0 0 0 0 0 451,412 12.56 0
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