-----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, SH69POX2+JupBo0fLhr/MPDj7t54E8WQBq+IHraFVt/Djv2R3sUdpCr316rHSxem tzmHa8xpHp1MDLkEhhIVMA== 0000950144-99-012992.txt : 19991117 0000950144-99-012992.hdr.sgml : 19991117 ACCESSION NUMBER: 0000950144-99-012992 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 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: 99751431 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 September 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 September 30, 1999, and December 31, 1998................. 4 Statements of Operations Three and Nine Months Ended September 30, 1999 and 1998... 5 Statements of Cash Flows Nine Months Ended September 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 nine-month and three-month period ended September 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 September 30, 1999 and December 31, 1998 (Unaudited)
September 30, 1999 December 31, 1998 ------------------ ----------------- Assets: Cash $ 23,175 $ 140,972 U.S. Treasury obligations at cost plus accrued interest 5,318,552 5,322,469 Equity in commodity trading account: Cash 29,895 452,502 Unrealized gain (loss) on open futures contracts 27,223 (466,699) Market value of open option contracts 26,656 51,875 Other assets 1,038 2,973 ---------- ----------- Total Assets: $5,426,539 $ 5,504,092 ========== =========== Liabilities and Partners' Capital Liabilities: Accrued management fees $ 16,994 $ 17,191 Other accrued expenses 20,348 63,429 Redemptions payable 122,897 137,884 ---------- ----------- Total liabilities 160,239 218,504 ---------- ----------- Partners' capital: General partners 308,088 283,263 Limited partners 4,958,212 5,002,325 ---------- ----------- Total partners' capital 5,266,300 5,285,588 ---------- ----------- Total Liabilities and Partners' Capital: $5,426,539 $ 5,504,092 ========== ===========
See accompanying notes to financial statements. 5 CERES FUND, L.P. (A Tennessee Limited Partnership) Statements of Operations (Unaudited)
Nine Months Ended Three Months Ended September 30, September 30, 1999 1998 1999 1998 ---- ---- ---- ---- Income: Net gains on trading of commodity futures and option contracts: Realized gain (loss) on closed positions $110,488 $ 733,570 $(150,976) $(537,750) Change in unrealized gains (losses) on open positions 497,778 (104,689) 105,317 513,616 Interest 186,845 263,930 63,928 87,512 -------- --------- --------- --------- Income from operations $795,111 $ 892,811 $ 18,269 $ 63,378 -------- --------- --------- --------- Expenses: Brokerage commissions, exchange, clearing fees and NFA charges 273,606 635,661 93,171 186,372 Management fee allocations 160,440 203,112 51,445 67,288 Incentive fee allocations -- 14,116 -- 184 Professional and administrative expenses 54,000 54,000 18,000 18,000 -------- --------- --------- --------- 488,046 906,889 162,616 271,844 -------- --------- --------- --------- Net income (loss) $307,065 $ (14,078) $(144,347) $(208,466) ======== ========= ========= ========= Aggregate income (loss) allocated to general partners $ 24,825 $ 11,206 $ (5,281) $ (7,433) Aggregate income (loss) allocated to limited partners $282,240 $ (25,284) $(139,066) $(201,033) Net income (loss) per limited partnership unit $ 8.51 $ (.76) $ (4.28) $ (5.79)
See accompanying notes to financial statements. 6 CERES FUND, L.P. (A Tennessee Limited Partnership) Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 1999 1998 ---- ---- Cash flows from operating activities: Net income (loss) $ 307,065 $ (14,078) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Net unrealized gain (loss) on open contracts 497,778 (104,689) (Increase) decrease in assets: U. S. Treasury obligations 3,917 (400,350) Cash in commodities trading account 422,607 (241,824) Unrealized gain (loss) on open futures and options contracts (991,700) 279,624 Market value of open option contracts 25,219 (40,158) Other assets 1,935 247 Increase (decrease) in liabilities: Accrued management fees (197) 1,707 Accrued incentive fees -- (1,478) Other accrued expenses (43,081) (9,040) Amounts received for future subscriptions -- 12,500 Redemptions payable (14,987) (58,023) --------- --------- Net cash from (used in) in operating activities 208,556 (575,562) Cash flows from (used in) financing activities: Net proceeds from sale of limited partnership units 36,742 824,461 Redemption of limited partnership units (363,095) (202,053) --------- --------- Net increase (decrease) in cash (117,797) 46,846 Cash at the beginning of the year 140,972 155,155 --------- --------- Cash at the end of the quarter $ 23,175 $ 202,001 ========= =========
See accompanying notes to financial statements. 7 CERES FUND, L.P. (A Tennessee Limited Partnership) Notes to Financial Statements September 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 September 30, 1999 a total of 62,076.1046 units have been sold, 1,861.9400 units have been distributed in lieu of a cash distribution, and 31,816.9146 units have been redeemed, leaving an outstanding balance at September 30, 1999, of 32,121.1300 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 their capital accounts, 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 nine months ended September 30, 1999, management fees totaled $160,440 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 nine-month period of 1999 were $261,643. 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 nine-month period amounted to $186,845. (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 September 30, 1999 of $8.51 was calculated by dividing the Aggregate Income Allocated to Limited Partners of $282,240 by the Average Units outstanding between December 31, 1998 and September 30, 1999 (33,163.9909 Units). The Net Income (Loss) per Limited Partnership Unit for the period from January 1, 1998 through September 30, 1998 of ($.76) was calculated by dividing the Aggregate Income Allocated to Limited Partners of ($25,284) by the Average Units outstanding between December 31, 1997 and September 30, 1998 (33,366.4837 Units). 9 The Net Income (Loss) per Limited Partnership Unit for the period from July 1, 1999 through September 30, 1999 of ($4.28) was calculated by dividing the Aggregate Income Allocated to Limited Partners of ($139,066) by the Average Units outstanding between June 30, 1999 and September 30, 1999 (32,509.3829 Units). The Net Income (Loss) per Limited Partnership Unit for the period from July 1, 1998 through September 30, 1998 of ($5.79) was calculated by dividing the Aggregate Income (Loss) Allocated to Limited Partners of ($201,033) by the Average Units outstanding between June 30, 1998 and September 30, 1998 (34,726.9331 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 CERES FUND, L.P. (a Tennessee Limited Partnership) 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 September 30, 1999. RESULTS OF OPERATIONS The Three Months and Nine Months Ended September 30, 1999, compared to the Three Months and Nine Months Ended September 30, 1998. Trading results were more profitable during the three months ended September 30, 1999, as compared to the same period in 1998. The Partnership had income from trading activities of $18,269 for the three months ended September 30, 1999, as compared to income from trading activities of $63,378 for the three months ended September 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 $271,844 for the three months ended September 30, 1998 to $162,616 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 $93,171 for the three months ended September 30, 1999, as compared to $186,372 for the three months ended September 30, 1998. As a result of the foregoing, the Partnership had a net loss of $144,347 for the three months ended September 30, 1999 compared to a net loss of $208,466 for the same period in 1998; and a net loss per limited partnership Unit of $4.28 for the three months ended September 30, 1999, compared to a net loss per limited partnership Unit of $5.79 for the same period in 1998. Trading results were profitable during the nine months ended September 30, 1999, as compared to the same period in 1998. The Partnership had income from trading activities of $795,111 for the nine months ended September 30, 1999, compared to a gain from trading activities of $892,811 for the nine months ended September 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 $906,889 for the nine months ended September 30, 1998, to $488,046 for the nine months ended September 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 $160,440 for the nine months ended September 30, 1999, as compared to $203,112 for the nine months ended September 30, 1998. As a result of the foregoing, the Partnership had a net gain of $307,065 for the nine months ended September 30, 1999, as compared to a net loss of $14,078 for the same period in 1998, and a net gain per limited partnership Unit of $8.51 for the nine months ended September 30, 1999, compared to a net loss per limited partnership Unit of $.76 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 September 30, 1999, 228.4718 additional Units were sold and 2,314.1936 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 July 31, 1999 - 32,897.6357 (2) Units of Limited Partnership interest outstanding at August 31, 1999 - 32,897.6357 (3) Units of Limited Partnership interest outstanding at September 30, 1999 - 32,121.1300 12 E. Issuance of Limited Partnership Units for cash in the following amounts and on the following dates:
Dates Units Amount July 1, 1999 -- $ -- August 1, 1999 -- -- September 1, 1999 21.3654 3,342
F. Redemption of Limited Partnership Units for cash in the following amounts and on the following dates:
Dates Units Amount September 30, 1999 797.8711 $122,897
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: November 15, 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 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 23,175 5,402,326 1,038 0 0 5,426,539 0 0 5,426,539 160,239 0 0 0 5,266,300 0 5,426,539 608,266 795,111 0 488,046 0 0 0 0 0 0 0 0 0 307,065 8.51 0
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