UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended September 30, 2001
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ____________________
Commission File Number: 0-18444
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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
North Carolina 56-1560476
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1300 Altura Road Fort Mill, South Carolina 29708
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(Address of principal executive office) (Zip code)
(803) 547-9100
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(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
September 30, December 31,
2001 2000
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(Unaudited) (Note)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 75,755 $ 72,209
Accounts receivable, tenant 42,093 54,159
Prepaid expenses 1,050 -
Securities available for sale 75,534 59,113
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Total current assets 194,432 185,481
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INVESTMENTS AND NONCURRENT RECEIVABLES
Properties on operating leases and properties held
for lease, net of accumulated depreciation
2001 $705,480; 2000 $705,480 2,295,107 2,287,569
OTHER ASSETS
Deferred charges, net of accumulated amortization
2001 $12,190; 2000 $12,190 2,810 2,810
Deferred leasing commissions, net of accumulated
amortization 2001 $19,265; 2000 $19,265 33,122 33,122
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$ 2,525,471 $ 2,508,982
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LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 1,467,000 $ 60,000
Accounts payable 7,880 5,994
Accrued expenses 46,591 53,902
Deferred revenue - -
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Total current liabilities 1,521,471 119,896
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LONG-TERM DEBT, less current maturities - 1,452,000
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COMMITMENT AND CONTINGENCY (Note 4)
PARTNERS' EQUITY
General partners (13,305) (13,840)
Limited partners 1,010,567 957,563
Net unrealized gain (loss) on investment securities 6,738 (6,637)
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1,004,000 937,086
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$ 2,525,471 $ 2,508,982
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Note: The Condensed Balance Sheet at December 31, 2000 has been taken from
the audited financial statements at that date. See Notes to Condensed
Financial Statements.
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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
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2001 2000 2001 2000
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(Unaudited) (Unaudited)
Rental income $ 148,664 $ 137,965 $ 438,963 $ 412,296
Operating expenses:
Wages and contract labor 1,500 1,500 4,500 4,500
Depreciation and amortization - - - -
Repairs and maintenance 42,114 36,420 132,009 100,150
Management fees 4,450 4,073 13,156 12,354
Utilities 25,978 23,206 69,964 68,877
Professional fees 10,204 7,815 52,403 43,382
Property taxes 9,621 9,621 28,863 28,863
Miscellaneous 1,148 1,858 4,302 5,096
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95,015 84,493 305,197 263,222
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Operating income 53,649 53,472 133,766 149,074
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Nonoperating income (expense):
Interest and dividend income 1,067 2,713 4,661 6,770
Interest expense (24,723) (37,225) (84,888) (108,299)
Other - 1,171 - (4,709)
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(23,656) (33,341) (80,227) (106,238)
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Net income $ 29,993 $ 20,131 $ 53,539 $ 42,836
============= ============= ============= ============
Net income per limited
partnership unit $ 4.69 $ 3.15 $ 8.38 $ 6.70
============= ============= ============= ============
See Notes to Condensed Financial Statements.
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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
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2001 2000
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(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 53,539 $ 42,836
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization - -
Loss on sale of securities available for sale - 5,880
Change in assets and liabilities:
(Increase) Decrease in prepaids, deferrals and 11,016 (1,325)
other receivables
Increase (Decrease) in accounts payable and accrued expenses (5,425) 13,348
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Net cash provided by (used in) operating activities 59,130 60,739
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CASH FLOWS FROM INVESTING ACTIVITIES
Sale of securities available for sale - 91,120
Purchase of securities available for sale (3,046) (34,290)
Improvements in investment property (7,538) -
Disbursements for deferred charges - (1,498)
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Net cash provided by (used in) investing activities (10,584) 55,332
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term borrowings (45,000) (58,000)
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Net cash (used in) financing activities (45,000) (58,000)
Net increase (decrease) in cash and cash equivalents 3,546 58,071
Cash and cash equivalents:
Beginning 72,209 11,928
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Ending $ 75,755 $ 69,999
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See Notes to Condensed Financial Statements.
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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Nature of Business:
The Partnership was formed in July 1986 to acquire, operate, hold for
investment and sell real estate. The Partnership currently owns the
EastPark Executive Center in Charlotte, North Carolina. On April 24, 1998,
the Partnership sold its only other real property holding, the BB&T
building facilities (formerly the UCB building) located in Greenville,
South Carolina.
2. Opinion of Management:
In the opinion of management, the accompanying unaudited condensed
financial statements contain all adjustments (all of which were normal
recurring accruals) necessary for a fair presentation. The results of
operations for the interim periods are not necessarily indicative of the
results which may be expected for an entire year.
3. Statement of Cash Flows:
For purposes of reporting the statements of cash flows, the Limited
Partnership includes all cash accounts, which are not subject to
withdrawal restrictions or penalties, and all highly liquid debt
instruments purchased with a maturity of three months or less as cash and
cash equivalents on the accompanying condensed balance sheets.
4. Priority Return:
At December 31, 2000, the cumulative unpaid priority return to the unit
holders was $2,895,185 compared to $2,652,401 one-year prior. This
increase resulted from no distributions being made to partners during the
year. Based on the current and projected commercial real estate market
conditions, the General Partners believe that it is reasonably unlikely
that a sale of the remaining Partnership property would produce net sale
proceeds sufficient to pay any of such priority return. Furthermore, the
General Partners believe that it is reasonably unlikely that the
Partnership's operating income or any refinancing of Partnership debt
would generate sufficient funds to pay any portion of the priority return.
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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Changes in Financial Condition
There have not been any significant changes in financial condition from December
31, 2000 to September 30, 2001. The Partnership continues to accrue for the 2001
real property taxes to be paid in January 2002; therefore accrued expenses will
continue to increase each quarter of 2001.
Liquidity and Capital Resources
During the quarter ended September 30, 2001, the Partnership operations
continued to meet working capital requirements, and the working capital deficit
was decreased by approximately $33,000. Working capital deficit as of September
30, 2001 was $1,327,039. The large working capital deficit is mainly
attributable to the reclassification of long-term debt to short-term due to the
loan maturing on June 30, 2002. The General Partners anticipate seeking
to refinance such indebtedness with First Union, however no assurances can be
given that such refinancing will occur.
Results of Operations
Rental income for the nine months ended September 30, 2001 is up approximately
6% as compared to the same period of the prior year. This is attributable to
rental escalations as provided by the current leases and the additional space
leased by the General Services Administration ("GSA") earlier in the current
year. Repairs and maintenance has increased approximately $32,000 as compared to
the prior year due to the installation of new security lights, gates and signage
on the property. Professional fees are up approximately $9,000 for the year
mainly due to commission expense paid for the new GSA lease. Interest expense is
down by approximately $23,000 due to lower interest rates on the floating rate
loan with First Union.
Status of EastPark Executive Center
The General Partners remain committed on selling the EastPark facility and
continue to have it listed with a commercial real estate broker. At this time,
the facility is not under contract with any potential buyers. The General
Partners are also working towards extending the leases with the current tenants.
Although the facility is 93% leased, all current tenants have the option to
terminate their leases within the next two years. The GSA has the election to
terminate its lease in October 2002 and accounts for 86% of the total rental
income; accordingly, the General Partners will focus their lease extensions
efforts on the GSA. The Partnership renewed a 1,902 square foot lease with a
smaller tenant at the same rate as in effect for additional two year period.
This lease will now expire on July 31, 2003. The General Partners will continue
to search for the best offer for the property and manage it at acceptable
standards until such time as it can sell the property to a qualified buyer.
Forward-Looking Statements
This report contains certain forward-looking statements with respect to the
financial condition, results of operations, plans, objectives, future
performance and business of the Partnership. These forward-looking statements
involve certain risks and uncertainties. Actual results may differ materially
from those contemplated by such forward-looking statements.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is not engaged in any legal
proceedings of a material nature at the present time.
Item 6. Exhibit Index
(a) Exhibits:
Designation
Number Under
Exhibit Item 601 of
Number Regulation S-K Exhibit Description
1* 4 Instrument defining rights of security
holders - set forth in the Limited
Partnership Agreement
2* 10 Limited Partnership Agreement
3** 10.1 Exclusive Leasing and Management
Agreement dated October 1, 1994
(EastPark Executive Center)
4*** 10.2 Listing Agreement of Property For
Lease and/or Sale dated December 22,
1998 (EastPark Executive Center)
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the
three months ended September 30, 2001.
* Incorporated by reference to Exhibit A of the Partnership's
Prospectus dated December 1, 1987, Registration Number
33-07056-A.
** Incorporated by reference to Exhibit 3 of the Partnership's
Form 10-K for the year ended December 31, 1995.
*** Incorporated by reference to Exhibit 4 of the Partnership's
Form 10-Q for the quarter ended December 31, 1998.
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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.
YAGER/KUESTER PUBLIC FUND
LIMITED PARTNERSHIP
(Registrant)
By: DRY Limited Partnership,
General Partner of Registrant
Date 11/14/01 By: /s/ Dexter R. Yager, Sr.
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Dexter R. Yager, Sr.
General Partner
Date 11/14/01 By: /s/ Thomas K. Emery
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Thomas K. Emery
Chief Financial Officer
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