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 March 31, 2002
---------------------
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
------------
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-1560476
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1300 Altura Road Fort Mill, South Carolina 29708
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip code)
(803) 547-9100
- --------------------------------------------------------------------------------
(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 [ ] 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
March 31, December 31,
2002 2001
---------------- ----------------
(Unaudited) (Note)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 90,013 $ 65,583
Accounts receivable, tenant 42,093 42,091
Prepaid expenses 1,063 -
Securities available for sale 62,246 59,223
---------------- ----------------
Total current assets 195,415 166,897
---------------- ----------------
INVESTMENTS AND NONCURRENT RECEIVABLES
Properties on operating leases and properties held
for lease, net of accumulated depreciation
2002 $705,480; 2001 $705,480 2,287,569 2,287,569
OTHER ASSETS
Deferred charges, net of accumulated amortization
2002 $12,190; 2001 $12,190 2,810 2,810
Deferred leasing commissions, net of accumulated
amortization 2002 $19,265; 2001 $19,265 33,122 33,122
---------------- ----------------
$ 2,518,916 $ 2,490,398
================ ================
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 1,437,000 $ 1,452,000
Accounts payable 5,929 11,793
Accrued expenses 24,435 8,769
---------------- ----------------
Total current liabilities 1,467,364 1,472,562
---------------- ----------------
LONG-TERM DEBT, less current maturities - -
---------------- ----------------
COMMITMENT AND CONTINGENCY (Note 4)
PARTNERS' EQUITY
General partners (12,677) (12,993)
Limited partners 1,072,675 1,041,388
Unrealized gain on investment securities (8,446) (10,559)
---------------- ----------------
1,051,552 1,017,836
---------------- ----------------
$ 2,518,916 $ 2,490,398
================ ================
Note: The Condensed Balance Sheet at December 31, 2001 has been taken from
the audited financial statements at that date. See Notes to Condensed
Financial Statements.
2
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
-------------------------------
2002 2001
------------- ------------
(Unaudited) (Unaudited)
Rental income $ 147,625 $ 143,671
Operating expenses:
Wages and contract labor 1,500 1,500
Depreciation and amortization - -
Repairs and maintenance 42,309 38,509
Management fees 4,429 4,284
Utilities 23,221 22,132
Professional fees 16,914 19,566
Property taxes 10,665 9,621
Miscellaneous 1,062 922
------------- -----------
100,100 96,534
------------- -----------
Operating income 47,525 47,137
------------- -----------
Nonoperating income (expense):
Interest and dividend income 1,213 1,947
Interest expense (17,135) (32,697)
Other - -
------------- -----------
(15,922) (30,750)
------------- -----------
Net income $ 31,603 $ 16,387
============= ===========
Net income per limited
partnership unit $ 4.95 $ 2.56
============= ===========
See Notes to Condensed Financial Statements.
3
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
------------------------
2002 2001
---------- -----------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 31,603 $ 16,387
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 - -
Change in assets and liabilities:
(Increase) Decrease in prepaids, deferrals and (1.065) 6,433
other receivables
Increase (Decrease) in accounts payable and accrued expenses 9,802 (27,779)
--------- ----------
Net cash provided by (used in) operating activities 40,340 (4,959)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of securities available for sale - -
Purchase of securities available for sale (910) (1,266)
Improvements in investment property - (7,538)
--------- ----------
Net cash provided by (used in) investing activities (910) (8,804)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term borrowings (15,000) (15,000)
--------- ----------
Net cash (used in) financing activities (15,000) (15,000)
Net increase (decrease) in cash and cash equivalents 24,430 (28,763)
Cash and cash equivalents:
Beginning 65,583 72,209
--------- ----------
Ending $ 90,013 $ 43,446
========= ==========
See Notes to Condensed Financial Statements.
4
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 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, 2001, the cumulative unpaid priority return to the unit
holders was $3,137,969 compared to $2,895,185 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.
5
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, 2001 to March 31, 2002. Accrued expenses have increased from year-end due to
the monthly accrual of the 2002 real property taxes. Cash has increased due to
cash being provided by operating activities.
Liquidity and Capital Resources
During the quarter ended March 31, 2002, the Partnership operations continued to
meet working capital requirements and the working capital deficit was deceased
by approximately $34,000. The working capital deficit as of March 31, 2002 was
$1,271,949. 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 have received a verbal commitment from
Wachovia Bank, NA (formerly First Union National Bank) to refinance such
indebtedness. The new loan will mature on December 31, 2004 with interest at the
bank's prime rate (currently 4.75%) and a monthly principal payment at $7,000,
up from the current $5,000.
Results of Operations
Operations for the three months ended March 31, 2002 are comparable to the same
period of the prior year. Rental income is up approximately 3% due to escalation
increases for the current tenants and increased occupancy. Operating expenses
are up approximately $4,000 as compared to the same period of the prior year,
generally due to the increase in repairs and maintenance. Interest expense is
down by approximately $15,000 or 48% due to the decrease in interest rates on
the floating rate loan.
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 November 2002 and accounts for 86% of the total rental
income; accordingly, the General Partners will focus their lease extension
efforts on the GSA. However, no assurances can be given that a replacement
tenant could be found if the GSA decides to terminate. In May 2002, the
Partnership renewed a 4,046 square foot lease for an additional year with a 4%
rate increase. The lease will now expire on April 30, 2003 and has a rental rate
of $15.23 per square foot. 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.
6
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 March 31, 2002.
- --------------------------------------------------------------------------------
* 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-K for the year ended December 31, 1998.
7
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 05/14/02 By: /s/ Dexter R. Yager, Sr.
---------------------- ------------------------------------
Dexter R. Yager, Sr.
General Partner
Date 05/14/02 By: /s/ Thomas K.Emery
---------------------- ------------------------------------
Thomas K. Emery
Chief Financial Officer