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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 June 30, 1999
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
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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
incorporation or organization) Identification Number)
1300 Altura Road Fort Mill, South Carolina 29715-9201
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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 [ ] 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.
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PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
June 30, December 31,
1999 1998
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ASSETS (Unaudited) (Note)
CURRENT ASSETS
Cash and cash equivalents $ 27,862 $ 45,738
Accounts receivable, tenant 38,941 39,695
Prepaid expenses 1,724 -
Securities available for sale 121,894 118,779
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Total current assets 190,421 204,212
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INVESTMENTS AND NONCURRENT RECEIVABLES
Properties on operating leases and properties held
for lease, net of accumulated depreciation
1999 $705,480; 1998 $705,480 2,368,831 2,333,320
OTHER ASSETS
Deferred charges, net of accumulated amortization
1999 $12,190; 1998 $12,190 2,810 2,810
Deferred leasing commissions, net of accumulated
amortization 1999 $19,265; 1998 $19,265 33,122 29,670
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$ 2,595,184 $ 2,570,012
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LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Note payable, bank $ 500,000 $ 500,000
Current maturities of long-term debt 1,115,064 1,145,441
Accounts payable 10,573 5,997
Accrued expenses 38,492 18,296
Deferred revenue 2,179 -
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Total current liabilities 1,666,308 1,669,734
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LONG-TERM DEBT, less current maturities - -
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COMMITMENT AND CONTINGENCY (Note 4)
PARTNERS' EQUITY
General partners (13,961) (14,202)
Limited partners 945,552 921,681
Unrealized gain on investment securities (2,715) (7,201)
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Total partner's equity 928,876 900,278
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$ 2,595,184 $ 2,570,012
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Note: The Condensed Balance Sheet at December 31, 1998 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 Six Months Ended
June 30, June 30,
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1999 1998 1999 1998
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Rental income $ 140,200 $ 137,115 $ 275,132 $ 433,775
Operating expenses:
Wages and contract labor 2,004 2,100 3,504 5,400
Depreciation and amortization - 75,999 - 141,143
Repairs and maintenance 28,436 31,896 55,852 79,786
Management fees 4,122 5,168 8,277 13,802
Utilities 21,962 30,168 43,559 66,069
Professional fees 28,025 22,402 43,345 49,178
Property taxes 8,994 12,226 17,989 35,107
Miscellaneous 2,328 3,457 3,228 9,638
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95,871 183,416 175,754 400,123
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Operating income 44,329 (46,301) 99,378 33,652
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Nonoperating income (expense):
Interest and dividend income 2,269 5,750 4,923 10,833
Interest expense (39,201) (62,285) (78,695) (166,324)
Other (1,494) (145) (1,494) 1,210
Loss on Sale of properties held for lease - (175,712) - (175,712)
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$ (38,426) $(232,392) $ (75,266) (329,993)
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Net income $ 5,903 $(278,694) $ 24,112 $(296,341)
============== ============== =============== ===============
Net income per limited
partnership unit $ 0.93 $ (43.75) $ 3.79 $ (46.52)
============== ============== =============== ===============
See Notes to Condensed Financial Statements.
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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
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1999 1998
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(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 24,112 $ (296,341)
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization - 141,143
Loss(Gain) on sale of securities available for sale 1,494 (1,210)
Loss on sale of properties held for lease - 175,712
Change in assets and liabilities:
(Increase) Decrease in prepaids, deferrals and
other receivables (970) 31,356
Increase (Decrease) in accounts payable and accrued expenses 26,951 (107,319)
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Net cash provided (used) by operating activities 51,587 (56,659)
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CASH FLOWS FROM INVESTING ACTIVITIES
Sale of securities available for sale 20,138 404,092
Purchase of securities available for sale (20,261) (317,906)
Proceeds from sale of properties held for lease - 3,241,214
Improvements in investment property (35,511) -
Disbursements for deferred leasing commissions (3,452) (19,777)
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Net cash (used) provided in investing activities (39,086) 3,307,623
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term borrowings (30,377) (3,306,161)
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Net cash (used) in financing activities (30,377) (3,306,161)
Net (decrease) in cash and cash equivalents (17,876) (55,197)
Cash and cash equivalents:
Beginning 45,738 92,544
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Ending $ 27,862 $ 37,347
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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 the BB&T building facilities (formerly the UCB
building) in Greenville, South Carolina.
2. Opinion of Management:
In the opinion of management, the accompanying unaudited condensed
financial statements contain all adjustments (all 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, 1998, the cumulative unpaid priority return to the unit
holders was $2,409,617 compared to $2,166,833 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, 1998 to June 30, 1999. The Partnership had approximately $35,000 in
additional upfit costs during the first quarter of 1999. These upfit costs were
for a new tenant that moved in February 1, 1999. The Partnership also paid
approximately $3,500 in commissions relating to this new lease.
Liquidity and Capital Resources
During the quarter ended June 30, 1999, the Partnership continued to fund
working capital requirements, and the working capital deficit was increased by
approximately $10,000 from December 31, 1998. The working capital deficit at
June 30, 1999 was $1,475,887. The loans on the EastPark facility with First
Union and United of Omaha matured on June 30, 1999 and July 1, 1999,
respectively. These two loans were refinanced with one loan of $1,625,000 with
First Union National Bank. Although the new loan terms require interest only
payments, the Partnership will continue to pay essentially the same level of
debt service as before the refinance. The interest rate on the new loan is the
prime rate of First Union, which is currently 8%. The loan will mature on
September 30, 1999. The General Partners will renew the loan if the EastPark
facility is not sold before this date. (See "Status of EastPark Executive
Center" below).
Results of Operations
Rental income for the three months ended June 30, 1999 is comparable to the same
period of the prior year and down approximately $158,000 for the six months
ended June 30, 1999 as compared to the same period of the prior year. The main
cause for this decrease is related to the sale of the BB&T building in April of
the prior year. Operating expenses are down approximately $224,000 for the year.
The main factor for this increase is due to the fact that depreciation and
amortization expense was not taken during the year. Generally accepted
accounting principles ("GAAP") do not allow for depreciation to be taken after
the building was written down to current market value in the prior year. The
occupancy rate at the EastPark facility is currently 91%.
Status of EastPark Executive Center
The EastPark Executive Center is now under contract to be sold to Four Dan, LLC,
a North Carolina Limited Liability Company, for a sales price of $2,525,000. The
due diligence period is scheduled to end on September 2, 1999, with an
anticipated closing to occur within 30 days after the end of the due diligence
period. The sale of the EastPark Executive Center is contingent upon receiving
the consent of Limited Partners holding a majority of the Limited Partnership
Units. The prior contract on the EastPark Executive Center with Cap Care Group,
Inc. was terminated on May 18, 1999. CAP Care Group, Inc. terminated the
contract by its exercise of an early termination right.
Risks Associated with Year 2000
The Partnership, in its day to day operations, relies upon various computer
software and hardware that may be adversely affected by the change in the
millennium, from 1999 to 2000. In general, information system experts have
predicted that a wide variety of problems, from systems failures to data entry
and transfer errors, will result from the turn of the century. Repeated systems
failures, data entry and transfer errors and similar computer problems would
result in a material adverse effect on the Partnership and its operations.
However, the Partnership has examined its commuter software and hardware and,
based on such examination, does not reasonably anticipate any significant
internal problems as a result of the change in the millennium. The Partnership
may, however, be materially and adversely affected by external systems problems,
problems over which the Partnership has minimal control. The costs associated
with bringing the Partnership's computer systems in compliance will be minimal
as the management
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company of the Partnership will be responsible for the majority of these costs.
In the worst case scenario, this single-property company would be able to
operate on a manual accounting system which would not have an adverse affect on
the day to day operations of the Partnership.
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.
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 Page
Number Regulation S-K Exhibit Description Number
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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
(EastPark Executive Center)
5 10.3 Offer to Purchase Contract by and between the Partnership and Four
Dan, LLC dated July 19, 1999.
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K:
1. Termination of the Offer to Purchase Contract dated
April 16, 1999 for the EastPark Executive Center, by
and between the Partnership and CAP Care Group, Inc.
(incorporated by reference to report Form 8-K dated
May 18, 1999.)
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* 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 September 30, 1997.
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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 08/13/99 By: /s/ Dexter R. Yager, Sr.
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Dexter R. Yager, Sr.
General Partner
Date 08/13/99 By: /s/ Jerry R. Haynes
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Jerry R. Haynes
Chief Financial Officer
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