10-Q 1 g71209e10-q.txt YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP 1 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, 2001 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 incorporation or organization) (I.R.S. Employer Identification Number) 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. 2 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP CONDENSED BALANCE SHEETS

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. 2 3 YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP CONDENSED STATEMENTS OF OPERATIONS

See Notes to Condensed Financial Statements. 3 4 YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP CONDENSED STATEMENTS OF CASH FLOWS

See Notes to Condensed Financial Statements. 4 5 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. 5 6 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 June 30, 2001. Accrued expenses, as well as cash and cash equivalents, have decreased from year end due to the payment of the 2000 real property taxes in January 2001 of approximately $37,000. 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 2002. Liquidity and Capital Resources During the quarter ended June 30, 2001, the Partnership operations continued to meet working capital requirements, although the working capital was decreased by approximately $1,295,000. The decrease in the working capital is mainly due to the reclassification of long-term debt to short-term due to the loan maturing on June 30, 2002. The General Partners anticipate seeking refinance with First Union, however no assurances can be given. Working capital deficit as of June 30, 2001 was $1,295,231. Results of Operations Rental income for the six months ended June 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 year. Repairs and maintenance has increased approximately $26,000 as compared to the prior year due to the installation of new security lights and gates on the property. Professional fees are up approximately $6,000 for the year due to commission expense paid for the new GSA lease. Interest expense is down by approximately $10,000 due to lower interest rates. Status of EastPark Executive Center The General Partners continue to focus on selling the EastPark facility and continue to have it listed with a commercial real estate broker. As previously reported, the General Partners entered into two separate sales contracts for such facility during 1999. Both of these contracts were terminated by the prospective buyers under their respective terms of such contracts after due diligence by the buyers. 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 2 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 at the same rate for additional two years. 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 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 7 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 (EastPark Executive Center) (b) Reports on Form 8-K: No reports on Form 8-K have been filed during the three months ended June 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. 7 8 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 08/14/01 By: /s/ Dexter R. Yager, Sr. ------------------------- ------------------------------- Dexter R. Yager, Sr. General Partner Date 08/14/01 By: /s/ Thomas K.Emery ------------------------- ------------------------------- Thomas K. Emery Chief Financial Officer 8

YAGER KUESTER PUBLIC FUND 1986 LIMITED PARTNERSHIP 10-Q