10-Q 1 g77863e10vq.txt YAGER KUESTER PUBLIC FUND LTD PARTNERSHIP 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, 2002 --------------------------------------------- or [x] 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 incorporation or organization) 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 [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

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

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

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 June 30, 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 June 30, 2002, the Partnership operations continued to meet working capital requirements and the working capital deficit was deceased by approximately $1,400,000. The working capital as of June 30, 2002 was $94,849. The large reduction to working capital deficit is mainly attributable to the reclassification of the current portion of the long-term debt. On June 4th, the General Partners refinanced the existing loan with Wachovia Bank, NA (formerly First Union National Bank). The new loan matures on December 31, 2004 with interest at the bank's prime rate (currently 4.75%). Monthly principal payments of $7,000 will commence on August 31, 2002. The new principal payment is $2,000 higher than the $5,000 previously required. Results of Operations Operations for the six months ended June 30, 2002 are comparable to the same period of the prior year. Rental income is up approximately 2% due to escalation increases for the current tenants and increased occupancy. Operating expenses are down approximately $3,000 as compared to the same period of the prior year. The favorable operating expense variance is related to the normal fluctuations of repairs and maintenance. Interest expense is down by approximately $25,500 or 42% 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 91% leased, all current tenants have the option to terminate their leases within the next two years. The tenant, GSA, has the election to terminate its lease in November 2002. The GSA lease accounts for 86% of the total rental income at East Park; accordingly, the General Partners will focus their lease extension efforts towards the GSA lease. However, no assurances can be given that a replacement tenant could be found if GSA decides to terminate their lease. In May 2002, the Partnership renewed a 4,046 square foot lease for an additional year with a 4% rate increase. The renewed lease expires 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) 9 99.1 Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code. (Sarbanes- Oxley Act of 2002) 10 99.2 Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code. (Sarbanes- Oxley Act of 2002) (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 08/14/02 By: /s/ Dexter R. Yager, Sr. ----------------- ------------------------------------ Dexter R. Yager, Sr. General Partner Date 08/14/02 By: /s/ Thomas K.Emery ----------------- -------------------------------------- Thomas K. Emery Chief Financial Officer 8

YAGER KUESTER PUBLIC FUND 1986 LIMITED PARTNERSHIP 10-Q