<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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, 1996
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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
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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)
<TABLE>
<S> <C>
North Carolina 56-1560476
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
12201 Steele Creek Road Charlotte, North Carolina 28273
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(Address of principal executive office) (Zip code)
</TABLE>
(704) 588-4074
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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.
This document contains 8 pages. The Exhibit Index is located on page 7.
<PAGE> 2
PART I -- FINANCIAL INFORMATION
2
Item 1. Financial Statements
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
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ASSETS (Unaudited) (Note)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 77,545 $ 139,930
Accounts receivable, tenant 73,565 37,565
Prepaid expenses 658 1,100
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Total current assets 151,768 178,595
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INVESTMENTS AND NONCURRENT RECEIVABLES
Securities available for sale 132,579 135,050
Properties on operating leases and properties held
for lease, net of accumulated depreciation
1996 $1,100,089; 1995 $1,059,195 7,152,340 6,774,759
Accrued rent receivable 54,158 57,283
OTHER ASSETS
Deferred charges, net of accumulated amortization
1996 $37,405; 1995 $35,919 8,695 10,180
Deferred leasing commissions, net of accumulated
amortization 1996 $21,581; 1995 $18,503 60,330 59,014
---------- ----------
$7,559,870 $7,214,881
========== ==========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Note payable, bank $ 611,983 $ 219,783
Current maturities of long-term debt 2,919,495 2,931,715
Accounts payable 152,322 128,472
Accrued expenses 57,134 127,880
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Total current liabilities 3,740,934 3,407,850
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LONG-TERM DEBT, less current maturities 1,258,337 1,288,753
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COMMITMENT AND CONTINGENCY (Note 4)
PARTNERS' EQUITY
General partners 2,241 1,793
Limited partners 2,549,583 2,505,239
Unrealized gain(loss) on investment securities 8,775 11,246
---------- ----------
2,560,599 2,518,278
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$7,559,870 $7,214,881
</TABLE> ========== ==========
Note: The Condensed Balance Sheet at December 31, 1995 has been taken from
the audited financial statements at that date. See Notes to Condensed
Financial Statements.
<PAGE> 3
3
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1996 1995
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(Unaudited)
<S> <C> <C>
Rental income $ 317,463 $ 332,889
Operating expenses:
Wages and contract labor 4,566 10,875
Depreciation and amortization 45,458 44,808
Repairs and maintenance 29,484 30,746
Management fees 11,384 10,765
Utilities 35,436 37,899
Professional fees 17,522 16,343
Property taxes 22,020 22,715
Miscellaneous 5,484 7,685
--------- ---------
171,354 181,836
--------- ---------
Operating income 146,109 151,053
--------- ---------
Nonoperating income (expense):
Interest and dividend income 2,910 1,475
Interest expense (104,227) (106,374)
Other ------ (5,719)
--------- ---------
(101,317) (110,618)
--------- ---------
Net income $ 44,792 $ 40,435
========= =========
Net income per limited
partnership unit $ $7.03 $ 6.35
========= =========
</TABLE>
See Notes to Condensed Financial Statements.
<PAGE> 4
4
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1996 1995
---------- ----------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 44,792 $ 40,435
Adjustments to reconcile net income to net cash
(used) provided by operating activities:
Depreciation and amortization 45,458 44,808
Loss on sale of securities available for sale ------ 5,719
Change in assets and liabilities:
(Increase) in prepaids, deferrals and (32,433) (64,048)
other receivables
(Decrease) in accounts payable and accrued expenses (46,896) (70,943)
--------- ---------
Net cash provided (used) by operating activities 10,921 (44,029)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of securities available for sale ------ 54,841
Improvements in investment property (422,870) (8,642)
--------- ---------
Net cash (used) provided in investing activities (422,870) 46,199
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term borrowings (42,636) (40,321)
Proceeds from note payable 392,200 ------
--------- ---------
Net cash provided (used) in financing activities 349,564 (40,321)
Net (decrease) in cash and cash equivalents (62,385) (38,151)
Cash and cash equivalents:
Beginning 139,930 107,906
--------- ---------
Ending $ 77,545 $ 69,755
========= =========
</TABLE>
See Notes to Condensed Financial Statements.
<PAGE> 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 two properties currently owned
are the UCB Building in Greenville, South Carolina, and the EastPark
Executive Center in Charlotte, North 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, 1995, the cumulative unpaid priority return to the unit
holders was $1,681,265 compared to $1,438,481 one year prior. This
increase resulted from no distributions being made to partners during
the year and the pro rata share due partners pursuant to the Limited
Partnership Agreement. 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 Partnership properties would
produce net sale proceeds sufficient to pay the 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
<PAGE> 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, 1995 to March 31, 1996. Accounts receivable has increased since
December 31, 1995 due to billings for the annual common area maintenance
("CAM") charges at the UCB building. Accrued expenses, as well as cash and cash
equivalents, has decreased in the first quarter due to the payment of the 1995
property taxes in January 1996.
Liquidity and Capital Resources
During the quarter ended March 31, 1996, the Partnership continued to fund
working capital requirements, although the working capital deficit increased
from ($3,229,255) at December 31, 1995 to ($3,589,167) at March 31, 1996. This
significant working capital deficiency is primarily a result of the
reclassification of the loan on the UCB building to current liabilities from
long-term debt. The reclassification of the loan is due to the balloon payment
of approximately $2,817,000 that is due in December 1996. An increase in
current liabilities can also be attributed to an additional line of credit
secured by the Partnership in connection with the EastPark Executive Center GSA
upfit, of which $611,983 was outstanding at March 31, 1996. The General
Partners were able to secure an increase in this line of credit from $750,000
to $1,000,000 to cover substantially all of the GSA upfit costs. A loan
extension to April 1997 was also obtained. No distributions were paid to the
limited partners this quarter, resulting in an increase to their cumulative
unpaid priority return. (See note 4 of the condensed financial statements.)
Results of operations
Net income is up slightly for the first quarter of 1996 compared to the same
period of the prior year by approximately $4,300. Rental income decreased by
approximately $15,400 in the first quarter primarily due to the decrease in CAM
reimbursements as provided in the Metropolitan Life Insurance Company lease at
UCB. Expenses for the first quarter of 1996 are down by approximately $10,400.
This is primarily due to the decrease in expenses relating to contact labor and
repairs and maintenance. Occupancy rates are currently 96% at the UCB building
and 95% at the EastPark Building. The occupancy at the UCB building is down
from 100%, due to a lease renewal by Manpower in which they are occupying less
space.
Status of Sales Efforts; Future Matters
As previously reported, the General Partners believe that, after engaging in
significant (but unsuccessful) efforts to sell the Properties, it is the best
interests of the Partnership to continue to focus on the completion of the GSA
upfit and securing refinancing on the UCB Building debt.
6
<PAGE> 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:
<TABLE>
Designation
Number Under
Exhibit Item 601 of Page
Number Regulation S-K Exhibit Description Number
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<S> <C> <C> <C>
1. 4 Instrument defining rights of security holders - set forth in the
Limited Partnership agreement which is contained in the
Prospectus of the Partnership, dated December 1, 1987,
Registration Number 33-07056-A (hereinafter "Prospectus")
and incorporated herein by reference.
2. 10 Limited Partnership Agreement - contained in the Prospectus
incorporated herein by reference.
3. 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the three months
ended March 31, 1996.
</TABLE>
7
<PAGE> 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 05/20/96 By: /s/ Dexter R. Yager, Sr.
--------------- --------------------------------------
Dexter R. Yager, Sr.
General Partner
Date 05/20/96 By: /s/ Alison L. Hawk
--------------- ------------------------------
Alison L. Hawk
Controller
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 77,545
<SECURITIES> 132,579
<RECEIVABLES> 73,565
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 151,768
<PP&E> 8,252,429
<DEPRECIATION> 1,110,089
<TOTAL-ASSETS> 7,559,870
<CURRENT-LIABILITIES> 3,740,934
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,559,870
<SALES> 0
<TOTAL-REVENUES> 317,463
<CGS> 0
<TOTAL-COSTS> 171,354
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 104,227
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,792
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
