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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, 1998
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)
12201 Steele Creek Road Charlotte, North Carolina 28273
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(Address of principal executive office) (Zip code)
(704) 588-4074
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(Registrant's telephone number, including area code)
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(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
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- ----------
ASSETS (Unaudited) (Note)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 37,347 $ 92,544
Accounts receivable, tenant 38,196 38,196
Prepaid expenses 5,380 7,053
Securities available for sale 176,562 267,629
----------- ----------
Total current assets 257,485 405,422
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INVESTMENTS AND NONCURRENT RECEIVABLES
Properties on operating leases and properties held
for lease, net of accumulated depreciation
1998 $778,394; 1997 $1,482,902 3,635,214 7,155,595
Accrued rent receivable -- 29,683
OTHER ASSETS
Deferred charges, net of accumulated amortization
1998 $12,940; 1997 $12,190 2,060 2,810
Deferred leasing commissions, net of accumulated
amortization 1998 $21,897; 1997 $45,826 22,928 40,092
----------- ----------
$ 3,917,687 $7,633,602
=========== ==========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Note payable, bank $ 500,000 $1,000,000
Current maturities of long-term debt 559,206 2,834,990
Accounts payable 7,211 14,423
Accrued expenses 37,445 137,552
----------- ----------
Total current liabilities 1,103,862 3,986,965
----------- ----------
LONG-TERM DEBT, less current maturities 615,064 1,145,441
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COMMITMENT AND CONTINGENCY (Note 4)
PARTNERS' EQUITY
General partners (1,279) 1,684
Limited partners 2,201,032 2,494,411
Unrealized gain on investment securities (992) 5,101
----------- ----------
Total partner's equity 2,198,761 2,501,196
----------- ----------
$ 3,917,687 $7,633,602
=========== ==========
</TABLE>
Note: The Condensed Balance Sheet at December 31, 1997 has been taken from
the audited financial statements at that date. See Notes to Condensed
Financial Statements.
2
<PAGE> 3
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Rental income $ 137,115 $ 284,510 $ 433,775 $ 579,582
Operating expenses:
Wages and contract labor 2,100 14,530 5,400 20,653
Depreciation and amortization 77,773 65,223 141,143 130,260
Repairs and maintenance 31,896 44,347 79,786 80,869
Management fees 5,168 11,355 13,802 22,563
Utilities 30,168 35,872 66,069 74,297
Professional fees 22,402 8,756 49,178 19,957
Property taxes 12,226 22,095 35,107 44,190
Miscellaneous 3,457 5,425 9,638 10,564
--------- --------- --------- ---------
185,190 207,603 400,123 403,353
--------- --------- --------- ---------
Operating income (48,075) 76,907 33,652 176,229
--------- --------- --------- ---------
Nonoperating income (expense):
Interest and dividend income 5,750 1,865 10,833 7,013
Interest expense (62,285) (107,012) (166,324) (212,280)
Other (145) 59 1,210 885
Loss on sale of properties held for lease (175,712) -- (175,712) --
--------- --------- --------- ---------
(232,392) (105,088) (329,993) (204,382)
--------- --------- --------- ---------
Net income $(280,467) $ (28,181) $(296,341) $ (28,153)
========= ========= ========= =========
Net income per limited
partnership unit $ (44.03) $ (4.42) $ (46.52) $ (4.42)
========= ========= ========= =========
</TABLE>
See Notes to Condensed Financial Statements.
3
<PAGE> 4
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------
1998 1997
----------- ---------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ (296,341) $ (28,153)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 141,143 130,260
(Gain) on sale of securities available for sale (1,210) (885)
Loss on sale of properties held for lease 175,712 --
Change in assets and liabilities:
(Increase) in prepaids, deferrals and 31,356 68,879
other receivables
(Decrease) in accounts payable and accrued expenses (107,319) (153,692)
----------- ---------
Net cash (used) provided by operating activities (56,659) 16,409
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of securities available for sale 404,092 116,119
Purchase of securities available for sale (317,906) (116,346)
Proceeds from sale of properties held for lease 3,241,214 --
Improvements in investment property -- (4,613)
Disbursements for deferred leasing commissions (19,777) (4,007)
----------- ---------
Net cash provided (used) in investing activities 3,307,623 (8,847)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term borrowings (3,306,161) (91,779)
Proceeds from note payable -- 57,517
----------- ---------
Net cash (used) in financing activities (3,306,161) (34,262)
Net (decrease) in cash and cash equivalents (55,197) (26,700)
Cash and cash equivalents:
Beginning 92,544 103,036
----------- ---------
Ending $ 37,347 $ 76,336
=========== =========
</TABLE>
See Notes to Condensed Financial Statements.
4
<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 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, 1997, the cumulative unpaid priority return to the unit
holders was $2,166,833 compared to $1,924,049 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
<PAGE> 6
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Changes in Financial Condition
As a result of the sale of the BB&T building (See "Results of Operations"
below), properties held for lease as well as long-term debt has decreased since
year end. The Partnership continues to accrue monthly for the 1998 real property
taxes to be paid in January 1999; therefore accrued expenses will continue to
increase each quarter of 1998.
Liquidity and Capital Resources
During the quarter ended June 30,1998, the Partnership continued to fund working
capital requirements, and the working capital deficit was reduced by
approximately $2,735,165 from December 31,1997. This reduction in the working
capital deficit is mainly attributable to the use of the proceeds from the sale
of the BB&T Building to payoff the First Union note on this property as well as
to pay down $500,000 on the First Union line of credit for the upfit of the
EastPark facility. This line of credit will be due and payable on June 30, 1999.
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 consolidated financial statements.)
Results of Operations
Net income from operations for the three months ended June 30,1998 is down
approximately $253,000 compared to the same period of the prior year. Rental
revenue is also down $147,000 for the second quarter. The sale of the BB&T
building at a loss of $175,712 on April 24, 1998 is the main factor for both of
these decreases. Operating expenses for the second quarter of 1998 are down by
approximately $22,000. Although there is an increase in professional fees of
approximately $14,000, most all other expenses are down for the second quarter
of 1998, all of which relate to the disposition of the BB&T building. Total
interest expense for the second quarter has decreased $44,728 compared to the
same period of 1997. The occupancy rate at the EastPark facility is currently
80.2%.
Status of East Park Facility
The General Partners are continuing to focus on selling the EastPark facility
and continue to have it listed with a Charlotte-based real estate broker. The
General Partners are also working on increasing the occupancy at EastPark. The
General Partners believe that the higher occupancy would support a higher asking
price for the EastPark facility.
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>
<CAPTION>
Designation
Number Under
Exhibit Item 601 of
Number Regulation S-K Exhibit Description Page Number
------ -------------- ------------------- -----------
<S> <C> <C> <C>
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)
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the
three months ended June 30, 1998.
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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.
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 8/14/98 By: /s/ Dexter R. Yager, Sr.
------------------- --------------------------------
Dexter R. Yager, Sr.
General Partner
Date 8/14/98 By: /s/ Jerry R. Haynes
------------------- --------------------------------
Jerry R. Haynes
Chief Financial Officer
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 37,347
<SECURITIES> 176,562
<RECEIVABLES> 38,196
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 257,485
<PP&E> 4,413,608
<DEPRECIATION> 778,394
<TOTAL-ASSETS> 3,917,687
<CURRENT-LIABILITIES> 1,103,862
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,917,687
<SALES> 0
<TOTAL-REVENUES> 445,818
<CGS> 0
<TOTAL-COSTS> 400,123
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 166,324
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (175,712)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (296,341)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
