Item 1. Business. The registrant is a North Carolina limited partnership formed in July 1986 (hereinafter referred to as the "Partnership"). The Partnership engaged in a "blind pool offering," the proceeds of which were used to purchase income-producing real property. During the year ended December 31, 1988, the Partnership received the minimum investment required to remove subscribers' funds from escrow. The Partnership's offering terminated with a total subscription of $3,195,000 from investor limited partners. The net proceeds were used to purchase the properties described in Item 2
Item 2. Properties. On June 23, 1989, the Partnership purchased the EastPark Executive Center, an office complex comprised of two buildings located in Charlotte, North Carolina with net leasable area of 45,300 square feet, for a purchase price of $3,155,138 of which $1,500,000 was provided by a first mortgage loan bearing interest at 10.5% per annum and having a term of 10 years. This mortgage loan became due in July 1999 and was refinanced with First Union National Bank. In 1998, the Partnership recorded a loss of $1,392,468 to reflect the $2,365,800 estimated sales value of the EastPark facility, net of related costs to sell. In 1999, the Partnership recorded an additional loss of $81,262 to expense additional improvements and to reflect a $2,323,500 estimated sales value, net of related costs to sell. In 2002, the Partnership incurred additional improvements of $15,050 that were expensed.
On November 30, 1989, the Partnership acquired the BB&T Bank Building (formerly the UCB Building), a three-story office building in Greenville, South Carolina with net leasable area of 39,138 square feet, for a purchase price of $4,202,544 of which $3,110,000 was provided by a first mortgage loan from United Omaha. This mortgage loan became due on December 1, 1996 and was refinanced with First Union National Bank. On April 24, 1998, this property was sold for $3,471,000, resulting in a loss to the Partnership of $206,428.
In connection with the office building purchases, $26,312 of acquisition costs were capitalized.
No further purchases of real property are projected and no funds are available for that purpose. (See Item 7 below, "Status of EastPark Facility" for recent developments regarding the property.)
Item 3.
Item 3. Legal Proceedings. The Partnership is not involved in any legal proceedings and was not so involved during the year ended December 31, 2002.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders. Not applicable.
PART II
Item 5.
Item 5. Market for the Partnership's Common Equity and Related Stockholder Matters. There is no established public trading market for the Partnership's securities. The Partnership has approximately 520 limited partners. Cash distributions made to the limited partners during the recent years are set out in the Statements of Cash Flow included in the Financial Statements included in Part II, Item 8 of this Report.
Item 6.
Item 6. Selected Financial Data.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Liquidity and Capital Resources
During the year ended December 31, 2002, the Partnership continued to fund working capital requirements and working capital was increased by approximately $1,436,000 from December 31, 2001. The working capital as of December 31, 2002 was $130,930. The large increase in working capital is mainly attributable to the reclassification of the current portion of the long-term debt. On June 4, 2002, 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 4.25%). Monthly principal payments of $7,000 commenced on August 31, 2002. The new principal payment is $2,000 higher than the $5,000 previously required.
The cumulative unpaid priority return to the unit holders increased from $3,137,969 at December 31, 2001 to $3,380,753 at December 31, 2002. This increase resulted from no distributions being made to partners during the year pursuant to the Limited Partnership Agreement. Based on 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 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 the priority return.
During the year ended December 31, 2002, the Partnership had net income of $127,251 as compared to the net income of $84,672 in 2001. (See "Results of Operations" below for explanation of variance.) Rental income, operating expenses and interest expense for the years ended December 31, 2002 and 2001 resulted exclusively from the operations of the Partnership's commercial real estate properties. The EastPark Executive Center buildings were 91% leased at both December 31, 2002 and December 2001.
See Item 13 (Certain Relationships and Related Transactions) for a discussion regarding leasing commissions, management fees and repair service fees paid to FSK Properties, LLC, a General Partner of the Partnership, as well as administrative reimbursements paid to Internet Services Corporation.
In the event that funds derived from operations are insufficient to meet the Partnership's working capital needs, the General Partners have agreed to fund the shortfall.
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.
Results of Operations
Comparison of 2002 results with 2001.
Net income for the year ended December 31, 2002 increased by approximately $42,000 or 50% as compared to the same period of the prior year. The main factor attributing to this increase in net income is lower interest expense. The current loan has a floating prime interest rate, which has remained low during 2002 due to current market conditions. Rental income increased by approximately 2% due to rental escalations as provided by the current leases. All other operating expenses were consistent with the prior year.
Comparison of 2001 results with 2000.
Net income for the year ended December 31, 2001 increased by approximately $19,000 or 30% as compared to the same period of the prior year. Rental income increased by 6% due to rental escalations as provided by the current leases and the additional space leased by the GSA during 2001. Repairs and maintenance increased approximately $38,000 as compared to the prior year due to the installation of new security lights, gates and signage on the property. Professional fees increased by approximately $15,000 due to commissions on the new leases and additional costs of the management company. Interest expense is down approximately $41,000 due to lower rates on the floating rate loan with Wachovia.
Critical Accounting Policy and Risk Factors
In the ordinary course of business, the Partnership has made a number of estimates and assumptions relating to the reporting results of operations and financial position in preparing its financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ significantly from those estimates under different assumptions and conditions. The Partnership believes the following discussion addresses the Partnership's most critical accounting policy, which is determined to be the most important to the portrayal of the Partnership's financial condition and results and require management's most difficult, subjective and complex judgements, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Leased property held for sale.
The Partnership has adopted Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. As described in the section "Status of EastPark Facility" (see below), the real estate has been listed with a broker for approximately four years. The ultimate realizable value requires management to make estimates and assumptions about market conditions and events that may or may not occur in the future. Management has used all available information to record the property at a net realizable value. Because future events cannot be predicted with certainty, there can be no assurances that an additional write-down of the property will not be necessary.
Status of EastPark Facility
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 currently or within the next year. The GSA has the election to cancel its lease upon ninety (90) days written notice and accounts for 85% of the total rental income; accordingly, the General Partners will focus their lease extension efforts on the GSA. However, no assurances can be given that a replacement tenant could be found if GSA decides to terminate its lease. The General Partners will continue to search for the best offer for the property and manage it at acceptable standards until such time as the Partnership can sell the property to a qualified buyer.
Item 8.
Item 8. Financial Statements and Supplementary Data. The financial statements are attached hereto.
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
FINANCIAL REPORT
DECEMBER 31, 2002
CONTENTS
- -------------------------------------------------------------------------------- INDEPENDENT AUDITOR'S REPORT 1 - --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
Balance sheets 2
Statements of operations 3
Statements of partners' equity 4
Statements of cash flows 5
Notes to financial statements 6 - 12
- -------------------------------------------------------------------------------
[MCGLADREY & PULLEN Logo]
INDEPENDENT AUDITOR'S REPORT
To the Partners Yager/Kuester Public Fund Limited Partnership Fort Mill, South Carolina
We have audited the accompanying balance sheets of Yager/Kuester Public Fund Limited Partnership as of December 31, 2002 and 2001, and the related statements of operations, partners' equity and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Yager/Kuester Public Fund Limited Partnership as of December 31, 2002 and 2001, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.
/s/ McGladrey & Pullen, LLP
Charlotte, North Carolina February 11, 2003
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
BALANCE SHEETS DECEMBER 31, 2002 AND 2001
See Notes to Financial Statements.
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
See Notes to Financial Statements.
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' EQUITY YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
See Notes to Financial Statements.
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
See Notes to Financial Statements.
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
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NOTE 1. NATURE OF BUSINESS AND ORGANIZATION, PARTNERSHIP AGREEMENT AND SIGNIFICANT ACCOUNTING POLICIES
Nature of business and organization: The Partnership is a North Carolina limited partnership formed in July 1986. The purpose of the Partnership is to acquire, operate, hold for investment and sell commercial rental property. The partnership has property located in Charlotte, North Carolina.
The general partners of the Partnership are DRY Limited Partnership, a North Carolina limited partnership in which Dexter R. Yager, Sr. is the general partner and FSK Limited Partnership, a North Carolina limited partnership in which Faison S. Kuester, Jr. is the general partner.
Partnership agreement: Under the terms of the partnership agreement, all taxable income, tax losses and cash distributions from operations are to be allocated 99% to the limited partners and 1% to the general partners until the limited partners receive a return of their initial capital contributions and a "Priority Return". The Priority Return is a sum equal to 8% per annum cumulative, but not compounded, (prorated for any partial year) of the adjusted capital contributions of the limited partners, calculated from the last day of the calendar quarter in which each limited partner is admitted to the Partnership to the date of payment. Thereafter, taxable income, tax losses and cash distributions from operations will be allocated 75% to the limited partners and 25% to the general partners.
Upon the sale or refinancing of any future partnership properties, the partnership agreement specifies certain allocations of net proceeds and taxable gain or loss from the transaction.
A summary of the Partnership's significant accounting policies follows:
Use of estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents: 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 an original maturity of three months or less as cash and cash equivalents on the accompanying balance sheets. At various times throughout the year, the Partnership may have cash balances at financial institutions which exceed federally-insured amounts.
Accounts receivable, tenant: Accounts receivable are recognized at the contracted monthly rent amount. Accounts receivable are considered past due when payment is not received within the contract term. The Partnership does not charge late fees or interest on past due balances.
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
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NOTE 1. NATURE OF BUSINESS AND ORGANIZATION, PARTNERSHIP AGREEMENT AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investment in securities available for sale: Financial Accounting Standards Board Statement No. 115 requires that management determine the appropriate classification of securities at the date individual investment securities are acquired, and that the appropriateness of such classification be reassessed at each balance sheet date. Since the Partnership neither buys securities in anticipation of short-term fluctuations in market prices nor can commit to holding debt securities to their maturities, the investment in debt and marketable equity securities have been classified as available for sale in accordance with Statement No. 115. Available-for-sale securities are stated at fair value, and unrealized holding gains and losses are reported as a separate component of partners' equity. Realized gains and losses, including losses from declines in value of specific securities determined by management to be other-than-temporary, are included in income. Realized gains and losses are determined on the basis of the specific securities sold.
Deferred charges: Deferred charges are related to prepaid fees which are amortized over the length of the related loans, 1 to 10 years, on a straight-line basis. Amortization was discontinued in 1998 subsequent to the recognition of impairment (see Note 4).
Deferred leasing commissions: Deferred leasing commissions related to obtaining specific leases are amortized using the straight-line method over the noncancelable lease terms which range from three to seven years. Amortization was discontinued in 1998 subsequent to the recognition of impairment (see Note 4).
Revenue recognition: Rental revenue is recognized evenly over the term of the lease. In connection with negotiating and obtaining leases, the Partnership's management may at times grant concessions, such as free rent for a specific number of months during the lease. These costs are amortized over the life of the lease.
Disclosures about the fair value of financial instruments: Financial Accounting Standards Board Statement No. 107, Disclosures About Fair Value of Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Statement 107 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. At December 31, 2002 and 2001, the carrying values of the Partnership's financial instruments, including accounts receivable which are due on demand and the mortgage payable which bears interest at market rates, approximate their fair values.
Partnership equity: The Financial Accounting Standards Board issued Statement No. 128, Earnings Per Share. The Statement specifies the computation, presentation, and disclosure requirements for earnings per share. Management believes that Statement No. 128 is analogous to limited partnership units and accordingly, additional disclosures for partnership units are presented in the accompanying financial statements.
Income taxes: Under current income tax laws, income or loss of the Partnership is included in the income tax returns of the partners. Accordingly, the Partnership will make no provision for federal or state income taxes.
Leased property held for sale: The Partnership has adopted Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Statement No. 144 requires assets to be reported at the lower of their carrying value or estimated fair value less cost to sell.
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
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NOTE 1. NATURE OF BUSINESS AND ORGANIZATION, PARTNERSHIP AGREEMENT AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reclassifications: The Company's policy is to reclassify certain amounts reported in prior year financial statements when necessary for conformity with classifications adopted in the current year. These reclassifications do not have a material effect on prior year financial statements.
NOTE 2. WORKING CAPITAL RESERVE
Per the Partnership Agreement, a minimum working capital reserve of $94,500 must be maintained to fund any expenditures that the cash flow from properties on operating leases is insufficient to meet. The combined balance of cash and cash equivalents and securities available for sale exceeds this requirement at December 31, 2002 and 2001 by $102,986 and $30,306, respectively.
Securities available for sale may be sold in order to fund future operating cash flow expenditures.
NOTE 3. SECURITIES AVAILABLE FOR SALE
The following is a summary of the Partnership's securities available for sale as of December 31, 2002 and 2001:
At December 31, 2002, the Partnership did not have trading or held to maturity securities.
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 3. SECURITIES AVAILABLE FOR SALE (CONTINUED)
Gross realized gains and losses from the sale of securities available for sale for the years ended December 31, 2002, 2001 and 2000 are as follows:
2002 2001 2000 ------------------------------------------------------ Realized gains $ - $ - $ - Realized (losses) - - (5,880) ------------------------------------------------------ $ - $ - $ (5,880) ======================================================
The Partnership has only equity securities. Equity securities have no maturity date. Therefore, there are no amortized cost or fair values of securities available for sale as of December 31, 2002 by contractual maturity.
Proceeds from sales of securities available for sale during the years ended December 31, 2002, 2001 and 2000 are as follows:
Dividend income included in nonoperating income (expense) in the accompanying Statements of Operations totaled $4,795, $5,774 and $9,059 for the years ended December 31, 2002, 2001 and 2000, respectively.
NOTE 4. LEASED PROPERTY HELD FOR SALE
The Partnership leases office facilities under various lease agreements. The following schedule provides an analysis of the Partnership's investment in property held for lease by major classes as of December 31, 2002 and 2001, respectively.
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 4. LEASED PROPERTY HELD FOR SALE (CONTINUED)
The following is a schedule by year of all minimum future rentals on noncancelable operating leases as of December 31, 2002:
Year Ending December 31, Amount - ------------------------------------------------------------------------------ 2003 $ 35,791
The property is currently contracted with a real estate broker. It is the intention of the General Partners to market and sell the property. The sales proceeds will be used to pay off debt/liabilities and return partners' equity. During 2002, the Partnership expensed $15,050 of additional improvements and upgrades made to the building. The allowance on impairment of property is subject to potential significant change based upon market conditions. Subsequent to the recognition of the impairment, depreciation and amortization of the related assets were discontinued.
NOTE 5. NOTE PAYABLE, BANK, LONG-TERM DEBT AND PLEDGED ASSETS
Long-term debt and pledged assets consists of the following at December 31, 2002 and 2001:
NOTE 6. PRIORITY RETURN
The cumulative unpaid priority return to the limited partners is $3,380,753 and $3,137,969 at December 31, 2002 and 2001, respectively. There were no cash distributions to the limited partners for the priority return for the years ended December 31, 2002, 2001 and 2000. Based on current and projected real estate market conditions, the General Partners believe that it is reasonably unlikely that a future sale of the Partnership property would produce sufficient net sales proceeds to pay the priority return.
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
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NOTE 7. RELATED PARTY TRANSACTIONS
Management expenses paid to a General Partner and to Internet Services Corporation, a related party, in connection with day-to-day operations of the Partnership amounted to $17,865, $17,585, and $16,493 for the years ended December 31, 2002, 2001 and 2000, respectively. Also, allocated expenses were paid to related parties in the amounts of $75,938, $68,638 and $56,569 for the years ended December 31, 2002, 2001 and 2000, respectively.
NOTE 8. MAJOR TENANTS
Rental income for the years ended December 31, 2002, 2001 and 2000, respectively, included approximate rentals from the following major tenants which accounted for 10% or more of the total rental income of the Partnership for those years:
Approximate Amount of Rental Income Year Ended December 31, ------------------------------------------------------ 2002 2001 2000 ------------------------------------------------------ Tenant A $ 506,505 $ 467,000 $ 462,000
Accounts receivable from the major tenant identified above was as follows at December 31, 2002 and 2001, respectively:
December 31, -------------------------------------- 2002 2001 -------------------------------------- Tenant A $ 42,247 $ 42,091
The major tenant identified above has the option to terminate its lease agreement with the Partnership two years prior to the end of the lease. If the option is exercised, the tenant may terminate its lease with the Partnership after November 30, 2002. The tenant has not exercised this option.
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 9. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following tables present summarized quarterly data for the years ended December 31, 2002 and 2001:
Item 9.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. Not applicable.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Partnership. The Partnership has no executive officers and directors. The General Partners of the partnership are DRY Limited Partnership, the sole General Partner of which is Dexter R. Yager, Sr., and FSK Limited Partnership, the sole General Partner of which is Faison S. Kuester, Jr.
Following is a brief discussion of the background and experience of Messrs. Kuester and Yager.
Faison S. Kuester, Jr., 57, graduated from the University of North Carolina at Chapel Hill with a Bachelor of Arts Degree in History in 1967. He is a resident of Charlotte, North Carolina. After three years service in the United States Army as a Lieutenant, Mr. Kuester joined Independence Development Corporation in 1972 serving as a director of leasing and management for a period of three years. In 1974, Mr. Kuester formed his own company, Kuester Realty and Management, in order to lease and manage commercial properties in Charlotte, North Carolina and surrounding communities. In addition to leasing and managing various commercial properties, Kuester Realty developed two medical clinics in the Charlotte area. In 1980, Kuester Properties, Inc. ("KPI") was formed to specialize in on-site management of apartment communities in the southeastern United States. The following year Cauble and Kuester Company, Inc. was organized to lease and manage commercial properties in the metropolitan Atlanta area. This partnership brought together Cauble and Company, experienced mortgage lenders and leasing agents in the Atlanta market, and Kuester Realty and Management. Finally, in 1983, Kuester Development Corporation was formed to allow the Kuester companies to engage in selective real estate development projects in the southeastern United States.
Through Kuester Development Corporation, a wholly-owned subsidiary of KPI, Mr. Kuester has been directly involved with the development of several commercial real estate properties in North and South Carolina and Georgia. These include the First United National Bank Building in Wilmington, North Carolina, two retail office showroom projects, two medical office buildings and residential condominiums in Charlotte, North Carolina, an office building in Savannah, Georgia, and an office building in Greenville, South Carolina. Kuester Development Corporation also has developed over 1000 apartment units throughout Charlotte, North Carolina since 1983.
In October 1996, Mr. Kuester formed FSK Properties, LLC to provide management, leasing and brokerage services to his clients. FSK Properties, LLC serves as property manager of the Partnership property.
Dexter R. Yager, Sr., 63, is the President and founder of D&B Yager Enterprises, Inc., Mr. Yager's Amway distributorship business. Through D&B Yager Enterprises, Inc., Mr. Yager has been an independent business owner for Amway Corporation for over 35 years during which time he has achieved the status of Founder's Crown Ambassador, which is the highest level attainable as an Amway distributor. The Amway Corporation, now known as Quixtar, is one of the largest manufacturers of home care products in the world. He is also a former member and past president of the Amway Distributor Association Board of Directors. Mr. Yager has many other family-owned businesses and is responsible for the development of several businesses, including the following: Yager Personal Development, Inc., which handles Mr. Yager's services as a speaker at Amway events, Yager Construction Company, Inc., which is a general building contractor; and YFP, LLC (f/k/a as The Dexter and Birdie Yager Family Limited Partnership), which owns various real estate investments and manages real estate for the Yager family.
Mr. Yager has significant experience in real estate investment for his own account. Mr. Yager personally, and through partnerships in which he and his wife own a majority interest, has made investments in raw land, office buildings, shopping centers, and other commercial and residential real estate having a market value in excess of $10,000,000. He has made substantial additional real estate investments through partnerships in which he does not own a majority interest.
Item 11.
Item 11. Executive Compensation. The Partnership does not employ any executive officers or directors. Dexter R. Yager, Sr. and Faison S. Kuester have policy making functions with regard to Partnership operations. See Item 10 for the relationship of such persons to the Partnership. See Item 13 for a description of payments made to FSK Properties, LLC for property management services and to Internet Services Corporation, Inc. for accounting and management services.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management. The General Partners initially contributed a total of $2,500 to the capital of the Partnership, consisting of a $1,600 contribution from DRY Limited Partnership and $900 from FSK Limited Partnership. The General Partners own a 1% interest in all items of Partnership income, gain, loss, deductions
or credits including 1% of net cash from operations. The General Partners also own a residual 25% interest in net cash from a sale or refinancing of the Partnership Property, subordinated to the receipt by the Limited Partners of the return of their capital contributions and their priority return and to the payment of any subordinated real estate commissions due to affiliates of the General Partners.
The General Partners do not own any Limited Partnership interest in the Partnership.
Item 13.
Item 13. Certain Relationships and Related Transactions. During the fiscal year ended December 31, 2002, FSK Properties, LLC received $52,316 for management fees, commissions and repair service fees. Internet Services Corporation, Inc. received $41,487 for providing accounting/management services. Internet Services Corporation is owned equally by three trusts, the beneficial interests of which inure to the benefit of three children of Dexter R. Yager, Sr., the sole General Partner of DRY Limited Partnership, which limited partnership is one of the two general partners of the Partnership. Janitorial services for the EastPark Executive Center are provided by Marquis Cleaning Services, which is operated and owned by Dexter R. Yager's nephew.
The General Partners believe that the terms for the above mentioned services are as favorable as those the Partnership could obtain from unaffiliated parties.
Item 14.
Item 14. Controls and Procedures. In connection with the preparation of this report, the person performing the function of principal executive officer and the person performing the function of the principal financial officer of the Partnership have evaluated the effectiveness of the Partnership's disclosure controls and procedures as of a date within 90 days of the filing of this report and have concluded that the Partnership's disclosure controls and procedures are suitable and effective for the Partnership, taking into consideration the size and nature of the Partnership's business and operations
PART IV
Item 15.
Item 15. Exhibits, Financial Statements Schedules and Reports on Form 8-K.
(a)(1) The following financial statements of the Partnership are included in Part II, Item 8 hereof.
(i) Independent Auditor's Report (ii) Balance Sheets as of December 31, 2002 and 2001 (iii) Statements of Operations for years ended December 31, 2002, 2001 and 2000 (iv) Statements of Partners' Equity for years ended December 31, 2002, 2001 and 2000 (v) Statements of Cash Flows for years ended December 31, 2002, 2001 and 2000 (vi) Notes to Financial Statements
(a)(2) All schedules have been omitted because they are inapplicable, not required, or the information is included elsewhere in the financial statements or notes thereto.
(a)(3) Exhibits:
(4) Instrument defining rights of securities holders - set forth in the Limited Partnership Agreement which is contained in the Prospectus incorporated herein by reference.
(10.1)* Limited Partnership Agreement
(10.2)** Exclusive Leasing and Management Agreement dated October 1, 1994 (EastPark Executive Center).
(10.3)***Listing Agreement of Property for Lease and/or Sale dated December 22, 1998 (EastPark Executive Center).
(23) Consent of Independent Auditor
(b) Reports on Form 8-K: None.
(c) Exhibits: The exhibits listed in Item 14(a)(3) above and not incorporated herein by reference are filed with this Form 10-K.
(d) Financial Statement Schedules: There are no financial statement schedules included in this Form 10-K report. - --------------------------------------------------------------------------------
* 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 3 of the Partnership's Form 10-K for the year ended December 31, 1998.
CERTIFICATE OF PERSON PERFORMING FUNCTIONS OF CHIEF EXECUTIVE OFFICER
I, Dexter R. Yager, Sr., certify that:
1. I have reviewed this annual report on Form 10-K of Yager/Kuester Public Fund Limited;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, is made known to us, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: March 31, 2003
/s/ Dexter R. Yager, Sr. ---------------------------------------- Dexter R. Yager, Sr., General Partner of DRY Limited Partnership, the General Partner of Registrant
CERTIFICATE OF PERSON PERFORMING FUNCTIONS OF CHIEF FINANCIAL OFFICER
I, Thomas K. Emery, certify that:
1. I have reviewed this annual report on Form 10-Q of Yager/Kuester Public Fund Limited;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, is made known to us, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: March 31, 2003 /s/Thomas K. Emery ------------------ Thomas K. Emery (Serving in the function of Principal Accounting Officer)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
By: FSK Limited Partnership
March 31, 2003 By: /s/ Faison S. Kuester, Jr. ------------------------------ Faison S. Kuester, Jr. General Partner (Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 31, 2003 by the following persons on behalf of the Partnership and in the capacities and on the dates indicated.
/s/ Thomas K. Emery /s/ Faison S. Kuester - ---------------------------------------- ----------------------------------- Thomas K. Emery Faison S. Kuester, Jr., General (Serving in the function of Principal Accounting Officer) Partner of FSK Limited Partnership, General Partner of the Partnership
Date March 31, 2003 Date March 31, 2003 --------------------------------- ----------------------------
/s/ Dexter R. Yager, Sr. ----------------------------------- Dexter R. Yager, Sr., General Partner of DRY Limited Partnership, General Partner of the Partnership
Date March 31, 2003 ---------------------------