##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549
 FORM 10-KSB (Mark One) (X)
    
    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the fiscal year ended December 31, 2003 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 0-8444 Yager/Kuester Public Fund Limited Partnership  North Carolina
    
    56-1560476(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Identification No.)1300 Altura Road, P.O. Box 1329
Fort Mill, South Carolina
    
    29716-1329(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (803) 547-9100 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class
    
    Name of Each Exchange on
Which RegisteredNone
 Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Units(Title of Class)
 Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [  ] Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X] State issuers revenues for its most recent fiscal year: $602,254 State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as
of a specified date within the past 60 days. Not Applicable. Documents Incorporated By Reference Exhibits (4) and (10.1) of Part IV, required by Item 601 of Regulation
S-K, are incorporated by reference from the prospectus of the registrant, dated
December 1, 1987, Registration Number 33-07056-A (hereinafter Prospectus).




---



##### 



PART I Item 1. Description of 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 below, to pay the expenses of the
offering and to fund the working capital account. The funds not required
for those purposes, totaling $84,273, were returned to investors. The sole business of the Partnership currently is the operation of
the EastPark Executive Center located in Charlotte, North Carolina
(EastPark). This commercial office building was purchased with the
proceeds of the public offering and loan funds (described below). The
Partnership previously owned a second office building that was sold on
April 24, 1998. (See Item 2 below for a description of the properties.)
The lease terms with the major tenant at EastPark are summarized below. EastPark Executive Center, Charlotte, NC  the General Services
Administration (GSA) has a lease term for a ten (10) year period ending
on October 31, 2004, at a current rental rate of $15.15 per square foot,
subject to its right to early termination of the lease upon ninety (90)
days notice. The Partnership has incurred approximately $1,104,000 in
leasehold improvements in connection with the GSA lease. The GSA lease
accounts for approximately 85% of the rental income related to the
EastPark Executive Center. The remaining leasehold space is leased to two
other tenants. The Partnership has no employees of its own; management of the
Partnerships property is performed by FSK Properties, LLC, an affiliate
of FSK Limited Partnership. Administration of the Partnership is
performed by the General Partners. (See Items 9 and 12 below.) Item 2. Description of Property. 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 (currently
Wachovia Bank, N.A.). 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 $2,323,501 estimated sales value, net of related costs to sell.
In 2002 and 2003, the Partnership incurred improvements costs of $15,050
and $10,300, respectively 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 8 below, Status of EastPark
Facility for recent developments regarding the property.) Item 3. Legal Proceedings. The Partnership is not involved in any
legal proceedings and was not so involved during the year ended December
31, 2003. Item 4. Submission of Matters to a Vote of Security Holders. Not
applicable. 2




---



##### 



PART II Item 5. Market for Common Equity, Related Stockholder Matters and
Small Business Issuer Purchases of Equity Securities. 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 7 of this Report. Item 6. Managements Discussion and Analysis or Plan of Operation. Liquidity and Capital Resources During the year ended December 31, 2003, the Partnership continued to
fund working capital requirements, although working capital was decreased by
approximately $1,185,000 from December 31, 2002. The working capital deficit
as of December 31, 2003 was $1,054,167. The large decrease in working
capital is due to the reclassification of the long-term debt to short-term
due to the current loan maturing on December 31, 2004. If this
reclassification had not been made, working capital would have been
approximately $165,000. The General Partners will seek refinancing with
Wachovia Bank, N.A. (f/k/a First Union National Bank) for the loan on
EastPark; however, no assurances can be given that such refinancing will
occur. The cumulative unpaid priority return to the unit holders increased
from $3,380,753 at December 31, 2002 to $3,619,173 at December 31, 2003.
This increase resulted from no distributions being made to partners during
the year pursuant to the Limited Partnership Agreement. Although no
distributions were paid to partners on the priority return, the
Partnership did make distributions in 2003 in the amount of $4,365
representing 2002 Federal and North Carolina tax owed on behalf of foreign
and non-resident partners. 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, 2003, the Partnership had net
income of $118,053 as compared to the net income of $127,251 in 2002.
(See Results of Operations below for explanation of variance.) Rental
income, operating expenses and interest expense for the years ended
December 31, 2003 and 2002 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, 2003 and December
2002. See Item 12 (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 2003 results with 2002. Net income for the year ended December 31, 2003 decreased by
approximately $9,000 or 7% as compared to the same period of the prior
year. Rental income increased less than 1% from the prior year as two of
the tenants began month-to-month leases this year that did not provide for
rental escalations. Operating expenses are up approximately 6% over the
prior year 3




---



##### 



mainly due to a parking lot repair expense of $50,605.
Interest expense continues to be down from the prior year due to the
decrease in interest rates on the floating rate loan. The interest rate at
December 31, 2003 was 4%. 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 was
lower interest expense. The loan has a floating prime interest rate,
which 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. 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 judgments,
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
five 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. The
General Partners have signed an agreement with a new broker in 2004 as the
previous brokers had shifted their objectives and focus towards retail
projects only. 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 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 7. Financial Statements. The financial statements are attached
hereto. 4




---



##### 



Yager/Kuester Public Fund
Limited Partnership Financial Report December 31, 2003




---



##### 



Contents Independent Auditors Report
    
    
    1Financial StatementsBalance sheets
    
    
    2Statements of operations
    
    
    3Statements of partners equity
    
    
    4Statements of cash flows
    
    
    5Notes to financial statements
    
    
    6 - 10




---



##### 



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, 2003 and 2002, and the related
statements of operations, partners equity and cash flows for each of the three
years in the period ended December 31, 2003. 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, 2003 and 2002, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2003, in conformity with accounting principles generally accepted
in the United States of America. /s/ McGladrey & Pullen,
LLP Charlotte, North Carolina
February 20, 2004 1




---



##### 



Yager/Kuester Public Fund
Limited Partnership Balance Sheets
December 31, 2003 and 2002 2003
    
    2002AssetsCurrent AssetsCash and cash equivalents (Note 2)
    
    $
    208,237
    
    
    $
    124,060Accounts receivable, tenants (Note 8)
    
    
    45,962
    
    
    
    42,247Prepaid expenses
    
    
    242
    
    
    
    Securities available for sale (Note 3)
    
    
    
    
    
    
    73,426Total current assets
    
    
    254,441
    
    
    
    239,733Leased property held for sale, net (Notes 4 and 5)
    
    
    2,323,501
    
    
    
    2,323,501$
    2,577,942
    
    
    $
    2,563,234Liabilities and Partners EquityCurrent LiabilitiesCurrent maturities of long-term debt (Note 5)
    
    $
    1,303,000
    
    
    $
    84,000Accounts payable
    
    
    4,445
    
    
    
    10,155Accrued expenses
    
    
    1,163
    
    
    
    14,648Total current liabilities
    
    
    1,308,608
    
    
    
    108,803Long-Term Debt, less current maturities (Note 5)
    
    
    
    
    
    
    1,310,000Commitment and Contingency (Note 6)Partners EquityGeneral partners
    
    
    (10,541
    )
    
    
    (11,721
    )Limited partners (Note 6)
    
    
    1,279,875
    
    
    
    1,167,367Other comprehensive income, unrealized (loss) on
investment securities (Note 3)
    
    
    
    
    
    
    (11,215
    )1,269,334
    
    
    
    1,144,431$
    2,577,942
    
    
    $
    2,563,234
 See Notes to Financial Statements. 2




---



##### 



Yager/Kuester Public Fund
Limited Partnership Statements of Operations
Years Ended December 31, 2003, 2002 and 2001 2003
    
    2002
    
    2001Rental income (Notes 4 and 8)
    
    $
    602,254
    
    
    $
    597,286
    
    
    $
    586,588Operating expenses:Contract labor
    
    
    6,000
    
    
    
    6,000
    
    
    
    6,000Repairs and maintenance
    
    
    204,520
    
    
    
    171,023
    
    
    
    176,063Management fees (Note 7)
    
    
    17,776
    
    
    
    17,865
    
    
    
    17,585Utilities
    
    
    90,063
    
    
    
    98,367
    
    
    
    93,370Professional fees
    
    
    64,888
    
    
    
    67,594
    
    
    
    64,702Property taxes
    
    
    42,295
    
    
    
    40,633
    
    
    
    40,633Miscellaneous
    
    
    5,914
    
    
    
    6,053
    
    
    
    5,424431,456
    
    
    
    407,535
    
    
    
    403,777Operating income
    
    
    170,798
    
    
    
    189,751
    
    
    
    182,811Nonoperating income (expense):Interest and dividend income
    
    
    3,464
    
    
    
    4,997
    
    
    
    6,019Interest expense
    
    
    (56,381
    )
    
    
    (67,497
    )
    
    
    (104,158
    )Other
    
    
    172
    
    
    
    
    
    
    
    (52,745
    )
    
    
    (62,500
    )
    
    
    (98,139
    )Net income
    
    
    118,053
    
    
    
    127,251
    
    
    
    84,672Deduct net income applicable to limited
partners (per limited partner unit
2003 $18.29; 2002 $19.72; 2001 $13.12)
    
    
    116,873
    
    
    
    125,979
    
    
    
    83,825Net income applicable to
general partners (per
general
partner unit 2003 $23.61;
2002 $25.46; 2001 $16.94)
    
    $
    1,180
    
    
    $
    1,272
    
    
    $
    847
 See Notes to Financial Statements. 3




---



##### 



Yager/Kuester Public Fund
Limited Partnership Statements of Partners Equity
Years Ended December 31, 2003, 2002 and 2001 AccumulatedOtherComprehensive
    
    General
    
    Limited
    
    ComprehensiveTotal
    
    Income (Loss)
    
    Partners
    
    Partners
    
    Income (Loss)Balance, December 31, 2000
    
    $
    937,086
    
    
    
    
    
    
    $
    (13,840
    )
    
    $
    957,563
    
    
    $
    (6,637
    )Comprehensive incomeNet income
    
    
    84,672
    
    
    $
    84,672
    
    
    
    847
    
    
    
    83,825Other comprehensive income:Unrealized loss on securities available
for sale, net of reclassification entry below
    
    
    (3,922
    )
    
    
    (3,922
    )
    
    
    
    
    
    
    
    
    
    
    (3,922
    )Comprehensive income
    
    
    
    
    
    $
    80,750Balance, December 31, 2001
    
    
    1,017,836
    
    
    
    
    
    
    
    (12,993
    )
    
    
    1,041,388
    
    
    
    (10,559
    )Comprehensive incomeNet income
    
    
    127,251
    
    
    $
    127,251
    
    
    
    1,272
    
    
    
    125,979Other comprehensive income:Unrealized loss on securities available
for sale, net of reclassification entry below
    
    
    (656
    )
    
    
    (656
    )
    
    
    
    
    
    
    
    
    
    
    (656
    )Comprehensive income
    
    
    
    
    
    $
    126,595Balance, December 31, 2002
    
    
    1,144,431
    
    
    
    
    
    
    
    (11,721
    )
    
    
    1,167,367
    
    
    
    (11,215
    )Comprehensive incomeNet income
    
    
    118,053
    
    
    $
    118,053
    
    
    
    1,180
    
    
    
    116,873Other comprehensive income:Unrealized gain on securities available
for sale, net of reclassification entry below
    
    
    11,215
    
    
    
    11,215
    
    
    
    
    
    
    
    
    
    
    
    11,215Comprehensive income
    
    
    
    
    
    $
    129,268Distributions
    
    
    (4,365
    )
    
    
    
    
    
    
    
    
    
    
    (4,365
    )Balance, December 31, 2003
    
    $
    1,269,334
    
    
    
    
    
    
    $
    (10,541
    )
    
    $
    1,279,875
    
    
    $
    2003
    
    
    

    2002
    
    
    
    2001Reclassification adjustmentUnrealized holding gains (losses) arising
during the period
    
    $
    11,387
    
    
    $
    (656
    )
    
    $
    (3,922
    )Less reclassification adjustment for gains
included in net income
    
    
    (172
    )
    
    
    
    
    
    
    Net unrealized gain (loss) on investments
securities
    
    $
    11,215
    
    
    $
    (656
    )
    
    $
    (3,922
    )
 See Notes to Financial Statements. 4




---



##### 



Yager/Kuester Public Fund
Limited Partnership Statements of Cash Flows
Years Ended December 31, 2003, 2002 and 2001 2003
    
    2002
    
    2001Cash Flows From Operating ActivitiesNet income
    
    $
    118,053
    
    
    $
    127,251
    
    
    $
    84,672Adjustments to reconcile net income to net
cash provided by operating activities:Net realized gain on sale of securities
available for sale
    
    
    (172
    )
    
    
    
    
    
    
    Changes in assets and liabilities:(Increase) decrease in accounts receivable,
tenant and accrued rent receivable
    
    
    (3,715
    )
    
    
    (156
    )
    
    
    12,068Increase in prepaid expenses
    
    
    (242
    )
    
    
    
    
    
    
    Increase (decrease) in accounts payable and
accrued expenses
    
    
    (19,195
    )
    
    
    4,241
    
    
    
    (39,334
    )Net cash provided by operating activities
    
    
    94,729
    
    
    
    131,336
    
    
    
    57,406Cash Flows From Investing ActivitiesPurchase of securities available for sale
    
    
    
    
    
    
    (15,534
    )
    
    
    (4,877
    )Proceeds from sale of securities available for sale
    
    
    84,813
    
    
    
    675
    
    
    
    845Net cash provided by (used in)
investing activities
    
    
    84,813
    
    
    
    (14,859
    )
    
    
    (4,032
    )Cash Flows from Financing ActivitiesPrincipal payments on long-term borrowings
and notes payable
    
    
    (91,000
    )
    
    
    (58,000
    )
    
    
    (60,000
    )Cash distributions
    
    
    (4,365
    )
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    (95,365
    )
    
    
    (58,000
    )
    
    
    (60,000
    )Net increase (decrease) in cash and
cash equivalents
    
    
    84,177
    
    
    
    58,477
    
    
    
    (6,626
    )Cash and cash equivalents:Beginning
    
    
    124,060
    
    
    
    65,583
    
    
    
    72,209Ending
    
    $
    208,237
    
    
    $
    124,060
    
    
    $
    65,583Supplemental Disclosure of Cash Flow Information:Cash payment for interest
    
    $
    61,488
    
    
    $
    68,453
    
    
    $
    110,468Supplemental Disclosures of Noncash Transactions:Net unrealized gain (loss) on securities available
for sale
    
    $
    11,215
    
    
    $
    (656
    )
    
    $
    (3,922
    )
 See Notes to Financial Statements. 5




---



##### 



Yager/Kuester Public Fund
Limited Partnership Notes to Financial Statements 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. 6




---



##### 



Yager/Kuester Public Fund
Limited Partnership Notes to Financial Statements 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. 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. 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 held for sale
to be reported at the lower of their carrying value or estimated fair value
less cost to sell. Reclassifications: Certain amounts reported in prior year financial statements
have been restated to conform to the 2003 presentations. These
reclassifications do not affect net income or partners equity on the 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, 2003 and 2002 by $113,737 and $102,986, respectively. 7




---



##### 



Yager/Kuester Public Fund
Limited Partnership Notes to Financial Statements Note 3. Securities Available for Sale During 2003, the Partnership sold all available for sale securities. The
following is a summary of the Partnerships securities available for sale as of
2002: Gross
    
    GrossUnrealized
    
    UnrealizedCost
    
    Gains
    
    Losses
    
    Fair Value2002Securities available for sale:Mutual funds
    
    $
    82,722
    
    
    $
    
    
    
    $
    (11,282
    )
    
    $
    71,440Other equity investments
    
    
    1,919
    
    
    
    67
    
    
    
    
    
    
    
    1,986$
    84,641
    
    
    $
    67
    
    
    $
    (11,282
    )
    
    $
    73,426
 Gross realized gains and losses from the sale of securities available for sale
for the years ended December 31, 2003, 2002 and 2001 are as follows: 2003
    
    2002
    
    2001Realized gains
    
    $
    2,271
    
    
    $
    
    
    
    $
    Realized (losses)
    
    
    (2,099
    )
    
    
    
    
    
    
    Net realized gains
    
    $
    172
    
    
    $
    
    
    
    $
    
 Proceeds from sales of securities available for sale during the years ended
December 31, 2003, 2002 and 2001 are as follows: 2003
    
    2002
    
    2001Proceeds from sales of securities available for sale
    
    $
    84,813
    
    
    $
    675
    
    
    $
    845
 Dividend and interest income included in nonoperating income (expense) in the
accompanying Statements of Operations totaled $3,464, $4,997 and $6,019 for the
years ended December 31, 2003, 2002 and 2001, respectively. 8




---



##### 



Yager/Kuester Public Fund
Limited Partnership Notes to Financial Statements 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, 2003 and 2002,
respectively. 2003
    
    2002Land
    
    $
    631,028
    
    
    $
    631,028Building
    
    
    2,524,110
    
    
    
    2,524,110Building improvements
    
    
    1,311,641
    
    
    
    1,311,641Other deferred charges and commissions, net
    
    
    35,932
    
    
    
    35,9324,502,711
    
    
    
    4,502,711Less accumulated depreciation
    
    
    705,480
    
    
    
    705,4803,797,231
    
    
    
    3,797,231Less impairment of property
    
    
    1,473,730
    
    
    
    1,473,730$
    2,323,501
    
    
    $
    2,323,501
 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.
The Partnership expensed $10,300 and $15,050 of additional improvements and
upgrades made to the building, for the years ended December 31, 2003 and 2002,
respectively. These repair improvements did not increase the value of the
property and thus were expensed. 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. The current lease agreements expire
in 2004, thus there are no contractual amounts of rental income due for years
2005 and beyond. Note 5. Long-Term Debt and Pledged Assets Long-term debt and pledged assets consists of the following at December 31,
2003 and 2002: 2003
    
    2002Note payable to bank, due in monthly installments of $7,000
plus interest at prime (4.0% at December 31, 2003),
through December 2004, secured by building, guaranteed by
general partner.
    
    $
    1,303,000
    
    
    $
    1,394,000Less current maturities
    
    
    1,303,000
    
    
    
    84,000$
    
    
    
    $
    1,310,000
 9




---



##### 



Yager/Kuester Public Fund
Limited Partnership Notes to Financial Statements Note 6. Priority Return The cumulative unpaid priority return to the limited partners is $3,619,173 and
$3,380,753 at December 31, 2003 and 2002, respectively. For the year ended
December 31, 2003, there was a cash disbursement for $4,365 to pay taxes. There
were no cash distributions to the limited partners for the priority return for
the years ended December 31, 2002 and 2001. 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. Note 7. Related Party Transactions Management expenses paid to a General Partner in connection with day-to-day
operations of the property amounted to $17,776, $17,865, and $17,585 for the
years ended December 31, 2003, 2002 and 2001, respectively. An additional
$33,644, $34,451 and $31,211 for on-site management and repair service fees was
paid to this affiliate as well for the years ended December 31, 2003, 2002 and
2001, respectively. Also, allocated expenses were paid to Internet Services Corporation, a related
party, in the amounts of $31,705, $41,487 and $37,427 for the years ended
December 31, 2003, 2002 and 2001, respectively for day-to-day operations
associated with accounting and administration. Note 8. Major Tenants Rental income for the years ended December 31, 2003, 2002 and 2001,
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 IncomeYear Ended December 31,2003
    
    2002
    
    2001Tenant A
    
    $
    510,683
    
    
    $
    506,505
    
    
    $
    467,000Tenant B
    
    
    61,605
    
    
    
    
    
    
    
    
 Accounts receivable from major tenants identified above was as follows at
December 31, 2003 and 2002, respectively: December 31,2003
    
    2002Tenant A
    
    $
    45,962
    
    
    $
    42,247
 The lease term of the major tenant expires in November 2004 but allows for an
early termination with 90 days notice. The Partnership has pursued the tenant
for a lease extension without any success. The other two tenants have
month-to-month leases that can terminate at any time. Monthly rental income
ranges from $2,179 to $42,660 for the largest tenant. Due to the short-term
nature of the lease terms future rentals are uncertain. 10




---



##### 



Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure. Not applicable. Item 8a. Controls and Procedures. The Partnerships General Partner and
Principal Accounting Officer have conducted an evaluation of the Partnerships
disclosure and procedures as of December 31, 2003. Based on their evaluation,
the General Partner and Principal Accounting Officer have concluded that the
Partnerships disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Partnership in reports that it
files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
applicable Securities and Exchange Commission rules and forms. There were no
significant changes in the Partnerships internal controls or in other factors
that could significantly affect these controls subsequent to the date of the
most recent evaluation of these controls by the Partnerships General Partner
and Principal Accounting Officer, including any corrective actions with regard
to significant deficiencies and material weaknesses. PART III Item 9. Directors and Executive Officers of the Partnership. The
Partnership has no executive officers and directors; however, the General
Partners and their powers of attorney perform these functions. 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., 58, 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., 64, is the President and founder of D&B Yager
Enterprises, Inc., Mr. Yagers Quixtar business (formerly Amway). Through D&B
Yager Enterprises, Inc., Mr. Yager has been an independent business owner for
Quixtar for over 35 years, during which time he has achieved the status of
Founders Crown Ambassador, which is the highest level attainable as a Quixtar
independent business owner. The Quixtar Corporation 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 (now
known as the Independent Business Owners International 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, 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. 17




---



##### 



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.
He has made substantial additional real estate investments through partnerships
in which he does not own a majority interest. Item 10. 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 9
for the relationship of such persons to the Partnership. See Item 12 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 11. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters. 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 12. Certain Relationships and Related Transactions. During the
fiscal year ended December 31, 2003, FSK Properties, LLC received $17,776 for
management fees and additional $33,644 for on-site management and repair
service fees. Internet Services Corporation, Inc. received $31,705 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 13. 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 7 hereof.(i)
    
    Independent Auditors Report(ii)
    
    Balance Sheets as of December 31, 2003 and 2002(iii)
    
    Statements of Operations for years ended December 31, 2003, 2002 and 2001(iv)
    
    Statements of Partners Equity for years ended December 31, 2003, 2002 and 2001(v)
    
    Statements of Cash Flows for years ended December 31, 2003, 2002 and 2001(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.
 18




---



##### 



(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
February 2, 2004 (EastPark Executive Center).(31.1)
    
    
    Certification required by
Section 31 of Item 601 of
Regulation S-K(31.2)
    
    
    Certification required by Section 31 of Item 601 of
Regulation S-K.(32.1)
    
    
    Certification pursuant to Section 1350 of Chapter 63 of
Title 18 of the United States Code (Sarbanes-Oxley Act of
2002)(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.
 Item 14. Principal Accountant Fees and Services. During the period covering the fiscal years ended 2003 and 2002, McGladrey &
Pullen, LLP and RSM McGladrey, Inc. performed the following professional
services: 2003
    
    2002Audit Fees
    
    $
    27,970
    
    
    $
    10,700Audit-Related Fees
    
    $
    -0-
    
    
    $
    -0-Tax Fees
    
    $
    -0-
    
    
    $
    -0-All Other Fees
    
    $
    -0-
    
    
    $
    -0-
   *
    
    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. 19




---



##### 



SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act , the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized. YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIPBy:
    
    FSK Limited PartnershipMarch 24, 2004
    
    
    
    By:
    
    /s/
    
    Faison S. Kuester, Jr.Faison S. Kuester, Jr.General Partner(Principal Executive Officer)
 In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated. /s/Thomas K. Emery
    
    /s/ Faison S. KuesterThomas K. Emery
    
    Faison S. Kuester, Jr., General(Serving in the function of Principal
    
    Partner of FSK Limited Partnership,Accounting Officer)
    
    General Partner of the PartnershipDate March 24, 2004
    
    Date March 24, 2004/s/ Dexter R. Yager, Sr.Dexter R. Yager, Sr., GeneralPartner of DRY Limited Partnership,General Partner of the PartnershipDate March 24, 2004
 20