SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: June 30, 1998 Commission File Number: 0-13174
THE MARINA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Indiana 35-1689935
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
11691 Fall Creek Road, Indianapolis, IN 46256
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 845-0270
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
Page 1 of 11 Pages
<PAGE>
THE MARINA LIMITED PARTNERSHIP
FORM 10-Q
Table of Contents
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements (unaudited)
A. Balance Sheets - June 30, 1998, and December 31, 1997. 3
B. Statements of Earnings - Comparative three months ended
June 30, 1998, and 1997. 4
C. Statements of Earnings - Comparative six months ended
June 30, 1998, and 1997. 5
D. Statements of Cash Flows - Comparative six months ended
June 30, 1998, and 1997. 6
E. Note to Interim Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 10
PART II. OTHER INFORMATION
(The items of Part II are inapplicable or the answers thereto
are negative and, accordingly, no reference is made to said
items in this report.)
Signature 11
Page 2 of 11 Pages
<PAGE>
PART I - FINANCIAL INFORMATION
THE MARINA LIMITED PARTNERSHIP
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
The financial information incorporated in this form reflects all adjustments
which are, in the opinion of management, necessary to a fair statement of the
results for the interim period.
A. THE MARINA LIMITED PARTNERSHIP
Balance Sheets
June 30, 1998, and December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Assets 1998 1997
------ ---- ----
<S> <C> <C>
Cash and cash equivalents $ 5,753,882 $ 5,531,556
Receivables from homesite sales 1,246,542 1,468,895
Other receivables and assets 512,368 519,445
Properties held for sale:
Homesites available for sale 1,573,651 1,864,770
Homes available for sale 2,071,572 1,743,092
Land and land improvements 734,696 735,678
4,379,919 4,343,540
--------- ----------
Property and equipment:
Marine property and equipment,net 2,801,032 2,630,222
Recreational facilities, net 518,642 508,001
Commercial properties, net 2,386,328 2,472,045
5,706,002 5,610,268
--------- ----------
Other investments:
Marina I 2,698,340 2,404,228
Dockside Cafe 83,731 139,119
Flatfork Creek Utility (16,698) 20,482
---------- ----------
$ 20,364,086 $20,037,533
========== ==========
Liabilities and Partners' Equity
Accounts payable 483,803 590,865
Accrued bonuses 91,183 66,666
Deferred revenues and sale deposits 740,293 202,195
Total liabilities 1,315,279 859,726
---------- ----------
Partners' equity:
General partner 5,682,076 5,731,363
Limited partners 13,366,731 13,446,444
Total partners' equity 19,048,807 19,177,807
----------- ----------
$ 20,364,086 $20,037,533
========== ==========
</TABLE>
Page 3 of 11 Pages
<PAGE>
B. THE MARINA LIMITED PARTNERSHIP
Statements of Earnings
Three Months Ended June 30, 1998, and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Revenues:
Homes and homesite sales $ 975,698 $1,206,000
Marine operations 2,485,714 1,838,391
Equity in earnings of investee companies 549,501 698,368
Interest income 91,566 99,582
Rental income, net 59,402 76,295
Recreational facilities, net 40,270 36,578
Gain on sales of land held for investment - 95,802
--------- ---------
4,202,151 4,051,016
Cost and expenses:
Cost of homes and homesites sold
and related expenses 728,467 613,159
Marine operations 1,734,596 1,210,499
General and administrative 294,602 242,260
Management fees paid to general partner 37,249 32,105
--------- ---------
2,794,914 2,098,023
--------- ---------
Net earnings 1,407,237 1,952,993
Net earnings attributable to general partner 537,670 581,985
--------- ---------
Net earnings attributable to limited partners $ 869,567 $ 1,371,008
======== =========
Weighted average number of limited
partner units outstanding 417,183 473,947
Net earnings per limited partner unit $ 2.08 $ 2.89
========= =========
</TABLE>
Page 4 of 11 Pages
<PAGE>
C. THE MARINA LIMITED PARTNERSHIP
Statements of Earnings
Six Months Ended June 30, 1998, and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Revenues:
Homes and homesite sales $2,296,063 $1,770,493
Marine operations 2,672,878 2,083,752
Equity in earnings of investee companies 767,164 675,593
Interest income 208,658 207,262
Rental income, net 177,328 130,193
Recreational facilities, net 5,266 9,807
Gain on sales of land held for investment 234,275 95,802
--------- ---------
6,361,632 4,972,902
Cost and expenses:
Cost of homes and homesites sold
and related expenses 1,504,095 780,726
Marine operations 2,034,228 1,567,268
General and administrative 544,243 474,031
Management fees paid to general partner 45,093 37,820
--------- ---------
4,127,659 2,859,845
--------- ---------
Net earnings 2,233,973 2,113,057
Net earnings attributable to general partner 853,545 629,684
--------- ---------
Net earnings attributable to limited partners $ 1,380,428 $ 1,483,373
========= =========
Weighted average number of limited
partner units outstanding 417,183 473,947
Net earnings per limited partner unit $ 3.31 $ 3.13
========= =========
</TABLE>
Page 5 of 11 Pages
<PAGE>
D. THE MARINA LIMITED PARTNERSHIP
Statements of Cash Flows
Six Months Ended June 30, 1998, and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 2,233,973 $2,113,057
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation of properties 211,935 185,691
Equity in earnings of investee companies (767,164) (675,593)
Collection of receivables relating to prior
years' homesite sales 375,754 269,087
Receivables on current year's homesite sales (153,401) (769,180)
Gain on sales of land held for investment (234,275) ( 95,802)
Homes and homesite development costs (372,942) (564,885)
Cost of homesites sold 335,430 486,192
Deferred revenues and sale deposits 538,098 512,377
Change in operating assets and liabilities (75,468) (126,516)
Net cash provided by
operating activities 2,091,939 1,334,428
--------- ---------
Cash flows from investing activities:
Distributions Received from Marina I 545,463 (76,763)
Investment in Dockside Cafe,
net of distributions received (20,157) (8,382)
Additions to marine property and equipment (281,440) (293,364)
Additions to land and land development costs (1,801) (155,183)
Additions to commercial properties - (3,800)
Additions to recreational facilities 26,229 112,984
Proceeds from sales of land held for investment 237,210 260,000
Net cash (used) by investing activities 493,360 (220,186)
Cash flows from financing activities:
Distribution to partners (2,362,973) (2,194,189)
------------ -----------
Net Cash used in financing activities (2,362,973) (2,194,189)
Net (decrease) increase in cash
and cash equivalents 222,326 (1,079,947)
Cash and cash equivalents at beginning of period 5,531,556 4,591,103
--------- ---------
Cash and cash equivalents at end of period $ 5,753,882 $ 3,511,156
========= =========
</TABLE>
Page 6 of 11 Pages
<PAGE>
E. THE MARINA LIMITED PARTNERSHIP
Note to Interim Financial Statements
Three and Six Months Ended June 30, 1998, and 1997
(Unaudited)
Note (1) Basis of Presentation
A summary of significant accounting policies used by The Marina Limited
Partnership is set forth in Note 1 of Notes to Financial Statements included in
the December 31, 1997 Annual Report Form 10-K.
The interim financial statements have been prepared in accordance with
instructions to Form 10-Q, and therefore, do not include all information and
footnotes necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles.
The interim financial statements at June 30, 1998, and for the three and six
months ended June 30, 1998 and 1997, have not been audited by independent
accountants, but reflect, in the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows for such periods.
Page 7 of 11 Pages
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1998
AND 1997.
The following discussion and analysis is intended to address the
significant factors affecting the Partnership's results of operations and
financial condition. It is designed to provide a more comprehensive review of
the operating results and financial position than could be obtained from an
analysis of the financial statements alone. It should, however, be read in
conjunction with the financial statements included elsewhere herein.
Homesite Sales
During the three and six month periods ended June 30, 1998 and 1997 the
Partnership sold homesites as follows:
2nd Quarter Six Months
----------- ----------
1998 1997 1998 1997
---- ---- ---- ----
Cambridge 1 6 3 10
Bridgewater 1 3 1 5
Morse Overlook 2 0 6 0
---- ---- ---- ----
4 9 10 15
==== ==== ==== ====
The Partnership is the general partner of Marina I LP ("Marina I"), which has
developed homesites in Cambridge. During the three and six month periods ended
June 30, 1998 and 1997 Marina I sold homesites from Cambridge as follows:
June 30
1998 1997
---- ----
2nd Quarter 14 5
==== ===
Six Months 21 12
==== ===
COMPUTER SYSTEMS AND YEAR 2000 ISSUES
The Partnership is currently upgrading its computer systems to provide a
more complete Management Information System, and accordingly will install
software that is anticipated will properly recognize the year 2000 to avoid
system failures. The cost of year 2000 compliance within this system change is
not identifiable, but is not deemed material. However, no estimate can be made
as to any adverse impact that may result from the failure of the Partnership's
vendors or suppliers to become year 2000 compliant.
If the Partnership or one or more of the third party vendors or suppliers
fail to complete its year 2000 program in a timely manner, there can be no
assurance that such failure will not have a material adverse effect on the
Partnership's operations or financial position.
Page 8 of 11 Pages
<PAGE>
Results of Operations
Six Months ended June 30, 1998
1998 Compared to 1997. Net earnings increased by $121,000 in 1998 from 1997.
This increase was primarily due to increased equity earnings from Marina I of
$165,000, an increase in earnings after direct costs of $122,000 from Marine
operations, and an increase in gains on the sale of investment land of $138,000.
These gains were partially offset by a decrease in earnings from home and
homesite sales to $792,000 in 1998 compared to $990,000 in 1997.
The increase in operating income of $122,000 from marine operations is the
result of contributions from all elements of marine business.
The Partnership recognized $840,000 as its share of the earnings from
Marina I in 1998, compared to $675,000 in 1997. This increase is the result of
homesite sales of $2,816,000 in 1998 as compared to $1,867,000 in 1997, which
reflects the shift in homesite sales to Marina I due to the Partnerships'
homesites in Cambridge being substantially sold.
The increase in the cost of homes and homesites sold as a percentage of
revenues is due to the Partnership's sale of three homes during the six month
period ended June 30, 1998. These sales reflect a lower margin as compared to
homesite sales.
During 1998, the Partnership sold commercial property held for investment
at Morse Lake for an aggregate $237,000, which resulted in a gain of $234,000.
This compared to a gain of $96,000 on sale of investment property in 1997.
As of June 30, 1998, the Partnership had $514,000 of unamortized advance
dock rentals toward the 1998 boating season. This is compared to $474,000 as of
June 30, 1997. The rental payments are deferred when received and recognized as
earned during the April to September boating season.
On April 3, 1998, the Partnership made a cash distribution to the partners
of record on March 23, 1998, of $3.50 per unit of partnership interest, for a
total of $2,363,000. This compares to a cash distribution of $3.25 per
partnership unit on April 17, 1997.
Page 9 of 11 Pages
<PAGE>
Results of Operations
Three Months ended June 30, 1998
1998 Compared to 1997. Net earnings decreased by $546,000 for the second quarter
of 1998 as compared to 1997. This was primarily due to a decrease in earnings
from the sale of homes and homesites of $346,000, a decrease in equity earnings
from Marina I of $87,000 and a decrease in earnings from the sale of investment
land of $96,000.
Earnings from home and homesite sales were $247,000 in 1998, which compares
to $593,000 in 1997.
The Partnership recognized $584,000 as its share of the earnings from
Marina I in 1998, compared to $671,000 in 1997. This decrease is the result of
homesite sales of $1,660,000 in 1998 as compared to $1,788,000 in 1997.
During the second quarter of 1998 the partnership sold no commercial land
held for investment compared to a sale in 1997.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Pursuant to Item 305(e) of Regulation S-K, the Partnership is not required
to provide information in response to this Item 3.
Page 10 of 11 Pages
<PAGE>
SIGNATURE
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.
THE MARINA LIMITED PARTNERSHIP
(Registrant)
By: /s/ Donald J. Calabria
Donald J. Calabria
Vice President and
Chief Financial Officer
The Marina II Corporation
General Partner of
The Marina Limited Partnership
DATE: August 13, 1998
Page 11 of 11 Pages
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE FILER'S FORM 10-Q FOR THE QUARTER ENDED
JUNE 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000803605
<NAME> THE MARINA LIMITED PARTNERSHIP
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,753,882
<SECURITIES> 0
<RECEIVABLES> 1,758,910
<ALLOWANCES> 0
<INVENTORY> 4,379,919
<CURRENT-ASSETS> 0
<PP&E> 5,706,002
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,364,086
<CURRENT-LIABILITIES> 1,315,279
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 19,048,807
<TOTAL-LIABILITY-AND-EQUITY> 20,364,086
<SALES> 4,968,941
<TOTAL-REVENUES> 6,361,632
<CGS> 3,538,332
<TOTAL-COSTS> 4,127,659
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,233,973
<EPS-PRIMARY> 3.31
<EPS-DILUTED> 3.31
</TABLE>
