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: September 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 - September 30, 1998, and December 31, 1997. 3
B. Statements of Earnings - Comparative three months ended
September 30, 1998, and 1997. 4
C. Statements of Earnings - Comparative nine months ended
September 30, 1998, and 1997. 5
D. Statements of Cash Flows - Comparative nine months ended
September 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
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
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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
September 30, 1998, and December 31, 1997
(Unaudited)
Assets 1998 1997
------ ---- ----
Cash and cash equivalents .................... $ 5,882,010 $ 5,531,556
Receivables from homesite sales .............. 1,226,387 1,468,895
Other receivables and assets ................. 406,659 519,445
Properties held for sale:
Homesites available for sale ............. 1,452,524 1,864,770
Homes available for sale ................. 1,614,292 1,743,092
Land and land improvements ............... 742,204 735,678
----------- -----------
3,809,020 4,343,540
----------- -----------
Property and equipment:
Marine property and equipment,net ........ 2,997,210 2,630,222
Recreational facilities, net ............. 510,924 508,001
Commercial properties, net ............... 2,344,213 2,472,045
----------- -----------
5,852,347 5,610,268
----------- -----------
Other investments:
Marina I ................................. 2,827,948 2,404,228
Dockside Cafe ............................ 102,001 139,119
Flatfork Creek Utility ................... 1,309,005 20,482
----------- -----------
$21,415,377 $20,037,533
Liabilities and Partners' Equity
Accounts payable ............................. 752,275 590,865
Accrued bonuses .............................. 137,908 66,666
Deferred revenues and sale deposits .......... 163,184 202,195
----------- -----------
Total liabilities ................... 1,053,367 859,726
----------- -----------
Partners' equity:
General partner ............................ 6,183,811 5,731,363
Limited partners ......................... 14,178,199 13,446,444
Total partners' equity .............. 20,362,010 19,177,807
----------- -----------
$21,415,377 $20,037,533
Page 3 of 11 Pages
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B. THE MARINA LIMITED PARTNERSHIP
Statements of Earnings
Three Months Ended September 30, 1998, and 1997
(Unaudited)
1998 1997
---- ----
Revenues:
Homes and homesite sales ....................... $1,047,161 $ 291,966
Marine operations .............................. 1,666,882 1,289,423
Equity in earnings of investee companies ....... 164,324 207,738
Interest income ................................ 122,703 117,943
Rental income, net ............................. 90,612 28,952
Recreational facilities, net ................... 73,355 85,187
Gain on sales of land held for investment ...... -- 566,144
Miscellaneous .................................. -- 3,654
---------- ----------
3,165,037 2,591,007
Costs and expenses:
Cost of homes and homesites sold
and related expenses .................... 622,403 194,506
Marine operations .............................. 945,685 728,715
General and administrative ..................... 245,223 283,031
Management fees paid to general partner ........ 38,493 31,558
---------- ----------
1,851,804 1,237,810
Net earnings ............................ 1,313,233 1,353,197
Net earnings attributable to general partner ..... 501,717 403,248
---------- ----------
Net earnings attributable to limited partners .... $ 811,516 $ 949,949
========== ==========
Weighted average number of limited
partner units outstanding .................... 417,183 473,947
========== ==========
Net earnings per limited partner unit ............ $ 1.95 $ 2.00
========== ==========
Page 4 of 11 Pages
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C. THE MARINA LIMITED PARTNERSHIP
Statements of Earnings
Nine Months Ended September 30, 1998, and 1997
(Unaudited)
1998 1997
Revenues:
Homes and homesite sales ....................... $3,343,223 $2,062,459
Marine operations .............................. 4,339,760 3,373,176
Equity in earnings of investee companies ....... 931,488 883,331
Interest income ................................ 331,361 325,205
Rental income, net ............................. 267,940 159,146
Recreational facilities, net ................... 78,621 94,993
Gain on sales of land held for investment ...... 234,275 661,946
Miscellaneous .................................. -- 3,654
---------- ----------
9,526,668 7,563,910
Costs and expenses:
Cost of homes and homesites sold
and related expenses .................... 2,126,528 975,230
Marine operations .............................. 2,979,913 2,295,984
General and administrative ..................... 789,465 757,063
Management fees paid to general partner ........ 83,586 69,378
---------- ----------
5,979,492 4,097,655
Net earnings ............................ 3,547,176 3,466,255
Net earnings attributable to general partner ..... 1,355,280 1,032,933
---------- ----------
Net earnings attributable to limited partners .... $2,191,896 $2,433,322
========== ==========
Weighted average number of limited
partner units outstanding ...................... 417,183 473,947
========== ==========
Net earnings per limited partner unit ............ $ 5.25 $ 5.13
========== ==========
Page 5 of 11 Pages
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D. THE MARINA LIMITED PARTNERSHIP
Statements of Cash Flows
Nine Months Ended September 30, 1998, and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,547,176 $ 3,466,255
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation of property and equipment 317,902 267,286
Equity in earnings of investee companies (931,488) (833,331)
Collection of receivables relating to prior
years' homesite sales 629,882 461,073
Receivables on current year's homesite sales (387,374) (737,873)
Gain on sales of land held for investment (234,275) (661,946)
Homes and homesite development costs 42,557 (1,263,696)
Cost of homesites sold 490,830 344,910
Deferred revenues and sale deposits (39,011) 19,935
Change in operating assets and liabilities 345,438 78,665
----------- -----------
Net cash provided by operating activities 3,781,637 1,091,278
----------- -----------
Cash flows from investing activities:
Distributions received from Marina I 545,463 76,763
Distributions received from Dockside Cafe 60,899 54,450
Investment in Flatfork Creek (1,350,000) --
Additions to marine property and equipment (532,933) (350,846)
Additions to land and land development costs (1,801) (14,585)
Additions to commercial properties (744) (43,447)
Additions to recreational facilities (26,304) (107,177)
Proceeds from sales of land held for investment 237,210 1,198,194
----------- -----------
Net cash (used) by investing activities (1,068,210) 813,252
----------- -----------
Cash flows from financing activities:
Distribution to partners (2,362,973)
----------- -----------
Net cash used by financing activities (2,362,973)
----------- -----------
Net (decrease) increase in cash
and cash equivalents 350,454 (287,034)
Cash and cash equivalents at beginning of period 5,531,556 4,591,103
----------- -----------
Cash and cash equivalents at end of period $ 5,882,010 $ 4,304,069
=========== ===========
</TABLE>
Page 6 of 11 Pages
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E. THE MARINA LIMITED PARTNERSHIP
Note to Interim Financial Statements
Three and Nine Months Ended September 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 September 30, 1998, and for the three and
nine months ended September 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 NINE MONTH PERIODS ENDED
SEPTEMBER 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 nine month periods ended September 30, 1998 and 1997, the
Partnership sold homesites as follows:
3rd Quarter Nine Months
----------- -----------
1998 1997 1998 1997
---- ---- ---- ----
Cambridge 0 0 3 10
Bridgewater 0 0 1 6
Morse Overlook 5 2 11 0
-- -- -- --
5 2 15 16
== == == ==
The Partnership is the general partner of Marina I LP ("Marina I"), which also
develops homesites in Cambridge. During the three and nine month periods ended
September 30, 1998 and 1997, Marina I sold homesites from Cambridge as follows:
September 30
1998 1997
---- ----
3rd Quarter 4 5
==== =====
Nine Months 25 16
==== =====
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. It is anticipated that this upgrade will be complete by March 31,
1999. The cost of the Year 2000 compliance within this system change is not
identifiable, but is not deemed material.
No estimate has been made by the Partnership 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 plan. The Partnership has not developed a
Year 2000 contingency plan that would address Year 2000-related problems
experienced by either the Partnership or one or more of its third party vendors
or suppliers.
Page 8 of 11 Pages
<PAGE>
The foregoing discussion of Year 2000 issues includes forward-looking statements
reflecting the Partnership's current assessment with respect to its Year 2000
compliance efforts and the impact of Year 2000 issues on the Partnership's
business and operations. Various factors could cause actual results to differ
materially from those contemplated by such assessment and forward-looking
statements, including many factors that are beyond the control of the
Partnership. These factors include, but are not limited to, representations by
vendors and customers, technological advancements, economic conditions and
competitive considerations.
Results of Operations
Nine Months ended September 30, 1998
1998 Compared to 1997.
Net earnings increased by $81,000 in 1998 from 1997. This increase was primarily
due to increases in earnings after direct costs from homesites and home sales of
$129,000, an increase in earnings after direct costs from Marina operations of
$283,000, and an increase of $83,000 in equity earnings from Marina I, L.P.
These increases were offset by a decrease in 1998 compared to 1997 in earnings
from sale of investment land of $428,000.
The increase in operating income of $283,000 from marine operations is the
result of contributions from all elements of the marine business. Such increases
are primarily attributable to volume increases stemming from a strong economic
environment. The marine business is recreational in nature and a good economic
climate results in more disposable income, some of which is directed to
recreational goods and services.
The Partnership recognized $969,000 as its share of the earnings from Marina I
in 1998, compared to $886,000 in 1997. This increase is the result of homesite
sales of $3,198,000 in 1998 as compared to $2,739,000 in 1997, which reflects
the shift in homesite sales to Marina I due to the Partnership's 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 four homes during the nine month period
ended September 30, 1998 compared to none in 1997. 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 $662,000 on sale of investment property in 1997.
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
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Results of Operations
Three Months ended September 30, 1998
1998 Compared to 1997.
Net earnings decreased by $40,000 for the third quarter of 1998 as compared to
1997. This was primarily due to a decrease in earnings from the sale of
investment land of $566,000 during the third quarter of 1997 which in turn was
substantially offset by an increase of $327,000 in earnings from homesites and
home building sales and $160,000 improvement in Marine earnings over third
quarter 1997.
The Partnership recognized $130,000 as its share of the earnings from Marina I
in 1998, compared to $211,000 in 1997. This decrease is the result of homesite
sales of $382,000 in 1998 as compared to $473,000 in 1997.
During the third quarter of 1998 the Partnership advanced $1,350,000 to Flatfork
Creek Utility which was used to retire bank debt which the Partnership had
guaranteed. This advance will carry a 6.6% annual interest rate, which was the
rate charged by the bank on the debt.
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: November 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
SEPTEMBER 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 5,882,010
<SECURITIES> 0
<RECEIVABLES> 1,633,046
<ALLOWANCES> 0
<INVENTORY> 3,809,020
<CURRENT-ASSETS> 0
<PP&E> 5,852,347
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,415,377
<CURRENT-LIABILITIES> 1,053,367
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,362,010
<TOTAL-LIABILITY-AND-EQUITY> 21,415,377
<SALES> 7,682,983
<TOTAL-REVENUES> 9,526,668
<CGS> 5,106,441
<TOTAL-COSTS> 5,979,492
<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> 3,547,176
<EPS-PRIMARY> 5.25
<EPS-DILUTED> 5.25
</TABLE>
