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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996 or
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[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to ____________
Commission file number 0-17672
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TOWER PARK MARINA INVESTORS, L.P.,
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
(Exact name of registrant as specified in its charter)
California 95-4137996
- -------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
16633 Ventura Blvd., 6th Floor, Encino, California 91436
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 907-0400
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____________________________________
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [X]
DOCUMENTS INCORPORATED BY REFERENCE
NONE
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PART I
ITEM 1. Business.
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Tower Park Marina Investors, L.P. (formerly PS Marina Investors I), a
California Limited Partnership ("Registrant"), is a publicly held limited
partnership organized on January 6, 1988 under the California Revised Limited
Partnership Act. Commencing August 4, 1988, Registrant offered 12,000 units
(including options) of limited partnership interest (the "Units") to the public
at $5,000 per Unit in an interstate offering. The offering was terminated on
November 27, 1989, with limited partners purchasing 4,508 Units for an aggregate
purchase price of $22,540,000.
Registrant's general partners (the "General Partners") are Westrec
Investors, Inc., (formerly PS Marina Investors, Inc.) a California corporation
(the "Corporate General Partner") and B. Wayne Hughes ("Mr. Hughes"). Effective
March 1, 1997 Tower Park Marina Operating Corporation, a wholly-owned subsidiary
of Westrec Financial, Inc., a California corporation ("Westrec Financial") was
substituted for Mr. Hughes, see Item 4 below for additional details. The
Corporate General Partner is a wholly-owned subsidiary of Westrec Properties,
Inc., a California corporation ("Westrec Properties"). On June 7, 1990, 100% of
the common stock of Westrec Properties, Inc. was purchased by Westrec Financial.
Prior to that date, Westrec Properties was owned by ten individual shareholders,
of which one, Mr. Hughes, owned 53.1% of the common stock. The Corporate
General Partner, acting through its directors and executive officers, is
responsi ble for the day-to-day operations of Registrant. In conjunction with
the change of ownership of Westrec Properties, Mr. Hughes, entered into an
agreement pursuant to which Mr. Hughes delegated the responsibility for the day-
to-day operations of Registrant to the Corporate General Partner, but Mr. Hughes
has retained certain rights to consent to fundamental transactions. Reference
is made to Item 12 below for additional
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information regarding the change of ownership of Westrec Properties. The
limited partners of Registrant have no right to participate in the management or
conduct of Registrant's business and affairs.
Registrant has entered into management agreements with Westrec Marina
Management, Inc. ("WMMI"), a California corporation and a wholly-owned
subsidiary of Westrec Financial, whereby WMMI has agreed to manage Registrant's
properties for monthly fees generally equal to 6% of gross revenues from the
operation of the properties. The management agreements are cancelable on 60
days' notice by either party with or without cause. WMMI also manages marina
properties for other entities affiliated with the General Partners and for
unaffiliated third parties.
Registrant was formed to acquire and improve existing marinas and
related facilities and, to a lesser extent, to develop marina facilities.
Marina facilities typically contain wet and/or dry boat storage facilities,
gasoline sales facilities and may contain one or more related facilities such as
a recreational vehicle ("R.V.") or campground facilities, boat trailer storage
facilities, boat rental and sales facilities, restaurants, or similar
facilities, and boat supplies and sundries stores. Substantially all of the
Registrant's income is derived from the operation for rental of wet and/or dry
boat storage facilities and related facilities such as R.V. facilities and boat
trailer storage facilities, and from the receipt of rental payments under leases
or subleases as described below. All other operations or facilities at a marina
that constitute a significant portion of the marina's operations, currently are,
and in the future, are expected to be, leased by Registrant to unaffiliated or
affiliated lessees or sublessees who will operate them. Registrant may lease
certain facilities to affiliates of the General Partners provided that the terms
of such leases are no less favorable to Registrant than those contained in
leases with unaffiliated parties.
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Registrant's principal investment objectives are to (1) preserve and
protect Registrant's invested capital; (2) provide cash distributions from
property operations; (3) provide federal income tax deductions so that during
the early years of property operations substantially all or a portion of cash
distributions to the limited partners will be tax sheltered; (4) maximize the
potential for appreciation in value of Registrant's properties; and (5) build up
equity through the reduction of mortgage loans on Registrant's properties.
The General Partners or an affiliate supervise the construction of
improvements to Registrant's properties.
As of December 31, 1996, Registrant owned one property. Reference is
made to Item 2 for a summary of information about this property. On September
30, 1996, the Registrant's ThunderBoat and Banyan Bay Marinas were foreclosed on
by the lender on the properties. On February 6, 1996, the Registrant's
Chandlers Landing Yacht Club was sold at a foreclosure sale to the lender on the
property. See Liquidity and Capital Resources below for additional details of
these losses.
Registrant competes in the operation of its property with other
entities, some of which may have greater assets than Registrant. The primary
factors upon which competition is based are location, the manner in which the
property is managed and marketed, the nature and quality of facilities and
rental rates. Registrant's property may encounter competition from other marinas
which are located near it, and no assurance can be given that additional
competing marinas will not be developed in the vicinity of the property.
Affiliates of the General Partners operate a marina in the vicinity of
Registrant's marina, and the General Partners or their affiliates may organize
future partnerships or other entities to own and operate marinas which may
compete with Registrant's
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property. The General Partners and their affiliates, including in particular
WMMI, may also manage marinas owned by unaffiliated third parties which may
compete with Registrant's property.
The Registrant's Tower Park Marina, is operated under a lease with the
California State Lands Commission ("CSLC"). Registrant's ability to assign or
sublease its rights under this agreement would require the consent of the CSLC.
An uncured breach of any of the conditions of the CSLC lease would constitute
grounds for revocation of the lease.
Marinas are subject to numerous governmental regulations, particularly
environmental regulations, such as water pollution and water quality control
regulations, and other miscellaneous regulatory requirements. Failure to comply
with those regula tions would constitute grounds for revocation of the CSLC
lease when such failure affects the leased property. Any licensee or subtenant
of Registrant will also have to comply with such regulations.
Registrant and its sublessees are subject to certain reporting
requirements relating to any water pollution caused by their operations, such as
the California Safe Drinking Water and Toxic Enforcement Act of 1986
("California Proposition 65") in the case of the Tower Park Marina and similar
laws in other states. California Proposition 65 contains a prohibition on
discharging specified toxic chemicals into water or land where such chemicals
pass (or probably will pass) into any source of drinking water. Civil penalties
have been established for violations of California Proposition 65 and actions
may also be brought. Registrant and its sublessees must comply with applicable
laws concerning the lawful handling and disposal of certain products used in and
generated by the operation of its marinas, such as oil, paint, sewage and fuel.
Registrant and its
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sublessees must also comply with applicable federal, state and local laws
concerning underground storage tanks. The Environmental Protection Agency
("EPA") has issued a number of regulations relating to underground storage tanks
which include a reporting requirement for a specified level of soil
contamination. Moreover, at all times, owners of tanks are responsible for the
cost of cleaning up any leaks and for compensating injured parties. Registrant
may also be subject to state laws regarding underground storage tanks that have
requirements more stringent than those under the EPA. It is possible that
storage tanks at Tower Park Marina may have to be replaced in the future. If
any leaks from storage tanks or spillage or disposal from other operations (such
as the loading of gasoline into boats by Registrant or its sublessees or the
disposal of paint, oil and other products used in the repair of boats) causes or
has caused contamination of the soil or the water, Registrant and its sublessees
will be required to comply with federal, state and local laws relating to
"hazardous waste" clean-up and Registrant and its sublessees may have to incur
expenses to dispose of the hazardous waste in a lawful manner. If other parties
contribute or have contributed to water or soil contamination at Tower Park
Marina, Registrant would be able to seek reimbursement from such other parties
in connection with the payment by Registrant of any expenses to comply with such
regulations.
In November 1991, contamination was discovered in the area surrounding
a fuel storage tank at Tower Park Marina. The Registrant has engaged
environmental consultants to perform additional tests to determine the extent of
the contamination. Currently, the California Regional Water Quality Control
Board has required groundwater sampling and monitoring on a quarterly basis. At
this time, it is not possible to determine the extent of contamination that
exists and as such the cost of remediation cannot be estimated.
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Tower Park Marina is also subject to a variety of federal, state and
local laws affecting their development or improvement, including laws and
regulations relating to environmental factors. Difficulties or failures in
obtaining required approvals could delay or prevent the improvement at the
property.
The operations at Tower Park Marina are influenced by factors
affecting the marina and boating industries nationally, in addition to varying
seasonally, with activity increasing substantially during the period April
through October of each year.
There are 44 persons who render service on behalf of Registrant on a
full-time basis, and 47 persons who render services on a part-time basis. These
persons include managers, assistant managers, relief managers, area managers,
restaurant personnel, accounting, administrative and clerical personnel,
construction, dock personnel and development and supervision personnel. The
persons rendering services on a part-time basis may also render services on
behalf of one or more of WMMI, Westrec Financial, other partnerships organized
by Westrec Financial and other persons or entities owning properties managed by
WMMI.
The term of Registrant is until the property has been sold and, in any
event, not later than December 31, 2038.
ITEM 2. Property.
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As of December 31, 1996, the Registrant owned Tower Park Marina, which
is located in San Joaquin County, California. The property was acquired on
February 1, 1988. A portion of Tower Park Marina is leased from the California
State Lands Commission. Tower Park Marina improvements and operations currently
consist of the following: (a) 188 covered slips contained in 17 covered sheds;
(b) 184 open slips; (c) end ties for approximately 18 boats; (d) an R.V.
facility containing approximately 397 existing
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spaces; (e) a gas dock facility; (f) three warehouse buildings utilized as a
restaurant and bar, store, boat sales offices, and maintenance shop containing
three covered dry boat storage areas with capacity for approximately 77 boats;
and (g) additional dry storage areas with capacity for approximately 85 boats.
Registrant operates the wet and dry boat storage facilities, the R.V. facility
and the gas dock facility. The covered boat slips at Tower Park Marina are
typically rented on a month to month basis. Most of the open boat slips and the
lineal boat dockage at Tower Park Marina are rented on a monthly, weekly or
daily basis. The R.V. facility consists of permanent (rented on an annual
basis) R.V. camping and transient R.V. camping. As of March 31, 1997, the
permanent wet slip facilities (consisting of 234 slips) were approximately 81.6%
leased and the permanent R.V. spaces (consisting of 131 spaces) were
approximately 77.9% leased.
Tower Park Marina is held subject to an encumbrance which is described in
this report under Note (3) of the Notes to Financial Statements included in Item
14(a).
ITEM 3. Legal Proceedings.
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Louis J. Hadbavny, et al. vs. PS Marina Investors I, et al.
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On October 23, 1992, thirty-three of the Unit holders filed a
complaint in the Superior Court of the State of California, County of Los
Angeles against the Registrant, its General Partners and others. The complaint
alleged securities fraud, negligent misrepresentation and breach of fiduciary
duty in connection with the initial offering and the subsequent management of
the Registrant. This matter was settled in December 1995. The terms of the
settlement required the General Partners to: (1) forgive advances totalling
$577,000 previously made to the Registrant, (2) bear all costs of administering
the Partnership for a period of three years, (3) reduce their interest in future
cash distribu-
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tions of the Registrant to one percent, and (4) pay $120,000 to the plaintiffs'
attorneys in reimbursement of fees.
Tower Park, Inc., David M. Smith and Maynard S. Woodard vs. PS Marina
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Investors I, et al.
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On June 2, 1992, the plaintiffs filed this complaint in the Superior
Court of the State of California, County of San Joaquin against the Registrant,
its General Partners and others alleging a breach of contract and breach of the
implied covenant of good faith and fair dealing. The complaint pertained to
certain purchase price adjustments Registrant agreed to pay in connection with
its purchase of Tower Park Marina if the plaintiffs were successful in obtaining
certain governmental approvals for the further development of the property. The
proper permits were not obtained and therefore the Registrant believed that the
plaintiffs were not entitled to the additional compensation. The complaint
sought compensatory damages in the amount of $1,685,000, plus interest, attorney
fees and costs.
The case was settled in February 1996. In connection with the
Registrant obtaining the full release from all obligations associated with the
purchase price adjustment agreement, the Registrant agreed to pay $50,000 to the
plaintiffs.
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Resolution Trust Corporation, et al. vs. PS Marina Investors I, et al.
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On August 16, 1994, plaintiffs filed this complaint in the Superior
Court of the State of California, County of San Joaquin alleging causes of
action for (1) specific performance of a deed of trust on Tower Park Marina, (2)
appointment of a receiver, (3) injunctive relief, and (4) judicial foreclosure
on the Tower Park Marina.
In January 1996, Resolution Trust Corporation ("RTC") sold the note to
a third party. The note was subsequently purchased by an affiliate of Mr.
Hughes. The Registrant has entered into an option agreement (which expired on
April 10, 1996) to purchase the note from the affiliate at its cost ($1,700,000)
plus carrying costs. The Registrant entered into a new option agreement
effective March 1, 1997, see Item 4 below for a detailed description of the
option terms.
Leaman vs. PS Marina Investors I, et al.
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In September 1995, Mr. Leaman, the prior owner of ThunderBoat and
Banyan Bay Marinas filed suit in the Circuit Court of the 17th Judicial Circuit
in and for Broward County, Florida, alleging that the Registrant had failed to
pay him $1,100,000 of additional compensation relating to the Registrant's
purchase of ThunderBoat and Banyan Bay Marinas. In connection with the purchase
of these properties from Mr. Leaman in 1989, the Registrant entered into an
employment agreement that provided that Mr. Leaman would be entitled to earn a
bonus, payable over three years. The maximum bonus that Mr. Leaman could have
earned was $1,100,000. Mr. Leaman resigned from his employment in less than one
year. Mr. Leaman is alleging that the bonus is actually just deferred
compensation due from his sale of the properties to Registrant. The Registrant
intends to defend the case vigorously, particularly on the grounds that no bonus
was
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earned based on the financial results of the properties. The Registrant filed
its answers and affirmative defenses on May 10, 1995 and the case remains in the
discovery phase.
ITEM 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
On October 1, 1996, the vote of security holders of Registrant was
solicited to permit the substitution of Tower Park Marina Operating Corporation,
a wholly owned subsidiary of Westrec Financial, for B. Wayne Hughes as a general
partner and to change the Registrant's name to Tower Park Marina Investors, L.P.
Both of these issues were approved and made effective March 1, 1997. In
connection with this solicitation, Mr. Hughes entered into a new option
agreement with the Registrant, which allows the Registrant to purchase the note
secured by Tower Park Marina for Mr. Hughes' cost, $1,700,000, plus $68,000 of
accrued unpaid interest. As of December 31, 1996, the note was reflected on the
Registrant's balance sheet at its face value of $6,715,000 with an additional
$2,046,000 being shown as accrued unpaid interest. The option is initially for
a one year period expiring on February 28, 1998. The Registrant may extend the
option agreement for two additional one year periods by paying Mr. Hughes
$50,000 for each extension requested. The extension payment will be applied as
a reduction in the principal amount due.
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PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters.
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Registrant has no common stock.
The Units are not listed on any national securities exchange or quoted
on the NASDAQ System, and there is no established public trading market for the
Units. Secondary sales activity for the Units has been limited and sporadic.
The General Partners monitor transfers of the Units because the admission of the
transferee as a substitute limited partner requires the consent of the General
Partners under the Partner ship Agreement. However, the General Partners do not
monitor or regularly receive or maintain information regarding the prices at
which secondary sales transactions in the Units have been effectuated. Various
organizations offer to purchase and sell limited partnership interests
(including securities of the type such as the Units) in secondary sales
transactions. Various publications such as Investment Advisor summarize and
report information (on a monthly, bi-monthly or less frequent basis) regarding
secondary sales transactions in certain limited partnership interests, including
the prices at which such secondary sales transactions are effected.
Exclusive of the General Partners' interest in Registrant, as of
December 31, 1996, there were approximately 1,032 Unit holders of record.
Registrant makes quarterly distributions of all "Cash Flow from
Operations" and will make distributions of "Cash from Sales or Refinancing".
Cash Flow from Operations is the total cash receipts of the Registrant from the
operations of the Registrant's business, which includes, but is not limited to,
cash receipts from the rental of the Registrant's properties, and which excludes
Cash from Sales or Refinancing, less: (i)
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all operating expenses other than non-cash expenses such as depreciation and
amortiza tion; (ii) all principal and interest payments on any loans or
advances; (iii) any sums expended for capital improvements or replacements
(excluding amounts paid from funds provided by capital contributions); and (iv)
a cash reserve for working capital or other purposes, the amount of which shall
be determined by the General Partners. Cash from Sales or Refinancing is the
net proceeds to Registrant from all sales, exchanges and refinancing of
Registrant's properties, less payment of indebtedness relating to such
properties and adequate cash reserves from such net proceeds for other
obligations of Registrant for which there is no provision; however, Cash from
Sales or Refinancing does not include any proceeds reinvested in properties.
As a result of Registrant's continued operating deficits,
distributions have been suspended since June 30, 1991. See Item 6 and 7 for a
more detailed discussion of the Registrant's operating results.
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ITEM 6. Selected Financial Data.
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The data set forth below should be read in connection with the
Financial Statements and Notes thereto appearing elsewhere herein, and
Management's Discussion and Analysis of Financial Condition and results of
Operations.
<TABLE>
<CAPTION>
(In thousands of dollars, except per unit information)
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For the Year 1996 1995 1994 1993 1992
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<S> <C> <C> <C> <C> <C>
Revenues $ 3,318 $ 2,380 $ 2,340 $ 2,920 $ 3,050
======= ========== ======== ======== ========
Net loss $ (145) $ (10,934) $ (2,462) $ (3,848) $ (2,457)
======= ========== ======== ======== ========
Limited Partners'
share (144) (10,825) (2,437) (3,810) (2,432)
General Partners'
share (1) (109) (25) (38) (25)
Limited Partners'
per unit data(1)
Net Loss (31.94) (2,401.29) (540.59) (845.16) (539.49)
Cash Distributions - - - - -
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As of December 31, 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------
Total assets $ 2,874 $ 5,500 $ 15,550 $ 18,594 $ 21,033
======= ========== ======== ======== ========
Mortgage notes
payable $ 6,736 $ 9,286 $ 9,385 $ 9,593 $ 9,628
======= ========== ======== ======== ========
</TABLE>
______________________
(1) Per unit data is based on the weighted average number of Units outstanding
during each year, 4,508.
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ITEM 7. Management's Discussion and Analysis of Financial Condition and
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Results of Operations.
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In August 1988 the Registrant commenced an offering of up to 12,000
units of limited partnership interest to the public in an interstate offering.
The offering was terminated on November 27, 1989 after the sale of 4,508 units.
Tower Park Marina was purchased in February 1988 and as of December
31, 1996, $9,933,000 had been incurred in capital costs associated with its
acquisition and subsequent improvement. Chandlers Landing Marina was purchased
in September 1988 (foreclosed February 1, 1994) and, in July 1991, the adjacent
Chandlers Landing Yacht Club was purchased (foreclosed February 6, 1996).
ThunderBoat Marina and Banyan Bay Marina were purchased in November 1989 and
foreclosed on September 30, 1996.
The operations of the Registrant's Marinas are influenced by factors
affecting the marina and boating industries nationally, as well as by local
market and weather conditions.
1996 Compared to 1995
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For the year ended December 31, 1996, net operating cash flow
(deficit)[cash flow before debt service] for Tower Park was $198,000 ($199,000
in 1995), for Chandlers Landing was ($7,000)(($30,000) in 1995), for ThunderBoat
was $16,000 (71,000 in 1995), and for Banyan was ($46,000)(($68,000) in 1995).
The slight decline in Tower Park Marina's net operating cash flow was
the net effect of the removal of the court-appointed receiver in May 1995, which
represented $91,000 of fees in 1995, offset by a $46,000 decline in RV parking
in 1996 and an $11,000 decline in slip rentals. In addition, effective January
1, 1996 the Registrant took over the
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operations of the restaurant and bar and general store which had previously been
leased to Marine Ventures Limited, an affiliate of the Corporate General
Partner.
The improvement in Chandlers Landing Yacht Club's net operating cash
flow deficit is due to the ceasing of operations in December 1995 and the
property being sold at a trustee foreclosure sale on February 6, 1996.
The decline in ThunderBoat Marina's net operating cash flow is
attributable to lower occupancies during 1996 and because the property was sold
to the lender at a foreclosure sale and was transferred effective September 30,
1996. Banyan Bay Marina's improvement is due to the Registrant only incurring
holding costs through September 30, 1996, the effective date that the property
was transferred to the Lender at a foreclosure sale.
For the year ended December 31, 1996, the Registrant incurred a cash
flow deficit of $818,000 (net loss plus depreciation and amortization), an
improvement of $150,000 over the $968,000 deficit incurred in 1995. The
improvement in cash flow was primarily due to the loss of Chandler's Landing
Yacht Club on February 6, 1996 and ThunderBoat and Banyan Bay Marinas on
September 30, 1996. The cash flow deficit was covered through the suspension of
debt service payments on substantially all of the Registrant's notes payable and
by advances from the Corporate General Partner. The Registrant's note payable
at December 31, 1996 is secured by Tower Park Marina. See Liquidity and Capital
Resources below regarding the status of this note.
Slip rental revenue for the Registrant declined $149,000 in 1996
compared to 1995. The decline was comprised of a decrease in slip rental
revenue of $11,000 at Tower Park and decrease of $138,000 at ThunderBoat.
RV park revenues decreased $46,000 in 1996 to $610,000. Revenues from
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permanent RV park rentals at Tower Park declined $27,000 due to a decline in
occupancy and a $8,000 decline in transient activity offset by an increase in
rates. The balance of the decline is due to a decrease in electricity charge
backs.
Lease income remained relatively stable in 1996 compared to 1995.
Cost of operations increased $968,000 in 1996 over 1995, due primarily
to Registrant operating the restaurant, bar and general store at Tower Park
Marina effective January 1, 1996. These new departments incurred costs of
$1,114,000, while providing additional revenue of $1,231,000.
The decline in interest expense is due to the foreclosure of
Chandler's Landing Yacht Club on February 6, 1996 and the foreclosure of
ThunderBoat Marina and Banyan Bay Marina on September 30, 1996.
The increase in management fees is the result of the new operations at
Tower Park Marina, which resulted in a $40,000 increase in management fees for
Tower Park Marina. This increase was offset by the loss of ThunderBoat Marina on
September 30, 1996.
Depreciation and amortization declined due to the loss of Chandlers
Landing Yacht Club, ThunderBoat Marina and Banyan Bay Marina in 1996 and no
depreciation being taken on these facilities in 1996. In addition, the
depreciation of Tower Park Marina declined because of the write-down of this
property in 1995.
1995 Compared to 1994
---------------------
For the year ended December 31, 1995, net operating cash flow
(deficit)[cash flow before debt service] for Tower Park was $199,000 ($112,000
in 1994), for Chandlers Landing was ($30,000) (($40,000) in 1994), for
ThunderBoat was $71,000 ($86,000 in
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1994), and for Banyan was ($68,000) (($73,000) in 1994).
The improvement in Tower Park Marina's net operating cash flow is due
primarily to the removal of the court-appointed receiver in May 1995, which
resulted in $91,000 of receiver fees in 1995 compared to $251,000 in 1994,
offset by a $76,000 increase in administrative costs.
The slight improvement in Chandlers Landing Yacht Club's net operating
cash flow deficit is attributable to a significant curtailment of the property's
operation in August 1995 and the ceasing of operations in December 1995. This
property was sold at a trustee foreclosure sale on February 6, 1996.
The occupancy at ThunderBoat Marina had been increasing steadily
during 1994 and the first part of 1995. However, in April 1995 the occupancy
began to fall below that of a year earlier and as of April 1, 1996 the dry
storage spaces were 58.7% occupied, a decline of 34 boats from a year earlier.
For the year, dry storage revenues increased $13,000 to $463,000, with an
increase in dry storage operating costs of $29,000.
Due to the continued availability of storage space at ThunderBoat
Marina and because of ThunderBoat's superior location, Banyan Bay Marina remains
closed. Banyan Bay Marina was listed for sale in August 1995, but to date no
offers have been received. The Registrant has decided to allow the lender on the
ThunderBoat and Banyan Bay Marinas to foreclose on these properties. See
Liquidity and Capital Resources below for additional details regarding this
decision.
For the year ended December 31, 1995, the Registrant incurred a cash
flow deficit of $968,000 (net loss plus depreciation and amortization and net
realizable value reserve), an improvement of $799,000 over the $1,767,000
deficit incurred in 1994. The improvement in cash flow was primarily due to
1994 including $700,000 of litigation costs.
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See Item 3 Legal Proceedings. The cash flow deficit was covered through the
suspension of debt service payments on substantially all of the Registrant's
notes payable. Each of the notes payable is secured by various of Registrant's
properties. See Liquidity and Capital Resources below regarding the status of
the various loans.
Slip rental revenue for the Registrant declined $26,000 in 1995
compared to 1994. The decline was comprised of a decrease in slip rental revenue
of $31,000 at Tower Park and an increase of $5,000 at ThunderBoat.
RV park revenues decreased $7,000 in 1995 to $656,000. Revenues from
permanent RV park rentals at Tower Park declined $4,000 due to a 5.6% increase
in rates, offset by a 9.0% decline in occupancy and a $3,000 decline in
transient activity.
Lease income increased $27,000 in 1995, primarily because of new
leases at Tower Park Marina, primarily to a boat rental operator.
Other income, interest expense and management fees remained relatively
stable in 1995 compared to 1994.
Cost of operations declined $108,000 in 1995 from 1994. The decrease
was primarily due to the removal of the court appointed receiver at Tower Park
in May 1995, which resulted in a $160,000 reduction in costs, from $251,000 in
1994 to $91,000 in 1995. Depreciation and amortization declined $350,000 in
1995, due to those assets with a seven year life being fully depreciated during
1994 and 1995.
Liquidity and Capital Resources
-------------------------------
Since its inception in 1988 the Registrant has operated at a deficit.
These deficits have been partially covered by advances from the General Partners
and cash reserves. In addition, the Registrant has discontinued making debt
service payments on substantially all of its notes payable.
19
<PAGE>
No payments have been made on the note payable secured by Tower Park
Marina since September 1991. During 1991, 1992, 1993 and 1994, the Partnership
was involved in various negotiations with the lender, a financial institution,
and its successor, Resolution Trust Corporation ("the RTC"), to restructure or
otherwise settle the note. In February 1994, the RTC foreclosed on Chandlers
Landing Marina (also collateral for the note) by bidding $2,038,000 of its note
at the foreclosure sale. In January 1995, the RTC sold the note to a third
party. The note was then purchased by an affiliate of Mr. Hughes. The
Registrant entered into an option agreement to purchase the note from the
affiliate at its cost ($1,700,000) plus carrying costs, which expired on April
10, 1996. In connection with the substitution of a new general partner for
Mr. Hughes, the option agreement was extended until February 28, 1998, (see Item
4 above for additional details).
In October 1993, the Registrant discontinued making payments on the
$2,000,000 note payable secured by ThunderBoat Marina and Banyan Bay Marina,
and, as a result, was in default on this note. In September 1994, the lender
initiated an action seeking to foreclose on the marinas. In January 1995, the
Registrant entered into a forbearance agreement in which the lender agreed to
forbear action to foreclose until July 15, 1996 as long as the Registrant made
monthly payments to the lender of $4,000. As part of the forbearance agreement,
the Registrant agreed that if the note was not paid in full or otherwise
acceptably restructured prior to July 15, 1995, the lender would be entitled to
a judgment of foreclosure. In July 1995, the Registrant and the lender agreed
to extended the forbearance period until February 15, 1996. The extension
required an initial fee of $30,000 and monthly payments, beginning in September
1995, of $25,000, which were applied to accrued unpaid interest. In February
1996, the lender offered to extend the forbearance period if the monthly
payments were increased to $40,000. Due to
20
<PAGE>
the continued operating cash flow deficits of the properties and the inability
to sell the Banyan Bay Marina, the Registrant allowed the lender to foreclose on
the properties effective September 30, 1996.
On October 5, 1995, the loan secured by Chandlers Landing Yacht Club
was sold to President's Square Limited Partnership. On October 13, 1995,
President's Square Limited Partnership notified the Partnership that it was in
default of several provisions on the loan, and demanded that the defaults be
corrected within 30 days or the note would be accelerated and due immediately.
As all the conditions of default could not be corrected, and after evaluating
the current value of the property, the Partnership allowed the property to be
sold at a trustee foreclosure sale on February 6, 1996.
Registrant's ability to continue to operate through 1997 and beyond is
contingent on, among other factors, the improvement in Tower Park Marina
operations and their ability to refinance Tower Park Marina in order to exercise
their rights under the option agreement.
ITEM 8. Financial Statements and Supplementary Data.
-------------------------------------------
Registrant's financial statements are included elsewhere herein.
Reference is made to the Index to Financial Statements and Financial Statement
Schedules in Item 14(a).
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure.
--------------------
Not applicable.
21
<PAGE>
PART III
ITEM 10. Directors and Executive Officers of Registrant.
----------------------------------------------
Registrant has no directors or executive officers.
Registrant's general partners are PS Marina Investors, Inc. and B.
Wayne Hughes. The Corporate General Partner, acting through its directors and
executive officers, is responsible for the day-to-day operations of Registrant.
In conjunction with the change of ownership of Westrec Properties, Mr. Hughes,
the individual general partner of Registrant, entered into an agreement pursuant
to which Mr. Hughes delegated the responsibility for the day-to-day operations
of Registrant to the Corporate General Partner, but Mr. Hughes has retained
certain rights to consent to fundamental transactions, including the purchase,
development, financing or sale of a property, the borrowing of funds in excess
of $100,000 and transactions between Registrant and the Corporate General
Partner or affiliates. Reference is made to Item 12 below for additional
information regarding the change of ownership of Westrec Properties.
Registrant's properties are managed and operated by Westrec Marina Management,
Inc. ("WMMI"), a wholly-owned subsidiary of Westrec Financial.
The names and ages of all directors and executive officers of the
Corporate General Partner, and the executive officer of WMMI who performs
significant policy-making or operational functions for Registrant, the offices
held by each of them, the dates of their elections to such offices, and their
business experience during the past five years are set forth below. Such
information is also provided below for Mr. Hughes, the individual General
Partner of Registrant.
22
<PAGE>
<TABLE>
<CAPTION>
Office and Date Business Experience
Name Age of Election During Past 5 Years
---- --- --------------- -------------------
<S> <C> <C> <C>
Michael M. Sachs 55 President and Mr. Sachs has been a
Director of the Director, President and
Corporate General Treasurer of MVL since July
Partner (1990); 1987. He is President of a
Secretary and professional corporation
Director of the which from 1982 to July
Corporate General 1985 was general counsel to
Partner (1987); Public Storage Inc. ("PSI")
President, and its affiliates and, from
Secretary and 1982 to 1991, was of counsel
Director of Westrec to Sachs & Phelps, attorneys
Financial and at law. From July 1985 to
President of June 1990, Mr. Sachs was
Westrec Properties the Executive Vice President,
(1990); Secretary director and general counsel
and Director of of PSI. PSI was organized
Westrec Properties in 1972 and, together with
and WMMI (1987) its affiliates, has been
engaged in the development,
construction, acquisition,
management and syndication
of mini-warehouses and,
to a lesser extent,
business parks in the
United States and Canada.
He was a director of PSI
(formerly Storage Equities,
Inc.) and Storage
Properties, Inc. ("SPI")
until 1995, each of which
is a real estate
investment trust whose
investment advisor is
affiliated with PSI, is a
director of MMI Medical,
Inc., a company that offers
health care providers
diagnostic imaging services,
and is a director of New
Century Financial Corporation,
a residential mortgage brokerage,
since its inception in 1995.
</TABLE>
23
<PAGE>
<TABLE>
<S> <C> <C> <C>
Jeffrey K. Ellis 36 Vice President Mr. Ellis joined Westrec
(1990) and Chief Properties in March 1989.
Financial Officer From 1987 to 1990, he was
(1996) of Westrec Vice President of Madison
Financial, the Pizza Corporation which
Corporate General developed and managed
Partner; and restaurants in the United
Westrec Properties States. From 1982 to 1987,
(1990) Mr. Ellis was employed
with Price Waterhouse,
certified public accountants,
most recently as an audit
manager specializing in the
real estate industry.
William W. Anderson 48 President (1990) Mr. Anderson joined
Director (1995) of WMMI in 1989 as
WMMI, Director Executive Vice President
(1996) of Westrec and became President in
Financial and 1990. He has overall
Westrec Properties responsibility for property
and the Corporate operations. From 1984 to
General Partner. 1989, Mr. Anderson was
Vice-President of
Calamigos Ranch, where he
was vice president of
operations. Calamigos Ranch
operates corporate special
events and conferences.
From 1979 to 1984, he was
a management specialist
with the National Park
Service.
B. Wayne Hughes 63 Individual General Mr. Hughes was Secretary
Partner of of PSI from its
Registrant since organization in 1972, and
Registrant's Vice-President from 1974,
inception (1988) until November 1978, when
he became President, which
position he continues to
hold. He has been active
in the real estate
investment field during the
past
</TABLE>
24
<PAGE>
<TABLE>
<S> <C> <C> <C>
25 years. He has been
President and director of
Public Storage, Inc. from
1980 to 1992, and in 1991
became Chairman of the
Board.
</TABLE>
Pursuant to Articles 16 and 17 of Registrant's Partnership Agreement,
a copy of which is included in Registrant's prospectus included in SEC
Registration No. 33-21021, each of the general partners continues to serve until
(i) death, insanity, insolvency, bank ruptcy or dissolution, (ii) withdrawal
with the consent of the other general partner and a majority vote of the limited
partners, or (iii) removal by a majority vote of the limited partners.
Each director of the Corporate General Partner serves until he resigns
or is removed from office by Westrec Properties, and may resign or be removed
from office at any time with or without cause. Each officer of the Corporate
General Partner serves un til he resigns or is removed by the board of directors
of the Corporate General Partner. Any such officer may resign or be removed
from office at any time with or without cause. No such officer was selected as
such pursuant to any arrangement or understanding be tween such officer and any
other person.
During 1995 two partnerships with which the Corporate General Partner
is affiliated filed petitions under the United States Bankruptcy Code. First,
on May 22, 1995, Washington, D.C. Associates, a general partnership ("WDCA"),
filed a petition in the United States Bankruptcy Court for the District of
Columbia. WDCA is a partnership of two limited partnerships of which the
Corporate General Partner is the managing general partner. Second, on June 28,
1995, Westrec Skipjack Partners, L.P., a limited partnership ("Skipjack"), filed
a petition in the United States Bankruptcy Court for the District of Maryland.
A subsidiary of Westrec Financial, Inc., the parent corporation of
25
<PAGE>
the Corporate General Partner, is the general partner of a limited partnership
which in turn is the general partner of Skipjack. Both of these cases were
concluded in 1996 with the properties being transferred to their respective
lenders.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
--------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Registrant's General Partners, and the directors and executive officers of the
Corporate General Partner, and persons who own more than ten percent of the
Registrant's Units, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of Units. General
Partners, officers, directors and greater than ten-percent Unitholders are
required by SEC regulation to furnish the Registrant with copies of all Section
16(a) forms they file.
To the Registrant's knowledge, based solely on review of the copies of
such reports furnished to the Registrant and written representations that no
other reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its General Partners, the
executive officers and directors of the Corporate General Partner and greater
than ten-percent beneficial owners of the Registrant were complied with.
ITEM 11. Executive Compensation.
----------------------
Registrant has no directors or officers. See Item 13 for a
description of cer tain transactions between Registrant and its General Partners
and their affiliates.
26
<PAGE>
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
(a) As of the date hereof, no person is known by Registrant to own
benefi cially more than 5% of the Units of limited partnership interest.
(b) Registrant has no officers and directors.
As of December 31, 1996, the General Partners have contributed
$1,000 to the capital of Registrant. None of the directors and officers of the
Corporate General Partner own any Units of limited partnership interest of
Registrant.
The Corporate General Partner is a wholly-owned subsidiary of Westrec
Properties. On June 7, 1990, 100% of the common stock of Westrec Properties was
pur chased by Westrec Financial. Prior to that date, Westrec Properties, Inc.
was owned by ten individual shareholders, and 53.1% of the common stock was
owned by Mr. Hughes, the individual General Partner.
Westrec Financial (which may be deemed a parent of Registrant) has two
classes of stock outstanding, common stock and Convertible Participating
Preferred Stock (the "Preferred Stock") which votes together with the common
stock, except for the election of directors. Michael M. Sachs, an officer and
director of Westrec Financial and the Corporate General Partner owns 85% of the
common stock of Westrec Financial. (Mr. Sachs was an officer, director and
shareholder of Westrec Properties prior to its ac quisition by Westrec
Financial.)
In addition, the Corporate General Partner and the Individual General
Partner have entered into an agreement allowing each General Partner to offer to
sell to the other its rights to receive cash and other distributions from
Registrant (such rights are referred to as the "Interest"). The offer must be
accompanied by an offer to buy the In terest of the other General Partner at the
same price. The General Partner not making the offer has the option to elect
whether to purchase the Interest of the other General
27
<PAGE>
Partner or to sell its Interest in Registrant to the offering General Partner.
After the sale, the purchasing General Partner must use his or its best efforts
to secure the approval of the limited partners of Registrant to the withdrawal
of the selling General Partner.
(c) Registrant knows of no contractual arrangements, the operation of
the terms of which may at a subsequent date result in a change in control of
Registrant, ex cept as described above and except for Articles 16, 17 and 21.1
of Registrant's Partnership Agreement, a copy of which is included in
Registrant's prospectus included in SEC Regis tration Statement No. 33-21021.
Those articles provide, in substance, that the limited partners shall have the
right, by majority vote, to remove a general partner and that a gen eral partner
may designate a successor with the consent of the other general partner and a
majority of the limited partners.
ITEM 13. Certain Relationships and Related Transactions.
----------------------------------------------
Registrant's prospectus included in SEC Registration Statement No. 33-
21021 provides that the General Partners and their affiliates are entitled to
the following com pensation:
1. Acquisition and Development Fees to be paid to the General
Partners or their affiliates for their services in connection with the analysis,
research, negotiation, documentation, acquisition, construction and development
related to investments for Reg istrant, in an amount equal to 6% of the purchase
price or the cost of construction of the properties. Cumulative Acquisition and
Development Fees paid to the General Partners and their affiliates through
December 31, 1996 totalled $1,576,000, ($3,000 of which was paid in 1996).
2. Loan Brokerage Fee to be paid to the General Partners or their
affili ates for their services in negotiating and obtaining permanent financing
on properties from
28
<PAGE>
an unaffiliated lender, in an amount equal to 1% of the principal amount of the
financing or refinancing, which would be reduced to the extent any other loan
brokerage fee is paid to any other loan broker in connection with the
transaction. Loan Brokerage Fees paid to the General Partners and their
affiliates through December 31, 1996 totalled $71,000 (none of which was paid in
1996).
3. The Corporate General Partner made advances to Registrant during
1995 and 1996 to cover operating deficits and capital expenditures. At December
31, 1996, these advances totalled $1,208,000 and accrue interest at prime plus
1% (9.25% at December 31, 1996). Interest paid or accrued to the Corporate
General Partner for 1996 totalled $92,000.
4. The General Partners are entitled to receive a percentage of
distribu tions of Cash Flow from Operations and Cash from Sales and Refinancing
with respect to any fiscal year. In connection with the settlement of a lawsuit
(see Item 3 - Legal Proceedings), the General Partners have agreed to reduce
their share of any future distributions to 1%. No such distributions were made
during 1996 and none are expected in 1997.
Registrant and WMMI, a subsidiary of Westrec Financial, have entered
into management agreements, a copy of the form of which is included as an
exhibit to Registrant's Registration Statement, SEC Registration Statement No.
33-21021. Under the terms of those agreements, WMMI will receive as
compensation for its management services a property management fee, payable
monthly, in an amount equal to the sum of (i) 6% of the "Gross Revenue" from
operations of the properties and (ii) 6% of the Net Sales Revenue from
operations of the properties. The term "Gross Revenue" means all receipts (net
of security deposits returned to the tenants) of Registrant from the opera tions
of the properties, including without limitation, rental payments of lessees of
space in
29
<PAGE>
the marinas, vending machine or concessionaire revenues, maintenance charges, if
any, paid by the tenants of the marinas in addition to basic rent, parking fees,
if any, revenues from boat rentals or campground rentals, if any, and rental
payments received under any subleases, but excluding all revenues from the sale
of goods or merchandise (other than vending machine and concessionaire
revenues), including gasoline. The term "Net Sales Revenue" means all receipts
of Registrant from the properties from the sale of goods or merchandise (other
than vending machine and concessionaire revenues), including gasoline, minus the
direct cost of the goods sold (not including any overhead costs of Registrant).
The management fee will cover, without additional expense to Registrant, the
time WMMI's executive officers expend on project management and WMMI's overhead
costs such as its expenses for rent, utilities and servicing of Registrant's
accounts payable. During 1996, $173,000 was paid or accrued by Registrant to
WMMI pursuant to the management agreements.
Registrant may lease certain facilities or operations at a property to
affiliates, provided that the terms of such lease are no less favorable to
Registrant than those contained in leases with unaffiliated parties.
Registrant had entered into a lease with MVL, an affiliate of the Corporate
General Partner, for the operation of the restaurant and bar, general store and
pontoon boat rental operation at Tower Park Marina (collectively, the "MVL Tower
Park Operations"). The lease was terminated effective December 31, 1995.
30
<PAGE>
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
---------------------------------------------------------------
(a) List of Documents filed as part of the Report.
1. Financial Statements: See Index to Financial Statements.
2. Financial Statement Schedules: See Index to Financial
Statements.
3. Exhibits: See Exhibit Index contained herein.
(b) No reports on Form 8-K were filed in the fourth quarter of 1996.
(c) See Exhibit Index contained herein.
(d) See Index to Financial Statements.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Ex change Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
TOWER PARK MARINA INVESTORS, L.P.,
(formerly PS MARINA INVESTORS I),
a California Limited Partnership
Dated: April 11, 1997 By: Westrec Investors, Inc.,
------------------------
(formerly PS MARINA INVESTORS, INC.)
------------------------------------
General Partner
By: Michael M. Sachs
----------------
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this re port has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
Michael M. Sachs President, Secretary and April 11, 1997
- ------------------------ Director of Westrec Investors,
Michael M. Sachs Inc., the Corporate General
Partner of the Registrant
(principal executive officer)
William W. Anderson Director of Westrec April 11, 1997
- ------------------------ Investors, Inc., the
William W. Anderson Corporate General Partner
of the Registrant.
Jeffrey K. Ellis Vice President and Chief April 11, 1997
- ------------------------ Financial Officer of Westrec
Jeffrey K. Ellis Investors, Inc., the Corporate
General Partner of the
Registrant (principal financial
officer and principal
accounting officer)
</TABLE>
32
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.,
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
Index to Financial Statements and Financial Statement Schedules
(Item 14 (a))
<TABLE>
<CAPTION>
Page
Reference
---------
<S> <C>
Report of Ernst & Young LLP, Independent Auditors F-1
Balance Sheets at December 31, 1996 and 1995 F-2
Statements of Operations for the year ended
December 31, 1996, 1995 and 1994 F-3
Statements of Partners' Equity (Deficit) for the year
ended December 31, 1996, 1995 and 1994 F-4
Statements of Cash Flows for the year ended
December 31, 1996, 1995 and 1994 F-5
Notes to Financial Statements F-6 to F-14
Schedules for the year ended December 31, 1996,
1995 and 1994
III - Real Estate and Accumulated Depreciation F-15 to F-16
</TABLE>
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information is included in the financial statements or
the notes thereto.
33
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
Tower Park Marina Investors, L.P.,
(formerly PS Marina Investors I),
a California Limited Partnership
We have audited the accompanying balance sheets of Tower Park Marina Investors,
L.P. (formerly PS Marina Investors I), a California Limited Partnership, as of
December 31, 1996 and 1995, and the related statements of operations, partners'
equity (deficit), and cash flows for each of the three years in the period ended
December 31, 1996. Our audits also included the financial statement schedule
listed in the accompanying Index at Item 14(a). These financial statements and
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 presents fairly, in
all material respects, the financial position of Tower Park Marina Investors,
L.P. (formerly PS Marina Investors I), a California Limited Partnership, at
December 31, 1996, and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth thereon.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Notes 2 and 3, the
Partnership's property is not generating a satisfactory level of cash flow and
cash flow projections do not indicate significant improvement in the near term
in order for the Partnership to exercise the option on the note payable. These
issues raise substantial doubt about the Partner ship's ability to recover the
carrying value of its assets (not withstanding the write-down of the marina
facility to its net realizable value) and to continue as a going concern. The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Partnership to continue as a going concern.
Ernst & Young, LLP
Los Angeles, California
March 14, 1997
F-1
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1995
------------ -------------
<S> <C> <C>
ASSETS
- ------
Cash $ 20,000 $ 26,000
Accounts receivable 135,000 80,000
Tower Park Marina, net 2,483,000 2,529,000
Marina facilities and other related
assets to be abandoned, net - 2,750,000
Other assets, net 236,000 115,000
----------- -----------
$ 2,874,000 $ 5,500,000
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
Accounts payable and accrued expenses $ 836,000 $ 848,000
Accounts payable and other liabilities
related to marinas to be abandoned 100,000 1,034,000
Interest payable 2,046,000 1,328,000
Advances from affiliates 1,390,000 1,208,000
Deferred rentals 226,000 111,000
Notes payable 6,736,000 6,729,000
Notes payable related to marinas to
be abandoned - 2,557,000
Commitments and contingencies - -
----------- -----------
11,334,000 13,815,000
Partners' equity (deficit):
Limited partners' equity (deficit), $5,000
per unit, 4,508 units authorized, issued
and outstanding (7,515,000) (7,371,000)
Less deferred contributions (76,000) (76,000)
----------- -----------
(7,591,000) (7,447,000)
General partners' deficit (869,000) (868,000)
----------- -----------
Total partners' equity (deficit) (8,460,000) (8,315,000)
----------- -----------
$ 2,874,000 $ 5,500,000
=========== ===========
</TABLE>
See accompanying notes.
F-2
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
STATEMENTS OF OPERATIONS
For the year ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ --------------- -------------
<S> <C> <C> <C>
Revenues:
Slip rentals $1,127,000 $ 1,276,000 $ 1,302,000
Restaurant 831,000 - -
RV Park 610,000 656,000 663,000
Retail store 400,000 - -
Lease income 248,000 251,000 224,000
Other income 102,000 197,000 151,000
---------- ------------ -----------
3,318,000 2,380,000 2,340,000
---------- ------------ -----------
Expenses:
Cost of operations 3,093,000 2,125,000 2,233,000
Interest expense 870,000 1,080,000 1,030,000
Depreciation and amortization 111,000 922,000 1,272,000
Litigation costs - - 700,000
Management fees paid to an
affiliate 173,000 143,000 144,000
---------- ------------ -----------
4,247,000 4,270,000 5,379,000
---------- ------------ -----------
Net loss before gain on abandoned
marina facilities, net realizable
value adjustment and forgiveness
of debt by affiliate (929,000) (1,890,000) (3,039,000)
Gain on abandoned marina facilities 784,000 - -
Net realizable value adjustment - (9,044,000) -
Forgiveness of debt by affiliate - - 577,000
---------- ------------ -----------
Net loss $ (145,000) $(10,934,000) $(2,462,000)
========== ============ ===========
Allocation of net loss:
Limited Partners' $ (144,000) $(10,825,000) $(2,437,000)
General Partners' (1,000) (109,000) (25,000)
---------- ------------ -----------
$ (145,000) $(10,934,000) $(2,462,000)
========== ============ ===========
Limited Partners' net loss
per unit $ (31.94) $ (2,401.29) $ (540.59)
========== ============ ===========
</TABLE>
See accompanying notes.
F-3
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For the year ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
------------ ------------- -------------
<S> <C> <C> <C>
Balances at December 31, 1993 $(734,000) $ 5,815,000 $ 5,081,000
Net loss (25,000) (2,437,000) (2,462,000)
--------- ------------ ------------
Balances at December 31, 1994 (759,000) 3,378,000 2,619,000
Net loss (109,000) (10,825,000) (10,934,000)
--------- ------------ ------------
Balances at December 31, 1995 (868,000) (7,447,000) (8,315,000)
Net loss (1,000) (144,000) (145,000)
--------- ------------ ------------
Balances at December 31, 1996 $(869,000) $ (7,591,000) $ (8,460,000)
========= ============ ============
</TABLE>
See accompanying notes.
F-4
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
STATEMENTS OF CASH FLOWS
For the year ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(145,000) $(10,934,000) $(2,462,000)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation and amortization 111,000 922,000 1,272,000
Gain on abandoned marina facilities (784,000) - -
Net realizable value reserve - 9,044,000 -
Forgiveness of debt - - (577,000)
(Increase) decrease in accounts receivable (55,000) (38,000) 86,000
(Increase) decrease in other assets (78,000) 86,000 (103,000)
(Decrease) increase in accounts payable
and accrued expenses (12,000) 30,000 461,000
Increase in interest payable, net 718,000 786,000 889,000
Increase (decrease) in deferred rentals 115,000 (17,000) (117,000)
--------- ------------ -----------
Net cash used for operating activities (130,000) (121,000) (551,000)
--------- ------------ -----------
Cash flows from investing activities:
Proceeds from sale of Chandlers Landing Marina - - 2,038,000
Construction in progress and improvements
to marina facilities (65,000) (152,000) (138,000)
--------- ------------ -----------
Net cash (used for) provided by investing activities (65,000) (152,000) 1,900,000
--------- ------------ -----------
Cash flows from financing activities:
Repayment of interest payable - (86,000) (1,838,000)
Proceeds from (repayments on) notes payable 7,000 (98,000) (208,000)
Advances from affiliates, net 182,000 169,000 808,000
--------- ------------ -----------
Net cash provided by (used for) financing activities 189,000 (15,000) (1,238,000)
--------- ------------ -----------
Net (decrease) increase in cash (6,000) (288,000) 111,000
Cash at the beginning of year 26,000 314,000 203,000
--------- ------------ -----------
Cash at the end of year $ 20,000 $ 26,000 $ 314,000
========= ============ ===========
</TABLE>
See accompanying notes.
F-5
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PARTNERSHIP MATTERS
------------------------------------------------------------------
Description of the Partnership
------------------------------
Tower Park Marina Investors, L.P. (formerly PS Marina Investors I), a
California Limited Partnership (the "Partnership"), was organized under the
California Revised Limited Partnership Act, pursuant to a Certificate of
Limited Partnership filed on January 6, 1988 to acquire, own, and operate
and to a lesser extent, develop marina facilities.
The General Partners in the Partnership are Westrec Investors, Inc.
(formerly PS Marina Investors, Inc.), a wholly-owned subsidiary of Westrec
Properties, Inc. ("Westrec"), and B. Wayne Hughes, a shareholder of Westrec
until June 1990. Effective March 1, 1997, the limited partners approved
the substitution of Tower Park Marina Operating Corporation, a wholly owned
subsidiary of Westrec Financial, Inc., for Mr. Hughes.
The Partnership was formed to sell a maximum of 12,000 units of limited
partnership interest at $5,000 per unit ($60,000,000). The General
Partners have contributed a total of $1,000. On November 27, 1989, the
Partnership's offering was terminated with 4,508 units issued, resulting in
$22,540,000 of limited partner funds being raised (before commission
discount of $3,000 granted to an investor). Half of each Limited Partner's
total capital contribution was deferred. The final installment was due on
August 1, 1990, and $76,000 of such deferrals remain outstanding.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from these estimates.
Net Realizable Value Reserve
----------------------------
As of December 31, 1996 the Partnership owns Tower Park Marina. Because of
continued operating cash flow deficits, the Partnership allowed the
Chandlers Landing Yacht Club to be sold at a trustee foreclosure sale on
February 6, 1996, and allowed the lender to foreclose on the ThunderBoat
and Banyan Bay Marinas on September 30, 1996. Due to the pending
foreclosure, a net realizable value reserve of $6,851,000 (including a
reserve from miscellaneous assets of $110,000) was established at December
31, 1995, and all the assets and liabilities associated with ThunderBoat
and Banyan Bay Marinas were reclassified in the December 31, 1995 balance
sheet.
F-6
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PARTNERSHIP MATTERS
------------------------------------------------------------------
(continued)
-----------
Net Realizable Value Reserve (continued)
----------------------------------------
A net realizable value reserve of $2,193,000 was established at December
31, 1995 to reduce the carrying value of Tower Park Marina to its then
estimated realizable value. No addition to this preserve was considered
necessary at December 31, 1996 since the Partnership believes current cash
flows are sufficient to recover the carrying value of the marina.
In March 1995, the FASB issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of
" which requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less
than the assets' carrying amount. Statement 121 also addresses the
accounting for long-lived assets that are expected to be disposed of. The
Company adopted Statement 121 effective January 1, 1996. The adoption of
Statement 121 had no significant impact on the Partnership's financial
statements.
Offering and Organization Costs
-------------------------------
Costs incurred in preparing Partnership documents, prospectuses and any
other sales literature, costs incurred in qualifying the units for sale
under federal and state securities laws and costs incurred in marketing the
units have been charged to the limited partners' equity to the extent the
total does not exceed 5% of the gross proceeds of the offering. The amount
by which these organization and registration costs exceeded 5% of the gross
proceeds of the offering were borne by PS Marina Investors, Inc.
Cash Distributions
------------------
Prior to December 1994, the General Partners had an interest in Cash Flow
from Operations (as defined) and Cash from Sales or Refinancings (as
defined) based on the timing and amount of prior distributions. No
distributions have been made since 1991.
In December 1994, in connection with the settlement of a lawsuit brought by
33 limited partners of the Partnership, the General Partners agreed to
reduce their interest in all future cash distributions from any source to
1%.
F-7
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PARTNERSHIP MATTERS
------------------------------------------------------------------
(continued)
-----------
Allocations of Net Income or Loss
---------------------------------
As set forth in the Partnership Agreement, net loss shall be allocated 99%
to the Limited Partners and 1% to the General Partners. Net income shall
generally be allocated to Partners in proportion to their cash
distributions.
Earnings Per Unit
-----------------
Per unit data is based on the weighted average number of the Limited
Partnership units outstanding during the period; 4,508.
Marina Facilities
-----------------
Marina facilities are stated at cost to the Partnership less net realizable
value reserves. Depreciation is calculated on a straight-line basis.
Depreciable lives for the major asset categories are as follows:
Asset Category Depreciable Life
-------------- ----------------
Buildings 20 years
Improvements 20 years
Floating docks 7 years
Fixed docks 20 years
Dry storage racks 7 years
Furniture, fixtures and equipment 7 years
Leasehold interest life of lease
Taxes Based on Income
---------------------
Taxes based on income are the responsibility of the individual partners
and, accordingly, are not reflected in the accompanying financial
statements.
F-8
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
2. MARINA FACILITIES
-----------------
Marina facilities include the purchase price of the properties and related
acquisition and closing costs. The Partnership pays an acquisition fee of
6% of the contract purchase price of the marina facilities, plus a
development fee of 6% of the cost of improvements made to the Marina
facilities. Capitalized as a cost of marina facilities were development
fees paid to Westrec of $3,000 and $8,000 for the year ended December 31,
1996 and 1995, respectively. Marina facilities at December 31, comprised
the following:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Land $ 1,040,000 $ 7,244,000
Buildings 2,078,000 4,849,000
Improvements 1,999,000 3,647,000
Floating docks 2,755,000 3,085,000
Fixed docks - 186,000
Dry storage racks - 843,000
Furniture, fixtures and equipment 1,120,000 1,805,000
Leasehold interest 941,000 941,000
----------- -----------
9,933,000 22,600,000
Less accumulated depreciation
and amortization (5,257,000) (8,000,000)
----------- -----------
4,676,000 14,600,000
Other assets related to marinas
to be abandoned - 135,000
Net realizable value reserve (2,193,000) (9,456,000)
----------- -----------
$ 2,483,000 $ 5,279,000
=========== ===========
</TABLE>
As of December 31, 1996, Tower Park Marina, located in the Sacramento - San
Joaquin Delta near Sacramento, California, had a cost of $9,933,000,
accumulated depreciation of $5,257,000 and a net realizable value reserve
of $2,193,000.
The marina facilities to be abandoned at December 31, 1995 consisted of
Chandlers Landing Yacht Club ($1,244,000), located on Lake Ray Hubbard in
Dallas County, Texas, ThunderBoat Marina ($7,357,000), located in Dania,
Florida near Fort Lauderdale and Banyan Bay Marina ($4,126,000) also
located in Dania, Florida. The Chandlers Landing Yacht Club was sold at a
trustee foreclosure sale on February 6, 1996 (see Note 3) and due to the
continued operating losses at ThunderBoat and Banyan Bay Marinas, as well
as the inability to sell the Banyan Bay Marina, the Partnership allowed the
Lender to foreclose on these properties on September 30, 1996. (See Note
3). Because of the impending foreclosures and write-down to net realizable
value at December 31, 1995, no depreciation was taken on these three
properties for the year ended December 31, 1996.
F-9
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
PS MARINA INVESTORS I
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
2. MARINA FACILITIES (CONTINUED)
-----------------------------
Included in the net loss before gain on abandoned marina facilities, net
realizable value adjustment and forgiveness of debt by affiliate for the
year ended December 31, 1996 is $7,000 of losses related to Chandlers
Landing Yacht Club, $46,000 of losses related to Banyan Bay Marina and
$16,000 of income related to ThunderBoat Marina.
The Partnership's marina is not generating satisfactory levels of cash
flows and cash flow projections do not indicate significant improvement in
the near term. These matters raise substantial doubt about the
Partnership's ability to recover the carrying value of its assets, (not
withstanding the write-down of the marina facility to its net realizable
value) and to continue as a going concern. The financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and
classification of liabilities that may result from the possible inability
of the Partnership to continue as a going concern.
3. NOTES PAYABLE
-------------
Notes payable at December 31, consist of the following:
<TABLE>
<CAPTION>
1996 1994
----------- -----------
<S> <C> <C>
Note payable to an individual, bearing
interest at 11% per annum, secured by
a deed of trust on Tower Park Marina, due
on February 28, 1998. $6,715,000 $6,715,000
$2,000,000 revolving line of credit with a
financial institution bearing interest at
the bank's prime rate plus 1% secured by
deeds of trust on ThunderBoat and Banyan
Bay Marinas, due on February 15, 1996. - 2,000,000
Note payable to a financial institution
bearing interest at a variable rate secured
by a deed of trust on Chandlers Landing
Marina Yacht Club, interest and $1,250 of
principal payable monthly, due on June 1, 1996. - 557,000
Other 21,000 14,000
----------- -----------
$6,736,000 $9,286,000
=========== ===========
</TABLE>
F-10
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
3. NOTES PAYABLE (continued)
-------------------------
At December 31, 1996 future principal payments are as follows:
<TABLE>
<CAPTION>
Year
----
<S> <C>
1997 $ 10,000
1998 6,719,000
1999 4,000
2000 3,000
----------
$6,736,000
==========
</TABLE>
No payments have been made on the note secured by Tower Park Marina since
September 1991. Throughout 1991, 1992, 1993 and 1994, the Partnership was
involved in various negotiations with the lender, a financial institution,
and its successor, Resolution Trust Corporation ("RTC"), to restructure or
otherwise settle the note. In January 1995, the RTC sold the note as part
of a sales initiative to a third party. The note was immediately sold to
an affiliate of the individual general partner. The Partnership has
entered into an option agreement to purchase the note from its current
holder for its cost ($1,700,000) plus carrying costs which expired on April
10, 1996. In connection with the substitution of Tower Park Marina
Operating Corporation for Mr. Hughes as General Partner, Mr. Hughes entered
into a new option agreement with the Registrant, which allows the
Registrant to purchase the note secured by Tower Park Marina, for Mr.
Hughes' cost, $1,700,000, plus $68,000 of accrued unpaid interest. As of
December 31, 1996, the note was reflected on the Registrant's balance sheet
at its face value of $6,715,000 with an additional $2,046,000 being shown
as accrued unpaid interest (based on the option agreement to acquire the
note, its fair value is deemed to be the option price of $1,700,000). The
option is initially for a one year period expiring on February 28, 1998.
The Registrant may extend the option agreement for two additional one year
periods by paying Mr. Hughes $50,000 for each one year extension. The
extension payment will be applied as a reduction in the principal amount
due.
In October 1993, the Partnership discontinued making payments on its
$2,000,000 note payable secured by ThunderBoat Marina and Banyan Bay
Marina. In September 1994, the lender initiated an action seeking to
foreclose on the marinas. In January 1995, the Partnership entered into a
forbearance agreement in which the lender agreed to forbear action to
foreclose until July 15, 1995 as long as the Partnership made monthly
payments to the lender of $4,000. As part of the forbearance agreement,
the Partnership agreed that if the note was not paid in full or otherwise
acceptably restructured prior to July 15, 1995, the lender would be
entitled to a judgment of foreclosure. In July 1995, the Partnership and
the lender agreed to extend the forbearance period until February 15, 1996.
The extension required an initial fee of $30,000 and monthly payments,
beginning in September 1995, of $25,000, which were applied to accrued
unpaid interest. In February 1996, the lender offered to extend the
forbearance period if the monthly payments were increased to $40,000. Due
to the continued operating cash flow deficits of the properties and the
inability to sell the Banyan Bay Marina, the Partnership allowed the Lender
to foreclose on the properties on September 30, 1996.
F-11
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
3. NOTES PAYABLE (continued)
-------------------------
On October 5, 1995, the loan secured by Chandlers Landing Yacht Club was
sold to President's Square Limited Partnership. On October 13, 1995,
President's Square Limited Partnership notified the Partnership that it was
in default of several provisions of the loan, and demanded that the
defaults be corrected within 30 days or the note would be accelerated and
due immediately. As all the conditions of default could not be corrected,
and after evaluating the current value of the property, the Partnership
allowed the property to be sold at a trustee foreclosure sale on February
6, 1996.
The Partnership's ability to continue as a going concern is dependent upon
their ability to exercise their option on the note secured by Tower Park
Marina and improved operational cash flow. The financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and
classification of liabilities that may result from the possible inability
of the Partnership to continue as a going concern.
4. RELATED PARTY TRANSACTIONS
--------------------------
The Partnership has an agreement with Westrec Marina Management, Inc., an
affiliate of Westrec, to manage the day-to-day operations of the marinas
for a fee equal to 6% of the marinas' monthly gross revenues (as defined).
Management fees for the year ended December 31, 1996, 1995 and 1994 were
$173,000, $143,000 and $144,000, respectively.
In connection with funding operating deficits and with the acquisition of
marina facilities, funds have been borrowed from Westrec. These borrowings
accrue interest at the prime rate plus 1% (9.50% at December 31, 1995).
Total interest paid or accrued to Westrec for the year ended December 31,
1996, 1995 and 1994 was $92,000, $84,000 and $82,000, respectively.
The Partnership had entered into a lease with Marine Ventures Limited
("MVL"), an affiliate of the Corporate General Partner, for the operation
of the restaurant and bar and general store at Tower Park Marina. The
lease was terminated effective December 31, 1995. Lease payments were
based on the level of cash flow from the businesses. Included in lease
income for the year ended December 31, 1995 and 1994 is $3,000 and $4,000
respectively.
The Partnership entered into a lease with MVL for the operation of
Chandlers Landing Yacht Club which requires MVL to pay the Partnership a
percentage of cash flow. As the yacht club operated at a deficit for the
year ended December 31, 1995 and 1994 no lease income was earned by the
Partnership. Due to continued operating losses, the operations of
Chandlers Landing Yacht Club were significantly curtailed in July 1995 and
sold at a trustee foreclosure sale on February 6, 1996 (see Note 2).
F-12
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
5. COMMITMENTS AND CONTINGENCIES
-----------------------------
In September 1994, Mr. Leaman, the prior owner of ThunderBoat and Banyan
Bay Marinas, filed suit alleging that the Partnership had failed to pay him
$1,100,000 of additional compensation relating to the Partnership's
purchase of ThunderBoat and Banyan Bay Marinas. In connection with the
purchase of these properties from Mr. Leaman in 1989, the Partnership
entered into an employment agreement that provided that Mr. Leaman would be
entitled to earn a bonus, payable over three years. The maximum bonus that
Mr. Leaman could have earned was $1,100,000. Mr. Leaman resigned from his
employment in less than one year. Mr. Leaman has alleged that the bonus is
actually just deferred consideration due from his sale of the properties to
the Partnership. The Partnership intends to defend the case vigorously.
In connection with the acquisition of Tower Park Marina, the Partnership
had agreed to pay a bonus price to the seller of the marina if certain
approvals from governmental authorities regarding the development of a
portion of the property were received before February 1, 1993. The amount
of the bonus price was dependent upon the amount of acreage covered by the
approvals, the length of time to receive such approvals, and the out-of-
pocket expenses incurred by the Partnership to receive such approvals.
Depending on these factors, the bonus price could have been as much as
$1,800,000. The agreement contains provisions for payment of the bonus
price by 20% in cash and the remainder to be paid in the form of a note
bearing interest at 12% per annum, amortized over 25 years and due in seven
years.
A suit that was filed against the Partnership in 1992 by the prior owners
of Tower Park regarding this bonus price was settled in February 1995. In
connection with the Partnership obtaining the full release from all
obligations associated with these bonus price provisions, the Partnership
paid $50,000. Legal costs associated with this case of $508,000 in 1994
and $124,000 in 1993 are included in litigation costs in the accompanying
Statements of Operations.
In October 1992, thirty-three of the Partnership's Limited Partners,
representing 130 of the Partnership's 4,508 Limited Partner units, filed a
complaint against the Partnership, its General Partners and others. The
suit alleged securities fraud, negligent misrepresentation and breach of
fiduciary duty. This matter was settled in December 1994. The terms of
the settlement required: (1) the General Partners to forgive advances
totalling $577,000 previously made to the Partnership, (2) the General
Partners to bear all costs of administering the Partnership for three
years, (3) the General Partners to reduce their interest in future cash
distributions of the Partnership to one percent, and (4) the General
Partners to pay $120,000 to the plaintiff's attorneys in reimbursement of
fees.
For the year ended December 31, 1994 the Partnership incurred $100,000 in
legal fees defending this suit. These costs are included in litigation
costs in the accompanying Statement of Operations. The $577,000 of
advances forgiven by the General Partners are included in the accompanying
Statement of Operations.
F-13
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
(FORMERLY PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
5. COMMITMENTS AND CONTINGENCIES (CONTINUED)
-----------------------------------------
In November 1991, contamination was discovered in the area surrounding a
fuel storage tank at Tower Park Marina. Environmental consultants have
been engaged to perform sampling to determine the extent of the
contamination. Presently, sufficient data has not been obtained to
estimate the cost of remediation, consequently no loss accrual has been
made in the financial statements.
The Partnership operates a portion of Tower Park Marina on approximately 14
acres of waterfront property under a lease with the California State Land
Commission (the "CSLC Lease"). The CSLC Lease expires on December 31,
1998, and provides that it may be renewed for two successive periods for 10
years each. The CSLC Lease provides for an annual rental based on gross
receipts, with a minimum annual rental of $5,000 payable in advance. Rent
expense associated with the CSLC Lease is included in cost of operations
and was $42,000, $41,000 and $43,000, respectively, for the year ended
December 31, 1996, 1995 and 1994.
Annual minimum lease payments are as follows:
Year
----
1997 $ 5,000
1998 5,000
---------
$ 10,000
=========
6. PROFORMA INFORMATION
--------------------
As discussed in Notes 2 and 3, the Partnership's Chandlers Landing Marina
was sold at a trustee foreclosure sale for $2,038,000 on February 1, 1994.
ThunderBoat Marina and Banyan Bay Marina were foreclosed on effective
September 30, 1996 and Chandlers Landing Yacht Club was sold at a trustee
foreclosure sale on February 6, 1996. Below is proforma information for
the Partnership, excluding the operations of ThunderBoat Marina, Banyan Bay
Marina, Chandlers Landing Yacht Club and Chandlers Landing Marina, for the
year ended December 31, 1996, 1995, and 1994.
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Revenues $2,890,000 $ 1,793,000 $ 1,768,000
Expenses 3,732,000 2,849,000 4,031,000
---------- ----------- -----------
Net loss $ (842,000) $(1,056,000) $(2,263,000)
========== =========== ===========
</TABLE>
F-14
<PAGE>
PS MARINA INVESTORS I
a California Limited Partnership
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Costs Subsequent
Initial Cost to Acquisition
------------------------- ----------------
Date Buildings & Buildings &
Acquired Description Encumbrances Land Improvements Improvements
- -------- ------------------ ------------ ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
02/88 Tower Park $6,715,000 $1,040,000 $6,213,000 $2,680,000
Net Realizable Value
Reserve
09/88 Chandlers Landing (A) 26,000 4,828,000 627,000
11/89 ThunderBoat $2,000,000(B) 3,432,000 3,502,000 423,000
11/89 Banyan Bay (B) 2,493,000 1,158,000 475,000
07/91 Chandlers Landing
Yacht Club (C) 557,000 279,000 463,000 502,000
---------- ---------- ----------- ----------
$9,272,000 $7,270,000 $16,164,000 $4,707,000
========== ========== =========== ==========
<CAPTION>
Gross Carrying Amount at December 31, 1996
---------------------------------------------------------------
Date Buildings & Accumulated
Acquired Description Land Improvements Total Depreciation
- -------- ------------------ ---------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
02/88 Tower Park $1,040,000 $ 8,893,000 $9,933,000 $5,257,000
Net Realizable Value (2,193,000)
Reserve
09/88 Chandlers Landing 0 0 0 0
11/89 ThunderBoat 0 0 0 0
11/89 Banyan Bay 0 0 0 0
07/91 Chandlers Landing
Yacht Club (C) 0 0 0 0
---------- ----------- ---------- ----------
$1,040,000 $ 8,893,000 $7,740,000 $5,257,000
========== =========== ========== ==========
</TABLE>
(A) This property, which was encumbered by the same note which secured Tower
Park, was lost to foreclosure on February 1, 1994.
(B) These properties, which were encumbered by the Registrants $2,000,000 line
of credit, were lost to foreclosure on September 30, 1996.
(C) This property, which was encumbered by the $600,000 Citibank note, was lost
to foreclosure on February 6, 1996.
F-15
<PAGE>
PS MARINA INVESTORS I
a California Limited Partnership
SCHEDULE III - REAL ESTATE AND
ACCUMULATED DEPRECIATION (continued)
REAL ESTATE RECONCILIATION
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of the year $13,144,000 $22,528,000 $27,790,000
Construction in progress and
improvements to facilities
during the year 60,000 225,000 221,000
Acquisitions during the year
Deductions during the year (5,464,000) (9,609,000) (5,483,000)
----------- ----------- -----------
Balance at the end of the year $ 7,740,000 $13,144,000 $22,528,000
=========== =========== ===========
<CAPTION>
ACCUMULATED DEPRECIATION RECONCILIATION
Year Ended December 31,
----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of the year $ 8,000,000 $ 7,148,000 $ 9,112,000
Additions during the year:
Depreciation 111,000 922,000 1,327,000
Deductions during the year (2,854,000) (70,000) (3,291,000)
----------- ----------- -----------
Balance at the end of the year $ 5,257,000 $ 8,000,000 $ 7,148,000
=========== =========== ===========
</TABLE>
The aggregate cost for Federal income tax purposes is $9,932,808.
F-16
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit No.
- ----------
<S> <C>
(4) (A) Amended and Restated Agreement of Limited Partnership (form included
as Exhibit A to the Prospectus of Registrant dated August 4, 1988,
contained in Amendment No. 2 to Registration Statement No. 33-21021,
of Registrant filed July 29, 1988, and is incorporated herein by
reference).
(B) Amended form of execution copy of Subscription Agreement/Promissory
Note (filed as pages A-1 through A-6 to Post-Effective Amendment No. 1
to Registration Statement No. 33-21021 of Registrant filed February
14, 1989, and is incorporated herein by reference).
(10) (A) Form of Property Management Agreement between Registrant and PS Marina
Management, Inc. (filed as Exhibit 10.1 to Registration Statement No.
33-21021 of Registrant and is incorporated herein by reference).
(B) Copy of Purchase Agreement together with certain documents, leases and
the CSLC Lease relating to the purchase of Tower Park Marina (filed as
Exhibit 10.3 to Registration Statement No. 33-21021 of Registrant and
is incorporated herein by reference).
(C) Copy of Purchase Agreement together with certain documents, subleases
and the Concession Agreement relating to the purchase of Chandlers
Landing Marina (filed as Exhibit 10.4 to Registration Statement No.
33-21021 of Registrant and is incorporated herein by reference).
(D) Copy of lease between Registrant and Marine Ventures Limited relating
to restaurant/bar, general store and pontoon boat rental operation at
Tower Park Marina (filed as Exhibit 10.5 to Registration Statement No.
33-21021 of Registrant and is incorporated herein by reference).
(E) Copy of Purchase Agreement together with certain documents relating to
the purchase of ThunderBoat Marina (filed as Exhibit 28A to the
Registrant's Current Report on Form 8-K filed December 28, 1989, and
is incorporated herein by reference).
(F) Copy of Purchase Agreement together with certain documents relating to
the purchase of Banyan Bay Marina (filed as Exhibit 28B to the
Registrant's Current Report on Form 8-K filed December 28, 1989, and
is incorporated herein by reference).
(27) Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 20,000
<SECURITIES> 0
<RECEIVABLES> 135,000
<ALLOWANCES> 0
<INVENTORY> 128,000
<CURRENT-ASSETS> 283,000
<PP&E> 7,740,000
<DEPRECIATION> (5,257,000)
<TOTAL-ASSETS> 2,874,000
<CURRENT-LIABILITIES> 3,208,000
<BONDS> 6,736,000
0
0
<COMMON> 0
<OTHER-SE> (8,460,000)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 2,874,000
<SALES> 0
<TOTAL-REVENUES> 3,318,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,377,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 870,000
<INCOME-PRETAX> (929,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 784,000
<CHANGES> 0
<NET-INCOME> (145,000)
<EPS-PRIMARY> (31.94)<F2>
<EPS-DILUTED> (31.94)<F2>
<FN>
<F1>TOTAL PARTNERS' DEFICIT
<F2>LIMITED PARTNERS' NET LOSS PER UNIT
</FN>
</TABLE>
