<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________________
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
Of the Securities Exchange Act of 1934
___________________________________________
For Quarter Ended Commission File
_________________ _______________
March 31, 1999 Number 0-17672
TOWER PARK MARINA INVESTORS, L.P.,
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 No.)
16633 Ventura Boulevard, 6/th/ Floor, Encino, California 91436
_______________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's phone number, including area code: (818) 907-0400
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 than the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
X
_______ ______
Yes No
<PAGE>
INDEX
-----
PART I. FINANCIAL INFORMATION PAGE REFERENCE
Balance Sheets at March 31, 1999 and
December 31, 1998 2
Statements of Operations for the three month
periods ended March 31, 1999 and 1998 3
Statements of Cash Flows for the three month
periods ended March 31, 1999 and 1998 4
Notes to Financial Statements 5-11
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12-13
PART II. OTHER INFORMATION 14
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Cash $ 4,000 $ 25,000
Accounts receivable 193,000 211,000
Tower Park Marina, net 2,395,000 2,419,000
Other assets, net 313,000 275,000
------------ ------------
$ 2,905,000 $ 2,930,000
============ ============
LIABILITIES AND PARTNERS' DEFICIT
- ---------------------------------
Accounts payable and accrued expenses $ 507,000 $ 525,000
Interest payable 3,347,000 3,199,000
Payable to affiliates 2,946,000 2,770,000
Deferred rentals 178,000 197,000
Notes payable 6,618,000 6,670,000
Commitments and contingencies - -
------------ ------------
13,596,000 13,361,000
Partners' deficit:
Limited partners' deficit, $50,000
per unit, 4,508 units authorized
issued and outstanding (9,723,000) (9,466,000)
Less deferred contributions (76,000) (76,000)
------------ ------------
(9,799,000) (9,542,000)
General partners' deficit (892,000) (889,000)
------------ ------------
Total partners' deficit (10,691,000) (10,431,000)
------------ ------------
$ 2,905,000 $ 2,930,000
============ ============
</TABLE>
See accompanying notes.
-2-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
STATEMENTS OF OPERATIONS
For the three month periods ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Revenues:
Slip rentals $ 152,000 $ 160,000
RV Park 118,000 106,000
Lease income 45,000 35,000
Restaurant and retail 70,000 51,000
Other income 26,000 16,000
--------- ---------
411,000 368,000
--------- ---------
Expenses:
Cost of operations 385,000 348,000
Interest expense 230,000 222,000
Depreciation and amortization 33,000 31,000
Management fees paid to affiliates 23,000 21,000
--------- ---------
671,000 622,000
--------- ---------
Net loss $(260,000) $(254,000)
========= =========
Allocation of net loss:
Limited Partners' $(257,000) $(251,000)
General Partners' (3,000) (3,000)
--------- ---------
$(260,000) $(254,000)
========= =========
Limited Partners' net loss
per unit $ (57.01) $ (55.68)
========= =========
</TABLE>
See accompanying notes.
-3-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
STATEMENTS OF CASH FLOWS
For the three month periods ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(260,000) $(254,000)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization 33,000 31,000
Decrease in accounts receivable 18,000 6,000
Increase in other assets (38,000) (20,000)
(Decrease) increase in accounts payable and
accrued expenses (18,000) 33,000
Increase in interest payable, net 148,000 150,000
Decrease in deferred rentals (19,000) (8,000)
--------- ---------
Net cash used for operating activities (136,000) (62,000)
--------- ---------
Net cash used for investing activities:
Construction in progress and improvements to
Tower Park Marina (9,000) (14,000)
--------- ---------
Cash flows from financing activities:
Repayments of notes payable (52,000) (52,000)
Advances from affiliates, net 176,000 135,000
--------- ---------
Net cash provided by financing activities 124,000 83,000
--------- ---------
Net (decrease) increase in cash (21,000) 7,000
Cash at the beginning of period 25,000 15,000
--------- ---------
Cash at the end of period $ 4,000 $ 22,000
========= =========
</TABLE>
See accompanying notes.
-4-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
FEDERAL INCOME TAX BASIS
March 31, 1999
(Unaudited)
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., a
wholly-owned subsidiary of Westrec Properties, Inc. ("Westrec"), and B. Wayne
Hughes, a shareholder of Westrec until September 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
----------------------------
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 reserve was considered necessary at
March 31, 1999 or during 1996, 1997 and 1998 since the Partnership believes
current cash flows are sufficient to recover the carrying value of the
marina.
-5-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
(continued)
-----------
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 Westrec Investors, Inc.
Cash Distributions
------------------
The General Partners have an interest in Cash Flow from Operations (as
defined) and Cash from Sales or Refinancings (as defined). No distributions
have been made since 1991.
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.
Tower Park Marina
-----------------
Tower Park Marina is stated at cost to the Partnership less net realizable
value reserve. 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
Furniture, fixtures and equipment 7 years
Leasehold interest life of lease
-6-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
(continued)
-----------
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.
Segment Reporting
-----------------
Effective January 1, 1998, the Partnership adopted the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 131
"Disclosures about Segments of an Enterprise and Related Information".
Statement No. 131 establishes standards for the way public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information
about operating segments in interim financial reports. Statement No. 131
also establishes standards for related disclosures about products and
services, geographic areas, and major customers. As management views the
Partnership as operating in a single business segment as described in Note 1,
the adoption of Statement No. 131 did not result in additional disclosure of
segment information.
-7-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
2. Tower Park Marina
-----------------
Tower Park Marina includes the purchase price of the property and related
acquisition and closing costs. The Partnership paid an acquisition fee of 6%
of the contract purchase price of the property, plus a development fee of 6%
of the cost of improvements made. Capitalized as a cost of Tower Park Marina
were development fees paid to Westrec of $1,000 and $6,000 for the three
months ended March 31, 1999, and for the year ended December 31, 1998,
respectively. At March 31, 1999 and December 31, 1998 the investment in
Tower Park Marina was comprised of the following:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Land $ 1,040,000 $ 1,040,000
Buildings 2,103,000 2,103,000
Improvements 2,083,000 2,083,000
Floating docks 2,796,000 2,796,000
Furniture, fixtures and equipment 1,146,000 1,146,000
Leasehold interest 941,000 941,000
Construction in progress 9,000 -
----------- -----------
10,118,000 10,109,000
Less accumulated depreciation and
amortization (5,530,000) (5,497,000)
----------- -----------
4,588,000 4,612,000
Net realizable value reserve (2,193,000) (2,193,000)
----------- -----------
$ 2,395,000 $ 2,419,000
=========== ===========
</TABLE>
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.
-8-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
3. Notes Payable
-------------
Notes payable at March 31, 1999 and December 31, 1998 consist of the
following:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Note payable to an individual, bearing
interest at 11% per annum, secured by
deed of trust on Tower Park Marina, due
on February 28, 2000 $6,615,000 $6,665,000
Other 3,000 5,000
---------- ----------
$6,618,000 $6,670,000
========== ==========
</TABLE>
At March 31, 1999 future principal payments are as follows:
<TABLE>
<CAPTION>
Year
----
<S> <C>
1999 $ 3,000
2000 6,615,000
----------
$6,618,000
==========
</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 "current holder"). The
Partnership 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, the current holder
entered into a new option agreement with the Partnership, which allows the
Partnership to purchase the note secured by Tower Park Marina, for the
current holder's cost, $1,700,000, plus $68,000 of accrued unpaid interest.
As of March 31, 1999, the note was reflected on the Partnership's balance
sheet at its face value of $6,615,000 with an additional $3,347,000 being
shown as accrued unpaid interest (based on the option agreement to acquire
the note, its fair value is deemed to be the current option price of
$1,600,000). The option was initially for a one-year period expiring on
February 28, 1998. The Partnership extended the option agreement for one year
in February 1998 by paying the affiliate $50,000, which was applied as a
reduction in the principal amount due. The Partnership extended the option
agreement for one additional year, until February 28, 2000, by making an
additional $50,000 principal payment in February 1999. In the event the
option is exercised, the Partnership will recognize a gain of approximately
$8,400,000 from the forgiveness of debt.
-9-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
3. Notes Payable (continued)
-------------------------
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 Partnership is currently in
the final stages of completing the refinancing of Tower Park Marina. The
Partnership has received a commitment letter from a financial institution to
finance up to $2 million. Before closing the refinance, the lease extension
on Tower Park (see Note 5) needs to be completed. Management anticipates the
refinancing to be completed by June 30, 1999. 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 marina for a
fee equal to 6% of the marina's monthly gross revenues (as defined).
Management fees for the three months ended March 31, 1999 and 1998, were
$23,000 and $21,000, respectively.
In connection with funding the Partnership's operating deficits funds have
been borrowed from Westrec. These borrowings accrue interest at the prime
rate plus 1% (8.75% at March 31, 1999). Total interest paid or accrued to
Westrec for the three months ended March 31, 1999 and 1998 was $49,000 and
$38,000, respectively.
5. Commitments and Contingencies
-----------------------------
In September 1994, Mr. Leaman, the prior owner of ThunderBoat and Banyan Bay
Marina, 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 alleged that the bonus was actually just deferred
consideration due from his sale of the properties to the Partnership. This
case was settled in October 1998, and reserves of $250,000 have been
established to cover the legal fees and settlement costs associated with the
case.
-10-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
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 expired 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
$10,000 for the three month period ended March 31, 1999 and 1998.
The Partnership is currently negotiating the terms of its lease extension
with the CSLC. There is no assurance that the Partnership will be successful
in securing a lease on terms acceptable to the Partnership.
-11-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
March 31, 1999
(Unaudited)
The revenues and expenses of the Partnership for the three months ended March
31, 1999 are generated from the operations of Tower Park Marina in the
Sacramento - San Joaquin Delta near Sacramento, California. As of March 31,
1999, Tower Park Marina had the following occupancies:
<TABLE>
<CAPTION>
Spaces %
Available Occupied
----------------------
<S> <C> <C>
Wet slips 235(1) 71.5%
Dry storage 118 55.9%
RV Park 130(1) 79.2%
</TABLE>
(1) non-transient spaces only
For the three months ended March 31, 1999, revenues for Tower Park Marina
increased $43,000 to $411,000. The increase was primarily due to a $29,000
increase in restaurant revenues, offset by a $8,000 decline in slip rentals.
The increase in restaurant revenues is due to a higher level of activity at
the property. Overall the property's net operating income remained unchanged
at $8,000 for the three months ended March 31, 1999.
The Partnership's net loss of $260,000 for the three months ended March 31,
1999 includes $33,000 of depreciation and amortization, a non-cash item, a
decline of $4,000 in cash flow over the same period a year ago. Contributing
to the Partnership's net loss was an $8,000 increase in interest expense, due
to increased borrowings from the General Partners.
By May 31, 1999, the installation of a new launch ramp at Tower Park Marina
will be completed at a cost of approximately $150,000. The new ramp will
increase the number of boats that can be launched each hour. This increased
capacity will allow Tower Park Marina to host several fishing tournaments
each year. These new functions should increase every facet of the property's
operation.
Liquidity and capital resources
-------------------------------
Since its inception in 1988 the Partnership has operated at a deficit. These
deficits have been partially covered by advances from the General Partners
and cash reserves. In addition, the Partnership had discontinued making debt
service payments on substantially all of its notes. As a result, all of the
Partnership's properties were lost to foreclosure, with the exception of
Tower Park Marina.
-12-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
March 31, 1999
(Unaudited)
From 1991 to 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 secured
by Tower Park Marina. 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 entered into an
option agreement to purchase the note from the affiliate at its cost
($1,700,000) plus carrying costs. The option agreement originally expired on
April 10, 1996, and has been extended until February 28, 2000.
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 operating results at Tower Park Marina.
Between 1988 and 1998, the Partnership received advances from affiliates of
the General Partners. These advances were utilized to acquire properties,
make capital improvements to the properties, cover operating deficits, and to
a lesser extent, make distributions to the partners.
-13-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
PART II. OTHER INFORMATION
March 31, 1999
(Unaudited)
ITEMS 1 through 6 are inapplicable.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATED: May 10, 1999
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
BY: Westrec Investors, Inc.
General Partner
BY: /s/Jeffrey K. Ellis
-------------------
Jeffrey K. Ellis
Vice President
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998
<CASH> 4,000 22,000
<SECURITIES> 0 0
<RECEIVABLES> 193,000 157,000
<ALLOWANCES> 0 0
<INVENTORY> 168,000 128,000
<CURRENT-ASSETS> 365,000 307,000
<PP&E> 7,925,000 7,829,000
<DEPRECIATION> (5,530,000) (5,404,000)
<TOTAL-ASSETS> 2,905,000 2,850,000
<CURRENT-LIABILITIES> 685,000 752,000
<BONDS> 6,618,000 6,677,000
0 0
0 0
<COMMON> 0 0
<OTHER-SE> (10,691,000)<F1> (9,574,000)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 2,905,000 2,850,000
<SALES> 0 0
<TOTAL-REVENUES> 411,000 368,000
<CGS> 0 0
<TOTAL-COSTS> 441,000 400,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 230,000 222,000
<INCOME-PRETAX> (260,000) (254,000)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (260,000) (254,000)
<EPS-PRIMARY> (57.01)<F2> (55.68)<F2>
<EPS-DILUTED> (57.01)<F2> (55.68)<F2>
<FN>
<F1>TOTAL PARTNERS' DEFICIT
<F2>LIMITED PARTNERS' NET LOSS PER UNIT
</FN>
</TABLE>
