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
September 30, 2000 Number 0-17672
TOWER PARK MARINA INVESTORS, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
--------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-4137990
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
16633 Ventura Boulevard, 6th 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 September 30, 2000 and
December 31, 1999 2
Statements of Operations for the three month
periods ended September 30, 2000 and 1999 3
Statements of Operations for the nine month
periods ended September 30, 2000 and 1999 4
Statements of Cash Flows for the nine month
periods ended September 30, 2000 and 1999 5
Notes to Financial Statements 6-12
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 13-14
PART II. OTHER INFORMATION 15
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
---------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash $ 63,000 $ 27,000
Accounts receivable 98,000 97,000
Tower Park Marina, net 2,628,000 2,542,000
Other assets, net 462,000 416,000
----------- -----------
$ 3,251,000 $ 3,082,000
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
Accounts payable and accrued expenses $ 272,000 $ 148,000
Interest payable 16,000 17,000
Payable to affiliates 3,589,000 3,162,000
Deferred rentals 120,000 160,000
Notes payable 2,068,000 2,100,000
Commitments and contingencies -- --
----------- -----------
6,065,000 5,587,000
Partners' deficit:
Limited partners' deficit, $50,000
per unit, 4,508 units authorized
issued and outstanding (1,925,000) (1,619,000)
Less deferred contributions (76,000) (76,000)
----------- -----------
(2,001,000) (1,695,000)
General partners' deficit (813,000) (810,000)
----------- -----------
Total partners' deficit (2,814,000) (2,505,000)
----------- -----------
$ 3,251,000 $ 3,082,000
=========== ===========
</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 September 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
----------- ----------
<S> <C> <C>
REVENUES:
Slip rentals $ 200,000 $ 196,000
RV Park 285,000 252,000
Lease income 40,000 40,000
Restaurant 222,000 207,000
Retail 201,000 198,000
Fuel 125,000 109,000
Boat service 37,000 --
Other income 18,000 41,000
---------- ----------
1,128,000 1,043,000
EXPENSES:
Cost of operations 870,000 795,000
Interest expense 142,000 111,000
Depreciation and amortization 54,000 48,000
Management fees paid to affiliates 49,000 45,000
---------- ----------
1,115,000 999,000
---------- ----------
Net income before forgiveness of debt 13,000 44,000
Forgiveness of debt -- 8,515,000
---------- ----------
Net income $ 13,000 $8,559,000
========== ==========
Allocation of net income:
Limited Partners' $ 13,000 $8,473,000
General Partners' -- 86,000
---------- ----------
$ 13,000 $8,559,000
========== ==========
Limited Partners' net income
per unit
$ 2.88 $ 1,879.77
========== ==========
</TABLE>
See accompanying notes.
-3-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
STATEMENTS OF OPERATIONS
For the nine month periods ended September 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
REVENUES:
Slip rentals $ 539,000 $ 511,000
RV Park 638,000 563,000
Lease income 117,000 132,000
Restaurant 488,000 406,000
Retail 376,000 349,000
Fuel 213,000 179,000
Boat service 56,000 -
Other income 76,000 113,000
----------- -----------
2,503,000 2,253,000
----------- -----------
EXPENSES:
Cost of operations 2,141,000 1,823,000
Interest expense 408,000 596,000
Depreciation and amortization 149,000 116,000
Management fees paid to affiliates 114,000 104,000
----------- -----------
2,812,000 2,639,000
----------- -----------
Net loss before forgiveness of debt (309,000) (386,000)
Forgiveness of debt - 8,515,000
----------- -----------
Net income (loss) $ (309,000) $ 8,129,000
=========== ===========
Allocation of net income (loss):
Limited Partners' $ (306,000) $ 8,048,000
General Partners' (3,000) 81,000
------------ -----------
$ (309,000) $ 8,129,000
=========== ===========
Limited Partners' net loss
per unit
$ (67.88) $ 1,785.27
=========== ===========
</TABLE>
See accompanying notes.
-4-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
STATEMENTS OF CASH FLOWS
For the nine month periods ended September 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (309,000) $ 8,129,000
Adjustments to reconcile net income (loss) to net
cash used for operating activities:
Depreciation and amortization 149,000 116,000
Forgiveness of debt -- (8,515,000)
(Increase) decrease in accounts receivable (1,000) 69,000
Increase in inventory (11,000) (49,000)
Increase in other assets (35,000) (19,000)
Increase (decrease) in accounts payable and
accrued expenses 124,000 (114,000)
Interest on interest payable on forgiven
debt, net -- 301,000
(Decrease) increase in interest payable (1,000) 16,000
Decrease in deferred rentals (40,000) (4,000)
----------- -----------
Net cash used for operating activities (124,000) (70,000)
----------- -----------
Net cash used for investing activities:
Construction in progress and improvements to
Tower Park Marina (212,000) (221,000)
----------- -----------
Cash flows from financing activities:
Repayments of notes payable (32,000) (45,000)
Advances from affiliates, net 427,000 (35,000)
Proceeds from refinancing, net -- 500,000
Increase in capitalized financing costs (23,000) (132,000)
----------- -----------
Net cash provided by financing activities 372,000 288,000
----------- -----------
Net increase (decrease) in cash 36,000 (3,000)
Cash at the beginning of period 27,000 25,000
----------- -----------
Cash at the end of period $ 63,000 $ 22,000
=========== ===========
</TABLE>
See accompanying notes.
-5-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
FEDERAL INCOME TAX BASIS
September 30, 2000
(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.
BASIS OF PRESENTATION
Certain 1999 balances have been reclassified to conform with the 2000
presentation.
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.
-6-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PARTNERSHIP MATTERS
(CONTINUED)
----------------------------------------------------------------------------
NET REALIZABLE VALUE RESERVE
As of September 30, 2000 the Partnership owns Tower Park Marina. 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 net
realizable value. No addition to this reserve has been considered necessary
since the Partnership has determined that, based on current cash flows,
estimated future cash flows will be sufficient to recover the carrying value
of the marina.
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.
INVENTORY
Inventory is stated at the lower of cost or market. Cost is determined
principally under the average cost method.
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.
-7-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PARTNERSHIP MATTERS
(CONTINUED)
---------------------------------------------------------------------------
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
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.
-8-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(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 $7,000 and $12,000
for the nine months ended September 30, 2000 and for the year ended
December 31, 1999, respectively. At September 30, 2000 and December 31,
1999 the investment in Tower Park Marina was comprised of the following:
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Land $ 1,040,000 $ 1,040,000
Buildings 2,111,000 2,111,000
Improvements 2,230,000 2,230,000
Floating docks 2,831,000 2,831,000
Furniture, fixtures and equipment 1,220,000 1,220,000
Leasehold interest 941,000 941,000
Construction in progress 212,000 -
----------- -----------
10,585,000 10,373,000
Less accumulated depreciation and
amortization (5,764,000) (5,638,000)
----------- -----------
4,821,000 4,735,000
Net realizable value reserve (2,193,000) (2,193,000)
----------- -----------
$ 2,628,000 $ 2,542,000
=========== ===========
</TABLE>
-9-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
3. OTHER ASSETS
Other assets at September 30, 2000 and December 31, 1999 are composed of the
following:
<TABLE>
<CAPTION>
2000 1999
----------- ---------
<S> <C> <C>
Inventory $ 186,000 $ 175,000
Capitalized financing costs 153,000 130,000
Other 160,000 125,000
---------- ---------
499,000 430,000
Accumulated amortization (37,000) (14,000)
---------- ---------
$ 462,000 $ 416,000
========== =========
</TABLE>
Capitalized financing costs were incurred during 2000 in connection with the
refinancing of Tower Park Marina. These costs are amortized over the loan
term, five years. Amortization for the nine months ended September 30, 2000
totaled $23,000.
4. NOTES PAYABLE
Notes payable at September 30, 2000 and December 31, 1999 consist of the
following:
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Note payable secured by a deed
of trust on Tower Park Marina $ 2,058,000 $ 2,085,000
Other 10,000 15,000
----------- -----------
$ 2,068,000 $ 2,100,000
============ ===========
</TABLE>
At September 30, 2000 future principal payments are as follows:
YEAR
2000 $ 13,000
2001 49,000
2002 50,000
2003 52,000
2004 1,904,000
-----------
$ 2,068,000
===========
-10-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
4. NOTES PAYABLE (CONTINUED)
Between September 1991 and September 30, 1999, no payments had been made
on the note secured by Tower Park Marina. 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 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 affiliate of Mr.
Hughes which holds the note, entered into a new option agreement with the
Partnership, which allows the Partnership to purchase the note secured by
Tower Park Marina, for the affiliate's cost, $1,700,000, plus $68,000 of
accrued unpaid interest.
As of December 31, 1998, the note was reflected on the Partnership's
balance sheet at its face value of $6,665,000 with an additional
$3,199,000 being shown as accrued unpaid interest. 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 by making an additional $50,000 principal payment in
February 1999. On July 1, 1999 the Partnership completed the refinancing
of Tower Park and exercised its option to repay the note payable for
$1,600,000. As a result, the Partnership recognized a gain of $8,515,000
from the forgiveness of debt.
The new note payable was for an initial amount of $2,000,000, with an
additional $500,000 available to make improvements to the property. As of
September 30, 2000, $100,000 had been borrowed for capital improvements.
The loan accrues interest at 9.34% and requires monthly principal and
interest payments of $19,000. The loan is due on July 1, 2004.
Interest paid on these notes for the nine months ended September 30, 2000
and 1999 was $148,000, and $98,000, respectively.
In connection with the refinancing of the Partnership's note payable
during 1999 the General Partner was paid $25,000 of loan brokerage fees
in accordance with the Partnership agreement.
Based on the market rate of the mortgage note, the fair value at
September 30, 2000 and December 31, 1999 is deemed to be the carrying
value.
-11-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
5. 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 nine months ended September 30, 2000
and 1999 were $114,000 and $104,000, 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% (10.5% at September 30, 2000). Total interest paid or
accrued to Westrec for the nine months ended September 30, 2000 and 1999
was $261,000 and $159,000, respectively.
6. COMMITMENTS AND CONTINGENCIES
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 operations at Tower Park Marina are influenced by factors that affect
the boating industry both locally and nationally, with activity at Tower
Park Marina increasing seasonally during the period April through October
of each year.
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"). Effective January 1, 1999, the
Partnership entered into a new lease with the CSLC for a term of 25
years. The CSLC Lease provides for an annual rental based on gross
receipts, with a minimum annual rental of $40,000 payable in advance.
Rent expense associated with the CSLC Lease is included in cost of
operations and was $30,000 for each of the nine months ended September
30, 2000 and 1999.
-12-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
September 30, 2000
(Unaudited)
The revenues and expenses of the Partnership for the nine months ended
September 30, 2000 are generated solely from the operations of Tower Park
Marina in the Sacramento - San Joaquin Delta near Sacramento, California. As
of September 30, 2000, Tower Park Marina had the following occupancies:
SPACES %
AVAILABLE OCCUPIED
------------------------
Wet slips 238 (1) 82.4%
Dry storage 147 79.6%
RV Park 136 (1) 86.8%
(1) non-transient spaces only
For the nine months ended September 30, 2000, revenues for Tower Park Marina
increased $250,000 to $2,503,000. The increase was primarily due to a
$82,000 increase in restaurant revenues and a $75,000 increase in RV
parking. In addition, during 2000 the Partnership took over the boat service
operation that had previously been leased. The increase in restaurant
revenues is due to extended hours of operation and an increased level of
activity at the property. Overall the property's net operating income
declined $54,000 to $282,000 for the nine months ended September 30, 2000.
The decline in operating income is due to primarily a $40,000 increase in
insurance costs.
The Partnership's net loss of $309,000 for the nine months ended September
30, 2000 includes $149,000 of depreciation and amortization, a non-cash
item, an improvement of $110,000 in cash flow over the same period a year
ago. This improvement is primarily the result of successfully refinancing
the debt on the property which reduced interest charges on the property debt
for the period by $267,000. This reduction was partially offset by a
$102,000 increase in interest paid to affiliates, which is the result of
higher interest rates and higher outstanding balances, and the $54,000
decline in operating results discussed above.
-13-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
September 30, 2000
(Unaudited)
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Partnership has received advances from affiliates
of the General Partners to acquire properties, make capital improvements to
the properties, cover operating deficits, and to a lesser extent, make
distributions to the partners.
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 was exercised on July
1, 1999 and with the additional capital provided by the refinancing, the
Partnership's financial uncertainty has been stabilized.
The Partnership's ability to continue to operate through 2000 and beyond is
contingent on among other factors, the improvement in Tower Park Marina
operations and continued advances from the General Partners. Management's
plans include the expenditure of approximately $400,000 in additional
repairs and capital improvements during 2000 and 2001, which management
believes will improve the operating results of the property.
-14-
<PAGE>
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
PART II. OTHER INFORMATION
September 30, 2000
(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: November 6, 2000
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
-15-
