For Quarter Ended
September 30, 2002

Commission File
Number 0-17672

a California Limited Partnership

(Exact name of registrant as specified in its charter)

California

95-4137996

(State or other jurisdiction of incorporation or organization)

(IRS Employer 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

Yes

x

No

o

PAGE REFERENCE

PART I.

FINANCIAL INFORMATION

Consolidated Balance Sheets at September 30, 2002 and December 31, 2001

2

Consolidated Statements of Operations for the three month periods ended September 30, 2002 and 2001

3

Consolidated Statements of Operations for the nine month periods ended September 30, 2002 and 2001

4

Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2002 and 2001

5

Notes to Consolidated Financial Statements

6-17

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

PART II.

OTHER INFORMATION

19

September 30,
2002

December 31,
2001

(Unaudited)

ASSETS

Cash

$

50,000

$

49,000

Reserve fund

260,000

253,000

Accounts receivable

161,000

131,000

Tower Park Marina, net (Note 2)

2,665,000

2,711,000

Water and sewer facilities, net (Note 3)

92,000

93,000

Other assets, net (Note 4)

287,000

274,000

$

3,511,000

$

3,515,000

LIABILITIES AND PARTNERS’ DEFICIT

Accounts payable and accrued expenses

$

292,000

$

195,000

Interest payable

15,000

16,000

Payable to affiliates

4,372,000

4,236,000

Deferred rentals

141,000

136,000

Notes payable (Note 5)

1,986,000

2,023,000

Commitments and contingencies (Note 7)

—  

—  

6,806,000

6,606,000

Minority partners’ interest

183,000

187,000

Partners’ deficit:

Limited partners’ deficit, $50,000 per unit, 4,508 units authorized issued and outstanding

(2,578,000

)

(2,388,000

)

Less deferred contributions

(76,000

)

(76,000

)

(2,654,000

)

(2,464,000

)

General partners’ deficit

(820,000

)

(818,000

)

Total partners’ deficit

(3,474,000

)

(3,282,000

)

$

3,515,000

$

3,511,000

2002

2001

Revenues:

Slip rentals

$

196,000

$

195,000

RV parking

297,000

301,000

Retail store

185,000

177,000

Fuel service

110,000

114,000

Water and sewer

43,000

74,000

Lease

55,000

56,000

Other income

48,000

29,000

934,000

946,000

Expenses:

Slip rentals

39,000

16,000

RV parking

42,000

58,000

Retail store

131,000

135,000

Fuel service

85,000

85,000

Water and sewer

68,000

68,000

Cost of operations

336,000

351,000

Interest expense

115,000

115,000

Depreciation and amortization

65,000

63,000

Management fees (Note 6)

42,000

42,000

Minority partners’ interest

(13,000

)

4,000

910,000

937,000

Income before discontinued operations

24,000

9,000

Loss from discontinued operations

—  

(1,000

)

Net income

$

24,000

$

8,000

Allocation of net income:

Limited Partners’

$

24,000

$

8,000

General Partners’

—  

—  

$

24,000

$

8,000

Limited Partners’ net income per unit:

Income from continuing operations

$

5.32

$

1.99

Loss from discontinued operations

—  

(.22

)

Net income

$

5.32

$

1.77

2002

2001

Revenues:

Slip rentals

$

526,000

$

537,000

RV parking

730,000

768,000

Retail store

360,000

353,000

Fuel service

188,000

213,000

Water and sewer

137,000

160,000

Lease

144,000

144,000

Other income

92,000

91,000

2,177,000

2,266,000

Expenses:

Slip rentals

69,000

43,000

RV parking

119,000

121,000

Retail store

280,000

282,000

Fuel service

153,000

173,000

Water and sewer

141,000

159,000

Cost of operations

992,000

1,067,000

Interest expense

325,000

390,000

Depreciation and amortization

194,000

179,000

Management fees (Note 6)

100,000

106,000

Minority partners’ interest

(4,000

)

2,000

2,369,000

2,522,000

Loss before discontinued operations

(192,000

)

(256,000

)

Loss from discontinued operations

—  

(15,000

)

Net loss

$

(192,000

)

$

(271,000

)

Allocation of net loss:

Limited Partners’

$

(190,000

)

$

(268,000

)

General Partners’

(2,000

)

(3,000

)

$

(192,000

)

$

(271,000

)

Limited Partners’ net loss per unit:

Loss from continuing operations

$

(42.15

)

$

(56.29

)

Loss from discontinued operations

—  

(3.16

)

Net loss

$

(42.15

)

$

(59.45

)

2002

2001

Cash flows from operating activities:

Net loss

$

(192,000

)

$

(271,000

)

Adjustments to reconcile net loss to net cash provided by (used for) operating activities:

Depreciation and amortization

194,000

179,000

Minority partners’ interest

(4,000

)

2,000

Increase in accounts receivable

(30,000

)

(90,000

)

(Increase) decrease in inventory

(19,000

)

45,000

Increase in other assets

(15,000

)

(21,000

)

Increase in accounts payable and accrued expenses

97,000

92,000

Decrease in interest payable

(1,000

)

—  

Increase in deferred rentals

5,000

30,000

Cash flows provided by (used for) operating activities

35,000

(34,000

)

Cash flows from investing activities:

Improvements to marina facilities

(121,000

)

(191,000

)

Improvements to water and sewer facilities

(5,000

)

(2,000

)

Increase in reserve fund

(7,000

)

(7,000

)

Cash flow used for investing activities

(133,000

)

(200,000

)

Cash flows from financing activities:

Borrowings on note payable

—  

14,000

Repayments of notes payable

(37,000

)

(35,000

)

Advances from affiliates, net

136,000

287,000

Net cash provided by financing activities

99,000

266,000

Net increase in cash

1,000

32,000

Cash at the beginning of period

49,000

70,000

Cash at the end of period

$

50,000

$

102,000

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 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.

Basis for Presentation

In the opinion of management, all adjustments and normal recurring accruals considered necessary for a fair presentation have been included.  Operating results for the nine month period ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Tower Park Marina Investors, L.P. and its majority-owned subsidiary, Little Potato Slough Mutual Water Company (“LPSMWC”).  All significant inter-company transactions and balances have been eliminated in the consolidation.

1.

Summary of Significant Accounting Policies and Partnership Matters (continued)

Principles of Consolidation (continued)

Tower Park Marina Investors, L.P. was organized on January 6, 1988 and elected a December 31 year end for tax reporting and financial reporting purposes.  Little Potato Slough Mutual Water Company (the “Subsidiary”) was organized on March 8, 1982 and elected a February 28 year end for tax reporting and financial reporting purposes.  The Company acquired a majority interest in Little Potato Slough Mutual Water Company.  The Subsidiary’s February 28 financial statements are consolidated with the December 31 financial statements of the Company since the difference in reporting periods is not more than 93 days.  There are no intervening events which may materially affect the financial position or results of operations.

Reserve Fund

The bylaws of LPSMWC require a reserve fund to be established for the replacement of its existing facilities and any expansion.  This reserve is funded by monthly water and sewer charges assessed to all the shareholders.  At September 30, 2002 the reserve fund balance was $259,000.  The reserve fund is composed of cash in bank, money market funds and certificates of deposit.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Revenue Recognition

Revenue from slip rentals and RV Parking are recognized over the length of the contract term.  Retail and fuel service revenues are recognized at point of sale.

In 2000, the Partnership adopted the Securities and Exchange Commission’s Staff Accounting Bulletin (SAB) No. 101, which establishes guidelines for applying generally accepted accounting principles to revenue recognition in financial statements.  The adoption of SAB No. 101 did not affect the results of operations or financial position of the Partnership.

1.

Summary of Significant Accounting Policies and Partnership Matters (continued)

Net Realizable Value Reserve

As of September 30, 2002 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.  The reserve represents an aggregate cost adjustment to individual assets in compliance with SFAS 121 and no restoration of this previously recognized reserve is permitted in accordance with paragraph 11 of this guidance.

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.

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.  The difference between the tax basis and the reported amounts of the Partnership’s assets and liabilities is attributable to the net realizable value reserve of $2,193,000 and accumulated depreciation of $1,080,000.

Segment Reporting

Effective January 1, 1998, the Partnership adopted the Financial Accounting Standards Board’s Statement of Financial Accounting Standards (“SFAS”) No. 131 “Disclosures about Segments of an Enterprise and Related Information”.  SFAS 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 and requires restatement of prior year information.  Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision makers in assessing performance.  SFAS No. 131 also establishes standards for related disclosures about products and services, geographic areas, and major customers.  The adoption of SFAS No. 131 did not affect the results of operations or financial position but did affect the disclosure of segment information, as presented in Note 8.

1.

Summary of Significant Accounting Policies and Partnership Matters (continued)

New Accounting Pronouncements

FASB issued on June 2001, SFAS No. 142, Goodwill and Other Intangible Assets.  This Statement addresses the financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB 17, Intangible Assets.  The provisions of this Statement are required to be applied starting with fiscal years beginning after December 15, 2001.  This Statement did not affect the results of operations or financial position of the Partnership.

FASB issued on June 2001, SFAS No. 143, Accounting for Asset Retirement Obligations.  This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.  This Statement shall be effective for financial statements issued for fiscal years beginning after June 15, 2002.  This Statement did not affect the results of operations or financial position of the Partnership.

FASB issued in August 2001, SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.  This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets.  This Statement was adopted by the Partnership on January 1, 2002.  This Statement requires the Partnership to test its marina facilities for recoverability because of current period operating or cash flow loss combined with a history of operating or cash flow losses.  An impairment loss shall be recognized if the carrying amount is greater than the sum of undiscounted cash flows expected to result from the use and eventual disposition of its marina facilities.  The Partnership reduced the carrying value of its marina facilities to its net realizable value in 1995 in accordance with SFAS 121.  The Partnership has determined that no impairment exists at September 30, 2002, and accordingly, no impairment charges have been recorded. 

2.

Tower Park Marina

Tower Park Marina, located in the Sacramento – San Joaquin Delta near Sacramento, California, includes the purchase price of the property and related acquisition and closing costs.  The Partnership pays an acquisition fee of 6% of the contract purchase price of the marina facility, 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 $10,000 for the nine months ended September 30, 2002 and the for the year ended December 31, 2001, respectively.  At September 30, 2002 and December 31, 2001 Tower Park Marina comprised the following:

2002

2001

Land

$

1,040,000

$

1,040,000

Buildings

2,264,000

2,264,000

Improvements

2,241,000

2,241,000

Floating docks

3,107,000

3,107,000

Furniture, fixtures and equipment

1,318,000

1,318,000

Leasehold interest

941,000

941,000

Construction in progress

121,000

—  

11,032,000

10,911,000

Less accumulated depreciation and amortization

(6,174,000

)

(6,007,000

)

4,858,000

4,904,000

Net realizable value reserve

(2,193,000

)

(2,193,000

)

$

2,665,000

$

2,711,000

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.

Water and sewer facilities

Water and sewer facilities at September 30, 2002 and December 31, 2001 are comprised of the following:

2002

2001

Water and sewer equipment

$

174,000

$

169,000

Less accumulated depreciation

(82,000

)

(76,000

)

$

92,000

$

93,000

4.

Other Assets

Other assets at September 30, 2002 and December 31, 2001 are comprised of the following:

2002

2001

Inventory

$

171,000

$

152,000

Capitalized financing costs

152,000

152,000

Other

56,000

41,000

379,000

345,000

Accumulated amortization

(92,000

)

(71,000

)

$

287,000

$

274,000

Capitalized financing costs were incurred during 1999 in connection with the refinancing of Tower Park Marina.  These costs are amortized over the loan term, five years.

Inventory is stated at the lower of cost (average cost method) or market (replacement or net realizable value).

5.

Notes Payable

Notes payable at September 30, 2002 and December 31, 2001 consist of the following:

2002

2001

Note payable secured by a deed of trust on Tower Park Marina

$

1,974,000

$

2,008,000

Other

12,000

15,000

$

1,986,000

$

2,023,000

At September 30, 2002 future principal payments are as follows:

Year

2002

$

15,000

2003

54,000

2004

1,911,000

2005

4,000

2006

2,000

$

1,986,000

The note payable secured by Tower Park Marina was for an initial amount of $2,000,000, with an additional $100,000 borrowed to make improvements to the property.  The loan accrues interest at 9.34% and requires monthly principal and interest payments of $23,000.  The loan is due on July 1, 2004.

Interest paid on these notes for the nine months ended September 30, 2002 and 2001 was $142,000 and $145,000, respectively.

Based on the market rate of the mortgage note, the fair value at September 30, 2002 is deemed to be the carrying value.

6.

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, 2002 and 2001 were $100,000 and $106,000, respectively.

In connection with funding the Partnership’s operating deficits, and with the acquisition of marina facilities, funds have been borrowed from Westrec.  During the nine months ended September 30, 2002 and 2001, $136,000 and $95,000 in funds were borrowed from Westrec.  Total borrowings from Westrec at September 30, 2002 (including accrued interest) were $4,372,000.  These borrowings accrue interest at the prime rate plus 1% (5.75% at September 30, 2002).  Total interest paid or accrued to Westrec for the nine months ended September 30, 2002 and 2001 was $184,000 and $245,000, respectively.

7.

Commitments and Contingencies

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.

In November 1991, contamination was discovered in the area surrounding a fuel storage tank at Tower Park Marina.  Currently, the Partnership is required to perform quarterly groundwater sampling and monitoring.  Environmental consultants have been engaged to perform this 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.  To date the Partnership has incurred $94,000 in monitoring fees.  Included in cost of operations for the nine months ended September 30, 2002 and 2001 are $7,000 and $8,000, respectively, of monitoring fees.

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 CSLC Lease was extended until December 31, 2023.  The CSLC Lease provides for an annual rent based on gross receipts, with a minimum annual rent of $40,000, payable in advance in quarterly installments of $10,000.  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, 2002 and 2001.

7.

Commitments and Contingencies (continued)

Future minimum lease payments under this lease are as follows:

Year

2002

$

10,000

2003

40,000

2004

40,000

2005

40,000

2006

40,000

Thereafter

684,000

$

854,000

The Partnership’s ability to continue to operate through 2002 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 $150,000 in additional repairs and capital improvements during 2002, which management believes will continue to improve the operations of the property.  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.

Segment Reporting

The Partnership has been aggregated into four reportable business segments, (Slip rentals, RV parking, Retail sales, and Fuel services):  Slip rentals comprise the wet boat slip rentals and dry boat storage operations at the marina.  RV parking represents both long term and transient recreational vehicle (“RV”) parking at the campgrounds adjacent to the marina.  Retail sales segment consists of the operations of the retail boat supply and sundries store at the marina.  The Fuel service segment reports the operations of the fuel dock at the marina.

The accounting policies of the reportable segments are the same as those described in summary of significant accounting policies.  The Company evaluates the performance of its operating segments based on income from operations before depreciation and amortization.

Summarized financial information concerning the Company’s reportable segments is shown in the following table.  The “other” line item includes results of insignificant operations and as it relates to segment profit (loss), income and expenses not allocated to reportable segments.

8.

Segment Reporting (continued)

For the nine month periods ended

Segment Information (in 000’s)

September 30,
2002

September 30,
2001

Revenues

Slip Rental

526

537

RV Parking

730

768

Retail Sales

360

353

Fuel Service

188

213

Other

373

395

Total Consolidated Revenues

2,177

2,266

Depreciation and Amortization

Slip Rental

42

36

RV Parking

13

13

Retail Sales

—  

—  

Fuel Service

—  

—  

Unallocated amount (2)

139

130

Total Consolidated Depreciation

194

179

Profit (Loss)

Slip Rental

415

458

RV Parking

598

634

Retail Sales

80

71

Fuel Service

35

40

Other (1)

(1,320

)

(1,459

)

Total Income Before Discontinued Operations

(192

)

(256

)

Sept 30,
2002

Dec 31,
2001

Assets

Slip Rental

228

271

RV Parking

238

251

Retail Sales

133

59

Fuel Service

24

17

Unallocated amount (2)

2,892

2,913

Total Consolidated Assets

3,515

3,511