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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: June 30, 2010
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from: to .
Commission File 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 incorporation or organization) |
(IRS Employer Identification No.) |
16633 Ventura Boulevard, 6th Floor Encino, California 91436-1835
(Address of principal executive offices) (Zip Code)
(818) 907-0400
Registrants phone number, including area code
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company: x
(Do not check if a smaller reporting company)
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ¨ No x
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨
As of June 30, 2010, Tower Park Marina Investors, LP had 4,508 units of limited partnership interest outstanding.
Table of Contents
Report on Form 10-Q
For quarter ended June 30, 2010
Page | ||||
PART I. FINANCIAL INFORMATION |
||||
ITEM 1. | FINANCIAL STATEMENTS | |||
Balance Sheets | 2 | |||
Statements of Operations for the three months ended June 30, 2010 and 2009 | 3 | |||
Statements of Operations for the six months ended June 30, 2010 and 2009 | 4 | |||
Statements of Cash Flows for the six months ended June 30, 2010 and 2009 | 5 | |||
Notes to Financial Statements | 6-14 | |||
ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 15-16 | ||
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 17 | ||
ITEM 4. | CONTROLS AND PROCEDURES | 17 | ||
PART II. OTHER INFORMATION | ||||
ITEM 1. | LEGAL PROCEEDINGS | |||
ITEM 1A. | RISK FACTORS | |||
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | |||
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | |||
ITEM 4. | SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS | |||
ITEM 5. | OTHER INFORMATION | |||
ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K | 18 | ||
SIGNATURES | 19 |
Table of Contents
TOWER PARK MARINA INVESTORS, L.P
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
BALANCE SHEETS
June 30, 2010 |
December 31, 2009 |
|||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 965,000 | $ | 988,000 | ||||
Accounts receivable net of allowance for doubtful accounts of $25,000 in 2010 and $24,000 in 2009 |
44,000 | 48,000 | ||||||
Tower Park Marina, net (Note 2) |
157,000 | 172,000 | ||||||
Other assets, net (Note 3) |
34,000 | 50,000 | ||||||
$ | 1,200,000 | $ | 1,258,000 | |||||
LIABILITIES AND PARTNERS DEFICIT |
||||||||
Accounts payable and accrued expenses |
$ | 520,000 | $ | 518,000 | ||||
Deferred gain on sale of Tower Park Marina (Note 2) |
1,453,000 | 1,561,000 | ||||||
Deferred rentals |
27,000 | 12,000 | ||||||
2,000,000 | 2,091,000 | |||||||
Commitments and contingencies (Note 5) |
| | ||||||
Partners deficit: |
||||||||
Limited partners equity, $5,000 per unit, 4,508 units authorized, issued and outstanding |
22,000 | (11,000 | ) | |||||
Deferred contributions |
(27,000 | ) | (27,000 | ) | ||||
Limited partners deficit |
(5,000 | ) | (38,000 | ) | ||||
General partners deficit |
(795,000 | ) | (795,000 | ) | ||||
Total partners deficit |
(800,000 | ) | (833,000 | ) | ||||
$ | 1,200,000 | $ | 1,258,000 | |||||
See accompanying notes to financial statements.
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TOWER PARK MARINA INVESTORS, L.P.
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
STATEMENTS OF OPERATIONS
For the three months ended June 30, 2010 and 2009
(Unaudited)
2010 | 2009 | |||||
Revenues: |
||||||
Slip rental |
$ | 194,000 | $ | 201,000 | ||
Dry storage |
35,000 | 43,000 | ||||
Fuel service |
49,000 | 60,000 | ||||
Interest and other income |
3,000 | 5,000 | ||||
Revenues from operations |
281,000 | 309,000 | ||||
Expenses: |
||||||
Slip rental |
17,000 | 13,000 | ||||
Dry storage |
8,000 | 10,000 | ||||
Fuel service |
41,000 | 46,000 | ||||
Cost of operations |
169,000 | 169,000 | ||||
Management fees (Note 4) |
15,000 | 16,000 | ||||
Depreciation and amortization |
8,000 | 6,000 | ||||
258,000 | 260,000 | |||||
Net income |
$ | 23,000 | $ | 49,000 | ||
Allocation of net profit: |
||||||
Limited Partners |
$ | 23,000 | $ | 49,000 | ||
General Partners |
| | ||||
$ | 23,000 | $ | 49,000 | |||
Limited Partners net income per unit: |
$ | 5.10 | $ | 10.87 | ||
Total units outstanding |
4,508 | 4,508 | ||||
See accompanying notes to financial statements.
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Table of Contents
TOWER PARK MARINA INVESTORS, L.P.
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
STATEMENTS OF OPERATIONS
For the six months ended June 30, 2010 and 2009
(Unaudited)
2010 | 2009 | |||||
Revenues: |
||||||
Slip rental |
$ | 378,000 | $ | 385,000 | ||
Dry storage |
70,000 | 85,000 | ||||
Fuel service |
60,000 | 70,000 | ||||
Interest and other income |
5,000 | 13,000 | ||||
Revenues from operations |
513,000 | 553,000 | ||||
Expenses: |
||||||
Slip rental |
30,000 | 24,000 | ||||
Dry storage |
13,000 | 14,000 | ||||
Fuel service |
56,000 | 58,000 | ||||
Cost of operations |
336,000 | 350,000 | ||||
Management fees (Note 4) |
28,000 | 30,000 | ||||
Depreciation and amortization |
17,000 | 12,000 | ||||
480,000 | 488,000 | |||||
Net income |
$ | 33,000 | $ | 65,000 | ||
Allocation of net profit: |
||||||
Limited Partners |
$ | 33,000 | $ | 64,000 | ||
General Partners |
| 1,000 | ||||
$ | 33,000 | $ | 65,000 | |||
Limited Partners net income per unit: |
$ | 7.32 | $ | 14.20 | ||
Total units outstanding |
4,508 | 4,508 | ||||
See accompanying notes to financial statements.
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TOWER PARK MARINA INVESTORS, L.P.
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2010 and 2009
(Unaudited)
2010 | 2009 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 33,000 | $ | 65,000 | ||||
Adjustments to reconcile net income to net cash provided by (used for) operating activities: |
||||||||
Depreciation and amortization |
17,000 | 12,000 | ||||||
Amortization of deferred gain |
(108,000 | ) | (108,000 | ) | ||||
Provision for doubtful accounts |
2,000 | 2,000 | ||||||
Decrease in accounts receivable |
2,000 | 7,000 | ||||||
Decrease (increase) in other assets |
16,000 | (11,000 | ) | |||||
Increase (decrease) in accounts payable and accrued expenses |
2,000 | (20,000 | ) | |||||
Increase in deferred rentals |
15,000 | 5,000 | ||||||
Cash flow used for operating activities |
(21,000 | ) | (48,000 | ) | ||||
Cash flows from investing activities: |
||||||||
Improvements to marina facilities |
(2,000 | ) | (20,000 | ) | ||||
Cash flow used for investing activities |
(2,000 | ) | (20,000 | ) | ||||
Cash flows from financing activities: |
| | ||||||
Net decrease in cash and cash equivalents |
(23,000 | ) | (68,000 | ) | ||||
Cash and cash equivalents at the beginning of period |
988,000 | 1,182,000 | ||||||
Cash and cash equivalents at the end of period |
$ | 965,000 | $ | 1,114,000 | ||||
See accompanying notes to financial statements.
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TOWER PARK MARINA INVESTORS, L.P.
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
(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. (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 Partnerships 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 Partners total capital contribution was deferred. The final installment was due on August 1, 1990, and $27,000 of such deferrals remain outstanding.
Basis of Presentation
The unaudited financial statements of Tower Park Marina Investors, LP at June 30, 2010 and for the six months ended June 30, 2010 are presented in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and have been prepared pursuant to Article 10 of the Securities and Exchange Commissions Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the years presented have been included. The results of operations for the six months ended June 30, 2010 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2010. These unaudited financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2009 included in our Annual Report on Form 10-K.
Cash and Cash Equivalents
Cash and cash equivalents consist of all amounts on deposit in interest bearing and non-interest bearing demand deposit accounts as well as highly liquid investments purchased with an original maturity of three months or less.
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TOWER PARK MARINA INVESTORS, L.P.
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
(Unaudited)
1. | Summary of Significant Accounting Policies and Partnership Matters (continued) |
Tower Park Marina
Tower Park Marina is stated at cost to the Partnership. Provision for depreciation and amortization is calculated using the straight-line method. Depreciable lives for the major asset categories are as follows:
Asset Category |
Depreciable Life | |
Furniture, fixtures and equipment |
7 years | |
Leasehold interest |
life of lease |
Revenue Recognition
Revenue from slip rentals and dry storage are recognized over the length of the contract term. Fuel service revenues are recognized at point of sale.
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.
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 interest in Cash Flow from Operations (as defined) and Cash from Sales or Refinancing (as defined) is 1%.
Allocations of Net Income or Loss
As set forth in the Partnership Agreement, net income and net loss shall be allocated 99% to the Limited Partners and 1% to the General Partners.
Earnings Per Unit
Per unit data is based on the weighted average number of the Limited Partnership units outstanding during the three months and six months ended June 30, 2010 and 2009, 4,508.
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TOWER PARK MARINA INVESTORS, L.P.
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
(Unaudited)
1. | Summary of Significant Accounting Policies and Partnership Matters (continued) |
Fair Value Measurements
On January 1, 2008, the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, became effective for the Partnership. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1 | Quoted prices in active markets for identical assets or liabilities. | |
Level 2 | Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. | |
Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
An assets or liabilitys level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.
The Partnership has segregated all financial assets and liabilities that are measured at fair value into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. The Partnership has no non-financial assets and liabilities that are measured at fair value.
The following table sets forth the Partnerships financial assets and liabilities measured at fair value by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The table below sets forth a summary of the fair values of the Partnerships financial assets as of June 30, 2010.
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Table of Contents
TOWER PARK MARINA INVESTORS, L.P.
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
(Unaudited)
1. | Summary of Significant Accounting Policies and Partnership Matters (continued) |
Total | Level 1 | Level 2 | Level 3 | |||||||
Assets |
||||||||||
Cash equivalents |
$ | 870,000 | $ | 870,000 | | | ||||
$ | 870,000 | $ | 870,000 | | | |||||
The Partnership believes that the carrying value of its cash, accounts receivable, accounts payable and accrued liabilities as of June 30, 2010 and December 31, 2009 approximate their fair values because of the short term nature of those instruments.
Concentration of Credit Risk
Financial instruments that potentially subject the Partnership to concentration of credit risk are cash and cash equivalent deposits in excess of federally insured limits. From time to time the Partnership may have bank deposits in excess of federally insured limits. The Partnership evaluates these excess deposits, and transfers amounts to other banks if it considers such transfers necessary.
Recently Issued Accounting Standards
In February 2010, the FASB issued Accounting Standards Update 2010-09, Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements. ASU 2010-09 removes the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP. The FASB also clarified that if the financial statements have been revised, then an entity that is not an SEC filer should disclose both the date that the financial statements were issued or available to be issued and the date the revised financial statements were issued or available to be issued. The FASB believes these amendments remove potential conflicts with the SECs literature. In addition, the amendments in the ASU requires an entity that is a conduit bond obligor for conduit debt securities that are traded in a public market to evaluate subsequent events through the date of issuance of its financial statements and must disclose such date. All of the amendments in the ASU were effective upon issuance (February 24, 2010) except for the use of the issued date for conduit debt obligors. That amendment is effective for interim or annual periods ending after June 15, 2010. The provisions of ASU 2010-09 did not have a material impact on the Partnerships financial statements.
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Table of Contents
TOWER PARK MARINA INVESTORS, L.P.
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
(Unaudited)
1. | Summary of Significant Accounting Policies and Partnership Matters (continued) |
Recently Issued Accounting Standards (continued)
In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. ASU 2010-06 amends Codification Subtopic 820-10 to add two new disclosures: (1) transfers in and out of Level 1 and 2 measurements and the reasons for the transfers, and (2) a gross presentation of activity within the Level 3 roll forward. The proposal also includes clarifications to existing disclosure requirements on the level of disaggregation and disclosures regarding inputs and valuation techniques. The proposed guidance would apply to all entities required to make disclosures about recurring and nonrecurring fair value measurements. The effective date of the ASU is the first interim or annual reporting period beginning after December 15, 2009, except for the gross presentation of the Level 3 roll forward information, which is required for annual reporting periods beginning after December 15, 2010 and for interim reporting periods within those years. Early application is permitted. The Partnership is currently assessing the impact that the adoption will have on its financial statements.
There were no other new accounting pronouncements that are expected to have a material impact or have potential material significance to the Partnership.
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.
2. | Tower Park Marina |
On March 27, 2007, the Partnership completed the sale of substantially all the assets of Tower Park Marina and RV Park to Kampgrounds of America (KOA) for $13,500,000 in cash. Net cash received was reduced to $13,459,000 due to property taxes and closing costs borne by the Partnership amounting to $41,000. The assets sold included the land and improvements known as Tower Park Marina, the Partnerships 51% interest in the Little Potato Slough Mutual Water Company, the Partnerships leasehold interest in the lease between the California State Land Commission (as landlord) and the Partnership (as tenant), dated as of January 14, 1999, approximately 100 acres of undeveloped land, and certain personal property associated with the foregoing. The gain was further reduced by $416,000 of maintenance repairs identified by KOA. The Partnership will make these repairs over the next several years.
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TOWER PARK MARINA INVESTORS, L.P.
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
(Unaudited)
2. | Tower Park Marina (continued) |
The Partnership recognized a gain of $8,117,000 and deferred gain of $2,152,000 from the sale in March 2007. The proceeds from the sale were used primarily to repay the Partnerships note payable and the payable to affiliates, and in April 2007, the Partnership made a distribution of $3,642,000 to its partners.
In connection with the sale, the existing lease agreement between KOA and the Partnership, under which the Partnership had leased the RV Park and retail store at Tower Park Marina to KOA, was terminated. Pursuant to a new lease, KOA leased back to the Partnership the marina facilities and dry storage buildings that make up a portion of the property that was sold. In accordance with ASC Topic 840, Leases, $2,152,000 of the gain from the sale was deferred and will be amortized as a reduction in rent expense over the ten-year term of the lease agreement. The amount of the gain that was deferred was based on the Partnerships ten year lease commitment, discounted at 10%. For the six months ended June 30, 2010 and 2009, $108,000 of the deferred gain from the sale was amortized for each period, and is reflected in cost of operations.
As of June 30, 2010 and December 31, 2009 the assets related to Tower Park Marina that remain as part of the Partnership are composed of the following:
2010 | 2009 | |||||||
Leasehold interest |
$ | 27,000 | $ | 27,000 | ||||
Floating docks |
45,000 | 45,000 | ||||||
Furniture, fixtures and equipment |
240,000 | 238,000 | ||||||
Vehicles |
36,000 | 36,000 | ||||||
348,000 | 346,000 | |||||||
Less accumulated depreciation |
(191,000 | ) | (174,000 | ) | ||||
$ | 157,000 | $ | 172,000 | |||||
See Note 5 for a discussion of the Partnerships continuing obligations with respect to the marina and adjacent property.
3. | Other Assets |
Other assets as of June 30, 2010 and December 31, 2009 are composed of the following:
2010 | 2009 | |||||
Fuel inventory |
$ | 26,000 | $ | 28,000 | ||
Other prepaid expenses |
8,000 | 22,000 | ||||
$ | 34,000 | $ | 50,000 | |||
Fuel inventory is stated at the lower of cost (average cost method) or market (replacement or net realizable value).
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Table of Contents
TOWER PARK MARINA INVESTORS, L.P.
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
(Unaudited)
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 marinas monthly gross revenues (as defined). Management fees for the six months ended June 30, 2010 and 2009 were $28,000 and $30,000, respectively.
In connection with their services in negotiating and obtaining permanent financing from an unaffiliated lender, the General Partners or their affiliates are entitled to receive an amount equal to 1% of the principal amount of the financing or refinancing, less any fees paid to other loan brokers. No loan brokerage fees were paid to the General Partners or their affiliates for the six months ended June 30, 2010.
5. | 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 period.
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). As mentioned in Note 2 above, the Partnerships leasehold interest in the CLSC lease was sold to KOA on March 27, 2007. Simultaneously with the sale of Tower Park Marina, the Partnership leased back a portion of the property consisting of the marina facilities and dry storage buildings. The marina operations will include all areas currently operated as part of the marina operations and approximately 7 acres of additional land for a future dry storage building, boat repair area and maintenance yard. The lease has a ten-year term with three (3) 5-year options to extend. Basic rent will be $25,000 per month for the first five years. Included in lease expense in cost of operations is $150,000, paid to KOA for each of the six months ended June 30, 2010 and 2009. The basic rent will be increased 3.5% per each lease year, adjusted every five years. The Partnership will be required during each year of the lease (i) to make payments of approximately $40,000 to KOA with respect to KOAs obligation under the CSLC lease and (ii) to expend at least $50,000 for capital expenditures and/or major repair/maintenance projects. Included in lease expense in cost of operations is $25,000 related to the CSLC lease for each of the six months periods ended June 30, 2010 and 2009, and approximately $167,000 has been spent on maintenance projects.
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TOWER PARK MARINA INVESTORS, L.P.
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
(Unaudited)
6. | Segment Reporting |
The Partnership has been aggregated into three reportable business segments (Slip rental, Dry storage and Fuel service): Slip rental reports the water-based boat slip rentals and Dry storage reports the land based boat storage operations 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 Partnership evaluates the performance of its operating segments based on income from operations before depreciation and amortization.
Summarized financial information concerning the Partnerships 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.
Segment Information (in 000s) |
For the
six- months ended June 30, |
|||||||
2010 | 2009 | |||||||
Revenues |
||||||||
Slip Rental |
$ | 378 | $ | 385 | ||||
Dry Storage |
70 | 85 | ||||||
Fuel Service |
60 | 70 | ||||||
Interest income |
5 | 13 | ||||||
Total Revenue |
$ | 513 | $ | 553 | ||||
Profit (Loss) |
||||||||
Slip Rental |
$ | 348 | $ | 361 | ||||
Dry Storage |
57 | 71 | ||||||
Fuel Service |
4 | 12 | ||||||
Other (1) |
(376 | ) | (379 | ) | ||||
Total Profit (Loss) |
$ | 33 | $ | 65 | ||||
June 30, 2010 |
December 31, 2009 |
|||||||
Assets |
||||||||
Slip Rental |
$ | 72 | $ | 72 | ||||
Unallocated amount (2) |
1,128 | 1,186 | ||||||
Total Assets |
$ | 1,200 | $ | 1,258 | ||||
(1) | These items are not provided to management on a segment basis and are not used by management to measure segment profit or loss. These include general and administrative expenses. |
(2) | Information about assets is not included in the measure of segment profit or loss that is reviewed by management. However, certain information is provided to management and is thus provided here. |
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TOWER PARK MARINA INVESTORS, L.P.
(formerly PS MARINA INVESTORS I)
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
June 30, 2010
(Unaudited)
7. | 401(k) Plan |
The Partnership sponsors a 401(k) Plan (the Plan) which is a qualified defined contribution plan under section 401(k) of the Internal Revenue Code. Full time employees who are at least 21 years of age and have completed one year of service, are eligible to participate in the Plan. Participants of the Plan may choose to contribute up to 50% of their compensation per year, as defined by the Plan, up to a maximum of $15,500 for each of the calendar years 2009 and 2008. The Partnership may match up to 50% of the employees quarterly contribution up to $1,250 per year. The Partnerships matching contribution was $513 and $475 for each of the six months ended June 30, 2010 and 2009.
Rollover Contributions from other qualified plans are accepted by the Plan. The Partnership does not match contributions of this type.
8. | Subsequent Events |
The Partnership has evaluated subsequent events for recognition or disclosure in the financial statements filed on Form 10-Q with the SEC and no events, other than those described in these notes, have occurred that require disclosure.
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Table of Contents
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
PART I. FINANCIAL INFORMATION
June 30, 2010
(Unaudited)
ITEM 2. | Managements Discussion and Analysis |
This quarterly report on Form 10-Q includes certain forward-looking statements. These statements are usually identified by the use of words such as believe, will, anticipate, estimate, expect, project, plan, intend, should, could, or similar expressions. These statements are based on managements current expectations and assumptions and are subject to uncertainty and changes in circumstances. Although we believe that the assumptions underlying the forward looking statements contained in this report are reasonable, actual results may differ materially from these expectations due to changes in global, economic, business, competitive, market and regulatory factors. We undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future.
Results of Operations for the six months ended June 30, 2010 and 2009
The revenues and expenses of the Partnership for the six months ended June 30, 2010 are generated from the marina and dry storage operations of Tower Park in the Sacramento San Joaquin Delta near Sacramento. As of June 30, Tower Park Marina had the following occupancies:
2010 | 2009 | |||||||||||
Available | Occupied | Available | Occupied | |||||||||
Wet slips |
218 | (1) | 87.6 | % | 223 | (1) | 93.3 | % | ||||
Dry storage |
155 | 67.1 | % | 155 | 83.9 | % |
(1) | non-transient slips only |
For the six months ended June 30, 2010, revenues from operations for Tower Park decreased $40,000 to $513,000. This was the result of a decrease in all segments of revenue. Slip rentals decreased $7,000, dry storage revenues decreased $15,000, fuel service revenues were down $10,000, and interest income decreased $8,000. In general, the decline is primarily due to a downturn in the economy causing customers to change their boating habits. This was exacerbated by bad weather for the first half of the year. The dry boat storage market is especially sensitive to economic conditions, as customers who might otherwise choose to store their boats at a marina in good economic times elect to store their vessels in their driveway or garage in an effort to save money. The cash balances for 2009 and the six months ended June 30, 2010 have remained relatively stable; however declining interest rates and a change to a more conservative investment mix have resulted in less interest income in 2010.
The Partnerships net profit from operations of $33,000 for the six months ended June 30, 2010 is a $32,000 decline over the same period a year ago. The decline is primarily attributed to a $13,000 decrease in net slip rental profits, a $14,000 decrease in net dry storage profits, a net $8,000 decline in fuel service profits offset by a slight decrease in operating costs. The decrease in operating costs was related to a decrease in personal property taxes compared to the same period in 2009.
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Table of Contents
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
PART I. FINANCIAL INFORMATION
June 30, 2010
(Unaudited)
ITEM 2. | Managements Discussion and Analysis (continued) |
Liquidity and capital resources
The Partnership had a net profit from operations (net income plus depreciation less interest income) for the six months ended June 30, 2010 of $45,000; however, this includes $108,000 of deferred gain (see Note 2). Excluding the deferred gain, the property had a net operating loss of $63,000. This was covered by existing cash balances. The Partnership has implemented cost reductions where possible, and has sufficient liquidity to cover any operating deficits for the next year.
On March 27, 2007, the Partnership completed the sale of substantially all the assets of Tower Park Marina and RV Park to Kampgrounds of America (KOA) for $13,500,000 in cash. The sale requires the Partnership to make approximately $400,000 in repairs to the property and resulted in a gain of approximately $8,117,000 and deferred gain of $2,152,000. The proceeds from the sale were used to repay the Partnerships note payable and the payable to affiliates. In April of 2007, the Partnership made a distribution of $3,642,000 to its partners.
As part of the sale, the Partnership agreed to lease back the marina and dry storage facilities that comprise a portion of the property. The lease has an initial term of ten years and three five (5) year options to extend. The lease requires minimum monthly payments of $25,000 for the first five years. The Partnership will also be required to reimburse KOA approximately $40,000 for its annual obligations with respect to the CSLC lease. In addition, the Partnership is required to spend a minimum of $50,000 per year on maintenance repairs and improvements. These contractual obligations are summarized below:
Tabular Disclosure of Contractual Obligations
Total | Less than 1 Year |
1 3 Years | 3-5 Years | More than 5 Years | |||||||||||
Operating Leases: |
|||||||||||||||
KOA Lease |
$ | 2,307,000 | $ | 150,000 | $ | 642,000 | $ | 713,000 | $ | 802,000 | |||||
Maintenance reserve |
400,000 | 400,000 | | | | ||||||||||
CSLC Lease Reimbursement |
270,000 | 20,000 | 80,000 | 80,000 | 90,000 | ||||||||||
Capital Improvement Commitment |
333,000 | 25,000 | 100,000 | 100,000 | 108,000 | ||||||||||
Other Long-Term Liabilities Reflected on the Partnerships Balance Sheet under GAAP |
| | | | | ||||||||||
Total |
$ | 3,310,000 | $ | 595,000 | $ | 822,000 | $ | 893,000 | $ | 1,000,000 |
With the sale completed, the Partnership was able to repay all of its debt and the negative cash flow from discontinued operations has been eliminated. The Partnership had a remaining cash balance of $965,000 as of June 30, 2010. Because of these factors, we believe the Partnership is in a position to meet its financial obligations going forward.
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Table of Contents
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
PART I. FINANCIAL INFORMATION
June 30, 2010
(Unaudited)
ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk |
Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange and interest rates. All Partnership transactions are payable in U.S. dollars. The Partnership holds most of its cash in a money market account. We do not consider the effects of interest rate movements to be a material risk to our financial condition. We do not hold any derivative instruments and do not engage in any hedging activities.
ITEM 4. | Controls and Procedures |
Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, the Partnership has evaluated, with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, the effectiveness of its disclosure controls and procedures (as defined in such rules) as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Partnerships disclosure controls and procedures are effective to ensure that information required to be disclosed by the Partnership in reports prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC) is recorded, processed, summarized and reported within the time periods specified by the SECs rules and forms.
Our management, including the Partnerships Chief Executive Officer and Chief Financial Officer, does not expect that the Partnerships disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Partnership have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control Over Financial Reporting.
There have been no significant changes in the Partnerships internal control over financial reporting that occurred during the second quarter of 2010 that have materially affected, or are reasonably likely to materially affect, the Partnerships internal control over financial reporting. The Partnership continues to review its disclosure controls and procedures, including its internal controls over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that the Partnerships systems evolve with its business.
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Table of Contents
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
June 30, 2010
(Unaudited)
PART II. OTHER INFORMATION
Items 1 through 5 are inapplicable.
Item 6. | Exhibits and Report on Form 8K |
a. | Exhibits |
31.1 | Certification of Michael M. Sachs pursuant to Rules 13a-14 and 15d-14 under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of William W. Anderson pursuant to Rules 13a-14 and 15d-14 under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.3 | Certification of Jeffrey K. Ellis pursuant to Rules 13a-14 and 15d-14 under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
b. | Reports on Form 8K |
Not applicable
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Table of Contents
TOWER PARK MARINA INVESTORS, L.P.
a California Limited Partnership
June 30, 2010
(Unaudited)
Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DATED: August 11, 2010 | ||
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 |
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