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: March 31, 2011

 

¨	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

Registrant’s 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 March 31, 2011, Tower Park Marina Investors, LP had 4,508 units of limited partnership interest outstanding.

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Table of Contents

TABLE OF CONTENTS

Report on Form 10-Q

For quarter ended March 31, 2011

 

				Page
PART I. FINANCIAL INFORMATION
ITEM 1.		FINANCIAL STATEMENTS
		Balance Sheets			2
		Statements of Operations for the three months ended March 31, 2011 and 2010			3
		Statements of Cash Flows for the three months ended March 31, 2011 and 2010			4
		Notes to Financial Statements			5-13
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			14-15
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			16
ITEM 4.		CONTROLS AND PROCEDURES			16
PART II. OTHER INFORMATION
ITEM 1.		LEGAL PROCEEDINGS			17
ITEM 1A.		RISK FACTORS			17
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			17
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES			17
ITEM 4.		SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS			17
ITEM 5.		OTHER INFORMATION			17
ITEM 6.		EXHIBITS AND REPORTS ON FORM 8-K			17
SIGNATURES					18

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TOWER PARK MARINA INVESTORS, L.P

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

BALANCE SHEETS

ITEM 1. Financial Statements

 

		March 31, 2011				December 31, 2010
		(Unaudited)
ASSETS
Cash and cash equivalents		$	636,000			$	844,000
Accounts receivable net of allowance for doubtful accounts of $25,000 in 2011 and $27,000 in 2010			58,000				64,000
Tower Park Marina, net (Note 2)			134,000				140,000
Other assets, net (Note 3)			37,000				47,000
TOTAL ASSETS		$	865,000			$	1,095,000
LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)
Accounts payable and accrued expenses		$	340,000			$	531,000
Deferred gain on sale of Tower Park Marina (Note 2)			1,292,000				1,346,000
Deferred rentals			28,000				18,000
Total liabilities			1,660,000				1,895,000
Commitments and contingencies (Note 5)			—				—
Partners’ deficit:
Limited partners’ deficit, $5,000 per unit, 4,508 units authorized, issued and outstanding			27,000				22,000
Deferred contributions			(27,000	)			(27,000	)
Limited partners’ equity (deficit)			—				(5,000	)
General partners’ equity (deficit)			(795,000	)			(795,000	)
Total partners’ deficit			(795,000	)			(800,000	)
TOTAL LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)		$	865,000			$	1,095,000

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 month periods ended March 31, 2011 and 2010

(Unaudited)

 

		2011				2010
Revenues:
Slip rental		$	156,000			$	184,000
Dry storage			32,000				35,000
Fuel service			11,000				11,000
Interest and other income			3,000				2,000
Revenues from operations			202,000				232,000
Expenses:
Slip rental			13,000				13,000
Dry storage			4,000				5,000
Fuel service			12,000				15,000
Cost of operations			147,000				167,000
Management fees (Note 4)			12,000				13,000
Depreciation			9,000				9,000
			197,000				222,000
Net income		$	5,000			$	10,000
Allocation of net profit:
Limited Partners		$	5,000			$	10,000
General Partners			—				—
		$	5,000			$	10,000
Limited Partners’ net income per unit:		$	1.11			$	2.22
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 three months ended March 31, 2011 and 2010

(Unaudited)

 

		2011				2010
Cash flows from operating activities:
Net income		$	5,000			$	10,000
Adjustments to reconcile net income to net cash used for operating activities:
Gain on sale of equipment			—				—
Depreciation			9,000				9,000
Amortization of deferred gain			(54,000	)			(54,000	)
Provision for doubtful accounts			—				—
Decrease (increase) in accounts receivable			4,000				(4,000	)
Decrease in other assets			10,000				17,000
Decrease in accounts payable and accrued expenses			(191,000	)			—
Increase in deferred rentals			10,000				11,000
Cash flow used for operating activities			(205,000	)			(11,000	)
Cash flows from investing activities:
Improvements to marina facilities			(3,000	)			(3,000	)
Cash flows from financing activities:			—				—
Net decrease in cash and cash equivalents			(208,000	)			(14,000	)
Cash and cash equivalents at the beginning of period			844,000				988,000
Cash and cash equivalents at the end of period		$	636,000			$	974,000

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

March 31, 2011

(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 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 $27,000 of such deferrals remain outstanding.

Basis of Presentation

The unaudited financial statements of Tower Park Marina Investors, LP at March 31, 2011 and for the three months ended March 31, 2011 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 Commission’s 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 periods presented have been included. The results of operations for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2011. These unaudited financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2010 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

March 31, 2011

(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 ended March 31, 2011 and 2010, 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

March 31, 2011

(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 asset’s or liability’s 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 Partnership’s 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 Partnership’s financial assets as of March 31, 2011.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

March 31, 2011

(Unaudited)

 

 

1.	Summary of Significant Accounting Policies and Partnership Matters (continued)

 

 

		Total				Level 1				Level 2				Level 3
Assets
Cash equivalents		$	559,000			$	559,000				—				—
		$	559,000			$	559,000				—				—

The Partnership believes that the carrying value of its cash, accounts receivable, accounts payable and accrued liabilities as of March 31, 2011 and December 31, 2010 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 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.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

March 31, 2011

(Unaudited)

 

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 Partnership’s 51% interest in the Little Potato Slough Mutual Water Company, the Partnership’s 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 agreed to make these repairs over the next several years. As of March 31, 2011, $188,000 has been spent towards this commitment.

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 Partnership’s 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 Partnership’s ten year lease commitment, discounted at 10%. For the three months ended March 31, 2011 and 2010, $54,000 of the deferred gain from the sale was amortized for each period, and is reflected in cost of operations. The remaining unamortized gain balance was $1,292,000 at March 31, 2011, and $1,346,000 at December 31, 2010.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

March 31, 2011

(Unaudited)

 

 

2.	Tower Park Marina (continued)

 

As of March 31, 2011 and December 31, 2010 the assets related to Tower Park Marina that remain as part of the Partnership are composed of the following:

 

		2011				2010
Leasehold interest		$	27,000			$	27,000
Floating docks			47,000				47,000
Furniture, fixtures and equipment			239,000				239,000
Vehicles			36,000				36,000
Construction in Progress			3,000				—
			352,000				349,000
Less accumulated depreciation			(218,000	)			(209,000	)
		$	134,000			$	140,000

See Note 5 for a discussion of the Partnership’s continuing obligations with respect to the marina and adjacent property.

 

3.	Other Assets

Other assets as of March 31, 2011 and December 31, 2010 are composed of the following:

 

		2011				2010
Fuel inventory		$	22,000			$	24,000
Other prepaid expenses			15,000				23,000
		$	37,000			$	47,000

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

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

March 31, 2011

(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 marina’s monthly gross revenues (as defined). Management fees for the three months ended March 31, 2011 and 2010 were $12,000 and $13,000, 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 three months ended March 31, 2011 and 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 Partnership’s leasehold interest in the CSLC 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 $75,000, paid to KOA for each of the three months ended March 31, 2011 and 2010. 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 KOA’s 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 $12,000 and $15,000, respectively related to the CSLC lease for the three month periods ended March 31, 2011 and 2010, and approximately $204,000 has been spent on maintenance projects since the inception of the lease.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

March 31, 2011

(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 Partnership’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.

 

Segment Information (in 000’s)		For the three- months ended March 31,
		2011				2010
Revenues
Slip Rental		$	156			$	184
Dry Storage			32				35
Fuel Service			11				11
Interest income			3				2
Total Revenue		$	202			$	232
Profit (Loss)
Slip Rental		$	143			$	171
Dry Storage			28				30
Fuel Service			(1	)			(4	)
Other (1)			(165	)			(187	)
Total Profit		$	5			$	10
		March 31, 2011				December 31, 2010
Assets
Slip Rental		$	74			$	74
Unallocated amount (2)			791				1,021
Total Assets		$	865			$	1,095

 

(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

March 31, 2011

(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 $16,500 for each calendar year. The Partnership matches 50% of the employee’s quarterly contribution up to $1,250 per year. The Partnership’s matching contribution, which was included in cost of operations, was $225 for the three months ended March 31, 2011 and 2010, respectively.

“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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TOWER PARK MARINA INVESTORS, L.P.

a California Limited Partnership

PART I. FINANCIAL INFORMATION

March 31, 2011

(Unaudited)

 

ITEM 2.

Management’s 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 management’s 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 three months ended March 31, 2011 and 2010

The revenues and expenses of the Partnership for the three months ended March 31, 2011 are generated from the marina and dry storage operations of Tower Park in the Sacramento – San Joaquin Delta near Sacramento. As of March 31, Tower Park Marina had the following occupancies:

 

		2011								2010
		Available				Occupied				Available				Occupied
Wet slips			219	(1)			85.4	%			219	(1)			94.5	%
Dry storage			155				63.9	%			155				67.7	%

 

(1)	non-transient slips only

For the three months ended March 31, 2011, revenues from operations for Tower Park decreased $30,000 to $202,000. This was primarily the result of decreases in slip rental and dry storage revenue. Slip rentals decreased $28,000, and dry storage revenues decreased $3,000. In general, the decline is primarily due to the continued downturn in the economy causing customers to change their boating habits. This was exacerbated by bad weather for the first three months 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. Several boating customers moved their boats out of slips and into the less expensive dry storage spaces for the winter months. Declining interest rates, and a 25% decline in the Partnership’s cash balance resulted in less interest income in 2011.

The Partnership’s cash balance declined $208,000 to $636,000 for the three months ended March 31, 2011, primarily due to $157,000 being spent on maintenance repairs that were committed to as part of the sale to KOA. (See Note 3)

The Partnership’s net profit from operations of $5,000 for the three months ended March 31, 2011 is a $5,000 decline over the same period a year ago. The decline is primarily attributed to a $28,000 decrease in net slip rental profits, a $2,000 decrease in net dry storage profits, offset by a slight improvement in fuel service margins and a $20,000 decrease in operating costs, which was primarily due to decreases in administrative payroll.

 

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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

a California Limited Partnership

PART I. FINANCIAL INFORMATION

March 31, 2011

(Unaudited)

 

 

ITEM 2.

Management’s Discussion and Analysis (continued)

 

Liquidity and capital resources

The Partnership had a net loss from operations for the three months ended March 31, 2011 of $40,000 (net income/loss before depreciation and amortization of deferred gain), which was covered from 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 Partnership’s 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		$	2,082,000			$	225,000			$698,000		$	713,000			$	446,000
Maintenance reserve			228,000				228,000			—			—				—
CSLC Lease Reimbursement			240,000				30,000			80,000			80,000				50,000
Capital Improvement Commitment			296,000				38,000			100,000			100,000				58,000
Other Long-Term Liabilities Reflected on the Partnership’s Balance Sheet under GAAP			—				—			—			—				—
Total		$	2,846,000			$	521,000			$878,000		$	893,000			$	554,000

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 $636,000 as of March 31, 2011. 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

March 31, 2011

(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 Partnership’s 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 SEC’s rules and forms.

Our management, including the Partnership’s Chief Executive Officer and Chief Financial Officer, does not expect that the Partnership’s 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 Partnership’s internal control over financial reporting that occurred during the first quarter of 2011 that have materially affected, or are reasonably likely to materially affect, the Partnership’s 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 Partnership’s systems evolve with its business.

 

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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

a California Limited Partnership

March 31, 2011

(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.
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

March 31, 2011

(Unaudited)

SIGNATURES

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.

 

 

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