Casa Munras Hotel Partners L P 10QSB 2003 Q1 Quarterly report (small business)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB


[X]		Quarterly report under Section 13 of 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2003


[ ]		Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from to

Commission file number 0-8901

CASA MUNRAS HOTEL PARTNERS, L.P.

(Exact name of small business issuer as specified in its charter)


California		95-3235634
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

8885 Rio San Diego Drive, Suite 220, San Diego, California 92108
(Address of principal executive offices)

(619) 297-4040
(Issuer’s telephone number, including Area Code)

Check 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 [ ]

Transitional Small Business Disclosure Format: Yes [ ] No [X]

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION
	Item 1. Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Controls and Procedures
PART II - OTHER INFORMATION
	Item 5. Other Information
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
Certification
EXHIBIT 99.1

PART I – FINANCIAL INFORMATION


Item 1.		Financial Statements

The accompanying unaudited financial statements of Casa Munras Hotel Partners, L.P. have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-QSB. Accordingly, these statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of the General Partner of the Registrant, all adjustments necessary for a fair presentation have been included. The financial statements presented herein have been prepared in accordance with the accounting policies described in the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2002 and should be read in connection therewith. The results of operations for the three-month period ended March 31, 2003 are not necessarily indicative of the results to be expected for the full year.

CASA MUNRAS HOTEL PARTNERS, L.P.
(A Limited Partnership)

BALANCE SHEETS


			March 31,
			2003			December 31,
			(Unaudited)			2002

ASSETS
CURRENT ASSETS:
	Cash		$	94,966		$	219,528
	Accounts receivable			58,074			50,985
	Food and beverage inventories			16,395			18,934
	Prepaid expenses			104,900			47,449

		Total current assets		274,335			336,896

LAND, PROPERTY AND EQUIPMENT - at cost:
	Building and improvements			6,541,528			6,541,528
	Hotel furnishings and equipment			2,318,283			2,307,694
	Restaurant furnishings and equipment			136,528			136,528
	Less accumulated depreciation			(5,887,638	)		(5,817,138	)

				3,108,701			3,168,612
	Land			700,000			700,000
	Construction in progress			37,554			—

		Land, property and equipment - net		3,846,255			3,868,612

OTHER ASSETS:
	Liquor license			40,000			40,000
	Loan commitment fees - net			123,072			128,931
	Escrow impound accounts			317,634			346,258

		Total other assets		480,706			515,189

		TOTAL	$	4,601,296		$	4,720,697

LIABILITIES AND PARTNERS’ DEFICIT
CURRENT LIABILITIES:
	Accounts payable - trade		$	115,495		$	44,856
	Accounts payable - related parties			161,153			48,289
	Accrued incentive management fees - related parties			155,611			207,273
	Accrued salaries and wages			15,977			6,428
	Accrued room tax			19,979			24,928
	Accrued other			21,468			9,304
	Current portion of long-term debt			138,324			135,696

		Total current liabilities		628,007			476,774
LONG-TERM DEBT				6,331,947			6,367,529

		Total liabilities		6,959,954			6,844,303

PARTNERS’ DEFICIT:
	General Partner (45 units issued and outstanding)			(237,093	)		(234,742	)
	Limited Partners (4,455 units issued and outstanding)			(2,121,565	)		(1,888,864	)

		Total partners’ deficit		(2,358,658	)		(2,123,606	)

		TOTAL	$	4,601,296		$	4,720,697

CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)

STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(Unaudited)



			2003			2002

REVENUES:
	Room		$	567,025		$	543,401
	Food and beverage			148,847			122,615
	Lease			25,876			26,079
	Telephone			6,257			6,277
	Other			4,395			6,151

		Total		752,400			704,523

OPERATING EXPENSES:
	Rooms			253,014			210,014
	Food and beverage			140,350			119,026
	Interest			124,977			127,441
	Administrative and general			90,704			98,222
	Marketing			81,221			78,448
	Depreciation and amortization			76,359			103,029
	Repairs and maintenance			74,958			68,209
	Energy cost			41,979			41,145
	Management fees			29,767			28,798
	Partnership administration and professional fees			27,750			24,001
	Insurance			24,921			25,212
	Property taxes			18,211			21,147
	Telephone			3,241			3,181

		Total (including reimbursed costs and payments for services to related parties of $248,834 and $190,729 for the three months ended March 31, 2003 and 2002, respectively)		987,452			947,873

NET LOSS			$	(235,052	)	$	(243,350	)

Continued

CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)

STATEMENTS OF CHANGES IN PARTNERS’ DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(Unaudited)


				2003			2002

ALLOCATION OF NET LOSS:
	General Partner (45 units outstanding)				(2,351	)		(2,434	)
	Limited Partners (4,455 units outstanding)				(232,701	)		(240,917	)

			Total	$	(235,052	)	$	(243,350	)

DISTRIBUTION TO PARTNERS				$	—		$	—

PER UNIT INFORMATION:
	(based upon 4,500 total units outstanding):
		Net loss		$	(52.23	)	$	(54.08	)

		Distribution		$	—		$	—

Concluded

CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)

STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(Unaudited)


				2003			2002

OPERATING ACTIVITIES:
	Net loss			$	(235,052	)	$	(243,350	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization			76,359			103,029
		Change in assets and liabilities:
			Accounts receivable		63,010			6,997
			Food and beverage inventories		2,539			(1,101	)
			Prepaid expenses		(57,451	)		(16,740	)
			Accounts payable and accrued expenses		78,506			25,290

			Net cash used in operating activities		(72,089	)		(125,875	)

INVESTING ACTIVITIES:
	Acquisition of property and equipment				(48,143	)		(121,449	)

FINANCING ACTIVITIES:
	Payment of long-term debt				(32,954	)		(30,519	)
	Distributions paid to Partners				—			(67,500	)
	Decrease in impound escrow accounts				28,624			54,424

			Net cash used in financing activities		(4,330	)		(43,595	)

NET DECREASE IN CASH					(124,562	)		(290,919	)
CASH AT BEGINNING OF PERIOD					219,528			759,358

CASH AT END OF PERIOD				$	94,966		$	468,439

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
	Cash paid during the period for interest			$	124,977		$	127,441


Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations for the Three Months Ended March 31, 2003 and 2002

For the three months ended March 31, 2003 as compared to the same period of the prior year, occupancy rates at the Registrant’s hotel were 40% versus 35% and average room rates were $95.98 versus $102.99, resulting in an increase in room revenue totaling $23,624 for the three months ended March 31, 2003 as compared to the comparable period in 2002. Food and beverage revenues increased $26,232 for the three months ended March 31, 2003 as compared to the first quarter of 2002.

The decrease in average room rates and low occupancy percentages for 2003 and 2002 are due to the continued economic recession in the San Francisco/Monterey Bay area. This area of the country has been more severely impacted by the effects of September 11, 2001, due to reduced foreign travel. Additionally, the effects of the dot.com slowdown, for which the region is noted, have reduced business travel to the region and have resulted in job cutbacks in the area resulting in reduced local leisure travel.

Increased guests at the hotel have resulted in more patrons at the restaurant and lounge and increased food and beverage revenues.

Operating expenses totaled $987,452 and $947,876 for the three months ended March 31, 2003 and 2002, respectively. The principal reasons for the increase in operating expenses in 2003 as compared to 2002 were increased salary and wages, medical insurance, and worker’s compensation insurance premiums due to the increase in the California minimum wage which impacts prevailing hospitality wage rates, increased medical insurance premiums in California and nationwide, and higher worker’s compensation insurance rates throughout California. These increases were partially offset by reduced depreciation and amortization.

Recent Accounting Pronouncements

In 2002 and 2001, the Financial Accounting Standards Board (“FSAB”) issued Statements of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations,” SFAS no. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections,” SFAS No. 146, “Accounting for Costs Associated with Exit of Disposal Activities,” SFAS No. 147, “Acquisitions of Certain Transition and Disclosure” which were adopted by the Partnership, if applicable, in calendar 2003. The adoption of these SFAS’s in 2003 did not have any impact on the Partnership’s financial condition, results of operations or cash flows.

Liquidity and Capital Resources

The Registrant’s primary source of cash is revenues from the operation and leasing of the hotel facility. The Registrant’s primary uses of cash are to fund hotel operating expenses, payments on the first mortgage, renovations and to pay distributions to Partners.

During the three months ended March 31, 2003, the Registrant used $72,089 in net cash flow for operating activities. Reductions in long-term debt totaled $32,954 and impound escrow accounts decreased $28,624 during the first quarter of 2003.

Acquisition of property and equipment during the three months ended March 31, 2003 totaled $48,143. It is estimated that approximately $150,000 more will be expended in the remainder of calendar 2003 for ongoing renovations of existing assets.

There were no distributions accrued in the fourth quarter of 2002. No distributions were declared for the first quarter of 2003.

The General Partner intends, to the extent cash from operations is available and such distributions are permitted under the first mortgage payable, to continue making cash distributions to the Partners at amounts approximating the Registrant’s net income.


Item 3.		Controls and Procedures

During the 90-day period prior to the filing date of this report, the Managing Member of the General Partner who performs the functions of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based upon, and as of the date of that evaluation, the Managing Member of the General Partner who performs the functions of the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports the Registrant files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required.

There have been no significant changes in the Registrant’s internal controls or in other factors that could significantly affect internal controls subsequent to the date the Registrant carried out its evaluation. There were no significant deficiencies or material weakness identified in the evaluation and therefore, no corrective actions were taken.

PART II – OTHER INFORMATION


Item 5.		Other Information

The Managing Member of the General Partner who performs the functions of the Chief Executive Officer and Chief Financial Officer of the Registrant have certified that the Quarterly Report of the Registrant on Form 10-QSB for the quarterly period ended March 31, 2003 fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. (ss) 78m or (ss) 78o(d)) and that information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


Item 6.		Exhibits and Reports on Form 8-K


		(a) Exhibits:

99.1 Certification of Managing Member of the General Partner who performs the functions of the Chief Executive Officer and Chief Financial Officer


		(b) Reports on Form 8-K:

None

SIGNATURE

In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	CASA MUNRAS HOTEL PARTNERS, L.P.

	CASA MUNRAS GP, LLC General Partner

	By:	/s/ JOHN F. ROTHMAN

		John F. Rothman, Managing Member

Dated: May 1, 2003

Certification

I, John F. Rothman, certify that:

1.		I have reviewed this quarterly report on Form 10-QSB of Casa Munras Hotel Partners, L.P.;

2.		Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.		Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

4.		As the Registrant’s certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have:

	a.		Designed such disclosure controls and procedures to ensure the material information relating to the Registrant is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b.		Evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c.		Presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date;

As the Registrant’s certifying officer, I have disclosed, based on my most recent evaluation, to the Registrant’s auditors and the audit committee of Registrant (or persons performing the equivalent function):

All significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weakness in internal controls; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls; and

As the Registrant’s certifying officer, I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weakness.

CASA MUNRAS GP, LLC
General Partner

	/s/ JOHN F. ROTHMAN

	John F. Rothman, Managing Member

Dated: May 1, 2003

Casa Munras Hotel Partners L P Inactive 10QSB2003 Q1 Quarterly report (small business)

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