Casa Munras Hotel Partners L P 10QSB 2001 Q2 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 June 30, 2001

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

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

(610) 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
		BALANCE SHEETS
		STATEMENTS OF OPERATIONS
		STATEMENTS OF CASH FLOWS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
PART II — OTHER INFORMATION
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURE

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, 2000 and should be read in connection therewith. The results of operations for the three and six month periods ended June 30, 2001 are not necessarily indicative of the results to be expected for the full year.

     In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations”. SFAS No. 141 requires the use of the purchase method of accounting for all business combinations initiated after June 30, 2001 and eliminates the pooling-of-interests method. The Partnership does not believe that the adoption of SFAS 141 will have a significant impact on its financial statements.

     In June 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 142 requires that goodwill and other intangible assets with indefinite lives no longer be amortized, but instead tested for impairment at least annually. In addition, the standard includes provisions for the reclassification of certain existing intangibles as goodwill and reassessment of the useful lives of existing recognized intangibles. SFAS 142 is effective for fiscal years beginning after December 31, 2001. The Partnership does not believe that the adoption of SFAS 142 will have a significant impact on its financial statements.

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

BALANCE SHEETS

			June 30,			December 31,
			2001			2000
			(Unaudited)
ASSETS
CURRENT ASSETS:
	Cash		$	836,816		$	1,298,650
	Accounts receivable			80,709			144,876
	Food and beverage inventories			18,176			17,009
	Prepaid expenses			68,359			45,263
		Total current assets		1,004,060			1,505,798
LAND, PROPERTY AND EQUIPMENT — at cost:
	Building and improvements			6,132,807			6,132,807
	Hotel furnishings and equipment			2,106,896			2,075,869
	Restaurant furnishings and equipment			89,432			89,432
	Less accumulated depreciation			(5,182,972	)		(4,992,772	)
				3,146,163			3,305,336
	Land			700,000			700,000
	Construction in progress			214,187
		Land, property and equipment — net		4,060,350			4,005,336
OTHER ASSETS:
	Liquor license			40,000			40,000
	Loan commitment fees — net			164,100			175,818
	Escrow impound accounts			184,061			236,775
		Total other assets		388,161			452,593
		TOTAL	$	5,452,571		$	5,963,727
LIABILITIES AND PARTNERS’ DEFICIT
CURRENT LIABILITIES:
	Accounts payable — trade		$	57,890		$	55,370
	Accounts payable — related parties			37,133			41,599
	Accrued incentive management fees — related parties			50,838			212,487
	Accrued salaries and wages			51,891			82,144
	Accrued room tax			60,860			46,356
	Accrued other			7,313			14,161
	Distributions payable			67,500			67,500
	Current portion of long-term debt			120,939			116,385
		Total current liabilities		454,364			636,002
LONG-TERM DEBT				6,567,265			6,628,895
		Total liabilities		7,021,629			7,264,897
PARTNERS’ DEFICIT:
	General Partner (45 units issued and outstanding)			(229,196	)		(226,517	)
	Limited Partners (4,455 units issued and outstanding)			(1,339,862	)		(1,074,653	)
		Total partners’ deficit		(1,569,058	)		(1,301,170	)
		TOTAL	$	5,452,571		$	5,963,727

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

STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(Unaudited)

			Three Months Ended				Six Months Ended
			June 30,				June 30,
			2001		2000		2001			2000
REVENUES:
	Room		$	854,092	$	1,334,426	$	1,550,381		$	1,965,759
	Food and beverage			174,349		199,187		337,263			341,744
	Lease			25,830		24,607		51,349			48,703
	Telephone			8,958		12,751		17,305			21,788
	Other			12,817		15,719		31,543			33,586
		Total		1,076,046		1,586,690		1,987,841			2,411,580
OPERATING EXPENSES:
	Rooms			262,511		296,022		494,566			523,822
	Food and beverage			147,615		172,702		290,656			316,090
	Interest			129,119		131,247		258,785			263,001
	Administrative and general			101,018		95,347		213,758			181,496
	Depreciation and amortization			100,959		95,859		201,918			191,718
	Energy cost			32,365		38,332		107,881			83,535
	Marketing			75,567		77,090		141,333			147,477
	Repairs and maintenance			79,604		70,712		144,133			137,245
	Management fees			76,750		152,404		128,674			198,570
	Partnership admin. and professional fees			19,643		14,560		52,916			38,624
	Insurance			19,886		9,892		39,842			18,730
	Property taxes			19,840		18,528		38,696			37,248
	Telephone			3,659		5,407		7,571			9,614
		Total (including reimbursed costs and payments for services to related parties of $270,762 and $286,129 and $554,948 and $465,143 for the three and six months ended June 30, 2001 and 2000, respectively)		1,068,536		1,178,102		2,120,729			2,147,170
NET INCOME (LOSS)			$	7,510	$	408,588	$	(132,888	)	$	264,410
										Continued

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

STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(Unaudited)

				Three Months Ended				Six Months Ended
				June 30,				June 30,
				2001		2000		2001			2000
ALLOCATION OF NET INCOME (LOSS):
	General Partner (45 units outstanding)			$	75	$	4,086	$	(1,329	)	$	2,644
	Limited Partners (4,455 units outstanding)				7,435		404,502		(131,559	)		261,766
			Total	$	7,510	$	408,588	$	(132,888	)	$	264,410
DISTRIBUTIONS TO PARTNERS				$	67,500	$	67,500	$	135,000		$	135,000
PER UNIT INFORMATION:
	(based upon 4,500 total units outstanding):
		Net income (loss)		$	1.67	$	90.80	$	(29.53	)	$	58.76
		Distributions		$	15.00	$	15.00	$	30.00		$	30.00
											Concluded

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

STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(Unaudited)

				2001			2000
OPERATING ACTIVITIES:
	Net (loss) income			$	(132,888	)	$	264,410
	Adjustments to reconcile net loss (income) to net cash (used in) provided by operating activities:
		Depreciation and amortization			201,918			191,718
		Change in assets and liabilities:
			Accounts receivable		64,167			42,988
			Food and beverage inventories		(1,167	)		(4,282	)
			Prepaid expenses		(23,096	)		54,080
			Accounts payable and accrued expenses		(186,192	)		(301,035	)
			Net cash (used in) provided by operating activities		(77,258	)		247,879
INVESTING ACTIVITIES:
	Acquisition of property and equipment				(245,214	)		(383,522	)
FINANCING ACTIVITIES:
	Payment of long-term debt				(57,076	)		(52,859	)
	Distributions paid to Partners				(135,000	)		(135,000	)
	Impound escrow accounts				52,714			38,067
			Net cash used in financing activities		(139,362	)		(149,792	)
NET DECREASE IN CASH					(461,834	)		(285,435	)
CASH AT BEGINNING OF PERIOD					1,298,650			1,265,796
CASH AT END OF PERIOD				$	836,816		$	980,361
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION —
	Cash paid during the period for interest			$	258,785		$	263,001

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

Results of Operations for the Three and Six Months Ended June 30, 2001 and 2000

     For the three and six months ended June 30, 2001 as compared to the same periods of the prior year, occupancy rates at the Registrant’s hotel were 50% and 47% versus 69% and 57% and average room rates were $112.42 and $110.32 versus $128.19 and $114.94, resulting in a decrease in room revenue totaling $480,334 and $415,378 for the three and six months ended June 30, 2001 as compared to the comparable periods in 2000. Food and beverage revenues decreased $24,838 and $4,481 for the three and six months ended June 30, 2001 as compared to the comparable periods in 2000. The decrease in occupancy resulting in reduced room revenue is primarily the result of reduced business and leisure travel for the three and six months ended June 30, 2001 as compared to the comparable period in 2000. In addition, in June 2000 the United States Open Golf Tournament was held at Pebble Beach on the Monterey Peninsula resulting in higher occupancy and room rates in June 2000 as compared to June 2001. Further, due to reduced occupancy on the Monterey Peninsula, area hotels have been more competitive in reducing room rates to attract additional occupancy for the three and six months ended June 30, 2001 as compared to the comparable period in 2000, which competition has resulted in lower room rates for the Hotel. Food and beverage revenues have decreased in 2001 over the comparable 2000 period primarily due to decreased patrons in the restaurant which number of patrons is impacted by the occupancy of the hotel.

     Operating expenses totaled $1,068,536 and $2,120,729 for the three and six months ended June 30, 2001 as compared to $1,178,102 and $2,147,170 for the three and six months ended June 30, 2000. Operating expenses for the three and six months ended June 30, 2001 and 2000 were down due to reduced occupancy levels for the three and six months ended June 30, 2001 as compared to the comparable periods in 2000, partially offset by increased energy costs in 2001.

     Net income (loss) decreased $401,078 and $397,298 to $7,510 and $(132,888) for the three and six months ended June 30, 2001 as compared to the comparable periods in 2000 respectively. The decrease in net income (loss) is principally attributed to reduced room revenues due to reduced occupancy and room rates due to reduced leisure travel for the three and six months ended June 30, 2001 as compared to the comparable periods in 2000 and the one time positive impact in June 2000 of the United States Open Golf Tournament.

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.

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     During the six months ended June 30, 2001, the Registrant used $77,258 in net cash flow for operating activities. Reductions in long-term debt totaled $57,076 and impound escrow accounts decreased $52,714 during the first six months of 2001.

     Acquisition of property and equipment during the six months ended June 30, 2001 totaled $245,214. It is estimated that approximately $400,000 more will be expended in 2001 for ongoing renovations of existing assets.

     Distributions totaling $67,500 were accrued in the first quarter and paid in the second quarter of 2001 and distributions totaling $67,500 were accrued in the second quarter of 2001 and have been paid in the third quarter of 2001.

     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.

PART II — OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits:

     None

(b) Reports on Form 8-K:

     None

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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:  August 9, 2001

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