<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1999
[ ] 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 (I.R.S. Employer
incorporation or organization) Identification No.)
5525 Oakdale Avenue, Suite 300, Woodland Hills,
California 91364 (Address of principal
executive offices)
(818) 888-6500
(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]
<PAGE> 2
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 generally accepted
accounting principles 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 generally accepted accounting
principles 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, 1998 and should be read in
connection therewith. The results of operations for the three and six month
period ended June 30, 1999 are not necessarily indicative of the results to be
expected for the full year.
1
<PAGE> 3
CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
June 30, December 31,
1999 1998
(Unaudited)
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 973,720 $ 1,077,900
Accounts receivable 143,282 42,219
Food and beverage inventories 15,193 17,834
Prepaid expenses 65,023 69,931
----------- -----------
Total current assets 1,197,218 1,207,884
----------- -----------
LAND, PROPERTY AND EQUIPMENT - at cost:
Building and improvements 5,802,211 5,802,211
Hotel furnishings and equipment 1,706,385 1,697,701
Restaurant furnishings and equipment 54,833 52,266
Construction in progress 247,127 --
Less accumulated depreciation (4,392,919) (4,212,919)
----------- -----------
3,417,637 3,339,259
Land 700,000 700,000
----------- -----------
Land, property and equipment - net 4,117,637 4,039,259
----------- -----------
OTHER ASSETS:
Liquor license 40,000 40,000
Loan commitment fees - net 212,886 222,689
Escrow impound accounts 236,042 211,942
----------- -----------
Total other assets 488,928 474,631
----------- -----------
TOTAL $ 5,803,783 $ 5,721,774
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable - trade $ 72,708 $ 66,260
Accounts payable - related parties 48,871 55,707
Accrued incentive management fees - related parties 70,708 151,812
Accrued salaries and wages 59,718 58,667
Accrued room tax 65,548 32,671
Accrued other 44,422 9,241
Guest advance deposits 187,231 --
Distributions payable 67,500 --
Current portion of long-term debt 103,728 99,823
----------- -----------
Total current liabilities 720,434 474,181
LONG-TERM DEBT 6,800,207 6,853,066
----------- -----------
Total liabilities 7,520,641 7,327,247
----------- -----------
PARTNERS' DEFICIT:
General Partner (45 units issued and outstanding) (230,674) (229,560)
Limited Partners (4,455 units issued and outstanding) (1,486,184) (1,375,913)
----------- -----------
Total Partners' deficit (1,716,858) (1,605,473)
----------- -----------
TOTAL $ 5,803,783 $ 5,721,774
=========== ===========
</TABLE>
2
<PAGE> 4
CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Room $ 993,626 $ 925,229 $1,682,883 $1,470,072
Food and beverage 211,615 180,816 373,246 307,308
Lease 23,729 22,586 47,587 45,679
Telephone 14,377 12,357 27,570 23,452
Other 13,703 5,235 28,049 9,596
---------- ---------- ---------- ----------
Total 1,257,050 1,146,223 2,159,335 1,856,107
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Rooms 287,743 240,155 518,754 448,974
Food and beverage 163,756 157,174 311,402 290,816
Administrative and general 98,466 99,611 190,676 183,604
Management fees 99,692 91,711 155,154 124,026
Depreciation and amortization 94,902 83,000 189,803 161,000
Marketing 95,597 80,862 175,033 152,045
Repairs and maintenance 65,900 64,724 127,640 132,899
Interest 133,220 51,286 266,908 67,079
Energy cost 43,514 41,761 96,566 85,524
Partnership administration
and professional fees 14,415 16,680 45,229 48,502
Property taxes 16,990 15,793 32,759 31,648
Insurance 7,809 7,809 15,618 15,618
Telephone 5,417 6,705 10,178 11,012
---------- ---------- ---------- ----------
Total (including reimbursed
costs and payments for
services to related parties
of $130,761 and $275,743
and $348,122 and $462,165
for the three and six months
ended June 30, 1999 and 1998,
respectively) 1,127,421 957,271 2,135,720 1,752,747
---------- ---------- ---------- ----------
NET INCOME $ 129,629 $ 188,952 $ 23,615 $ 103,360
========== ========== ========== ==========
</TABLE>
3
<PAGE> 5
CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALLOCATION OF NET INCOME:
General Partner $ 1,296 $ 1,890 $ 236 $ 1,034
Limited Partners (4,455 Limited
Partnership units outstanding) 128,333 187,062 23,379 102,326
---------- ---------- ---------- ----------
Total $ 129,629 $ 188,952 $ 23,615 $ 103,360
========== ========== ========== ==========
DISTRIBUTION TO PARTNERS:
Distribution to Partners $ 135,000 $4,675,500 $ 135,000 $4,675,500
Special distribution of refinance proceeds -- 215,644 -- 215,644
---------- ---------- ---------- ----------
Total Distribution to Partners $ 135,000 $4,891,144 $ 135,000 $4,891,144
========== ========== ========== ==========
PER UNIT INFORMATION
(based upon 4,500 total
units outstanding):
Net Income $ 28.81 $ 41.99 $ 5.25 $ 22.97
========== ========== ========== ==========
Distribution $ 30.00 $ 1,039.00 $ 30.00 $ 1,039.00
========== ========== ========== ==========
</TABLE>
4
<PAGE> 6
CASA MUNRAS HOTEL PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 23,615 $ 103,360
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 189,803 161,000
Change in assets and liabilities:
Accounts receivable (101,063) (15,874)
Food and beverage inventories 2,641 (671)
Prepaid expenses 4,908 (3,102)
Account payable and accrued expenses 242,348 235,259
----------- -----------
Net cash provided by operating activities 362,252 479,972
----------- -----------
INVESTING ACTIVITIES:
Acquisition of property and equipment (258,378) (1,076,103)
----------- -----------
FINANCING ACTIVITIES:
Borrowings from affiliates -- 222,210
Payments on notes from affiliates -- (588,420)
Long-term borrowings -- 7,250,000
Payment of long-term debt (48,954) (521,219)
Loan commitment fee -- (23,428)
Distributions paid to Partners (135,000) (4,891,164)
Impound escrow accounts (24,100) (66,550)
----------- -----------
Net cash (used in) provided by financing activities (208,054) 1,381,429
----------- -----------
NET (DECREASE) INCREASE IN CASH (104,180) 785,298
CASH AT BEGINNING OF PERIOD 1,077,900 367,327
----------- -----------
CASH AT END OF PERIOD $ 973,720 $ 1,152,625
=========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION -
Cash paid during the period for interest $ 266,908 $ 335,829
=========== ===========
</TABLE>
5
<PAGE> 7
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, 1999 and 1998
For the three and six months ended June 30, 1999 as compared to the
same period of the prior year, occupancy rates at the Registrant's hotel were
72% and 63% versus 75% and 63% and average room rates were $91.21 and $88.45
versus $88.37 and $84.99, resulting in an increase in room revenue totaling
$68,397 and $212,811 for the three and six months ended June 30, 1999 as
compared to the comparable period in 1998, respectively. Food and beverage
revenues increased $30,799 and $65,938 for the three and six months ended June
30, 1999 as compared to 1998, respectively. The increase in room rates for the
three and six months ended June 30, 1999 as compared to the same period of the
prior year reflects management's decision to charge more for rooms as a result
of the capital improvements program. Occupancy was down 3 percentage points in
the second quarter of 1999 over the comparable quarter of last year primarily
the result of increased room count in 1999 due to the new room addition coupled
with reduced group business partially offset by increased leisure travel.
Occupancy for the six months ended June 30, 1999 as compared to 1998 is flat,
with increased room count and reduced group business offset by increased leisure
travel. Food and beverage revenues have increased in 1999 over the comparable
1998 period primarily due to increased patrons as a result of increased rooms
rented.
Operating expenses totaled $1,127,421 and $2,135,720 for the three and
six months ended June 30, 1999 as compared to $957,271 and $1,752,747 for the
three and six months ended June 30, 1998. The principal reasons for the increase
in operating expenses in 1999 as compared to 1998 were increased interest
expense due to the new first mortgage and increased depreciation and room
expenses due to the new rooms added and increased rooms rented.
Net income decreased $59,323 and $79,745 to $129,629 and $23,615 for
the three and six months ended June 30, 1999 as compared to 1998, respectively.
The decrease in the net income in the second quarter of 1999 as compared to 1998
is primarily a result of increased interest expense partially offset by
increased revenues.
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 six months ended June 30, 1999, the Registrant generated
$352,449 in net cash flow for operating activities. Reductions in long-term debt
totaled $48,954, impound escrow accounts increased $24,100, and distributions to
partners totaled $135,000 during the six month period ended June 30, 1999.
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<PAGE> 8
Acquisition of property and equipment during the six months ended June
30, 1999 totaled $258,378. It is estimated that approximately $400,000 more will
be expended in 1999 for ongoing renovations of existing assets.
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.
Year 2000 Compliance
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process date fields containing a 2
digit year is commonly referred to as the Year 2000 Compliance issue. As the
year 2000 approaches, such systems may be unable to accurately process certain
date-based information.
Many of the Partnership's systems include packaged software recently
updated from large vendors who have represented that these systems are already
Year 2000 compliant. The Partnership has communicated with others with whom it
does significant business to determine their Year 2000 Compliance readiness and
the extent to which the Partnership is vulnerable to any third party Year 2000
issues. Based on these communications, the Partnership does not expect that
their business will be significantly impacted by the Year 2000. However, there
can be no guarantee that the systems of other companies on which the
Partnership's systems rely will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with the
Partnership's systems, would not have a material adverse effect on the
Partnership. The Partnership is prepared to utilize manual procedures in the
event of certain automated system failures.
The total cost to the Partnership of these Year 2000 Compliance
activities has not been and is not anticipated to be material to its financial
position or results of operations in fiscal years 1999 or 2000.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
7
<PAGE> 9
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 JOHN F. ROTHMAN
-------------------------------------
John F. Rothman, Managing Member
Dated: August 10, 1999
8
<PAGE> 10
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Description Page
- ------- ----------- ------------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 973,720
<SECURITIES> 0
<RECEIVABLES> 143,282
<ALLOWANCES> 0
<INVENTORY> 15,193
<CURRENT-ASSETS> 1,197,218
<PP&E> 4,117,637
<DEPRECIATION> (4,392,919)
<TOTAL-ASSETS> 5,803,783
<CURRENT-LIABILITIES> 720,434
<BONDS> 6,800,207
0
0
<COMMON> 0
<OTHER-SE> (1,716,858)
<TOTAL-LIABILITY-AND-EQUITY> 5,803,783
<SALES> 2,159,335
<TOTAL-REVENUES> 2,159,335
<CGS> 0
<TOTAL-COSTS> 2,135,720
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 276,711
<INCOME-PRETAX> 23,615
<INCOME-TAX> 0
<INCOME-CONTINUING> 23,615
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,615
<EPS-BASIC> $5.25
<EPS-DILUTED> $5.25
</TABLE>
