10-Q 1 0001.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ( x ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period ended _________________________ For Quarter Ended Commission File Number June 30, 2000 0-13130 UNITED MOBILE HOMES, INC. (Exact name of registrant as specified in its charter) New Jersey 22-1890929 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification number) Juniper Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, NJ 07728 Registrant's telephone number, including area code (732) 577-9997 125 Wyckoff Road, Eatontown, New Jersey 07724 (Former name, former address and former fiscal year, if changedsince last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ________ The number of shares outstanding of issuer's common stock as of August 4, 2000 was 7,351,894 shares. UNITED MOBILE HOMES, INC. for the QUARTER ENDED JUNE 30, 2000 PART I - FINANCIAL INFORMATION Page No. Item 1 - Financial Statements Consolidated Balance Sheets................................ 3 Consolidated Statements of Income.......................... 4 Consolidated Statements of Cash Flows...................... 5 Notes to Consolidated Financial Statements................. 6-7 Item 2 - Management Discussion and Analysis of Financial Conditions and Results of Operations............. 8-9 Item 3 - Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to information required regarding quantitative and qualitative disclosures about market risk from the end of the preceding year to the date of this Form 10-Q. PART II - OTHER INFORMATION.......................................... 10 SIGNATURES................................................. 11 -2- [CAPTION] UNITED MOBILE HOMES, INC. CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2000 and DECEMBER 31, 1999 June 30, December 31, 2000 1999 -ASSETS- INVESTMENT PROPERTY AND EQUIPMENT Land $ 6,779,335 $ 6,779,335 Site and Land Improvements 49,481,232 49,256,596 Buildings and Improvements 2,702,276 2,697,313 Rental Homes and Accessories 8,220,137 7,888,924 ---------- ---------- Total Investment Property 67,182,980 66,622,168 Equipment and Vehicles 3,040,430 2,969,556 ---------- ---------- Total Investment Property and Equipment 70,223,410 69,591,724 Accumulated Depreciation (28,654,807) (27,429,461) ---------- ---------- Net Investment Property and Equipment 41,568,603 42,162,263 ---------- ---------- OTHER ASSETS Cash and Cash Equivalents 766,485 724,650 Securities Available for Sale 15,036,620 12,794,514 Notes and Other Receivables 1,454,971 1,082,126 Unamortized Financing Costs 223,848 252,648 Prepaid Expenses 156,973 121,521 Land Development Costs 2,585,635 1,437,590 ---------- ---------- Total Other Assets 20,224,532 16,413,049 ---------- ---------- TOTAL ASSETS $ 61,793,135 $ 58,575,312 ========== ========== - LIABILITIES AND SHAREHOLDERS' EQUITY - MORTGAGES PAYABLE $ 30,012,291 $ 30,419,153 ---------- ---------- OTHER LIABILITIES Accounts Payable 290,959 105,215 Loans Payable 6,692,498 4,674,385 Accrued Liabilities and Deposits 1,612,034 1,493,897 Tenant Security Deposits 518,339 491,355 ---------- ---------- Total Other Liabilities 9,113,830 6,764,852 ---------- ---------- TOTAL LIABILITIES 39,126,121 37,184,005 ---------- ---------- SHAREHOLDERS' EQUITY Common Stock - $.10 par value per share 10,000,000 shares authorized, 7,597,794 and 7,483,196 shares issued and 7,351,894 and 7,312,696 shares outstanding, respectively 759,779 748,320 Additional Paid-In Capital 25,426,855 24,549,267 Accumulated Other Comprehensive Loss ( 638,038) ( 1,662,178) Accumulated Deficit ( 710,467) ( 667,793) Treasury Stock, at cost (245,900 and 170,500 shares, respectively) (2,171,115) ( 1,576,309) ---------- ---------- Total Shareholders' Equity 22,667,014 21,391,307 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $61,793,135 $ 58,575,312 ========== ==========
-UNAUDITED- See Notes to Consolidated Financial Statements -3- [CAPTION] UNITED MOBILE HOMES, INC. CONSOLIDATED STATEMENTS OF INCOME For the THREE AND SIX MONTHS ended JUNE 30, 2000 and 1999 THREE MONTHS SIX MONTHS 6/30/00 6/30/99 6/30/00 6/30/99 Rental and Related Income $ 4,630,873 $ 4,451,646 $ 9,242,455 $ 8,773,629 Community Operating Expense 1,995,382 2,060,524 3,967,900 4,024,213 --------- --------- --------- --------- Income from Community Operations 2,635,491 2,391,122 5,274,555 4,749,416 General and Administrative 493,422 441,386 947,637 824,099 Interest Expense 652,320 435,317 1,289,206 839,473 Investment Income (380,277) (164,488) (927,021) (331,098) Depreciation 619,512 600,323 1,232,643 1,225,938 Other Expenses 21,900 23,460 43,800 40,650 --------- --------- --------- --------- Income before Gains on Sales of Assets 1,228,614 1,055,124 2,688,290 2,150,354 Gain (Loss) on Sales of Assets (8,157) 16,529 16,261 4,452 --------- --------- --------- --------- Net Income $1,220,457 $1,071,653 $2,704,551 $2,154,806 ========= ========= ========= ========= Net Income Per Share - Basic and Diluted $ .17 $ .15 $ .37 $ .30 ========= ========= ========= ========= Weighted Average Shares - Basic 7,343,622 7,210,196 7,330,368 7,225,789 ========= ========= ========= ========= Diluted 7,343,622 7,223,525 7,330,368 7,244,232 ========= ========= ========= =========
-UNAUDITED- See Notes to Consolidated Financial Statements -4-
UNITED MOBILE HOMES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS for the SIX MONTHS ended June 30, 2000 and 1999 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 2,704,551 $ 2,154,806 Non-Cash Adjustments: Depreciation 1,232,643 1,225,938 Amortization 43,800 40,650 Gain on Sales of Securities Available for Sale (143,414) (53,473) Gain on Sales of Investment Property and Equipment (16,261) (4,452) Changes in Operating Assets And Liabilities - Notes and Other Receivables (372,845) (279,051) Prepaid Expenses (35,452) 168,515 Accounts Payable 185,744 36,512 Accrued Liabilities and Deposits 118,137 73,549 Tenant Security Deposits 26,984 41,486 --------- --------- Net Cash Provided by Operating Activities 3,743,887 3,404,480 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Investment Property and Equipment (673,955) (2,533,022) Proceeds from Sales of Assets 51,233 193,540 Additions to Land Development (1,148,045) (644,824) Purchase of Securities Available for Sale (1,576,152) (2,290,441) Proceeds from Sales of Securities Available for Sale 501,600 417,923 --------- --------- Net Cash Used by Investing Activities (2,845,319) (4,856,824) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Mortgages and Loans 2,018,113 5,576,531 Principal Payments of Mortgages and Loans (406,862) (1,152,675) Financing Costs on Debt (15,000) (90,116) Proceeds from Exercise of Stock Options -0- 263,750 Dividends Paid (1,858,178) (1,898,580) Purchase of Treasury Stock (594,806) (1,108,735) ------- --------- Net Cash (Used) Provided by Financing Activiites (856,733) 1,590,175 ------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS 41,835 137,831 CASH & CASH EQUIVALENTS - BEGINNING 724,650 832,408 ------- ------- CASH & CASH EQUIVALENTS - ENDING $ 766,485 $ 970,239 ======= =======
-UNAUDITED- See Notes to Consolidated Financial Statements -5- UNITED MOBILE HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2000 (UNAUDITED) NOTE 1 - ACCOUNTING POLICY The interim consolidated financial statements furnished herein reflect all adjustments which were, in the opinion of management, necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2000 and for all periods presented. All adjustments made in the interim period were of a normal recurring nature. Certain footnote disclosures which would substantially duplicate the disclosures contained in the audited consolidated financial statements and notes thereto included in the annual report of United Mobile Homes, Inc. (the Company) for the year ended December 31, 1999 have been omitted. NOTE 2 - NET INCOME PER SHARE AND COMPREHENSIVE INCOME Basic net income per share is calculated by dividing net income by the weighted average shares outstanding for the period. Diluted net income per share is calculated by dividing net income by the weighted average number of common shares outstanding plus the weighted average number of net shares that would be issued upon exercise of stock options pursuant to the treasury stock method. Options in the amounts of 13,329 and 18,443 for the three and six months ended June 30, 1999, respectively are included in the diluted weighted average shares outstanding. Options for 421,500 shares were excluded for the three and six months ended June 30, 2000 since they were anti-dilutive. Total comprehensive income, including unrealized gains (losses) on securities available for sale, amounted to $2,151,948 and $3,728,691, for the three and six months ended June 30, 2000, respectively and $1,606,467 and $2,314,593 for the three and six months ended June 30, 1999, respectively. NOTE 3 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN On June 15, 2000, the Company paid $1,376,095 as a dividend of $.1875 per share to shareholders of record as of May 15, 2000. The total dividends paid for the six months ended June 30, 2000 amounted to $2,747,225. On June 15, 2000, the Company received $467,580 from the Dividend Reinvestment and Stock Purchase Plan. There were 58,430 new shares issued under the Plan. The total amount received from the Dividend Reinvestment and Stock Purchase Plan for the six months ended June 30, 2000 amounted to $889,047. NOTE 4 - TREASURY STOCK During the six months ended June 30, 2000, the Company purchased 75,400 shares of its own stock for a total cost of $594,806. These shares are accounted for under the cost method and are included as Treasury Stock in the Consolidated Financial Statements. -6- NOTE 5 - EMPLOYEE STOCK OPTIONS During the six months ended June 30, 2000, the following stock option was granted: Date of Number of Number of Option Expiration Grant Employees Shares Price Date 1/6/00 1 25,000 $9.0625 1/6/2005 The Company also extended, for an additional five years, stock options for a total of 75,000 shares which expired on January 5, 2000. As of June 30, 2000, there were options outstanding to purchase 421,500 shares and 247,500 shares available for grant under the Company's Stock Option Plans. NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the six months ended June 30, 2000 and 1999 for interest was $1,366,206 and $907,073, respectively. Interest cost capitalized to Land Development was $77,000 and $67,600 for the six months ended June 30, 2000 and 1999, respectively. During the six months ended June 30, 2000 and 1999, the Company had dividend reinvestments of $889,047 and $812,272, respectively, which required no cash transfers. NOTE 7 - SUBSEQUENT EVENTS On July 27, 2000, the Company entered into a $4,000,000 mortgage with First Union Bank, of which $2,500,000 was taken down. This mortgage bears interest at LIBOR plus 155 points. This mortgage matures on August 1, 2002 but may be converted to a fixed rate mortgage loan for an additional five years. NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS In March 2000, the Financial Accounting Standards Board (FASB) issued Interpretation No. 44 "Accounting for Certain Transactions Involving Stock Compensation, an Interpretation of APB Opinion No. 25". The interpretation clarifies certain issues with respect to the application of Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees" (APB Opinion No. 25). The interpretation results in a number of changes in the application of APB Opinion No. 25 including, the accounting for modifications to equity awards as well as extending APB Opinion No. 25 accounting treatment to options granted to outside directors for their services as directors. The provisions of the interpretation were effective July 1, 2000 and apply prospectively, except for certain modifications to equity awards made after December 15, 1998. The initial adoption of the interpretation did not have a significant impact on the Company's financial statements. -7- MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS MATERIAL CHANGES IN FINANCIAL CONDITION United Mobile Homes, Inc. (the Company) owns and operates twenty- four manufactured home communities. These manufactured home communities have been generating increased gross revenues and increased operating income. The Company generated $3,743,887 net cash provided by operating activities. The Company received new capital of $889,047 through its Dividend Reinvestment and Stock Purchase Plan (DRIP). The Company repurchased 75,400 shares of its own stock at a cost of $594,806. The Company purchased $1,576,152 of securities of other real estate investment trusts. Mortgages Payable decreased by $406,862 as a result of principal repayments. Loans payable increased by $2,018,113 primarily as a result of additional borrowings to purchase of Securities Available for Sale. MATERIAL CHANGES IN RESULTS OF OPERATIONS Income from community operations increased by $244,369 to $2,635,491 for the quarter ended June 30, 2000 as compared to $2,391,122 for the quarter ended June 30, 1999. Income from community operations increased by $525,139 to $5,274,555 for the six months ended June 30, 2000 as compared to $4,749,416 for the six months ended June 30, 1999. This represents a continuing trend of rising income from community operations. The Company has been raising rental rates by approximately 4% to 5% annually. Rental and related income rose from $4,451,646 for the quarter ended June 30, 1999 to $4,630,873 for the quarter ended June 30, 2000. Rental and related income increased from $8,773,629 for the six months ended June 30, 1999 to $9,242,455 for the six months ended June 30, 2000. This was the result of higher rents and increased occupancy. Community operating expenses remained relatively stable for the quarter and six months ended June 30, 2000 as compared to the quarter and six months ended June 30, 1999. General and administrative expenses increased from $441,386 for the quarter ended June 30, 1999 to $493,422 for the quarter ended June 30, 2000. General and administrative expenses increased from $824,099 for the six months ended June 30, 1999 to $947,637 for the six months ended June 30, 2000. This was due to an increase in personnel costs. Interest expense increased by $217,003 for the quarter ended June 30, 2000 as compared to the quarter ended June 30, 1999 and by $449,733 for the six months ended June 30, 2000 as compared to the six months ended June 30, 1999. This was primarily a result of an increase in the average principal balance on borrowings outstanding. The balance outstanding of mortgages payable at June 30, 2000 was $30,012,291 as compared to $24,258,901 at June 30, 1999. Investment income increased from $164,488 for the quarter ended June 30, 1999 to $380,277 for the quarter ended June 30, 2000 and from $331,098 for the six months ended June 30, 1999 to $927,021 for the six months ended June 30, 2000. This was due primarily to purchases of Securities Available for Sale during 1999 and 2000. Included in Investment income is a realized gain of $143,414 on the sale of $358,186 of Securities Available for Sale. -8- Funds from operations (FFO), defined as net income, excluding gains (or losses) from sales of depreciable assets, plus depreciation increased from $1,655,447 for the quarter ended June 30, 1999 to $1,848,126 for the quarter ended June 30, 2000. FFO increased from $3,376,292 for the six months ended June 30, 1999 to $3,920,933 for the six months ended June 30, 2000. FFO does not replace net income (determined in accordance with generally accepted accounting principles) as a measure of performance or net cash flows as a measure of liquidity. FFO should be considered as a supplemental measure of operating performance used by real estate investment trusts. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities increased from $3,404,480 for the six months ended June 30, 1999 to $3,743,887 for the six months ended June 30, 2000. The Company believes that funds generated from operations together with the financing and refinancing of its properties will be sufficient to meet its needs over the next several years. IMPACT OF YEAR 2000 The Company has experienced no significant impact of its operations or its ability to accurately process financial information due to a Year 2000 related issue. In addition, the Company has no information that indicates a significant tenant, vendor or service provider may be unable to meet their rental obligations, sell goods or provide services to the Company because of Year 2000 issues. The Company will continue to monitor its operations for year 2000 related issues. -9- PART II OTHER INFORMATION Item 1 - Legal Proceedings - none Item 2 - Changes in Securities - none Item 3 - Defaults Upon Senior Securities - none Item 4 - Submission of Matters to a Vote of Security Holders - The annual meeting of shareholders was held on June 1, 2000 to elect a Board of Directors for the ensuing year and to approve the selection of independent auditors. Proxies for the meeting were solicited pursuant to Regulation 14 under the Securities and Exchange Act of 1934. Item 5 - Other Information - none Item 6 - Exhibits and Reports on Form 8-K - (a) Exhibits - none (b) Reports on Form 8-K - none -10- SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATE: August 10, 2000 By:/s/ Samuel A. Landy Samuel A. Landy, President DATE: August 10, 2000 By:/s/ Anna T. Chew Anna T. Chew, Vice President and Chief Financial Officer -11-