-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Licyk6XhXdbKRvhrodzRayeznKxl+bDQj3qlAHyxkjKf3lxlWmhJ4l6QIikqpQAJ WMbHLcisSoWNBKvM7XcdEQ== 0000752642-03-000045.txt : 20031113 0000752642-03-000045.hdr.sgml : 20031113 20031113111156 ACCESSION NUMBER: 0000752642-03-000045 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED MOBILE HOMES INC CENTRAL INDEX KEY: 0000752642 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 221890929 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12690 FILM NUMBER: 03996330 BUSINESS ADDRESS: STREET 1: 3499 ROUTE 9 N, SUITE 3-C STREET 2: JUNIPER BUSINESS PLAZA CITY: FREEHOLD STATE: NJ ZIP: 07728 BUSINESS PHONE: 7325779997 MAIL ADDRESS: STREET 1: 3499 ROUTE 9 N, SUITE 3-C STREET 2: JUNIPER BUSINESS PLAZA CITY: FREEHOLD STATE: NJ ZIP: 07728 10-Q 1 umh10q093003.txt FORM 10-Q 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 September 30, 2003 ( ) 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 September 30, 2003 0-13130 UNITED MOBILE HOMES, INC. (Exact name of registrant as specified in its charter) Maryland 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 (Former name, former address and former fiscal year, if changed since 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 November 1, 2003 was 8,027,858 shares. UNITED MOBILE HOMES, INC. for the QUARTER ENDED SEPTEMBER 30, 2003 PART I - FINANCIAL INFORMATION Page No. Item 1 - Financial Statements (Unaudited) Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6-10 Item 2 - Management Discussion and Analysis of Financial Conditions and Results of 11-14 Operations 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. Item 4 - Controls and Procedures 14 PART II - OTHER INFORMATION 15 SIGNATURES 16 Page 2
UNITED MOBILE HOMES, INC CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2003 AND DECEMBER 31, 2002 September 30, December 31 -ASSETS- 2003 2002 ___________ ___________ (Unaudited) INVESTMENT PROPERTY AND EQUIPMENT Land $ 6,927,970 $ 6,850,970 Site and Land Improvements 57,923,642 56,437,044 Buildings and Improvements 2,781,232 2,748,600 Rental Homes and Accessories 9,385,129 8,798,433 ___________ ___________ Total Investment Property 77,017,973 74,835,047 Equipment and Vehicles 4,401,702 3,919,983 ___________ ___________ Total Investment Property and Equipment 81,419,675 78,755,030 Accumulated Depreciation (36,964,141) (34,969,453) ___________ ___________ Net Investment Property and Equipment 44,455,534 43,785,577 ___________ ___________ OTHER ASSETS Cash and Cash Equivalents 1,364,858 2,338,979 Securities Available for Sale 31,545,904 32,784,968 Inventory of Manufactured Homes 2,647,307 2,775,459 Notes and Other Receivables 6,536,261 4,800,969 Unamortized Financing Costs 388,491 403,663 Prepaid Expenses 854,279 422,323 Land Development Costs 2,647,371 1,714,568 ___________ ___________ Total Other Assets 45,984,471 45,240,929 ___________ ___________ TOTAL ASSETS $90,440,005 $89,026,506 =========== =========== - LIABILITIES AND SHAREHOLDERS' EQUITY - LIABILITIES: MORTGAGES PAYABLE $44,659,004 $43,321,884 ___________ ___________ OTHER LIABILITIES Accounts Payable 609,623 956,663 Loans Payable 6,605,299 12,358,965 Accrued Liabilities and Deposits 1,624,059 2,141,636 Tenant Security Deposits 510,996 510,941 ___________ ___________ Total Other Liabilities 9,349,977 15,968,205 ___________ ___________ Total Liabilities 54,008,981 59,290,089 ___________ ___________ SHAREHOLDERS' EQUITY: Common Stock - $.10 par value per share, 23,000,000 and 15,000,000 shares authorized, 8,390,558 and 8,063,750 shares issued and 7,998,258 and 7,671,450 shares outstanding as of September 30, 2003 and December 31, 2002, respectively 839,056 806,375 Additional Paid-In Capital 33,828,387 29,411,328 Accumulated Other Comprehensive Income 5,308,399 3,988,429 Accumulated Income (Deficit) 165,104 (667,793) Treasury Stock at Cost (392,300 shares at September 30, 2003 and December 31, 2002) (3,709,922) (3,709,922) Notes Receivable from Officers (13,000 shares at December 31, 2002) -0- (92,000) ___________ ___________ Total Shareholders' Equity 36,431,024 29,736,417 ___________ ___________ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $90,440,005 $89,026,506 =========== ===========
-UNAUDITED- See Accompanying Notes to Consolidated Financial Statements Page 3
UNITED MOBILE HOMES, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 THREE MONTHS NINE MONTHS 9/30/03 9/30/02 9/30/03 9/30/02 ________ ________ ________ ________ REVENUES: Rental and Related Income $5,265,197 $5,081,035 $15,641,010 $15,076,014 Sales of Manufactured Homes 1,876,398 1,881,037 5,107,063 4,357,699 Interest and Dividend Income 848,860 812,766 2,545,783 2,149,843 Gain on Securities Available for Sales Transactions, 815,358 92,212 1,486,939 794,950 net Other Income 28,292 16,941 93,953 64,926 __________ __________ __________ __________ Total Revenues 8,834,105 7,883,991 24,874,748 22,443,432 __________ __________ __________ __________ EXPENSES: Community Operating 2,639,788 2,363,990 7,475,312 6,894,165 Expenses Cost of Sales of Manufactured Homes 1,504,503 1,642,491 4,047,248 3,722,705 Selling Expenses 283,278 271,299 856,156 731,782 General and Administrative Expenses 566,584 517,341 1,798,310 1,588,865 Interest Expense 785,933 865,372 2,417,348 2,455,878 Depreciation Expense 723,080 695,639 2,156,519 2,095,664 Amortization of Financing Costs 30,300 26,700 90,900 80,100 __________ __________ __________ __________ Total Expenses 6,533,466 6,382,832 18,841,793 17,569,159 __________ __________ __________ __________ Income before Gain on Sales of Investment Property and Equipment 2,300,639 1,501,159 6,032,955 4,874,273 Gain (Loss) on Sales of Investment Property and Equipment 13,098 (7,258) 50,652 (8,283) __________ __________ __________ ___________ Net Income $2,313,737 $1,493,901 $6,083,607 $4,865,990 ========== ========== ========== ========== Net Income per Share - Basic $ .29 $ .19 $ 0.78 $ .64 ========== ========== ========== ========== Diluted $ .29 $ .19 $ 0.77 $ .63 ========== ========== ========== ========== Weighted Average Shares Outstanding - Basic 7,905,395 7,627,344 7,788,311 7,587,282 ========== ========= ========== ========== Diluted 8,001,633 7,716,161 7,876,576 7,674,636 ========== ========= ========== ==========
-UNAUDITED- See Accompanying Notes to Consolidated Financial Statements Page 4
UNITED MOBILE HOMES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 2003 2002 ________ ________ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $6,083,607 $4,865,990 Non-Cash Adjustments: Depreciation 2,156,519 2,095,664 Amortization 90,900 80,100 Gain on Securities Available for Sale Transactions (1,486,939) (794,950) (Gain) Loss on Sales of Investment Property and Equipment (50,652) 8,283 Changes in Operating Assets and Liabilities: Inventory of Manufactured Homes 128,152 48,766 Notes and Other Receivables (1,735,292) (1,248,109) Prepaid Expenses (431,956) (587,452) Accounts Payable (347,040) (488,256) Accrued Liabilities and Deposits (517,577) 524,572 Tenant Security Deposits 55 36,692 ___________ ___________ Net Cash Provided by Operating Activities 3,889,777 4,541,300 ___________ ___________ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Manufactured Home Community (918,000) -0- Purchase of Investment Property and Equipment (2,196,617) (1,382,909) Proceeds from Sales of Assets 338,793 185,664 Additions to Land Development (932,803) (549,944) Purchase of Securities Available for Sale (5,741,183) (6,527,677) Proceeds from Sales of Securities Available for Sale 9,787,156 3,735,533 Repayment of Notes Receivables from Officers 92,000 -0- ___________ ___________ Net Cash Provided (Used) by Investing Activities 429,346 (4,539,333) ___________ ___________ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Mortgages and Loans 3,500,000 6,862,500 Principal Payments of Mortgages and Loans (7,916,546) (3,936,513) Financing Costs on Debt (75,728) (48,702) Proceeds from the Dividend Reinvestment and Stock Purchase Plan 2,350,004 137,050 Proceeds from Exercise of Stock Options 783,513 57,500 Dividends Paid, net of amount reinvested (3,934,487) (3,665,944) Purchase of Treasury Stock -0- (341,439) ___________ ___________ Net Cash Used by Financing Activities (5,293,244) (935,548) ___________ ___________ NET DECREASE IN CASH AND CASH EQUIVALENTS (974,121) (933,581) CASH & CASH EQUIVALENTS - BEGINNING 2,338,979 1,567,831 ___________ __________ CASH & CASH EQUIVALENTS - ENDING $ 1,364,858 $ 634,250 =========== ===========
-UNAUDITED- See Accompanying Notes to Consolidated Financial Statements Page 5 UNITED MOBILE HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (UNAUDITED) NOTE 1 - ORGANIZATION AND ACCOUNTING POLICY On September 29, 2003, United Mobile Homes, Inc. (the Company) changed its state of incorporation from New Jersey to Maryland. The reincorporation was approved by the Company's shareholders at the Company's annual meeting on August 14, 2003. The reincorporation was accomplished by the merger of the Company with and into its wholly-owned subsidiary, United Mobile Homes, Inc., a Maryland corporation, (United Maryland), which was the surviving corporation in the merger. As a result of the merger, each outstanding share of the Company's Class A common stock, $.10 par value per share, was converted into one share of common stock, $.10 par value per share of United Maryland common stock. In addition, each outstanding option to purchase New Jersey Common Stock was converted into the right to purchase Maryland Common Stock upon the same terms and conditions as immediately prior to the Merger. The Company's 1994 Stock Option Plan, as amended, was assumed by United Maryland. The conversion of the New Jersey Common Stock into Maryland Common Stock occurred without an exchange of certificates. Accordingly, certificates formerly representing shares of New Jersey Common Stock are now deemed to represent the same number of shares of Maryland Common Stock. Prior to the Merger, United Maryland had no assets or liabilities, other than nominal assets or liabilities. As a result of the Merger, United Maryland acquired all of the assets and all of the liabilities and obligations of the Company. The Merger was accounted for as if it were a "pooling of interests" rather than a purchase for financial reporting and related purposes, with the result that the historical accounts of the Company and United Maryland have been combined for all periods presented. United Maryland, has the same business, properties, directors, management, status as a real estate investment trust under the Internal Revenue Code of 1986, as amended, and principal executive offices as United Mobile Homes, Inc., a New Jersey corporation. 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 September 30, 2003 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 the Company for the year ended December 31, 2002 have been omitted. The Company, through its wholly-owned taxable subsidiary, UMH Sales and Finance, Inc. (S&F), conducts manufactured home sales in its communities. This company was established to enhance the occupancy of the communities. The consolidated financial statements of the Company include S&F and all of its other wholly- owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Certain reclassifications have been made to the financial statements for prior periods to conform to the current period presentation. Page 6 NOTE 1 - ORGANIZATION AND ACCOUNTING POLICY, (CONT'D.) Employee Stock Options On August 14, 2003, the shareholders approved and ratified the Company's 2003 Stock Option Plan authorizing the grant to officers and key employees of options to purchase up to 1,500,000 shares of common stock. This Plan replaced the Company's 1994 Stock Option Plan which, pursuant to its terms, terminates December 31, 2003. No future awards will be granted under the Company's 1994 Stock Option Plan. Prior to 2003, the Company accounted for its stock option plan under the recognition and measurement provision of APB Opinion No. 25, "Accounting for Stock Issued to Employees", and the related interpretations. No stock-based employee compensation was reflected in net income prior to 2003. Effective January 1, 2003, the Company adopted the fair value recognition provisions of SFAS No. 123, "Accounting for Stock Based Compensation". The Company has selected the prospective method of adoption under the provisions of SFAS No. 148 "Accounting for Stock-Based Compensation Transition and Disclosure". SFAS 123 requires that compensation cost for all stock awards be calculated and recognized over the service period (generally equal to the vesting period). This compensation cost is determined using option pricing models, intended to estimate the fair value of the awards at the grant date. Had compensation cost been determined consistent with SFAS No. 123, the Company's net income and earnings per share for the three and nine months ended September 30, 2003 and 2002 would have been reduced to the pro forma amounts as follows:
Three Months Nine Months ____________ ____________ 9/30/03 9/30/02 9/30/03 9/30/02 ________ ________ ________ ________ Net Income prior to compensation expense for grants in 2003 $2,320,650 $1,493,901 $6,090,520 $4,865,990 Compensation expense 6,913 -0- 6,913 -0- ________ ________ ________ ________ Net Income as Reported 2,313,737 1,493,901 6,083,607 4,865,990 Compensation expenses if the fair value method had been applied -0- 19,084 8,815 39,066 ________ ________ ________ ________ Net Income Pro forma $2,313,737 $1,474,817 $6,074,792 $4,826,924 ========= ========== ========== ========== Net Income per share - as reported Basic $ .29 $ .19 $ .78 $ .64 Diluted $ .29 $ .19 $ .77 $ .63 Net Income per share - pro forma Basic $ .29 $ .19 $ .78 $ .64 Diluted $ .29 $ .19 $ .77 $ .63
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighed-average assumptions used for grants in the following years: 2003 2002 2001 ____ ____ ____ Dividend yield 6.75% 6.75% 8% Expected volatility 19% 13% 25% Risk-free interest rate 3.91% 3.40% 4.29% Expected lives 8 8 5 Page 7 NOTE 1 - ORGANIZATION AND ACCOUNTING POLICY, (CONT'D.) The weighted-average fair value of options granted during the nine months ended September 30, 2003 was $1.30. During the nine months ended September 30, 2003, the following stock options were granted: Number Date of Number of of Option Expiration Grant Employees Shares Price Date 8/18/03 1 25,000 16.92 8/18/11 8/25/03 10 39,000 15.00 8/25/11 During the nine months ended September 30, 2003, nine employees exercised their stock options and purchased 78,000 shares for a total of $783,513. Additionally, stock options for a total of 31,000 shares expired without being exercised. As of September 30, 2003, there were options outstanding to purchase 343,000 shares and 1,436,000 shares were available for grant under the Company's 2003 Stock Option Plan. 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 amount of 96,238 and 88,265 shares for the three and nine months ended September 30, 2003 respectively, and 88,817 and 87,354 shares for the three and nine months ended September 30, 2002, respectively, are included in the diluted weighted average shares outstanding. Total comprehensive income, including change in unrealized gains (losses) on securities available for sale, amounted to $2,764,050 and $7,403,577 for the three and nine months ended September 30, 2003, respectively, and $817,843 and $5,383,758 for the three and nine months ended September 30, 2002, respectively. NOTE 3 - INVESTMENT PROPERTY AND EQUIPMENT On May 15, 2003, the Company acquired Woodland Manor (formerly Northway Manor), a manufactured home community located in West Monroe, New York. This community consists of 150 manufactured home sites, of which 65 are currently occupied. This community was purchased from MSCI 1998-CF1 West Monroe, LLC, an unrelated entity, for a purchase price, including closing costs, of approximately $918,000. Page 8 NOTE 4 - MORTGAGES PAYABLE Effective May 1, 2003, the Company extended the D&R Village mortgage for an additional five years. This mortgage payable is due on May 1, 2008 with the interest rate reset at 4.625%. On August 28, 2003, the Company obtained a $3,500,000 mortgage loan with First National Community Bank, located in Dunmore, PA. This mortgage payable is due on August 28, 2018 with an interest rate of prime plus 1/4% (with a minimum rate of 4 1/2% and a maximum rate of 7 1/4%), for the first seven years. Effective August 28, 2010, the interest rate will be prime plus 1% (but not more than 3% greater than the prime rate on August 28, 2010). This loan is secured by Heather Highlands Mobile Home Park in Pittston, PA. NOTE 5 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN On March 19, 2003, the Company amended the Dividend Reinvestment and Stock Purchase Plan to provide for monthly optional cash payments of not less than $500 per payment nor more than $1,000 unless a request for waiver has been accepted by the Company. On September 15, 2003, the Company paid $1,797,856 as a dividend of $.2275 per share to shareholders of record as of August 15, 2003. Gross dividends paid for the nine months ended September 30, 2003 amounted to $5,250,710, of which $1,316,223 was reinvested. During the nine months ended September 30, 2003, the Company received, including dividends reinvested, a total of $3,666,227 from the Dividend Reinvestment and Stock Purchase Plan. There were 248,808 new shares issued under the Plan. NOTE 6 - CONTINGENCIES The Company is under an investigation by the Environmental Protection Agency regarding its operation of its wastewater treatment facility at one community. The Company's wastewater treatment facilities are operated by licensed operators and supervised by a professional engineer. Management does not believe that this matter will have a material adverse effect on its business, consolidated balance sheet, or results of operations. The Company is subject to claims and litigation in the ordinary course of business. Management does not believe that any such claim or litigation will have a material adverse effect on the consolidated balance sheet or results of operations. NOTE 7 - SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the nine months ended September 30, 2003 and 2002for interest was $2,529,048 and $2,558,878, respectively. Interest cost capitalized to Land Development was $111,700 and $103,000 for the nine months ended September 30, 2003 and 2002, respectively. During the nine months ended September 30, 2003 and 2002, the Company had dividend reinvestments of $1,316,223 and $1,223,175, respectively, which required no cash transfers. During the nine months ended September 30, 2002, two officers exercised their stock options for 13,000 shares through the issuance of $149,500 of notes receivable. Page 9 NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51", which addresses consolidation by business enterprises of variable interest entities. The Interpretation clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. Management believes that this Interpretation will not have a material impact on the Company's financial statements. On October 9, 2003, the effective date was deferred until the end of the first interim or annual period ending after December 15, 2003, for certain interests held by a public entity in certain variable interest entities or potential variable interest entities created before February 1, 2003. In April 2003, the FASB issued Statement No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" ("SFAS No. 149"). SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under Statement 133. SFAS No. 149 is effective for contracts entered into or modified after September 30, 2003, with some exceptions, and for hedging relationships designated after September 30, 2003. The guidance should be applied prospectively. Management believes that this Statement will not have a material impact on the Company's financial statements. In May 2003, the FASB issued Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("SFAS No. 150). SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the Statement and still existing at the beginning of the interim period of adoption. Restatement is not permitted. Management believes that this Statement will not have a material impact on the Company's financial statements. On October 29, 2003, the FASB voted to indefinitely defer certain provisions of this statement relating to non-controlling (minority) interests in finite-like entities. Page 10 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS CHANGES IN FINANCIAL CONDITION On September 29, 2003, United Mobile Homes, Inc. (the Company) changed its state of incorporation from New Jersey to Maryland. The reincorporation was approved by the Company's shareholders at the Company's annual meeting on August 14, 2003. The reincorporation was accomplished by the merger of the Company with and into its wholly-owned subsidiary, United Mobile Homes, Inc., a Maryland corporation, (United Maryland), which was the surviving corporation in the merger. As a result of the merger, each outstanding share of the Company's Class A common stock, $.10 par value per share, was converted into one share of common stock, $.10 par value per share of United Maryland common stock. In addition, each outstanding option to purchase New Jersey Common Stock was converted into the right to purchase Maryland Common Stock upon the same terms and conditions as immediately prior to the Merger. The Company's 1994 Stock Option Plan, as amended, was assumed by the United Maryland. The conversion of the New Jersey Common Stock into Maryland Common Stock occurred without an exchange of certificates. Accordingly, certificates formerly representing shares of New Jersey Common Stock are now deemed to represent the same number of shares of Maryland Common Stock. Prior to the Merger, United Maryland had no assets or liabilities, other than nominal assets or liabilities. As a result of the Merger, United Maryland acquired all of the assets and all of the liabilities and obligations of the Company. United Maryland, has the same business, properties, directors, management, status as a real estate investment trust under the Internal Revenue Code of 1986, as amended, and principal executive offices as United Mobile Homes, Inc., a New Jersey corporation. On May 15, 2003, the Company acquired a manufactured home community in West Monroe, New York. The Company now owns and operates twenty-six manufactured home communities. These manufactured home communities have been generating increased gross revenues and increased operating income. The Company also purchases and holds securities of other real estate investment trusts. Effective April 1, 2001, the Company through its wholly- owned taxable subsidiary, UMH Sales and Finance, Inc. (S&F) began to conduct manufactured home sales in its communities. The Company generated $3,889,777 net cash provided by operating activities. The Company received, including dividends reinvested of $1,316,223, new capital of $3,666,227 through its Dividend Reinvestment and Stock Purchase Plan (DRIP). The Company sold $8,300,217 and purchased $5,741,183 of securities of other real estate investment trusts. Mortgages Payable increased by $1,337,120 as a result of a new mortgage of $3,500,000 partially offset by principal repayments of $2,162,880. Page 11 CHANGES IN RESULTS OF OPERATIONS Rental and related income increased from $5,081,035 for the quarter ended September 30, 2002 to $5,265,197 for the quarter ended September 30, 2003. Rental and related income increased from $15,076,014 for the nine months ended September 30, 2002 to $15,641,010 for the nine months ended September 30, 2003. This was primarily due to the acquisition of a new community and rental increases to residents. The Company has been raising rental rates by approximately 3% to 4% annually. Interest and dividend income rose from $812,766 for the quarter ended September 30, 2002 to $848,860 for the quarter ended September 30, 2003. Interest and dividend income rose from $2,149,843 for the nine months ended September 30, 2002 to $2,545,783 for the nine months ended September 30, 2003. This was due primarily to purchases of Securities available for sale during 2003. Gain on securities available for sale transactions amounted to $815,358 and $1,486,939 for the quarter and nine months ended September 30, 2003, respectively, as compared to $92,212 and $794,950 for the quarter and nine months ended September 30, 2002, respectively. Community operating expenses increased from $2,363,990 for the quarter ended September 30, 2002 to $2,639,788 for the quarter ended September 30, 2003. Community operating expenses increased from $6,894,165 for the nine months ended September 30, 2002 to $7,475,312 for the nine months ended September 30, 2003. This was primarily due to the acquisition of a new community and increased insurance expense, professional fees and personnel costs. General and administrative expenses increased from $517,341 for the quarter ended September 30, 2002 to $566,584 for the quarter ended September 30, 2003. General and administrative expenses increased from $1,588,865 for the nine months ended September 30, 2002 to $1,798,310 for the nine months ended September 30, 2003. This was primarily due to an increase in professional fees. Interest expense decreased from $865,372 for the quarter ended September 30, 2002 to $785,933 for the quarter ended September 30, 2003. Interest expense decreased from $2,455,878 for the nine months ended September 30, 2002 to $2,417,348 for the nine months ended September 30, 2003. This was primarily due to a decrease in loans payable and a decrease in interest rates. Depreciation expense and amortization of financing costs remained relatively stable for the quarter and nine months ended September 30, 2003 as compared to the quarter and nine months ended September 30, 2002. Sales of manufactured homes amounted to $1,876,398 and $5,107,063 for the quarter and nine months ended September 30, 2003, respectively, as compared to $1,881,037 and $4,357,699 for the quarter and nine months ended September 30, 2002, respectively. Cost of sales of manufactured homes amounted to $1,504,503 and $4,047,248 for the quarter and nine months ended September 30, 2003, respectively, as compared to $1,642,491 and $3,722,705 for the quarter and nine months ended September 30, 2002, respectively. Selling expenses amounted to $283,278 and $856,156 for the quarter and nine months ended September 30, 2003, respectively, as compared to $271,299 and $731,782 for the quarter and nine months ended September 30, 2002, respectively. These fluctuations are directly attributable to the fluctuations in sales. Income from the sales operations (defined as sales of manufactured homes less cost of sales of manufactured homes less selling expenses) amounted to $88,617 and $203,659 for the quarter and nine months ended September 30, 2003, respectively, as compared to $32,753 and a loss of $96,788 for the quarter and nine months ended September 30, 2002, respectively. The Company has been experiencing an increase in gross margin. The Company believes that sales of new homes produces new rental revenue and is an investment in the upgrading of the communities. Page 12 LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities decreased from $4,541,300 for the nine months ended September 30, 2002 to $3,889,777 for the nine months ended September 30, 2003 primarily due to an increase in notes and other receivables and a decrease in accrued liabilities and deposits. 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. FUNDS FROM OPERATIONS Funds from Operations (FFO) is defined as net income excluding gains (or losses) from sales of depreciable assets, plus depreciation. FFO should be considered as a supplemental measure of operating performance used by real estate investment trust (REITs). FFO excludes historical cost depreciation as an expense and may facilitate the comparison of REITs which have different cost bases. The items excluded from FFO are significant components in understanding and assessing the Company's financial performance. FFO (1) does not represent cash flow from operations as defined by generally accepted accounting principles; (2) should not be considered as an alternative to net income as a measure of operating performance or to cash flows from operating, investing and financing activities; and (3) is not an alternative to cash flow as a measure of liquidity. FFO, as calculated by the Company, may not be comparable to similarly entitled measures reported by other REITs. The Company's FFO for the quarter and nine months ended September 30, 2003 and 2002 is calculated as follows: Three Months Nine months 9/30/03 9/30/02 9/30/03 9/30/02 _________ _________ _________ __________ Net Income $2,313,737 $1,493,901 $6,083,607 $4,865,990 Loss(Gain)on Sales of Depreciable Assets (13,098) 7,258 (50,652) 8,283 Depreciation Expense 723,080 695,639 2,156,519 2,095,664 _________ _________ _________ __________ FFO $3,023,719 $2,196,798 $8,189,474 $6,969,937 ========= ========= ========= ========= The following are the cash flows provided (used) by operating, investing and financing activities for the nine months ended September 30, 2003 and 2002: 2003 2002 _____ _____ Operating Activities $3,889,777 $4,541,300 Investing Activities 429,346 (4,539,333) Financing Activities (5,293,244) (935,548) Page 13 CONTROLS AND PROCEDURES The Company's Chief Executive Officer and Chief Financial Officer, with the assistance of other members of the Company's management, have evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures are effective. The Company's Chief Executive Officer and Chief Financial Officer have also concluded that there have not been any changes in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. SAFE HARBOR STATEMENT This Form 10-Q contains various "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and the Company intends that such forward-looking statements be subject to the safe harbors created thereby. The words "may", "will", "expect", "believe", "anticipate", "should", "estimate", and similar expressions identify forward-looking statements. These forward-looking statements reflect the Company's current views with respect to future events and finance performance, but are based upon current assumptions regarding the Company's operations, future results and prospects, and are subject to many uncertainties and factors relating to the Company's operations and business environment which may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: (i) changes in the general economic climate; (ii) increased competition in the geographic areas in which the Company owns and operates manufactured housing communities; (iii) changes in government laws and regulations affecting manufactured housing communities; and (iv) the ability of the Company to continue to identify, negotiate and acquire manufactured housing communities and/or vacant land which may be developed into manufactured housing communities on terms favorable to the Company. The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. Page 14 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 August 14, 2003 to elect a Board of Directors for the ensuing year, to approve the selection of independent auditors, to approve a proposal by the Board of Directors to reincorporate the Company as a Maryland Corporation, and to approve the Company's 2003 Stock Option Plan. 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 - 31.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 31.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 32 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 8-K - none Page 15 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. UNITED MOBILE HOMES, INC. DATE: November 10, 2003 By /s/ Samuel A. Landy Samuel A. Landy President DATE: November 10, 2003 By /s/ Anna T. Chew Anna T. Chew Vice President and Chief Financial Officer Page 16
EX-31.1 3 umhexhibit311.txt CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, 302 Exhibit 31.1 CERTIFICATIONS I, Eugene W. Landy, certify that: 1. I have reviewed this quarterly report on Form 10-Q of United Mobile Homes, Inc.; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's interna control over financial reporting. Date: November 10, 2003 By: /s/ Eugene W. Landy Eugene W. Landy Chief Executive Officer EX-31.2 4 umhexhibit312.txt CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, 302 Exhibit 31.2 CERTIFICATIONS I, Anna T. Chew, certify that: 1. I have reviewed this quarterly report on Form 10-Q of United Mobile Homes, Inc.; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's interna control over financial reporting. Date: November 10, 2003 By: /s/ Anna T. Chew Anna T. Chew Chief Financial Officer EX-32 5 umhexhibit32.txt CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, 906 Exhibit 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of United Mobile Homes, Inc. (the "Company") for the quarterly period ended September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Eugene W. Landy, as Chief Executive Officer of the Company, and Anna T. Chew, as Chief Financial Officer, each hereby certifies, pursuant to 18 U.S.C. (section) 1350, as adopted pursuant to (section) 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ Eugene W. Landy Name: Eugene W. Landy Title: Chief Executive Officer Date: November 10, 2003 By: /s/ Anna T. Chew Name: Anna T. Chew Title: Chief Financial Officer Date: November 10, 2003
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