10-Q 1 e10-q.txt FORM 10-Q 1 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. OR [ ] Transition pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 COMMISSION FILE NUMBER 1-2616 SUN COMMUNITIES, INC. (Exact Name of Registrant as Specified in its Charter) Maryland 38-2730780 (State of Incorporation) (I.R.S. Employer Identification No.) 31700 Middlebelt Road 48334 Suite 145 (Zip Code) Farmington Hills, MI (Address of Principal Executive Offices) Registrant's telephone number, including area code: (248) 932-3100 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 [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 17,502,078 shares of Common Stock, $.01 par value as of July 28, 2000 Page 1 of 17 2 SUN COMMUNITIES, INC. INDEX
PAGES ----- PART I ------ Item 1. Financial Statements: Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999 3 Consolidated Statements of Income for the Periods Ended June 30, 2000 and 1999 4 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999 5 Notes to Consolidated Financial Statements 6-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-14 PART II ------- Item 4. Submission of Matters to a Vote of Security Holders 15 Item 6.(a) Exhibits required by Item 601 of Regulation S-K 15 Item 6.(b) Reports on Form 8-K 15 Signatures 16
2 3 SUN COMMUNITIES, INC. CONSOLIDATED BALANCE SHEETS JUNE 30, 2000 AND DECEMBER 31, 1999 (IN THOUSANDS)
ASSETS 2000 1999 --------------- ------------- Investment in rental property, net $ 781,133 $ 755,138 Cash and cash equivalents 6,706 11,330 Notes and other receivables 106,945 93,428 Investment in and advances to affiliates 26,422 18,841 Other assets 26,264 25,295 --------------- ------------- Total assets $ 947,470 $ 904,032 =============== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Line of credit $ 92,000 $ 47,000 Debt 353,501 354,564 Accounts payable and accrued expenses 16,732 17,616 Deposits and other liabilities 9,337 8,660 --------------- ------------- Total liabilities 471,570 427,840 --------------- ------------- Minority interests 140,423 137,834 --------------- ------------- Stockholders' equity: Preferred stock, $.01 par value, 10,000 shares authorized; no shares issued and outstanding -- -- Common stock, $.01 par value, 100,000 shares authorized; 17,501 and 17,459 issued and outstanding in 2000 and 1999, respectively 175 174 Paid-in capital 393,474 393,360 Officers' notes (11,257) (11,452) Unearned compensation (5,146) (5,459) Distributions in excess of accumulated earnings (41,769) (38,265) --------------- ------------- Total stockholders' equity 335,477 338,358 --------------- ------------- Total liabilities and stockholders' equity $ 947,470 $ 904,032 =============== =============
The accompanying notes are an integral part of the consolidated financial statements. 3 4 SUN COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIODS ENDED JUNE 30, 2000 (IN THOUSANDS EXCEPT FOR PER SHARE DATA) ------------
For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 ------------ ----------- ----------- ----------- Revenues: Income from property $ 32,947 $ 30,567 $ 66,076 $ 61,941 Other income, principally interest 3,117 2,194 6,021 3,820 ------------ ----------- ----------- ----------- Total revenues 36,064 32,761 72,097 65,761 ------------ ----------- ----------- ----------- Expenses: Property operating and maintenance 6,703 6,440 13,875 13,289 Real estate taxes 2,271 2,206 4,518 4,411 Property management 709 646 1,449 1,257 General and administrative 1,001 952 2,052 1,862 Depreciation and amortization 7,678 7,135 15,224 14,017 Interest 7,306 6,655 14,153 13,260 ------------ ----------- ----------- ----------- Total expenses 25,668 24,034 51,271 48,096 ------------ ----------- ----------- ----------- Income before minority interests 10,396 8,727 20,826 17,665 Less income allocated to minority interests: Preferred OP Units 1,956 626 3,871 1,252 Common OP Units 1,135 1,137 2,293 2,314 ------------ ----------- ----------- ----------- Net income $ 7,305 $ 6,964 $ 14,662 $ 14,099 ============ =========== =========== =========== Earnings per common share: Basic $ 0.42 $ 0.40 $ 0.85 $ 0.82 ============ =========== =========== =========== Diluted $ 0.42 $ 0.40 $ 0.84 $ 0.81 ============ =========== =========== =========== Weighted average common shares outstanding - basic 17,310 17,160 17,298 17,137 ============ =========== =========== =========== Distributions declared per common share outstanding $ 0.53 $ -- $ 1.04 $ 0.51 ============ =========== =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 4 5 SUN COMMUNITIES, INC CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (IN THOUSANDS)
2000 1999 ------------- ------------ Cash flows from operating activities: Net income $ 14,662 $ 14,099 Adjustments to reconcile net income to net cash provided by operating activities: Income allocated to minority interests 2,293 2,314 Depreciation and amortization 15,224 14,017 Amortization of deferred financing costs 317 404 Increase in other assets (3,140) (3,410) Decrease in accounts payable and other liabilities (207) (2,792) ------------- ------------ Net cash provided by operating activities 29,149 24,632 ------------- ------------ Cash flows from investing activities: Investment in rental properties (35,565) (28,395) Investment in and advances to affiliate (18,592) (3,323) Investments in notes receivable, net (2,311) (16,927) ------------- ------------ Net cash used in investing activities (56,468) (48,645) ------------- ------------ Cash flows from financing activities: Borrowings on line of credit, net 45,000 38,000 Repayments on notes payable and other debt (1,063) (976) Issuance (repurchase) of common stock and operating partnership units, net (267) 918 Distributions (20,975) (20,083) Payments for deferred financing costs -- (244) ------------- ------------ Net cash provided by financing activities 22,695 17,615 ------------- ------------ Net decrease in cash and cash equivalents (4,624) (6,398) Cash and cash equivalents, beginning of period 11,330 9,646 ------------- ------------ Cash and cash equivalents, end of period $ 6,706 $ 3,248 ============= ============ Supplemental Information: Conversion of partnership interest to notes receivable $ 11,011 $ -- Preferred OP Units issued for rental properties $ 3,564 $ -- Debt assumed for rental properties $ -- $ 1,700 Capitalized lease obligation for rental properties $ -- $ 10,605
The accompanying notes are an integral part of the consolidated financial statements 5 6 SUN COMMUNITIES, INC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION: These unaudited condensed consolidated financial statements of Sun Communities, Inc., a Maryland corporation, (the "Company"), have been prepared pursuant to the Securities and Exchange Commission ("SEC") rules and regulations and should be read in conjunction with the financial statements and notes thereto of the Company as of December 31, 1999. The following notes to consolidated financial statements present interim disclosures as required by the SEC. The accompanying consolidated financial statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of the interim financial statements. All such adjustments are of a normal and recurring nature. Certain reclassifications have been made to the prior period financial statements to conform with current period presentation. The Company owns 100 percent of the preferred stock of an affiliate, Sun Home Services, Inc. ("Sun Homes"), is entitled to 95 percent of the operating cash flow of Sun Homes, and accounts for its investment utilizing the equity method of accounting. The common stock of Sun Homes is owned by two officers of the Company and the estate of a former officer of the Company who collectively are entitled to receive 5 percent of the operating cash flow of Sun Homes. As of June 30, 2000, "SunChamp", a joint venture among the Company and Champion Enterprises, Inc., owned ten communities under initial development. The Company accounts for its investment utilizing the equity method of accounting. 2. RENTAL PROPERTY: The following summarizes rental property (in thousands):
June 30, December 31, 2000 1999 -------------- ----------------- Land $ 78,121 $ 76,069 Land improvements and buildings 747,078 720,662 Furniture, fixtures, equipment 17,730 16,943 Land held for future development 16,331 17,046 Property under development 27,565 16,976 ------------- --------------- 886,825 847,696 Accumulated depreciation 105,692 92,558 ------------- --------------- Rental property, net $ 781,133 $ 755,138 ============= ===============
6 7 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. NOTES AND OTHER RECEIVABLES: Notes receivable consisted of the following (in thousands):
June 30, December 31, 2000 1999 ------------- --------------- Mortgage notes receivable with minimum monthly interest payments ranging from 7% to LIBOR + 3.25%, maturing from May 2002 through June 2012, collateralized by four communities $ 29,555 $ 15,093 Note receivable, bears interest at LIBOR + 2.35% and payable on demand 41,307 40,794 Note receivable, bears interest at 9.75% and matures September 2005 4,000 4,000 Installment loans on manufactured homes with interest payable monthly at a weighted average interest rate and maturity of 11% and 21 years, respectively. 17,348 18,635 Notes receivable, other, various interest rates ranging from 6% to 9.5% or prime + 1.5%, various maturity dates through December 31, 2003. 1,562 1,562 Other receivables 13,173 13,344 ------------- --------------- $ 106,945 $ 93,428 ============= ===============
Officers' notes which are presented in stockholders' equity are 10 year, LIBOR + 1.75% notes, with a minimum and maximum interest rate of 6% and 9%, respectively, collateralized by 366,206 shares of the Company"s common stock and 127,794 OP Units with substantial personal recourse. 7 8 SUN COMMUNITIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. DEBT: The following table sets forth certain information regarding debt (in thousands):
June 30, December 31, 2000 1999 -------------- --------------- Collateralized term loan, interest at 7.01%, due September 9, 2007 $ 43,664 $ 43,927 Senior notes, interest at 7.375%, due May 1, 2001 65,000 65,000 Senior notes, interest at 7.625%, due May 1, 2003 85,000 85,000 Senior notes, interest at 6.97%, due December 3, 2007 35,000 35,000 Callable/redeemable notes, interest at 6.77%, due May 14, 2015, callable/redeemable May 16, 2005 65,000 65,000 Capitalized lease obligations, interest ranging from 5.5% to 6.3%, due June 2001 through January 2004 36,326 36,620 Mortgage notes, other 23,511 24,017 --------------- --------------- $ 353,501 $ 354,564 =============== ===============
The Company had $33 million available to borrow under its $125 million line of credit at June 30, 2000. Borrowings under the line of credit bear interest at the rate of LIBOR plus 1.0% and mature January 1, 2003. 5. EARNINGS PER SHARE (IN THOUSANDS):
For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 ------------ ----------- ----------- ----------- Earnings used for basic and diluted earnings per share computation $ 7,305 $ 6,964 $ 14,662 $ 14,099 ============ =========== =========== =========== Total shares used for basic earnings per share 17,310 17,160 17,298 17,137 Dilutive securities, principally stock options 123 193 91 155 ------------ ----------- ----------- ----------- Total shares used for diluted earnings per share computation 17,433 17,353 17,389 17,292 ============ =========== =========== ===========
Diluted earnings per share reflect the potential dilution that would occur if securities were exercised or converted into common stock. Convertible Preferred OP Units are excluded from the computations as their inclusion would have an antidilutive effect on earnings per share in 2000 and 1999. 8 9 SUN COMMUNITIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes thereto. Capitalized terms are used as defined elsewhere in this Form 10-Q. RESULTS OF OPERATIONS Comparison of the six months ended June 30, 2000 and 1999 For the six months ended June 30, 2000, income before minority interests increased by 17.9 percent from $17.7 million to $20.8 million, when compared to the six months ended June 30, 1999. The increase was due to increased revenues of $6.3 million while expenses increased by $3.2 million. Income from property increased by $4.1 million from $62.0 million to $66.1 million, or 6.7 percent, due primarily to rent increases and other community revenues ($3.2 million), lease up of manufactured home sites including new developments ($1.8 million), and acquisitions ($1.5 million), offset by a revenue reduction of $2.4 million due to the sale of four communities during 1999. Other income increased by $2.2 million from $3.8 million to $6.0 million due primarily to an increase in interest income. Property operating and maintenance expenses increased by $0.6 million from $13.3 million to $13.9 million, or 4.4 percent, due primarily to acquisitions. Real estate taxes increased by $0.1 million from $4.4 million to $4.5 million primarily due to acquisitions and changes in property tax assessments. Property management expenses increased by $0.2 million from $1.2 million to $1.4 million representing 2.2 percent and 2.0 percent of income from property in 2000 and 1999, respectively. General and administrative expenses increased by $0.2 million from $1.9 million to $2.1 million, representing 2.8 percent of total revenues in 2000 and 1999. Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased by $5.3 million from $44.9 million to $50.2 million. EBITDA as a percent of revenues increased to 69.6 percent in 2000 compared to 68.3 percent in 1999. Depreciation and amortization increased by $1.2 million from $14.0 million to $15.2 million, or 8.6 percent, due primarily to acquisitions and development of communities in 2000 and 1999. Interest expense increased by $0.9 million from $13.3 million to $14.2 million, or 6.7 percent, due primarily to investment in rental property and investment in and advances to affiliates. 9 10 SUN COMMUNITIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS, CONTINUED Comparison of the three months ended June 30, 2000 and 1999 For the three months ended June 30, 2000, income before minority interests increased by 19.1 percent from $8.7 million to $10.4 million, when compared to the three months ended June 30, 1999. The increase was due to increased revenues of $3.3 million while expenses increased by $1.6 million. Income from property increased by $2.4 million from $30.6 million to $33.0 million, or 7.8 percent, due primarily to rent increases and other community revenues ($1.5 million), lease up of manufactured home sites including new developments ($1.1 million), and acquisitions ($0.9 million), offset by a revenue reduction of $1.1 million due to the sale of four communities during 1999. Other income increased by $0.9 million from $2.2 million to $3.1 million due primarily to an increase in interest income. Property operating and maintenance expenses increased by $0.3 million from $6.4 million to $6.7 million, or 4.1 percent, due primarily to acquisitions. Real estate taxes increased by $0.1 million from $2.2 million to $2.3 million primarily due to acquisitions and changes in property tax assessments. Property management expenses increased by $0.1 million from $0.6 million to $0.7 million representing 2.2 percent and 2.1 percent of income from property in 2000 and 1999, respectively. General and administrative expenses remained constant at $1.0 million, representing 2.8 percent and 2.9 percent of total revenues in 2000 and 1999, respectively. Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased by $2.9 million from $22.5 million to $25.4 million. EBITDA as a percent of revenues increased to 70.4 percent in 2000 compared to 68.7 percent in 1999. Depreciation and amortization increased by $0.5 million from $7.1 million to $7.7 million, or 7.6 percent, due primarily to acquisitions and development of communities in 2000 and 1999. Interest expense increased by $0.6 million from $6.7 million to $7.3 million, or 9.8 percent, due primarily to investment in rental property and investment in and advances to affiliates. 10 11 SUN COMMUNITIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SAME PROPERTY INFORMATION The following table reflects property-level financial information as of and for the six months ended June 30, 2000 and 1999. The "Same Property" data represents information regarding the operation of communities owned as of January 1, 1999 and June 30, 2000. Site, occupancy, and rent data for those communities is presented as of the last day of each period presented. The table includes sites where the Company is providing financing and managing the properties. Such amounts relate to the total portfolio data and include 923 sites in 2000 and 1999.
SAME PROPERTY TOTAL PORTFOLIO ------------------------- ---------------------------- 2000 1999 2000 1999 ----------- ---------- ------------ ----------- Income from property $ 49,712 $ 47,103 $ 66,076 $ 61,941 ----------- ---------- ------------ ----------- Property operating expenses: Property operating and maintenance 3,870 3,553 13,875 13,289 Real estate taxes 8,831 8,445 4,518 4,411 ----------- ---------- ------------ ----------- Property operating expenses 12,701 11,998 18,393 17,700 ----------- ---------- ------------ ----------- Property EBITDA $ 37,011 $ 35,105 $ 47,683 $ 44,241 =========== ========== ============ =========== Number of operating properties 88 88 118 (2) 108 Developed sites 30,000 29,463 39,896 (2) 38,500 Occupied sites 28,623 28,054 36,631 35,600 Occupancy % 95.4% 95.2% 95.4% (1) 94.7% (1) Weighted average monthly rent per site $ 287 $ 274 $ 284 (1) $ 274 (1) Sites available for development 1,711 2,156 9,434 (3) 7,763 Sites planned for development in current year 267 723 1,830 (3) 2,343
(1) Occupancy % and weighted average rent relates to manufactured housing sites, excluding recreational vehicle sites and sites owned through a joint venture. (2) Includes 7 communities and 1,255 developed sites owned through joint ventures. (3) Includes 3,590 sites available for development and 640 sites planned for development owned through joint ventures. On a same property basis, property revenues increased by $2.6 million from $47.1 million to $49.7 million, or 5.5 percent, due primarily to increases in rents and occupancy related charges including water and property tax pass through. Also contributing to revenue growth was the increase of 569 leased sites at June 30, 2000 compared to June 30, 1999. Property operating expenses increased by $0.7 million from $12.0 million to $12.7 million or 5.9 percent, due to increased occupancies and costs. Property EBITDA increased by $1.9 million from $35.1 million to $37.0 million, or 5.4 percent. 11 12 SUN COMMUNITIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents decreased by $4.6 million to $6.7 million at June 30, 2000 compared to $11.3 million at December 31, 1999 because cash used in investing activities exceeded cash provided by operating and financing activities. Net cash provided by operating activities increased by $4.5 million to $29.1 million for the six months ended June 30, 2000 compared to $24.6 million for the same period in 1999. This increase was primarily due to a $2.8 million change in accounts payable and other liabilities and other assets and a $1.7 million increase in income before minority interests and depreciation and amortization. Net cash used in investing activities increased by $7.8 million to $56.5 million from $48.7 million primarily due to a $15.2 million increase in investment in and advances to affiliates and a $7.2 million increase in rental property acquisition activities offset by a $14.6 million decrease in investments in notes receivable, net. Net cash provided by financing activities increased by $5.1 million to $22.7 million for the six months ended June 30, 2000 compared to $17.6 million for the same period in 1999. This increase was primarily because of a $7.0 million increase in borrowings on the line of credit offset by a $1.2 million reduction in proceeds from common stock and operating partnership units and a $0.9 million increase in distributions. The Company expects to meet its short-term liquidity requirements generally through its working capital provided by operating activities. The Company expects to meet certain long-term liquidity requirements such as scheduled debt maturities and property acquisitions through the issuance of equity or debt securities, or interests in the Operating Partnership. The Company considers these sources to be adequate and anticipates they will continue to be adequate to meet operating requirements, capital improvements, investment in development, and payment of distributions by the Company in accordance with REIT requirements in both the short and long term. The Company may also meet these short-term and long-term requirements by utilizing its $125 million line of credit which bears interest at LIBOR plus 1.0% and is due January 1, 2003. See "Special Note Regarding Forward-Looking Statements." At June 30, 2000, the Company"s debt to total market capitalization ratio approximated 36.5% (assuming conversion of all Common and Preferred OP Units into shares of common stock). The debt has a weighted average maturity of approximately 5.3 years and a weighted average interest rate of 7.2%. Recurring capital expenditures approximated $2.0 million for the six months ended June 30, 2000. 12 13 SUN COMMUNITIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OTHER Funds from operations ("FFO") is defined by the National Association of Real Estate Investment Trusts ("NAREIT") as "net income (computed in accordance with generally accepted accounting principles) excluding gains (or losses) from debt restructuring and sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures." Industry analysts consider FFO to be an appropriate supplemental measure of the operating performance of an equity REIT primarily because the computation of FFO excludes historical cost depreciation as an expense and thereby facilitates the comparison of REITs which have different cost bases in their assets. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time, whereas real estate values have instead historically risen or fallen based upon market conditions. FFO does not represent cash flow from operations as defined by generally accepted accounting principles and is a supplemental measure of performance that does not replace net income as a measure of performance or net cash provided by operating activities as a measure of liquidity. In addition, FFO is not intended as a measure of a REIT"s ability to meet debt principal repayments and other cash requirements, nor as a measure of working capital. The following table calculates FFO for the periods ended June 30, 2000 and 1999 (in thousands):
For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 ------------ ----------- ----------- ----------- Net income available to common shareholders $ 7,305 $ 6,964 $ 14,662 $ 14,099 Add: Minority interest in earnings to common OP Unit holders 1,135 1,137 2,293 2,314 Depreciation and amortization, net of corporate office depreciation 7,613 7,075 15,094 13,897 ------------ ----------- ----------- ----------- Funds from operations $ 16,053 $ 15,176 $ 32,049 $ 30,310 ============ =========== =========== =========== Weighted average OP Units outstanding used for basic FFO per share/unit 19,999 19,964 20,003 19,950 Dilutive securities: Stock options and awards 123 193 91 155 Covertible preferred OP Units -- 1,183 -- 1,230 ------------ ----------- ----------- ----------- Weighted average OP Units used for diluted FFO per share/unit 20,122 21,340 20,094 21,335 ============ =========== =========== =========== FFO, per share/unit Basic $ 0.80 $ 0.76 $ 1.60 $ 1.52 ============ =========== =========== =========== Diluted $ 0.80 $ 0.74 $ 1.60 $ 1.48 ============ =========== =========== ===========
13 14 SUN COMMUNITIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OTHER CONTINUED: Year 2000 Update In February 2000, the Company officially concluded its Year 2000 compliance program as no events had occurred that significantly affected either the Company's operation or its financial statements. Special Note Regarding Forward-Looking Statements 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 financial 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 uncertainties and factors include the ability of manufactured home buyers to obtain financing, the level of repossessions by manufactured home lenders, and those referenced in the section entitled "Risk Factors" of the Company's Registration Statement on Form S-3 filed with the Securities and Exchange Commission on February 15, 2000. 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; (iv) the ability of manufactured home buyers to obtain financing; (v) the level of repossessions by manufactured home lenders; and (vi) 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. Recent Accounting Pronouncements In June 1998, FASB issued SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). This statement establishes accounting and reporting standards for derivative instruments including certain derivative instruments embedded in other contracts, (collectively referred to as derivatives) and for hedging activities. This statement will be effective January 1, 2001. There is no effect from the application of SFAS 133 on the earnings and financial position of the Company as the Company had no derivative instruments at June 30, 2000 and December 31, 1999. 14 15 SUN COMMUNITIES, INC. PART II ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On June 14, 2000, the Company held its Annual Meeting of Shareholders. The following matters were voted upon at the meeting: (a) The election of two directors to serve until the 2003 Annual Meeting of Shareholders or until their respective successors shall be elected and shall qualify. The results of the election appear below:
Votes Against Abstentions or Name Votes For or Withheld Broker Non-Votes ------------------- ------------- ------------------ ---------------- Paul D. Lapides 14,821,669 0 22,482 Ted J. Simon 14,820,169 0 23,982
ITEM 6.(A) - EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K EXHIBIT NO. DESCRIPTION 27 Financial Data Schedule ITEM 6.(B) - REPORTS ON FORM 8-K The Company did not file any reports on Form 8-K during the period covered by this Form 10-Q. 15 16 SUN COMMUNITIES, INC. 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. Dated: August 4, 2000 SUN COMMUNITIES, INC. BY: /s/ Jeffrey P. Jorissen ----------------------------------------------- Jeffrey P. Jorissen, Chief Financial Officer and Secretary 16 17 SUN COMMUNITIES, INC. EXHIBIT INDEX PAGE FILED NUMBER EXHIBIT NO. DESCRIPTION HEREWITH HEREIN 27 Financial Data Schedule X 17