Form 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the transition period ____________________ to _____________________
Commission File Number 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)
125 Wyckoff Road, Eatontown, New Jersey 07724
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (908) 389-3890
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.10 par value
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
Indicate by check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K X .
Based upon the assumption that directors and executive officers of the
registrant are not affiliates of the registrant, the aggregate market value
of the voting stock of the registrant held by nonaffiliates of the registrant
at March 14, 1996 was $70,207,572. Presuming that such directors and
executive officers are affiliates of the registrant, the aggregate market
value of the voting stock of the registrant held by nonaffiliates of the
registrant at March 14, 1996 was $50,832,660.
The number of shares outstanding of issuer's common stock as of
March 14, 1996 was 5,850,631 shares.
Documents Incorporated by Reference:
- - Exhibits incorporated by reference are listed in Part IV, Item (a)(3).
PART I
ITEM I - BUSINESS
General Development of Business
United Mobile Homes, Inc. (the Company) owns and operates twenty-one
mobile home parks containing 4,920 sites. The parks are located in New
Jersey, New York, Ohio, Pennsylvania and Tennessee. In January 1996, the
Company acquired an additional mobile home park, bringing its total to twenty-
two mobile home parks consisting of over 5,000 sites.
The Company was incorporated in the State of New Jersey in 1968. Its
executive offices are located at 125 Wyckoff Road, Eatontown, New Jersey
07724. Its telephone number is (908) 389-3890.
Effective January 1, 1992, the Company elected to be taxed as a real
estate invest trust (REIT) under Sections 856-858 of the Internal Revenue
Code. The Company received from the Internal Revenue Service a favorable
revenue ruling that it qualified as a REIT. The Company will not be taxed on
the portion of its income which is distributed to shareholders, provided it
distributes at least 95% of its taxable income, has at least 75% of its
assets in real estate investments and meets certain other requirements for
qualification as a REIT.
Background
Monmouth Capital Corporation, a publicly-owned Small Business Investment
Corporation, that had owned approximately 66% of the Company's stock, spun
off to its shareholders in a registered distribution three shares of United
Mobile Homes, Inc. for each share of Monmouth Capital Corporation. The
Company in 1984 and 1985 issued additional shares through rights offerings.
The Company has been in operation for twenty-seven years, the last eleven of
which have been as a publicly-owned corporation.
Narrative Description of Business
The Company's primary business is the ownership and operation of mobile
home parks - leasing mobile home spaces on a month-to-month basis to private
mobile home owners. The Company also leases homes to tenants.
A mobile home park community is designed to accommodate detached, single
family manufactured housing units, which are produced off-site by
manufacturers and delivered by truck to the site. Such dwellings, referred
to as mobile homes (which should be distinguished from travel trailers), are
manufactured in a variety of styles and sizes. Mobile homes, once located,
are rarely transported to another site; typically, a mobile home remains on
site and is sold by its owner to a subsequent occupant. This transaction is
commonly handled through a broker in the same manner that the more
traditional single-family residence is sold. Each owner of a mobile home
leases the site on which the home is located from the Company.
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Mobile homes are being accepted by the public as a viable and
economically attractive alternative to common stick-built single-family
housing. During the past five years, approximately one-fifth of all single-
family homes built and sold in the nation have been manufactured homes.
The size of a modern mobile home community is limited, as are other
residential communities, by factors such as geography, topography, and funds
available for development. Generally, modern mobile home park communities
contain buildings for recreation, green areas, and other common area
facilities, which, as distinguished from tenant owned mobile homes, are the
property of the park owner. In addition to such general improvements,
certain mobile home park communities include recreational improvements such
as swimming pools, tennis courts and playgrounds. Municipal water and sewer
services are available to some mobile home parks, while other parks supply
these facilities on site. The housing provided by the mobile home park
community, therefore, includes not only the manufactured dwelling unit (owned
by the resident), but also the physical community framework and services
provided by the mobile home park community.
The park manager interviews prospective residents, ensures compliance
with park regulations, maintains public areas and community facilities and is
responsible for the overall appearance of the park. The mobile home park
community, once fully occupied, tends to achieve a stable rate of occupancy.
The cost of effort in moving a home once it is located in a park encourages
the owner of the mobile home to resell his mobile home there rather than to
remove it from the park. This ability to produce relatively predictable
income, together with the location of the park, its condition and its
appearance, are factors in the long-term appreciation of the park.
The long-term industry trend may be toward condominium conversions. A
change from investor park ownership to tenant ownership would enhance the
value of existing manufactured home communities. All of the Company's parks
are located in areas of the country that have not yet accepted this concept.
Condominium conversion is a long-term possibility and has no impact on the
Company's current operations.
Investment and Other Policies of the Company
The Company may invest in improved and unimproved real property and may
develop unimproved real property. Such properties may be located throughout
the United States. In the past, it has concentrated on the northeast.
The Company has no restrictions on how it finances new mobile home
parks. It may finance parks by purchase money mortgages or other financing,
including first liens, wraparound mortgages or subordinated indebtedness. In
connection with its ongoing activities, the Company may issue notes,
mortgages or other senior securities. The Company intends to use both
secured and unsecured lines of credit.
The Company may issue securities for property, however, this has not
occurred to date, and it may repurchase or reacquire its shares from time to
time if in the opinion of the Board of Directors such acquisition is
advantageous to the Company.
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Property Maintenance and Improvement Policies
It is the policy of the Company to properly maintain, modernize, expand,
and make improvements to its properties when required. The Company
anticipates that renovation expenditures with respect to its present
properties over the next five years will be consistent with 1995
expenditures. It is the policy of the Company to maintain adequate insurance
coverage on all of its properties; and, in the opinion of the Company, all of
its properties are adequately insured where such insurance is available at a
reasonable cost as determined by management.
General Risks of Real Estate Ownership
The Company's investments will be subject to the risks generally
associated with the ownership of real property, including the uncertainty of
cash flow to meet fixed obligations, adverse changes in national economic
conditions, changes in the relative popularity (and thus the relative price)
of the Company's real estate investments when compared to other investments,
adverse local market conditions due to changes in general or local economic
conditions or neighborhood values, changes in interest rates and in the
availability of mortgage funds, costs and terms of mortgage funds, the
financial conditions of tenants and sellers of properties, changes in real
estate tax rates and other operating expenses (including corrections of
potential environmental issues as well as more stringent governmental
regulations regarding the environment), governmental rules and fiscal
policies including possible proposals for rent controls, as well as expenses
resulting from acts of God, uninsured losses and other factors which are
beyond the control of the Company. The Company's investments are primarily
in rental properties and are subject to the risk or inability to attract or
retain tenants with a consequent decline in rental income as a result of
adverse changes in local real estate markets or other factors.
Competition for Mobile Home Park Investments
The Company will be competing for mobile home park investments with
numerous other real estate entities, such as individuals, corporations, real
estate investment trusts and other enterprises engaged in real estate
activities, possibly including certain affiliates of the Company. In many
cases, the competing concerns may be larger and better financed than the
Company, making it difficult for the Company to secure new mobile home park
investments. Competition among private and institutional purchasers of
mobile home park investments has increased substantially in recent years,
with resulting increases in the purchase price paid for mobile home parks and
consequent higher fixed costs.
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Environmental, Regulatory and Energy Problems
The availability of suitable investments and the cost of construction
and operation of mobile home parks in which the Company may invest may be
adversely affected by legislative, regulatory, administrative and enforcement
action at the local, state and national levels in the areas, among others, of
housing and environmental controls. In addition to possible increasingly
restrictive zoning regulations and related land use controls, such
restrictions may relate to air, ground and water quality standards, wetlands
regulations, noise pollution and indirect environmental impacts such as
increased motor vehicle activity.
The Company owns and operates 10 mobile home park communities which
either have their own waste water treatment facility, water distribution
system, or both. At these locations, the Company is subject to compliance of
monthly, quarterly and yearly testing for contaminants as outlined by the
individual state's Department of Environmental Protection Agencies.
The Company must also comply with certain Federal Environmental
Protection Agency Regulations which may be more stringent than the state and
local governmental regulations. The costs of such testing are included in
the Company's operating expenses. As of the date of this report, there are
no enforcement actions pending by any federal, state or local environmental
agencies and management believes that the Company is in compliance with all
such regulations.
Currently, the Company is not subject to radon or asbestos monitoring
requirements.
Since most of the Company's mobile home parks are fully developed, the
Company, in its normal course of business, does not incur costs related to
local or state zoning issues. Zoning regulations often restrict expansion of
the Company's parks, but allow continuing operation of existing parks.
Rent control now affects only two of the Company's mobile home parks
which are in New Jersey and has resulted in a slower growth of earnings from
these properties.
Number of Employees
On March 1, 1996, the Company had approximately 70 employees, including
Officers. During the year, the Company hires approximately 20 part-time and
full-time temporary employees as lifeguards, grounds keepers and for
emergency repairs.
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ITEM 2 - PROPERTIES
United Mobile Homes, Inc. is engaged in the ownership and operation of
manufactured housing communities located in New Jersey, New York, Ohio,
Pennsylvania and Tennessee. The Company owns twenty-one manufactured housing
communities. The following is a brief description of the properties owned by
the Company:
Number 1995 Current
of Average Rent Per
Name of Mobile Home Park Sites Occupancy Month Per Site
Allentown Mobile Home Park 414 73% $189
4912 Raleigh-Millington Rd.
Memphis, TN 38128
Brookview Village 133 95% $285
Route 9N
Greenfield Center, NY 12833
Cedarcrest Mobile Home Park 283 100% $303
1976 North East Avenue
Vineland, NJ 08360
Cranberry Village 201 98% $255
201 North Court
Mars, PA 16046
Cross Keys Village 133 99% $207
Old Sixth Avenue Rd.
RD #1
Duncansville, PA 16635
D & R Village 234 99% $307
Route 146, RD 13
Clifton Park, NY 12065
Edgewood Mobile Home Park 218 82% $175
700 Edgewood Estates
Apollo, PA 15613
Fairview Manor 160 98% $315
2110 Mays Landing Rd.
Millville, NJ 08360
Forest Park Village 252 96% $221
724 Slate Avenue
Cranberry Twp., PA 16066
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Number 1995 Current
of Average Rent Per
Name of Mobile Home Park Sites Occupancy Month Per Site
Heather Highlands 457 70% $219
Mobile Home Park
109 S. Main Street
Pittston, PA 18640
Highland Estates 192 98% $286
60 Old Route 22
Kutztown, PA 19530
Kinnebrook Mobile Home Park 212 96% $302
Route 17-B
Monticello, NY 12701
Lake Sherman Village 210 98% $213
7227 Beth Avenue, SW
Navarre, OH 44662
Memphis Mobile City 168 83% $183
3894 N. Thomas Street
Memphis, TN 38127
Oxford Village 224 99% $296
2 Dolinger Drive
West Grove, PA 19390
Pine Ridge Village 137 99% $256
147 Amy Drive
Carlisle, PA 17013
Port Royal Village 402 85% $198
400 Patterson Lane
Belle Vernon, PA 15012
River Valley Estates 156 96% $167
2066 Victory Rd.
Marion, OH 43302
Sandy Valley Estates 327 94% $191
801 First, Route #2
Magnolia, OH 44643
Southwind Village 250 98% $237
435 E. Veterans Highway
Jackson, NJ 08527
Woodlawn Village 157 99% $372
Route 35
Eatontown, NJ 07724
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Occupancy rates are very stable with little year-to-year changes once
the community is filled (generally 90% or greater occupancy). It is the
Company's experience that, once a home is set up in the community, it is
seldom moved. The home if sold, is sold on-site to a new owner.
Residents generally rent on a month-to-month basis. Some residents have
one-year leases. Southwind Village and Woodlawn Village (both in New Jersey)
are the only parks subject to local rent control laws.
There are 14 sites at Sandy Valley which are under a consent order with
the Federal Government. This order provides that, as sites become vacant,
they cannot be reused.The restrictions on use were known at the time of
purchase, and the item is not material to the operation of Sandy Valley
Estates.
In connection with the operation of its 4,920 sites, the Company
operates approximately 275 rental units. These are homes owned by the
Company and rented to residents. The Company engages in the rental of mobile
homes primarily in areas where the communities have existing vacancies. The
rental homes produce income on both the home and for the site which might
otherwise be non-income producing. The Company sells the older rental homes
when the opportunity arises.
During 1995, the Company commenced engineering for the construction of
800 sites. Due to the difficulties involved in the approval and construction
process, it is difficult to predict the number of sites which will be
completed in a given year. The Company currently has 61 sites under
construction.
Significant Properties
The Company operates approximately $45,000,000 (at original cost) in
mobile home properties. These consist of 21 separate mobile home parks and
related equipment and improvements. There are 4,920 sites in the 21 parks.
No one park constitutes more than 10% of the total assets of the Company.
Port Royal Village with 402 sites, Sandy Valley Estates with 327 sites,
Cedarcrest Mobile Home Park with 283 sites, Allentown Mobile Home Park with
414 sites and Heather Highlands with 457 sites are the larger properties.
The following is a description of these properties:
PORT ROYAL VILLAGE
The Company acquired Port Royal Village in 1984. This is a 402-space
mobile home park located in Belle Vernon, Pennsylvania. The Company believes
this to be a sound acquisition for the following reasons: (a) the park is
well-maintained with city water and its own sewer plant, as well as a
swimming pool and community building; (b) the park has approximately 85%
occupancy; and (c) the park generates substantial revenues and net operating
income. Management believes that this park is a successful and valuable
mobile home park.
SANDY VALLEY ESTATES
The Company acquired Sandy Valley Estates in 1985. This is a 327-space
mobile home park located in Magnolia, Ohio. The Company believes this to be
an excellent park because (a) the park is well-maintained with municipal
sewer; (b) the park has its own well system; (c) the park has approximately
94% occupancy; and (d) the park generates revenues with an average monthly
rental of $191 per site, which rents are competitive with the other mobile
home parks in the area. The Company believes that it is an excellent
investment.
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CEDARCREST
On July 15, 1986 the Company paid $760,000 to acquire 94.05% of the
partnership interest in Cedarcrest Mobile Home Park Associates, Ltd., a
limited partnership that owned a 283-space mobile home park located in
Vineland, New Jersey. On June 30, 1988 the Company paid $40,000 to acquire
an additional 4.95% of the partnership interest, bringing the Company's total
ownership to 99% at November 30, 1988. During 1989 the Company acquired the
remaining 1% interest.
The Company believes this to be an excellent park for the following
reasons: (a) the park is well-maintained, (b) the mobile home park has
municipal sewer and water service; and (c) the park is 100% occupied. Rents
average $303 per month per site and they are competitive with other parks in
the area.
ALLENTOWN MOBILE HOME PARK
On September 15, 1986 the Company paid $850,000 to all of the limited
partners to acquire 97% of the partnership interests in Allentown Mobile Home
Park Associates, a limited partnership that owned a 414-space mobile home
park located in Memphis, Tennessee.
Royal Green, Inc., the General Partner of Allentown Mobile Home Park
Associates, retained its 3% interest in the partnership until January, 1990
at which time the Company purchased the 3% interest for $25,500.
The Company believes this to be a sound investment for the following
reasons: (a) the property is well maintained; (b) the park has municipal
sewer and water service; and (c) rents are competitive with other mobile home
parks in the area. Current occupancy is approximately 73%. The Company has
been disappointed that it has not brought occupancy to 90% or higher.
Nevertheless, in the future, the Company anticipates that it will be able to
increase occupancy. The park has the potential to be fully occupied in one
of the nicest areas in Memphis.
HEATHER HIGHLANDS
On January 30, 1992, the Company acquired an 88.36% interest in Heather
Highlands Mobile Home Village Associates, L.P., a limited partnership
operating a 457-space mobile home park located in Pittston, Pennsylvania.
The partnership has partners who are also officers, directors and/or
shareholders of the Company. Mr. Eugene Landy, Chairman of the Board,
retained the remaining 11.64% limited partnership interest. The purchase
price included total payments to the original limited partners of $972,400,
$35,000 to Burtenn Inc., General Partner and assumption of net liabilities of
approximately $1,500,000 for a total purchase price of approximately
$2,500,000. This purchase was based on an independent appraisal of fair
market value. In January 1995, the Company purchased the remaining 11.64%
partnership interest for $132,600. This price per unit was the same price
previously paid to non-affiliated sellers.
The Company anticipates that the park will ultimately have 415 sites
since the use of double wide units reduce the total number of available
sites.
The Company believes this to be a sound investment for the following
reasons: (a) the property is well maintained; (b) the park has municipal
sewer and water service; and (c) rents are competitive with other mobile home
parks in the area.
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Mortgages on Properties
The Company has mortgages on various properties. The maturity dates of
these mortgages are all in the year 2000. Interest varies from fixed rates
of 7.5% to 10.5%. The aggregate balances of these mortgages total
$17,707,635 at December 31, 1995. (For additional information, see Part IV,
Item 14(a)(1)(vi), Note 4 of the Notes to Consolidated Financial Statements -
Notes and Mortgages Payable).
ITEM 3 - LEGAL PROCEEDINGS
Legal proceedings are incorporated herein by reference and filed as Part
IV, Item 14(a)(1)(vi), Note 12 of the Notes to Consolidated Financial
Statements - Legal Matters.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of 1995 to a vote of
security holders through the solicitation of proxies or otherwise.
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PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company became publicly owned on January 3, 1985. As of January 5,
1994, shares of the Company were traded on the American Stock Exchange
(symbol UMH). The per share range of high and low quotes for the Company's
stock for each quarterly period is as follows:
1995 1994 1993
HIGH LOW HIGH LOW HIGH LOW
First Quarter 7-3/4 7-1/8 8-1/2 6-3/4 5-1/4 4-3/8
Second Quarter 8-7/16 7-1/2 8-1/4 7 6-5/8 5-1/4
Third Quarter 10-1/8 8-1/4 8 6-7/8 7-1/8 5-5/8
Fourth Quarter 10-1/2 9-5/8 7-1/2 7 8 6-3/4
On March 14, 1996 the closing price of the Company's stock was $12.
As of December 31, 1995, there were approximately 900 holders of the
Company's common stock based on the number of record owners.
For the years ended December 31, 1995, 1994 and 1993, total dividends
paid by the Company amounted to $2,954,847 or $.525 per share, $2,277,742 or
$.425 per share and $1,648,643 or $.325 per share, respectively.
On January 15, 1996, the Company declared a dividend of $.15 per share
to be paid on March 15, 1996 to shareholders of record February 15, 1996.
Future dividend policy will depend on the Company's earnings, capital
requirements, financial condition, availability and cost of bank financing
and other factors considered relevant by the Board of Directors. The Company
elected REIT status beginning in 1992. As a REIT, the Company must pay out
at least 95% of its taxable income in the form of a cash distribution to
shareholders.
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ITEM 6 - SELECTED FINANCIAL DATA
December 31,
1995 1994 1993 1992 1991
Income Statement Data:
Rental and
Related Income $13,332,961 $12,318,467 $11,521,677 $10,895,680 $9,718,902
Income from Park
Operations 7,449,168 6,864,080 6,407,937 6,069,885 5,669,172
Gains on Sales of
Assets 5,758 59,941 17,022 57,259 77,591
Net Income 2,491,581 2,141,279 1,346,219 1,028,551 638,672
Net Income
Per Share .44 .40 .26 .21 .14
...............................................................................
Balance Sheet Data:
Total Assets 29,758,397 $25,404,015 $25,274,685 $26,024,656 $26,709,734
Mortgages Payable 17,707,635 15,637,325 17,936,230 20,072,037 20,151,405
Shareholders'
Equity 10,290,487 7,721,783 6,229,453 4,612,025 3,593,630
...............................................................................
Average Number
of Shares
Outstanding 5,693,001 5,395,733 5,099,089 4,837,526 4,526,734
Funds from
Operations * $ 4,610,319 $ 3,941,086 $3,263,788 $2,828,798 $2,277,178
Funds from
Operations *
Per share .81 .73 .63 .58 .50
Cash Dividends
Per Share .525 .425 .325 .225 .20
* Defined as net income, excluding gains (or losses) from sales of assets,
plus depreciation and amortization.
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ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Revenue and Expense
1995 vs. 1994
Rental and related income increased from $12,318,467 for the year ended
December 31, 1994 to $13,332,961 for the year ended December 31, 1995 primarily
due to rental increases to tenants, increased occupancy and the acquisition of
a new park in January 1995. During 1995, the Company was able to obtain rent
increases of $7.00 to $16.00 per month on most of its occupied sites.
Overall occupancy rates are satisfactory with only five mobile home parks
experiencing vacancies over ten percent. Progress has been made to increase
occupancy at these parks. The Company has purchased one park in 1995 and has
negotiated for the purchase of a 161-space park, which closed in January 1996.
The Company is also evaluating further expansion at selected parks in order to
increase the number of available sites. Some of these parks are in various
stages of expansion.
Park operating expenses increased from $5,454,387 for the year ended
December 31, 1994 to $5,883,793 for the year ended December 31, 1995 primarily
as a result of the acquisition of an additional park. Park operating expenses
remained at 44% of gross revenues.
The Company's income from park operations continues to show steady growth
rising from $6,864,080 in 1994 to $7,449,168 in 1995.
General and administrative expenses decreased by 6% to $1,228,850 in 1995
primarily as a result of a decrease in personnel costs.
Interest expense increased to $1,675,998 in 1995 from $1,519,527 in 1994.
This was primarily as a result of an increase in the principal amount
outstanding offset by a decrease in the interest rate. During 1995, the
Company negotiated new long-term debt. Interest rates dropped from prime plus
1% to a fixed rate of 7.5%.
Depreciation expense increased from $1,799,169 in 1994 to $1,872,942 in
1995 due to the addition of a new park.
For the year ended December 31, 1995, the Company reported net income of
$2,491,581 as compared to net income of $2,141,279 for the year ended December
31, 1994. The Company is currently experiencing modest inflation. Modest
inflation is believed to have a favorable impact on the Company's financial
performance. With modest inflation, the Company believes that it can increase
rents sufficiently to match increases in operating expenses. High rates of
inflation (more than 10%) could result in an inability to raise rents to meet
rising costs and could create political problems such as the imposition of rent
controls. The Company anticipates continuing profits in 1996.
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1994 vs. 1993
Rental and related income increased from $11,521,677 for the year ended
December 31, 1993 to $12,318,467 for the year ended December 31, 1994 primarily
due to rental increases to tenants. During 1994, the Company was able to
obtain rent increases of $6.00 to $19.00 per month on most of its occupied
sites. There were no significant trends or changes in overall occupancy during
1994. Overall occupancy rates are satisfactory with only four mobile home
parks experiencing vacancies over ten percent.
Park operating expenses increased from $5,113,740 for the year ended
December 31, 1993 to $5,454,387 for the year ended December 31, 1994 primarily
due to increased personnel and utility costs. Park operating expenses remained
at 44% of gross revenues.
The Company's income from park operations continue to show steady growth
rising from $6,407,937 in 1993 to $6,864,080 in 1994.
General and administrative expenses remained relatively stable during
1994.
Interest expense decreased to $1,519,527 in 1994 from $1,757,710 in 1993.
During 1994, the Company negotiated new long-term debt. Interest rates on a
significant portion of the Company's debt dropped from prime plus 3% to prime
plus 1%. The Company also reduced the principal amount outstanding.
Depreciation expense remained relatively constant during 1994.
For the year ended December 31, 1994, the Company reported net income of
$2,141,279 as compared to $1,346,219 for the year ended December 31, 1993.
Although interest rates have risen during 1994, the Company believes that these
rates will remain relatively steady during 1995. The Company is currently
experiencing modest inflation. Modest inflation is believed to have a
favorable impact upon the Company's financial performance. With modest
inflation, the Company believes that it can increase rents sufficiently to
match increases in operating expenses. High rates of inflation (more than 10%)
could result in an inability to raise rents to meet rising costs and could
create political problems such as the imposition of rent controls.
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Liquidity and Capital Resources
As a real estate company, the Company uses funds for real estate
acquisitions, real property improvements and amortization of debt incurred in
connection with such acquisitions and improvements. The Company generates
funds through cash flow from properties, mortgages on properties and increases
in shareholder investments. The Company has liquidity available from a
combination of short and long-term sources. The Company currently has
mortgages payable totalling $17,707,635 secured by eight parks. The Company
also has a $500,000 line of credit with United Jersey Bank, N.A. (UJB), all of
which was available at December 31, 1995. The Company believes that its 21
mobile home parks have market values in excess of historical cost. Management
believes that this provides significant additional borrowing capacity.
Net cash provided by operating activities increased from $3,550,606 in
1993 to $4,343,548 in 1994 to $4,642,256 in 1995. Cash flow was primarily used
for capital improvements, payment of dividends, and the purchase of an
additional park in 1995. The Company meets maturing mortgage obligations by
using a combination of cash flow and refinancing. The dividend payments were
primarily made from cash flow from operations.
In addition to normal operating expenses, the Company requires cash for
additional investments in mobile home parks, capital improvements, purchase of
mobile homes for rent, scheduled mortgage amortization and dividend
distributions. As a REIT, the Company must distribute at least 95% of its
taxable income.
The Company estimates that it will purchase in 1996 approximately 50
mobile homes to be used as rentals for a total cost of $700,000. Management
believes that these mobile homes will each generate approximately $300 per
month in rental income in addition to lot rent.
Capital improvements include amounts needed to meet environmental and
regulatory requirements in connection with the mobile home parks that provide
water or sewer service. Excluding expansions, the Company is budgeting
approximately $1,000,000 in capital improvements for 1996.
The Company has a Dividend Reinvestment and Stock Purchase Plan (Plan).
Cash received from the Plan is a significant additional source of liquidity and
capital resources. During 1995, the Company paid $2,954,847 in dividends.
Amounts received under the Plan amounted to $3,031,970. The success of the
Plan resulted in a substantial improvement in the Company's liquidity and
capital resources in 1995.
The Company has undeveloped land which it could develop over the next
three years. During 1995, additional acreage was purchased in Vineland, New
Jersey which will be used for expansion in the future. In addition, the
Company plans to continue acquiring additional mobile home parks. On January
10, 1996, the Company completed the purchase of Wood Valley Mobile Home Park, a
161-space park located in Caledonia, Ohio. The total purchase price was
$1,992,000.
The Company believes that funds generated from operations, together with
the financing and refinancing of its properties, will be adequate to meet its
needs over the next several years.
-15-
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data listed in Part IV, Item
14(a)(1) are incorporated herein by reference.
The following is the Unaudited Selected Quarterly Financial Data:
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
THREE MONTHS ENDED
1995 MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
Rental & Related
Income $ 3,247,040 $ 3,304,765 $ 3,382,423 $ 3,398,733
Income from Park
Operations 1,839,493 1,814,328 1,838,716 1,956,631
Net Income 589,940 558,878 629,741 713,022
Net Income per Share .11 .10 .11 .12
THREE MONTHS ENDED
1994 MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
Rental & Related
Income $ 3,001,056 $ 3,053,201 $ 3,109,779 $ 3,154,431
Income from Park
Operations 1,658,699 1,684,324 1,745,954 1,775,103
Net Income 502,854 496,185 571,045 571,195
Net Income per Share .09 .09 .11 .11
THREE MONTHS ENDED
1993 MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
Rental & Related
Income $ 2,834,857 $ 2,846,301 $ 2,900,283 $ 2,940,236
Income from Park
Operations 1,598,102 1,613,918 1,581,309 1,614,608
Net Income 313,230 344,349 311,479 377,161
Net Income Per Share .06 .07 .06 .07
ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE MATTERS
None.
-16-
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Name, Age & Principal Occupation Director Shares Owned Percent
Office Held During Past Five Years Since Beneficially(1) of Stock
Robert A. Anderson Vice President of The 1980 14,083 0.24%
Age: 73 David Cronheim Company;
Director past President of the
Industrial Real Estate
Brokers Association of New
York and New Jersey.
Ernest V. Bencivenga Financial Consultant; 1969 11,327 (2) 0.20%
Age: 77 Treasurer and Director
Secretary/Treasurer (1961 to present) and Secretary
Director (1967 to present) of Monmouth
Capital Corporation;
Treasurer and Director (1968
to present) of Monmouth Real
Estate Investment Corporation.
Anna T. Chew Certified Public Accountant; 1994 4,276 (3) 0.07%
Age: 37 Controller (1991 to present) of
Vice President and Monmouth Real Estate Investment
Chief Financial Corporation; Controller (1991 to
Officer present) and Director (1994 to
Director present) of Monmouth Capital
Corporation; Senior Manager (1987
to 1991) of KPMG Peat Marwick LLP
Charles P. Kaempffer Investor; Director (1970 1969 54,197 (4) 0.93%
Age: 58 to present) of Monmouth
Director Capital Corporation; Director
(1975 to present) of Monmouth Real
Estate Investment Corporation;
and Director (1989 to present)
of Colonial State Bank.
-17-
Name, Age & Principal Occupation Director Shares Owned Percent
Office Held During Past Five Years Since Beneficially(1) of Stock
Eugene W. Landy Attorney at Law for the 1969 830,124 (5) 14.19%
Age: 62 firm of Landy & Landy;
Chairman of the President and Director
Board and (1961 to present) of Monmouth
Director Capital Corporation;
President and Director (1968
to present) of Monmouth Real
Estate Investment Corporation.
Samuel A. Landy Attorney at Law for the 1992 190,215 (6) 3.25%
Age: 35 firm of Landy & Landy;
President and Director (1990 to present) of
Director Monmouth Real Estate Investment
Corporation; Director (1994 to
present) of Monmouth Capital
Corporation.
Richard A. Molke Vice President of Remsco 1986 300,236 (7) 5.13%
Age: 69 Associates, Inc.,
Director a construction firm.
Eugene Rothenberg Obstetrician and 1977 79,529 (8) 1.36%
Age: 62 Gynecologist; President (1988 to
Director 1989 of the Medical Staff of
Monmouth Medical Center.
Robert G. Sampson Investor; Director (1968 1969 130,589 (9) 2.23%
Age: 68 to present) of Monmouth Real
Director Estate Investment Corporation;
Director (1963 to present) of
Monmouth Capital Corporation,;
Director (1972 to 1993) of
United Jersey Bank;
General Partner (1983 to
present) of Sampco, Ltd., an
investment group.
TOTALS .................. 1,614,576 27.60%
-18-
1.) Beneficial ownership, as defined herein, includes common stock as to
which a person has or shares voting and/or investment power.
2.) Includes 8,382 shares held by Mr. Bencivenga's wife and 1,239 shares
held in the United Mobile Homes, Inc. 401(k) Plan.
3.) Includes 2,818 shares held jointly with Ms. Chew's husband and 1,458
shares held in the United Mobile Homes, Inc. 401(k) Plan.
4.) Includes (a) 52,197 shares held as Trustee for Defined Benefit Pension
Plan for which Mr. Kaempffer has power to vote and (b) 2,000 shares held by
Mr. Kaempffer's wife.
5.) Includes (a) 49,391 shares held by Mr. Landy's wife, (b) 172,607 shares
held by Landy Investments, Ltd. in which Mr. Landy has a beneficial interest,
(c) 46,693 shares held in the Landy & Landy, Employee's Pension Plan, of
which Mr. Landy is a Trustee with power to vote, and (d) 107,352 shares held
in the Landy & Landy, Employees' Profit Sharing Plan, of which Mr. Landy is
a Trustee with power to vote. Excludes 208,052 shares held by Mr. Landy's
adult children in which he disclaims any beneficial interest.
6.) Includes (a) 22,590 shares held jointly with Mr. Samuel A. Landy's wife,
(b) 12,835 in a custodial account for his sons, and (c) 3,195 shares held in
the United Mobile Homes, Inc. 401(k) Plan.
7.) Includes 146,702 shares held by Mr. Richard Molke's wife. Excludes
3,333 shares held by Mr. Richard Molke's adult children in which he disclaims
any beneficial interest.
8.) Includes (a) 55,354 shares held by Rothenberg Investment, Ltd. in which
Dr. Rothenberg has a beneficial interest and (b) 20,173 shares held as
Trustee for a Profit Sharing Plan of which Dr. Rothenberg has power to vote.
9.) Includes (a) 32,400 shares held by the Estate of Helen Haskell Sampson
and (b) 48,492 shares held by Sampco, Ltd. in which he has a beneficial
interest.
-19-
ITEM 11 - EXECUTIVE COMPENSATION
Summary Compensation Table.
The following Summary Compensation Table shows compensation paid by the
Company for services rendered during 1995, 1994 and 1993 to the Chairman of
the Board and President. There were no other executive officers whose
aggregate cash compensation exceeded $100,000:
Name and Annual Compensation
Principal Position Options Year Salary Bonus All Other
Eugene W. Landy 50,000 1995 $ - $ - $310,160 (1)(3)
Chairman of the - 1994 $ - $ - $361,842 (1)(3)
Board - 1993 $ - $ - $179,838 (1)
Samuel A. Landy 25,000 1995 $150,000 $ 15,769 $ 16,674 (2)
President 25,000 1994 $150,000 $ 7,769 $ 9,513 (2)
25,000 1993 $109,038 $ 10,300 $ 10,126 (2)
(1) Represents base compensation of $150,000 in both 1995 and 1994,
and $137,800 in 1993 as well as Directors' fees and legal fees.
(2) Represents Directors' fees, fringe benefits and discretionary
contributions by the Company to the Company's 401(k) Plan
allocated to an account of the named executive officer.
(3) Includes $130,000 for 1995 and $190,000 for 1994 accrual
for pension and other benefits in accordance with Eugene W.
Landy's employment contract.
Stock Option Plan.
The following table sets forth, for the executive officers named in the
Summary Compensation Table, information regarding individual grants of stock
options made during the year ended December 31, 1995:
Potential Realized
% of Total Price Value at Assumed
Options Granted to Per Expiration Annual Rates for
Name Granted Employees Share Date 5% 10%
Eugene W. Landy 50,000 45% $8.25 1/05/00 $66,100 $91,450
Samuel A. Landy 25,000 22% $8.25 1/05/00 $33,050 $95,725
The following table sets forth for the executive officers named in the
Summary Compensation Table, information regarding stock options outstanding
at December 31, 1995:
Value of
Unexercised
Number of Unexercised In-The-Money
Shares Value Options at Year-End Options
Name Exercised Realized Exercisable/Unexercisable at Year-End
Eugene W. Landy -0- N/A -0- / 50,000 $ -0-/$75,000
Samuel A. Landy -0- N/A 75,000 / 25,000 $262,500/$37,500
-20-
Compensation of Directors.
The Directors receive a fee of $300 for each Board meeting attended.
Effective January 1, 1996, this fee was increased to $1,000 for each Board
meeting attended. Directors also receive a fixed annual fee of $7,600,
payable $1,900 quarterly. Directors appointed to house committees receive
$150 for each meeting attended. Those specific committees are Compensation
Committee, Audit Committee and Stock Option Committee.
Employment Contracts.
On December 14, 1993, the Company and Eugene W. Landy entered into an
Employment Agreement under which Mr. Eugene Landy receives an annual base
compensation of $150,000 plus bonuses and customary fringe benefits,
including health insurance, participation in the Company's 401(k) Plan,
stock options, five weeks vacation and use of an automobile. In lieu of
annual increases in compensation, there will be additional bonuses voted by
the Board of Directors.
On severance of employment for any reason, Mr. Eugene Landy will
receive severance pay of $450,000 payable $150,000 on severance and
$150,000 on the first and second anniversaries of severance. If employment
is terminated following a change in control of the Company, Mr. Eugene
Landy will be entitled to severance pay only if actually severed either at
the time of merger or subsequently.
In the event of disability, Mr. Eugene Landy's compensation shall
continue for a period of three years, payable monthly.
On retirement, Mr. Eugene Landy shall receive a pension of $50,000 a
year for ten years, payable in monthly installments.
In the event of death, Mr. Eugene Landy's designated beneficiary shall
receive $450,000, $100,000 thirty days after death and the balance one year
after death.
The Employment Agreement terminates December 31, 1998. Thereafter,
the term of the Employment Agreement shall be automatically renewed and
extended for successive one-year periods.
Effective January 1, 1996, the Company and Samuel A. Landy entered
into a three-year Employment Agreement under which Mr. Samuel Landy
receives an annual base salary of $165,000 for 1996, $181,500 for 1997 and
$199,650 for 1998 plus bonuses and customary fringe benefits. Bonuses
shall be at the discretion of the Board of Directors and shall be based on
certain guidelines. Mr. Samuel Landy will also receive four weeks
vacation, use of an automobile, and stock options for 25,000 shares in each
year of the contract.
The Company agrees to loan to Mr. Samuel Landy $100,000 at the
Company's corporate borrowing rate with a 5-year maturity and a 15-year
principal amortization. Additional amounts, secured by Company stock, may
be borrowed at the same terms for the exercise of stock options.
On severance and disability, Mr. Samuel Landy is entitled to one
year's pay.
-21-
Report of Board of Directors.
Overview and Philosophy
The Company has a Compensation Committee consisting of three
independent outside Directors. This Committee is responsible for making
recommendations to the Board of Directors concerning executive
compensation. The Compensation Committee takes into consideration three
major factors in setting compensation.
The first consideration is the overall performance of the Company.
The Board believes that the financial interests of the executive officers
should be aligned with the success of the Company and the financial
interests of its shareholders. Increases in funds from operations, the
enhancement of the Company's equity portfolio, and the success of the
Dividend Reinvestment and Stock Purchase Plan all contribute to increases
in stock prices thereby maximizing shareholders' return.
The second consideration is the individual achievements made by each
officer. The Company is a small real estate investment trust (REIT). The
Board of Directors is aware of the contributions made by each officer and
makes an evaluation of individual performance based on their own
familiarity with the officer.
The final criteria in setting compensation is comparable wages in the
industry. In this regard, the REIT industry maintains excellent
statistics.
Evaluation
The Company had an excellent year. The stock price rose from 7-3/8 at
December 31, 1994 to 9-3/4 at December 31, 1995. The Committee reviewed
the progress made by Mr. Eugene W. Landy, Chairman of the Board, in
reducing the Company's costs of funds. Mr. Eugene Landy was successful in
bringing the Company's long-term debt from a variable rate of prime plus 1%
to a fixed rate of 7.5%. Mr. Eugene Landy is under an employment agreement
with the Company. His base compensation under this contract is $150,000
per year. (The Summary Compensation Table shows an annual compensation to
Mr. Eugene Landy of $150,000 plus $30,160 in director's and other legal
fees plus $130,000 accrual for pension and other benefits for a total of
$310,160 in 1995.) The Committee has decided to grant Mr. Eugene Landy a
bonus of $15,000.
The Committee also reviewed the progress made by Mr. Samuel A. Landy,
President. Net income and funds from operations increased by approximately
16% and 17%, respectively. The Committee also noted that Mr. Samuel
Landy's current compensation was less than the average salary received by
Presidents of other REIT's. Therefore, the Committee decided to increase
Mr. Samuel A. Landy's base compensation from $150,000 to $165,000 effective
January 1, 1996 and to provide him with a five-year contract with scheduled
increases in base compensation. Mr. Samuel Landy will also be granted
stock options for 25,000 shares in each year of the five-year contract as
well as other fringe benefits. The Committee believes that an employment
agreement with Mr. Samuel Landy is in the best interest of the Company and
its shareholders to retain and to ensure continuity and stability of
management.
-22-
Other Information.
The Company had mortgages payable to Royal Green, Ltd., a partnership
in which Mr. Eugene W. Landy has a significant ownership interest. These
mortgages were repaid during 1994. Interest expense on these mortgages
amounted to $30,717 and $99,006 in 1994 and 1993, respectively.
COMPARATIVE STOCK PERFORMANCE.
The line graph compares the total return of the Company's common stock
for the last five years to the NAREIT All REIT Total Return Index published
by the National Association of Real Estate Investment Trusts (NAREIT) and
to the S&P 500 Index for the same period. The total return reflects stock
price appreciation and dividend reinvestment for all three comparative
indices. The information herein has been obtained from sources believed to
be reliable, but neither its accuracy nor its completeness is guaranteed.
1990 1991 1992 1993 1994 1995
United Mobile Homes, Inc. 100 142 222 360 393 551
S & P 500 100 131 141 155 157 215
NAREIT 100 136 152 180 182 215
-23-
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On December 31, 1994, no person owned of record, or was known by the
Company to own beneficially more than five percent (5%) of the shares of
the Company, except the following:
Percent
Name and Address Shares Owned of
Title of Class of Beneficial Owner Beneficially Class
Common Stock Beechmont Co., as Agent 394,400 6.74%
122 East 42nd St.
New York, NY 10168
Common Stock Richard H. Molke 300,236 5.13%
8 Ivins Place
Rumson, NJ 07760
Common Stock Eugene W. Landy 830,124 14.19%
20 Tuxedo Road
Rumson, NJ 07760
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Certain relationships and related party transactions are incorporated
herein by reference to Part IV, Item 14(a)(1)(vi), Note 7 of the Notes to
Consolidated Financial Statements - Related Party Transactions.
-24-
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
(a) (1) The following Financial Statements are filed as part of this
report.
Page(s)
(i) Independent Auditors' Report 27
(ii) Consolidated Balance Sheets as of December 31, 1995 28
and 1994
(iii) Consolidated Statements of Income for the years 29
ended December 31, 1995, 1994 and 1993
(iv) Consolidated Statements of Shareholders' Equity for 30
the years ended December 31, 1995, 1994 and 1993
(v) Consolidated Statements of Cash Flows for the years 31
ended December 31, 1995, 1994 and 1993
(vi) Notes to Consolidated Financial Statements 32-42
(a) (2) The following Financial Statement Schedule for the
years ended December 31, 1995, 1994 and 1993 is
filed as part of this report.
(i) Schedule III - Real Estate and Accumulated 43
Depreciation
All other schedules are omitted for the reason that they are not
required, are not applicable, or the required information is set forth in
the financial statements or notes thereto.
-25-
PART IV
(a) (3) The Exhibits set forth in the following index of Exhibits are filed
as a part of this Report.
Exhibit No. Description
(3) Articles of Incorporation and By-Laws:
Articles of Incorporation and By-Laws, Certificate of
Incorporation and Amendments thereto are incorporated
by reference to the Company's Registration Statement
No. 2-92896-NY, and Amendments thereto, filed with the
SEC on August 22, 1984.
(10) Material Contracts:
(a) Stock Option Plan is incorporated
by reference to the Company's Proxy Statement dated
April 25, 1994 filed with the SEC April 27, 1994.
(b) 401(k) Plan Document and Adoption
Agreement effective April 1, 1992 is incorporated by
reference to that filed with the Company's 1992 Form 10-
K filed with the SEC on March 9, 1993.
(c) Employment contract with Mr. Eugene
W. Landy dated December 14, 1993 is incorporated by
reference to that filed with the Company's 1993 Form 10-
K filed with the SEC on March 28, 1994.
(d) Employment contract with Mr. Ernest
V. Bencivenga dated November 9, 1993 is incorporated by
reference to that filed with the Company's 1993 Form 10-
K filed with the SEC on March 28, 1994.
(e) Employment contract with Mr. Samuel
A. Landy effective January 1, 1996.
(22) Subsidiaries of the Registrant:
The Company operates through wholly-
owned, multiple subsidiaries carrying on the same line
of business. The parent company is the Registrant.
The line of business is the operation of mobile home
parks. The Company operates through subsidiaries. A
full and complete list of operating subsidiaries,
listed by trade name is incorporated by reference to
the Company's Registration Statement No. 33-1396-NY,
and Amendments thereto, filed with the SEC on November
6, 1985.
(a)(3)(b) Reports of Form 8-K
None.
-26-
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
United Mobile Homes, Inc.:
We have audited the consolidated financial statements of United Mobile
Homes, Inc. as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of United
Mobile Homes, Inc. as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the years in the three year
period ended December 31, 1995 in conformity with generally accepted
accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
Short Hills, New Jersey
March 6, 1996
S/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
-27-
<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1994
<S> <C> <C>
1995 1994
- ASSETS -
INVESTMENT PROPERTY & EQUIPMENT
Land $ 5,194,402 $ 4,494,382
Site and Land Improvements 32,456,359 29,777,592
Buildings and Improvements 1,755,407 1,728,447
Rental Homes and Accessories 3,912,918 3,523,332
___________ ___________
Total Investment Property 43,319,086 39,523,753
Equipment and Vehicles 1,853,398 1,669,585
___________ ___________
Total Investment Property and Equipment 45,172,484 41,193,338
Accumulated Depreciation (19,145,830) (17,643,762)
___________ ___________
Net Investment Property & Equipment 26,026,654 23,549,576
___________ ___________
OTHER ASSETS
Cash and Cash Equivalents 2,043,282 357,547
Notes and Other Receivables 547,779 418,304
Unamortized Financing Costs 199,103 235,663
Prepaid Expenses 272,704 286,148
Land Development Costs 668,875 556,777
___________ ___________
Total Other Assets 3,731,743 1,854,439
___________ ___________
TOTAL ASSETS $ 29,758,397 $ 25,404,015
=========== ===========
-LIABILITIES & SHAREHOLDERS' EQUITY-
LIABILITIES:
MORTGAGES PAYABLE $ 17,707,635 $ 15,637,325
___________ ___________
OTHER LIABILITIES
Accounts Payable 197,357 151,548
Loans Payable -0- 500,000
Accrued Liabilities and Deposits 1,243,686 966,731
Tenant Security Deposits 319,232 294,028
___________ ___________
Total Other Liabilities 1,760,275 1,912,307
___________ ___________
MINORITY INTEREST -0- 132,600
___________ ___________
Total Liabilities 19,467,910 17,682,232
___________ ___________
SHAREHOLDERS' EQUITY:
Common Stock - $.10 par value per share,
10,000,000 shares authorized, 5,850,631
and 5,496,163 issued and outstanding as
of December 31, 1995 and 1994,
respectively 585,063 549,616
Additional Paid-In Capital 10,373,217 7,839,960
Accumulated Deficit (667,793) (667,793)
___________ ___________
Total Shareholders' Equity 10,290,487 7,721,783
___________ ___________
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 29,758,397 $ 25,404,015
=========== ===========
See Accompanying Notes to
Consolidated Financial Statements
</TABLE>
-28-
<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<S> <C> <C> <C>
1995 1994 1993
Rental and Related Income $ 13,332,961 $ 12,318,467 $ 11,521,677
Park Operating Expenses 5,883,793 5,454,387 5,113,740
__________ __________ __________
Income from Park Operations 7,449,168 6,864,080 6,407,937
Other Expenses (Income):
General and Administrative 1,228,850 1,308,724 1,259,572
Interest Expense 1,675,998 1,519,527 1,757,710
Interest Income ( 65,999) ( 25,474) ( 12,395)
Depreciation Expense 1,872,942 1,799,169 1,816,662
Other Expenses 251,554 180,796 257,191
__________ __________ __________
Income Before Gains
on Sales of Assets 2,485,823 2,081,338 1,329,197
Gains on Sales of Assets 5,758 59,941 17,022
__________ __________ __________
Net Income $ 2,491,581 $ 2,141,279 $ 1,346,219
========== ========== ==========
Net Income Per Share $ .44 $ .40 $ .26
========== ========== ==========
Weighted Average Shares
Outstanding 5,693,001 5,395,733 5,099,089
========== ========== ==========
See Accompanying Notes to
Consolidated Financial Statements
</TABLE>
-29-
<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Additional
Common Stock Paid-In Accumulated Treasury
Number Amount Capital Deficit Stock(1)
<S> <C> <C> <C> <C> <C>
Balance 12/31/92 4,965,024 $496,502 $4,868,641 $(667,793) $(85,325)
Common Stock Issued with
the Dividend Reinvestment
and Stock Purchase Plan 282,572 28,258 1,737,019 -0- 85,325
Common Stock Issued
through the Exercise of
Stock Options 28,000 2,800 66,450 -0- -0-
Distributions -0- -0- ( 302,424) (1,346,219) -0-
Net Income -0- -0- -0- 1,346,219 -0-
_________ _______ _________ _________ ______
Balance 12/31/93 5,275,596 527,560 6,369,686 ( 667,793) -0-
Common Stock Issued with
the Dividend Reinvestment
and Stock Purchase Plan 220,567 22,056 1,606,737 -0- -0-
Distributions -0- -0- ( 136,463) (2,141,279) -0-
Net Income -0- -0- -0- 2,141,279 -0-
_________ _______ _________ __________ ______
Balance 12/31/94 5,496,163 549,616 7,839,960 ( 667,793) -0-
Common Stock Issued with
the Dividend Reinvestment
and Stock Purchase Plan 354,468 35,447 2,996,523 -0- -0-
Distributions -0- -0- ( 463,266) (2,491,581) -0-
Net Income -0- -0- -0- 2,491,581 -0-
_________ _______ __________ _________ ______
Balance 12/31/95 5,850,631 $585,063 $10,373,217 $( 667,793) $ -0-
========= ======= ========== ========= ======
(1) Represented 17,065 shares of common stock. These shares were reissued
during 1993.
See Accompanying Notes to
Consolidated Financial Statements
</TABLE>
-30-
<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,491,581 $ 2,141,279 $ 1,346,219
Depreciation & Amortization 2,124,496 1,859,748 1,934,591
Minority Interest -0- 12,217 ( 739)
Gains on Sales of Assets ( 5,758) ( 59,941) ( 17,022)
Changes in Operating Assets
and Liabilities -
Notes and Other Receivables ( 129,475) ( 29,320) 36,129
Prepaid Expenses 13,444 ( 4,123) 133,273
Accounts Payable 45,809 2,884 78,159
Accrued Liabilities & Deposits 76,955 411,841 61,116
Tenant Security Deposits 25,204 8,963 ( 21,120)
__________ _________ _________
Net Cash Provided by Operating
Activities 4,642,256 4,343,548 3,550,606
__________ _________ _________
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Edgewood Mobile
Home Park ( 1,810,906) -0- -0-
Acquisition of Minority Interest ( 132,600) -0- -0-
Purchase of Investment Property
and Equipment ( 1,778,402) (1,556,297) ( 892,522)
Proceeds from Sales of Assets 288,494 305,018 127,543
Additions to Land Development
Costs ( 955,546) ( 556,763) ( 275,417)
__________ _________ __________
Net Cash Used by
Investing Activities ( 4,388,960) (1,808,042) (1,040,396)
__________ _________ __________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Mortgages and Loans 18,700,000 5,400,000 6,800,000
Net Proceeds from (Repayments of)
Short-Term Borrowings ( 500,000) 500,000 -0-
Principal Payments of Mortgages
and Loans (16,629,690) (7,698,905) (9,284,815)
Financing Costs on Debt ( 214,994) ( 94,577) ( 120,702)
Proceeds from Dividend Reinvestment
and Stock Purchase Plan 1,729,159 1,088,034 1,850,602
Proceeds from Exercise of Stock
Options -0- -0- 69,250
Dividends Paid ( 1,652,036) (1,736,983) (1,648,643)
__________ _________ __________
Net Cash Provided (Used) by
Financing Activities 1,432,439 (2,542,431) (2,334,308)
__________ _________ __________
NET INCREASE (DECREASE) IN CASH 1,685,735 ( 6,925) 175,902
CASH & CASH EQUIVALENTS - BEGINNING 357,547 364,472 188,570
__________ _________ _________
CASH & CASH EQUIVALENTS - ENDING $ 2,043,282 $ 357,547 $ 364,472
========== ========= =========
See Accompanying Notes to
Consolidated Financial Statements
</TABLE>
-31-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ELECTION TO BE TAXED AS A REAL ESTATE INVESTMENT TRUST
Effective January 1, 1992, United Mobile Homes, Inc. (the Company)
elected to be taxed as a Real Estate Investment Trust (REIT) under Sections
856-858 of the Internal Revenue Code. The Company will not be taxed on the
portion of its income which is distributed to shareholders, provided it
distributes at least 95% of its taxable income, has at least 75% of its
assets in real estate investments and meets certain other requirements for
qualification as a REIT.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE BUSINESS - The Company owns and operates twenty-one
mobile home parks containing 4,920 sites. The parks are located in New
Jersey, New York, Ohio, Pennsylvania and Tennessee.
These mobile home parks are listed by trade names as follows:
MOBILE HOME PARK LOCATION
Allentown Mobile Home Park Memphis, Tennessee
Brookview Village Greenfield Center, New York
Cedarcrest Mobile Home Park Vineland, New Jersey
Cranberry Village Mars, Pennsylvania
Cross Keys Village Duncansville, Pennsylvania
D & R Village Clifton Park, New York
Edgewood Mobile Home Park Apollo, Pennsylvania
Fairview Manor Millville, New Jersey
Forest Park Village Cranberry Township, Pennsylvania
Heather Highlands Mobile Home Park Inkerman, Pennsylvania
Highland Estates Kutztown, Pennsylvania
Kinnebrook Mobile Home Park Monticello, New York
Lake Sherman Village Navarre, Ohio
Memphis Mobile City Memphis, Tennessee
Oxford Village West Grove, Pennsylvania
Pine Ridge Village Carlisle, Pennsylvania
Port Royal Village Belle Vernon, Pennsylvania
River Valley Estates Marion, Ohio
Sandy Valley Estates Magnolia, Ohio
Southwind Village Jackson, New Jersey
Woodlawn Village Eatontown, New Jersey
BASIS OF PRESENTATION - The consolidated financial statements of the Company
include all of its wholly-owned subsidiaries. All intercompany transactions
and balances have been eliminated in consolidation. In preparing the
consolidated financial statements, management is required to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as contingent assets and liabilities as of the dates of
the consolidated balance sheets and revenue and expenses for the years then
ended. Actual results could differ significantly from these estimates and
assumptions.
-32-
NOTE 2 - Continued
INVESTMENT, PROPERTY AND EQUIPMENT AND DEPRECIATION - Property and equipment
are carried at cost. Depreciation for Sites and Building (15 to 27.5 years)
is computed principally on the straight-line method over the estimated useful
lives of the assets. Depreciation of Improvements to Sites and Buildings,
Rental Homes and Equipment and Vehicles (3 to 27.5 years) is computed
principally on the straight-line method. Land Development Costs are not
depreciated until they are put in use, at which time they are capitalized as
Sites or Site Improvements. Maintenance and repairs are charged to income as
incurred and improvements are capitalized. The costs and related accumulated
depreciation of property sold or otherwise disposed of are removed from the
accounts and any gain or loss is reflected in the current year's results of
operations.
UNAMORTIZED FINANCING COSTS - Legal fees and loan processing fees for new and
restructured mortgages are being amortized over the life of the related debt.
Amortization expenses charged to Other Expenses for the years ended December
31, 1995, 1994 and 1993 were $251,554, $60,579 and $117,929, respectively.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include certificates of
deposit and bank repurchase agreements with maturities of 90 days or less.
MINORITY INVESTMENTS - The Company consolidates the results of certain
operations that have minority interests. On January 30, 1992, the Company
acquired an 88.36% interest in a limited partnership. On February 3, 1995,
the Company acquired the remaining 11.64% interest in this limited
partnership.
REVENUE RECOGNITION - The Company derives its income from the rental of
mobile home sites. The Company also owns approximately 275 rental units
which are rented to tenants. Revenue is recognized on the accrual basis.
EARNINGS PER SHARE - Net income per share is computed using the weighted
average number of shares outstanding, adjusted for the exercise, or potential
exercise, of any dilutive outstanding stock options (See Note 5).
RECENT ACCOUNTING PRONOUNCEMENTS - In March 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of" (SFAS 121), which is effective for financial statements
issued for fiscal years beginning after December 15, 1995. The
implementation of SFAS 121 is not expected to have a material impact on the
financial position or results of operations of the Company.
RECLASSIFICATIONS - Certain amounts in the consolidated financial statements
for the prior years have been reclassified to conform to the statement
presentation for the current year.
-33-
NOTE 3 - INVESTMENT PROPERTY AND EQUIPMENT
On January 26, 1995, the Company acquired Edgewood Mobile Home Park a
218-space mobile home park located in Apollo, Pennsylvania. This mobile home
park was purchased from a partnership whose partners are also Officers,
Directors and shareholders of the Company. The purchase price, including
closing costs, totalled $1,810,906. An additional $200,000 plus interest at
8% is to be paid if the park generates, within a three year time limit,
$195,000 per year or more in operating income. This purchase was based on an
independent appraisal of fair market value.
On February 3, 1995, the Company purchased the remaining 11.64% interest
in Heather Highlands Mobile Home Village Associates, L.P. from Mr. Eugene W.
Landy for $132,600. This price per unit was the same price previously paid
to non-affiliated sellers, which was based on an independent appraisal of
fair market value.
On September 15, 1995, the Company purchased approximately ten acres of
vacant land adjacent to one of its parks in Vineland, New Jersey for a
purchase price of $32,500.
On October 10, 1995, the Company entered into an agreement to sell 5.5
acres of vacant land for a sales price of $385,000. This sale is schedule to
close in 1996.
The following is a summary of accumulated depreciation by major classes
of assets:
December 31, 1995 December 31, 1994
Site & Land Improvements $ 16,061,667 $ 14,666,938
Buildings & Improvements 942,710 861,781
Rental Homes & Accessories 1,015,358 1,018,551
Equipment & Vehicles 1,126,095 1,096,492
__________ __________
Total Accumulated
Depreciation $ 19,145,830 $ 17,643,762
========== ==========
-34-
NOTE 4 - NOTES AND MORTGAGES PAYABLE
The following is a summary of mortgages payable at December 31, 1995 and
1994:
Interest
Mortgages Due Date Rate 1995 1994
Allentown 10-01-98 7.55% $ -0- $ 424,800
D&R Village 09-01-00 9.75% 1,837,606 1,852,885
Fairview Manor 09-30-97 P + 2% -0- 665,601
Lake Sherman 03-01-98 P + 2% -0- 887,039
Oxford 03-01-99 P + 1% -0- 2,875,000
Pine Ridge 01-15-98 P + 2% -0- 749,581
Port Royal 03-01-99 P + 1% -0- 2,300,000
Sandy Valley 05-01-00 10.50% 893,993 910,388
Southwind 02-01-96 P + 1% -0- 902,506
Woodlawn 02-01-96 P + 1% -0- 319,525
Various 12-01-00 7.5% 14,976,036 -0-
Various 09-21-98 P + 1% -0- 3,750,000
__________ __________
TOTAL NOTES AND MORTGAGES $17,707,635 $15,637,325
========== ==========
At December 31, 1995 and 1994, mortgages are collateralized by real
property with a carrying value of $16,545,594 and $20,399,843, respectively,
before accumulated depreciation and amortization.
REVOLVING LINE OF CREDIT
On March 4, 1994, the Company received a $10,000,000 revolving line of
credit from United Jersey Bank N.A. (UJB). This line of credit expired on
July 7, 1995.
UNSECURED LINE OF CREDIT
The Company has available a $500,000 unsecured line of credit with UJB, all
of which was available at December 31, 1995. The interest rate on this line
of credit is prime plus 1%. This line of credit expires on December 20, 1996
but may be extended by UJB for additional one year periods.
RECENT FINANCING
On March 4, 1994, the Company utilized $5,400,000 ($3,000,000 on Oxford
Village and $2,400,000 on Port Royal Village) of the UJB revolving line of
credit. Interest was at a rate of prime plus 1%. Proceeds from these
advances were primarily used to retire existing debt. This borrowing was
subsequently repaid.
On January 26, 1995, the Company utilized $3,700,000 ($2,000,000 on
Woodlawn Village and $1,700,000 on Southwind Village) of the UJB revolving
line of credit. Proceeds from these advances were primarily used to retire
existing debt and to purchase Edgewood Mobile Home Park. This borrowing was
subsequently repaid.
-35-
On May 1, 1995, the mortgagee extended the Sandy Valley mortgage. The new
maturity date is May 1, 2000.
On November 29, 1995, the Company entered into a $15,000,000 mortgage
payable to UJB secured by Woodlawn Village, Southwind Village, Cedarcrest
Mobile Home Park, Fairview Manor Mobile Home Park, Oxford Village and Port
Royal Village. The interest rate on this mortgage loan is fixed at 7.5%.
This mortgage loan is due on December 1, 2000 but may be extended by the
Company for an additional five years. Proceeds of this mortgage were
primarily used to retire existing debt.
The aggregate principal payments of all mortgages payable are scheduled as
follows:
1996 - $ 356,418
1997 - 385,417
1998 - 416,775
1999 - 450,708
2000 - 484,438
Thereafter - 15,613,879
__________
Total - $ 17,707,635
==========
NOTE 5 - EMPLOYEE STOCK OPTIONS
Effective January 1, 1984, the shareholders approved a Stock Option Plan
for officers and key employees. This plan expired during 1994. As of
December 31, 1995 and 1994, 98,000 shares of stock options previously granted
remained outstanding under this plan.
On May 26, 1994, the shareholders approved and ratified the Company's 1994
Stock Option Plan authorizing the grant to officers and key employees of
options to purchase up to 750,000 shares of common stock. Options may be
granted any time up to December 31, 2003. No option shall be available for
exercise beyond ten years. All options are exercisable after one year from
the date of grant. The option price shall not be below the fair market value
at date of grant. Cancelled or expired options are added back to the "pool"
of shares available under the plan.
As of December 31, 1995, there were 160,000 shares exercisable and 576,000
shares available under these plans. The following is a summary of stock
options outstanding as of December 31, 1995:
Date of Number of Number of Option Expiration
Grant Employees Shares Price Date
09/02/92 5 44,000 $ 4.625 09/27/97
02/16/93 1 25,000 5.00 02/16/98
07/27/93 7 14,000 5.625 07/27/98
09/27/93 2 15,000 6.50 09/27/98
05/31/94 1 25,000 9.125 05/31/99
10/18/94 9 37,000 7.125 10/18/99
01/05/95 2 75,000 8.25 01/05/2000
08/03/95 7 22,000 8.375 08/03/2000
08/17/95 2 15,000 8.375 08/17/2000
_______
272,000
=======
-36-
In October, 1995 the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation". This Statement establishes
financial accounting and reporting standards for stock-based employee
compensation plans.
SFAS No. 123 provides for a "fair value based method" of accounting for
employees stock compensation plans. However, SFAS No. 123 allows an entity
to continue following APB Opinion No. 25 and thereby measuring compensation
cost under such plans using the "intrinsic value based method" provided
certain pro-forma footnote disclosure be made as if the fair value based
method was adopted.
On January 1, 1996, the Company elected to continue following APB Opinion
No. 25. The adoption of SFAS No. 123 will not have a material impact on the
results of operations or financial position of the Company.
NOTE 6 - 401(K) PLAN
Effective April 1, 1992, the Company instituted a 401(k) Plan (Plan). All
full-time employees who are over 21 years old and have completed one year of
service (as defined) are eligible for the Plan. Under this Plan, an employee
may elect to defer his/her compensation (up to a maximum of 18%) and have it
contributed to the Plan. Employer contributions to the Plan are at the
discretion of the Company. During 1995, 1994 and 1993, the Company made
matching contributions to the Plan of up to 50% of the first 6% of employee
salary. This amounted to $34,056, $27,543 and $23,803 for 1995, 1994 and
1993, respectively.
NOTE 7 - RELATED PARTY TRANSACTIONS AND OTHER MATTERS
TRANSACTIONS WITH AFFILIATED PARTNERSHIPS
The Company had mortgages payable to Royal Green, Ltd., a partnership in
which Mr. Eugene W. Landy has a significant ownership interest. These
mortgages were repaid during 1994. Interest expense on these mortgages
amounted to $30,717 and $99,006 in 1994 and 1993, respectively.
In addition, Royal Green Ltd. owns 30 homes located in Allentown Mobile
Home Park in Memphis, Tennessee. The Company charges Royal Green, Ltd.
market rent on each occupied unit.
Burtenn, Inc., a corporation in which Mr. Eugene W. Landy is the sole
shareholder, was the general partner of Heather Highlands. During 1993, the
Company paid $120,000 in partnership fees to Burtenn, Inc. No partnership
fees were paid during 1995 and 1994. During 1995, the Company acquired the
remaining 11.64% interest in Heather Highlands Mobile Home Village
Associates, L.P. from Mr. Eugene W. Landy (See Note 3).
MORTGAGE FUNDING LINE WITH MONMOUTH REAL ESTATE INVESTMENT CORPORATION
The Company had a $10,000,000 mortgage funding line with MREIC. This line
expired during 1994. There are five Directors of the Company who are also
Directors and shareholders of MREIC. Interest expense on these mortgages
amounted to $45,719 and $672,403 in 1994 and 1993, respectively.
-37-
TRANSACTIONS WITH THE MOBILE HOME STORE, INC.
The Company receives rental income from The Mobile Home Store, Inc. (MHS),
a wholly-owned subsidiary of Monmouth Capital Corporation. MHS sells and
finances the sales of mobile homes. Six Directors of the Company are also
Directors and shareholders of Monmouth Capital Corporation.
MHS pays the Company market rent on sites where MHS has a home for sale.
Total site rental income from MHS amounted to $40,623 and $5,572,
respectively for the years ended December 31, 1995 and 1994.
Effective April 1, 1995, the Company and MHS entered into an agreement
whereby MHS leases space from the Company to be used as sales lots, at market
rates, at most of the Company's parks. Total rental income relating to these
leases amounted to $67,500 for the year ended December 31, 1995.
As a REIT, the Company cannot be in the business of selling mobile homes
for profit. During 1995 and 1994, the Company had approximately $180,000 and
$115,000 respectively, of rental homes. The Company sold these homes to MHS
at book value.
During 1995, the Company purchased 10 homes totalling $196,952 to be used
as rental homes from MHS at its cost.
DIRECTORS', MANAGEMENT AND LEGAL FEES
During the years ended December 31, 1995, 1994 and 1993, Directors',
management, and legal fees to Mr. Eugene W. Landy and the law firm of Landy &
Landy amounted to $180,160, $171,842 and $179,838, respectively.
OTHER MATTERS
During 1994, the Company entered into a three-year employment agreement and
a five-year employment agreement with two of its executive officers. The
agreements provide for base compensation, bonuses and fringe benefits, in
addition to specified severance and retirement benefits. The Company is
accruing these benefits over the terms of the agreements. Included in
general and administrative expense for the years ended December 31, 1995 and
1994 were $155,650 and $197,350, respectively, relating to these agreements.
NOTE 8 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Effective April 17, 1989, the Company implemented a Dividend Reinvestment
and Stock Purchase Plan (DRIP). Under the terms of the DRIP, shareholders
who participate may reinvest all or part of their dividends in additional
shares of the Company at approximately 95% of the market price. Shareholders
may also purchase additional shares at approximately 95% of their market
price by making optional cash payments. Generally, dividend reinvestments
and purchases of shares are made quarterly on March 15, June 15, September 15
and December 15.
Amounts received and shares issued in connection with the DRIP for the
years ended December 31, 1995 and 1994 were as follows:
1995 1994
Amounts Received/Dividends $3,031,970 $1,628,793
Reinvested
Number of Shares Issued 354,468 220,567
-38-
NOTE 9 - DISTRIBUTIONS
The following dividends were paid to shareholders during the years ended
December 31, 1995 and 1994:
1995 1994
Date Paid Amount Per Share Date Paid Amount Per Share
March 15, 1995 $687,020 $ .125 March 15, 1994 $527,560 $ .100
June 15, 1995 696,425 .125 June 15, 1994 532,110 .100
September 15, 1995 707,884 .125 September 15, 1994 538,278 .100
December 15, 1995 863,518 .150 December 15, 1994 679,794 .125
_________ _____ _________ ____
$2,954,847 $ .525 $2,277,742 $.425
========= ===== ========= ====
Total distributions to shareholders for 1995 amounted to $2,954,847, or
$.525 per share, of which $.475 was taxed as ordinary income and $.05 was a
return on capital. This amount does not include the dividend resulting from
the discount on shares purchased through the Company's Dividend Reinvestment
and Stock Purchase Plan, which is considered a reduction in basis.
On January 15, 1996, the Company declared a dividend of $.15 per share to
be paid on March 15, 1996 to shareholders of record February 15, 1996.
NOTE 10 - FEDERAL INCOME TAXES
Effective January 1, 1992, the Company elected to be taxed as a REIT. As
the Company has distributed all of its income currently, no provision has
been made for Federal income or excise taxes for the years ended December 31,
1995, 1994 and 1993.
NOTE 11 - ENVIRONMENTAL ISSUES
In 1990, the Company converted the remaining oil heated mobile homes at
Cedarcrest Mobile Home Park to gas heat. To avoid any potential leakage into
the surrounding soils, the remainder of the oil tanks was removed. In order
to encourage tenants' full cooperation, the Company entered into an
agreement with South Jersey Gas Company to finance the tenants' purchase of
new appliances and the actual cost of converting. The Company guaranteed up
to $190,000 of the payments by the tenants. In addition, the Company
reimbursed each tenant up to $530 for conversion costs. The $190,000
guarantee was in the form of a cash deposit remitted to the utility company.
As of December 31, 1995, all of this deposit was returned to the Company.
-39-
NOTE 12 - LEGAL MATTERS
There are no lawsuits pending against the Company that management believes
will have a material effect on the financial condition or results of
operations of the Company.
The Company is a Defendant in various personal injury cases, all of which
are being defended by our insurance company.
The Company was also a Defendant in a case Jackson Township v. Southwind
Village Mobile Home Park. The Township alleged that the Company is
wrongfully refusing to comply with the Township ordinance requiring operation
of the park as a "senior citizen" mobile home park. The Company believes
that under Federal law, the Company cannot exclude families from the park.
On June 15, 1995, the Company was granted a Summary Judgment Order allowing
families into Southwind Village Mobile Home Park in Jackson, New Jersey. In
January 1996, the Company was awarded $70,000 for legal fees and other
damages.
The Company was a Plaintiff in a lawsuit, United Mobile Homes, Inc., et al
v. Bondy Oil, Inc., et al. The Company spent approximately $200,000 in 1990
and 1991 to remedy contamination to soil from home heating oil. United
Mobile Homes, Inc. seeks to recover that money from the oil suppliers. This
case was subsequently settled for $80,000 in January 1996.
The Company was a Plaintiff in a lawsuit, Heather Highlands Mobile Home
Village v. Jenkins Township Sanitary Authority. Jenkins Township Sanitary
Authority constructed public sewers and attempted to extract connection fees
from the Company of over $150,000. The Company challenged the legality of
the proposed fees. The Company settled this matter and has agreed to pay
Jenkins Township Sanitary Authority $104,760 plus interest for a total of
$111,042.
On June 7, 1995, a lawsuit was filed against the Company by Stults and
Associates, Inc. seeking payment of $45,000 for engineering services
pertaining to the expansion of River Valley Estates in Marion, Ohio. The
Company does not believe that any monies are owed and has filed a counter-
claim.
On January 17, 1996, a home owned by a resident at one of the Company's
parks exploded due to a gas leak in the resident's home. This explosion
damaged other surrounding resident owned homes. This matter is currently
under investigation.
-40-
NOTE 13 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the years ended December 31, 1995, 1994 and 1993 for
interest is as follows:
1995 1994 1993
Interest $ 1,701,454 $ 1,509,707 $ 1,742,074
During the years ended December 31, 1995, 1994 and 1993, land development
costs of $843,448, $294,283 and $63,171, respectively were transferred to
investment property and equipment and placed in service.
During the year ended December 31, 1995, the Company purchased Edgewood
Mobile Home Park. This purchase calls for an additional $200,000 payment if
certain conditions are met. This amount, which is included in accrued
liabilities, has been added to investment property and equipment.
During the years ended December 31, 1995, 1994 and 1993, the Company had
dividend reinvestments of $1,302,811, $540,759 and $-0-, respectively which
required no cash transfers.
NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company is required to disclose certain information about fair values
of financial instruments, as defined in Statement of Financial Accounting
Standards No. 107, "Disclosures About Fair Value of Financial Instruments."
Limitations
Estimates of fair value are made at a specific point in time, based upon,
where available, relevant market prices and information about the financial
instrument. Such estimates do not include any premium or discount that could
result from offering for sale at one time the Company's entire holdings of a
particular financial instrument. For a portion of the Company's financial
instruments, no quoted market value exists. Therefore, estimates of fair
value are necessarily based on a number of significant assumptions (many of
which involve events outside the control of management). Such assumptions
include assessments of current economic conditions, perceived risks
associated with these financial instruments and their counterparties, future
expected loss experience and other factors. Given the uncertainties
surrounding these assumptions, the reported fair values represent estimates
only and, therefore, cannot be compared to the historical accounting model.
Use of different assumptions or methodologies is likely to result in
significantly different fair value estimates.
The fair value of cash and cash equivalents and notes receivables
approximates their current carrying amounts since all such items are short-
term in nature. The fair value of mortgages payable approximates their
current carrying amounts since such amounts payable are at a current market
rate of interest.
-41-
NOTE 15 - SUBSEQUENT EVENTS
On January 10, 1996, the Company acquired Wood Valley Mobile Home Park from
an unrelated entity. This acquisition is a 161-space mobile home park
located in Caledonia, Ohio. The purchase price was $1,992,000.
On January 9, 1996, the Company entered into a $1,000,000 mortgage payable
(River Valley mortgage) to Bank One at an interest rate of prime. Proceeds
from this mortgage were used to purchase Wood Valley Mobile Home Park.
-42-
<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
Column A Column B Column C Column D
Year of Acquisition
Site, Land Capitalization
& Building Subsequent to
Description Encumbrances Land Improvements Acquisition
<S> <C> <C> <C> <C>
Memphis, TN $ -0- $250,000 $ 2,569,101 $ 724,186
Greenfield Center, NY -0- 37,500 232,547 1,282,067
Vineland, NJ (3) 320,000 1,866,323 548,477
Mars, PA -0- 181,930 1,922,931 137,268
Duncansville, PA -0- 60,774 378,093 243,114
Clifton Park, NY 1,837,606 391,724 704,021 284,928
Apollo, PA -0- 670,000 1,336,600 107,763
Millville, NJ (3) 216,000 1,166,517 332,412
Zelienople, PA -0- 75,000 977,225 921,318
Inkerman, PA -0- 572,500 2,151,569 557,573
Kutztown, PA -0- 145,000 1,695,041 483,195
Monticello, NY -0- 235,600 1,402,572 1,181,793
Navarre, OH -0- 290,000 1,457,673 527,420
Memphis, TN -0- 78,435 810,477 593,665
West Grove, PA (3) 175,000 990,515 837,705
Carlisle, PA -0- 37,540 198,321 625,617
Belle Vernon, PA (3) 150,000 2,491,796 912,627
Marion, OH -0- 236,000 785,293 582,533
Magnolia, OH 893,993 270,000 1,941,430 596,984
Jackson, NJ (3) 100,095 602,820 1,079,374
Eatontown, NJ (3) 157,421 280,749 128,676
__________ _________ __________ __________
2,731,599 $4,650,519 $25,961,614 $12,688,695
Various 14,976,036 ========= ========== ==========
__________
$17,707,635
==========
</TABLE>
-43-
<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
Column A Column E(1)(2) Column F(1)
Gross Amount at Which
Carried at 12/31/95
Site, Land
& Building Accumulated
Description Land Improvements Total Depreciation
<S> <C> <C> <C> <C>
Memphis, TN $ 250,000 $ 3,293,287 $ 3,543,287 $ 1,464,828
Greenfield Center, NY 37,500 1,514,614 1,552,114 728,010
Vineland, NJ 405,206 2,329,594 2,734,800 1,025,324
Mars, PA 181,930 2,060,199 2,242,129 940,633
Duncansville, PA 60,774 621,207 681,981 527,138
Clifton Park, NY 391,724 988,949 1,380,673 810,825
Apollo, PA 670,000 1,444,363 2,114,363 53,904
Millville, NJ 216,000 1,498,929 1,714,929 751,159
Zelienople, PA 75,000 1,898,543 1,973,543 1,302,531
Inkerman, PA 572,500 2,709,142 3,281,642 387,408
Kutztown, PA 409,339 1,913,897 2,323,236 542,824
Monticello, NY 318,472 2,501,493 2,819,965 546,914
Navarre, OH 290,000 1,985,093 2,275,093 634,804
Memphis, TN 78,435 1,404,142 1,482,577 635,639
West Grove, PA 175,000 1,828,220 2,003,220 1,266,233
Carlisle, PA 145,473 716,005 861,478 628,950
Belle Vernon, PA 150,000 3,404,423 3,554,423 2,368,489
Marion, OH 236,000 1,367,826 1,603,826 473,016
Magnolia, OH 270,000 2,538,414 2,808,414 1,262,126
Jackson, NJ 100,095 1,682,194 1,782,289 1,292,636
Eatontown, NJ 157,421 409,425 566,846 370,450
_________ __________ __________ __________
$5,190,869 $38,109,959 $43,300,828 $18,013,841
========= ========== ========== ==========
</TABLE>
-43a-
<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
Column A Column G Column H Column I
Date of Date Depreciable
Description Construction Acquired Life
<S> <C> <C> <C>
Memphis, TN prior to 1980 1986 3 to 27.5
Greenfield Center, NY prior to 1970 1977 3 to 27.5
Vineland, NJ 1973 1986 3 to 27.5
Mars, PA 1974 1986 5 to 27.5
Duncansville, PA 1961 1979 3 to 27.5
Clifton Park, NY 1972 1978 3 to 27.5
Apollo, PA prior to 1980 1995 5 to 27.5
Millville, NJ prior to 1980 1985 3 to 27.5
Zelienople, PA prior to 1980 1982 3 to 27.5
Inkerman, PA 1970 1992 5 to 27.5
Kutztown, PA 1971 1979 5 to 27.5
Monticello, NY 1972 1988 5 to 27.5
Navarre, OH prior to 1980 1987 5 to 27.5
Memphis, TN 1955 1985 3 to 27.5
West Grove, PA 1971 1974 5 to 27.5
Carlisle, PA 1961 1969 3 to 27.5
Belle Vernon, PA 1973 1983 3 to 27.5
Marion, OH 1950 1986 3 to 27.5
Magnolia, OH prior to 1980 1985 5 to 27.5
Jackson, NJ 1969 1969 3 to 27.5
Eatontown, NJ 1964 1978 3 to 27.5
</TABLE>
-43b-
<TABLE>
<CAPTION>
/------FIXED ASSETS-----/
(1) Reconciliation: 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C>
Balance - Beginning of Year $ 39,505,503 $ 38,362,956 $ 37,734,438
___________ ___________ ___________
Additions:
Acquisitions 2,006,600 -0- -0-
Improvements 2,237,114 1,567,553 762,791
Depreciation -0- -0- -0-
__________ __________ __________
Total Additions 4,243,714 1,567,553 762,791
__________ __________ __________
Deletions 448,389 425,006 134,273
__________ __________ __________
Balance - End of Year $ 43,300,828 $ 39,505,503 $ 38,362,956
========== ========== ==========
/--ACCUMULATED DEPRECIATION---/
12/31/95 12/31/94 12/31/93
Balance - Beginning of Year $ 16,544,208 $ 15,135,095 $ 13,582,124
Additions:
Acquisitions -0- -0- -0-
Improvements -0- -0- -0-
Depreciation 1,649,255 1,627,948 1,632,046
__________ __________ __________
Total Additions 1,649,255 1,627,948 1,632,046
__________ __________ __________
Deletions 179,622 218,835 79,075
__________ __________ __________
Balance - End of Year $ 18,013,841 $ 16,544,208 $ 15,135,095
========== ========== ==========
(2) The aggregate cost for Federal tax purposes approximates historical
cost.
(3) Represents one mortgage note payable secured by six properties.
</TABLE>
-43c-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: s/Eugene W. Landy
EUGENE W. LANDY
Chairman of the Board
Dated: March 14, 1996
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been duly signed below by the following persons on behalf of
the registrant and in the capacities and on the date indicated.
Title Date
s/Eugene W. Landy Chairman of the Board and March 14, 1996
EUGENE W. LANDY Director
s/Samuel A. Landy President and Director March 14, 1996
SAMUEL A. LANDY
s/Anna T. Chew Vice President and March 14, 1996
ANNA T. CHEW Chief Financial Officer
and Director
s/Ernest V. Bencivenga Secretary/Treasurer and March 14, 1996
ERNEST V. BENCIVENGA Director
s/Robert J. Anderson Director March 14, 1996
ROBERT J. ANDERSON
s/Charles P. Kaempffer Director March 14, 1996
CHARLES P. KAEMPFFER
s/Richard H. Molke Director March 14, 1996
RICHARD H. MOLKE
s/Eugene Rothenberg Director March 14, 1996
EUGENE ROTHENBERG
s/Robert G. Sampson Director March 14, 1996
ROBERT G. SAMPSON
-44-
UNITED MOBILE HOMES, INC.
Employment of the President - Samuel A. Landy
AGREEMENT EFFECTIVE JANUARY 1, 1996
BY AND BETWEEN: United Mobile Homes, Inc., a New Jersey
Corporation ("Corporation")
AND: Samuel A. Landy ("Employee")
Corporation desires to employ Employee to the business of the Corporation
and Employee desires to be so employed. The parties agree as follows:
1. Employment. Corporation agrees to employ Employee and Employee agrees
to be employed in the capacity as President for a term of three (3) years
effective January 1, 1996 and terminating December 31, 1999.
2. Time and Efforts. Employee shall diligently and conscientiously devote
his time and attention and put his best efforts to the discharge of his
duties as President of the Corporation.
3. Board of Directors. Employee should at all times discharge his duties
and consultation with an under supervision of the Board of Directors of the
Corporation. In the performance of his duties, Employee shall make his
principal office in such place as the Board of Directors of the Corporation
and Employee from time to time agree.
4. Compensation.
A. First year. During the Corporation's fiscal year beginning January 1,
1996, Corporation shall pay to Employee as compensation for his services the
sum of $165,000.00 which shall be paid in equal bi-weekly installments.
B. Second year. During the Corporation's fiscal year beginning January 1,
1997, Corporation shall pay to Employee as compensation for his services the
sum of $181,500.00 which shall be paid in equal bi-weekly installments.
C. Third year. During the Corporation's fiscal year beginning January 1,
1998, Corporation shall pay to Employee as compensation for his services the
sum of $199,650.00 which shall be paid in equal bi-weekly installments.
D. Bonuses.
Bonuses shall be paid at the discretion of the Board of Directors. The
following guidelines are agreed to:
1. The bonus will be 20% of base salary.
2. Performance will be measured by achieving one or more of the following
goals:
A. Net after tax income to increase 11% per year. Income
to be calculated based on ordinary after tax income.
Extraordinary one time items not to be included for
performance purposes.
B. Board shall be in position to increase dividend
due to increase in net income to $.60 in 1996, $.70 in 1997
and $.80 in 1998.
C. Construction of 100 new sites per year. An additional
200 sites per year will be presented to the Board for
acquisition based on their decision.
The payment of any one bonus under this plan does not exclude the
payment of any other bonuses including the stock option bonus referred to
below.
3. Stock option bonus. On January 1st of each of the three years in
this contract document provided performance was up to expectations,
the Employee shall receive the Option to Purchase 25,000 shares of
stock at market price or the price required by law.
E. Loans.
The Corporation agrees to loan the employee the money necessary for the
exercise of any stock option awarded pursuant to this contract or previously
awarded to the Employee, provided said loan is secured by the restricted or
unrestricted stock granted under the option and provided interest is paid
monthly at United's corporate borrowing rate. Each limited by option price.
The loan shall be a 5-year balloon loan amortized over 15 years. In addition
a loan of $100,000.00 will be granted upon signing of this contract pursuant
to the above term.
F. Expenses.
1. Corporation will reimburse the Employee for reasonable and necessary
expenses incurred by him and carrying out his duties under this agreement.
Employee shall present to the Corporation from time-to-time, an itemized
account of such expenses in such forms as may be required by the Corporation.
G. Automobile.
In recognition of Employee's need for an automobile for business purposes,
the Corporation will provide the Employee with an automobile including
maintenance, repairs, insurance and all costs incident thereto, all
comparable to those presently provided to Employee by the Corporation.
H. Indemnity and Attorneys Fees.
The Corporation agrees to indemnify the Employee from any and all lawsuits
filed directly against the Employee in either his capacity as Employee or as
a Director of the Corporation. The Corporation will pay all attorneys fees
and costs to defend the Employee from any such lawsuits.
I. Vacation.
Employee shall be entitled to take four (4) paid weeks vacation per year.
J. Disability or Severance.
Employee shall be entitled to one year's disability. Additionally,
employee is entitled to one year's severence if the severence is a result of
action by the Board. Employee is not entitled to both at the same time.
K. 401-k Plan.
The Corporation will continue to provide a 401-k Plan which the Employee
can contribute to at his option.
L. Contemporaneous Business Activity.
The Corporation recognizes that the Employee actively manages "The Mobile
Home Store, Inc." for Monmouth Capital Corporation and serves as the Director
to Monmouth Capital Corporation and Monmouth Real Estate Investment
Corporation. The Corporation is directly compensated by The Mobile Home
Store, Inc. for the services rendered by the Employee. The Employee will
continue to devote his services to the affairs of The Mobile Home Store,
Inc., Monmouth Capital Corporation and Monmouth Real Estate Investment
Corporation on condition, however, that those services will not interfere
with his employment pursuant to this agreement.
M. Change of More Than Three Corporate Directors.
In the event a change of more than three (3) Directors of the Corporation
during the term of this contract, then Samuel Landy shall have the option to
cancel this contract at any time after the change of more than three (3)
Directors. Notice of intent to cancel the contract shall be sent by Samuel
Landy to each Board member of the Corporation and shall be effective thirty
(30) days after mailing.
N. Notices.
All notices required or permitted to be given under this agreement shall be
given by certified mail, return receipt requested to the parties at the
following addresses or such other addresses as either may designate in
writing to the other party:
Corporation: United Mobile Homes, Inc.
125 Wyckoff Road
Eatontown, NJ 07724
Employee: Samuel A. Landy
124 Federal Road
Englishtown, NJ 07726
O. Governing Law.
This agreement shall be construed and governed in accordance with the laws
of the State of New Jersey.
P. Entire Contract.
This agreement constitutes the entire understanding and agreement between
the Corporation and Employee with regard to all matters herein. There are no
other agreements, conditions or representations oral or written express or
implied with regard thereto. This agreement may be amended only in writing
signed by both parties hereto.
IN WITNESS WHEREOF, Corporation has by its appropriate officers signed and
affixed its seal and Employee has signed and sealed this agreement.
UNITED MOBILE HOMES, INC.
_______________________ BY: s/Ernest V. Bencivenga
ERNEST V. BENCIVENGA
(Seal) Secretary/Treasurer
_______________________ BY: s/Samuel A. Landy
SAMUEL A. LANDY
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF UNITED MOBILE HOMES, INC. AS OF AND FOR THE YEAR
ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,043,282
<SECURITIES> 0
<RECEIVABLES> 645,679
<ALLOWANCES> 97,900
<INVENTORY> 0
<CURRENT-ASSETS> 2,863,765
<PP&E> 45,172,484
<DEPRECIATION> 19,145,830
<TOTAL-ASSETS> 29,758,397
<CURRENT-LIABILITIES> 1,760,275
<BONDS> 17,707,635
<COMMON> 585,063
0
0
<OTHER-SE> 9,705,424
<TOTAL-LIABILITY-AND-EQUITY> 29,758,397
<SALES> 0
<TOTAL-REVENUES> 13,404,718
<CGS> 0
<TOTAL-COSTS> 5,883,793
<OTHER-EXPENSES> 3,353,346
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,675,998
<INCOME-PRETAX> 2,491,581
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,491,581
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,491,581
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
