FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
( x ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period ended _________________________
For Quarter Ended Commission File Number
March 31, 1999 0-13130
UNITED MOBILE HOMES, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-1890929
(State or otherjurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
125 Wyckoff Road, Eatontown, New Jersey 07724
Registrant's telephone number, including area code (732) 389-3890
________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ________
The number of shares outstanding of issuer's common stock as of
May 7, 1999 was 7,173,296 shares.
<PAGE>
UNITED MOBILE HOMES, INC.
for the QUARTER ENDED
MARCH 31, 1999
PART I - FINANCIAL INFORMATION Page No.
Item 1 - Financial Statements
Consolidated Balance Sheets........................ 3
Consolidated Statements of Income.................. 4
Consolidated Statements of Cash Flows.............. 5
Notes to Consolidated Financial Statements......... 6-7
Item 2 - Management Discussion and Analysis of
Financial Conditions and Results of Operations..... 8-9
Item 3 - Quantitative and Qualitative Disclosures
About Market Risk
There have been no material changes to information
required regarding quantitative and qualitative
disclosures about market risk from the end of the
preceding year to the date of this Form 10-Q.
PART II - OTHER INFORMATION................................. 10
SIGNATURES........................................ 11
-2-
<PAGE>
<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1999 and DECEMBER 31, 1998
March 31, December 31,
1999 1998
<S> <C> <C>
- -ASSETS-
INVESTMENT PROPERTY AND EQUIPMENT
Land $ 6,797,935 $ 6,797,935
Site and Land Improvements 46,390,568 46,198,257
Buildings and Improvements 2,688,871 2,691,426
Rental Homes and Accessories 6,294,143 5,656,441
---------- ----------
Total Investment Property 62,171,517 61,344,059
Equipment and Vehicles 2,674,660 2,643,774
---------- ----------
Total Investment Property and Equipment 64,846,177 63,987,833
Accumulated Depreciation (25,681,541) (25,091,588)
---------- ----------
Net Investment Property and Equipment 39,164,636 38,896,245
---------- ----------
OTHER ASSETS
Cash and Cash Equivalents 1,107,842 832,408
Securities Available for Sale 8,813,854 7,752,565
Notes and Other Receivables 754,155 734,724
Unamortized Financing Costs 211,154 157,928
Prepaid Expenses 298,297 168,515
Land Development Costs 1,817,341 1,504,264
---------- ----------
Total Other Assets 13,002,643 11,150,404
---------- ----------
TOTAL ASSETS $ 52,167,279 $ 50,046,649
========== ==========
- - LIABILITIES AND SHAREHOLDERS' EQUITY -
MORTGAGES PAYABLE $ 24,420,393 $ 21,411,576
---------- ----------
OTHER LIABILITIES
Accounts Payable 76,543 152,011
Loans Payable 3,675,101 3,368,512
Accrued Liabilities and Deposits 1,549,160 1,495,653
Tenant Security Deposits 414,006 406,084
---------- ----------
Total Other Liabilities 5,714,810 5,422,260
---------- ----------
TOTAL LIABILITIES 30,135,203 26,833,836
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock - $.10 par value per share
10,000,000 shares authorized, 7,294,296
and 7,246,580 issued and 7,196,296 and
7,246,580 outstanding, respectively 729,430 724,658
Additional Paid-In Capital 23,864,780 23,427,783
Accumulated Other Comprehensive Loss ( 646,862) ( 271,835)
Accumulated Deficit ( 943,375) ( 667,793)
Treasury Stock (98,000 shares at
March 31,1999) ( 971,897) -0-
---------- ----------
Total Shareholders' Equity 22,032,076 23,212,813
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 52,167,279 $ 50,046,649
========== ==========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
-3-
<PAGE>
<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the THREE MONTHS ended
MARCH 31, 1999 and 1998
1999 1998
<S> <C> <C>
Rental and Related Income $ 4,321,983 $ 4,118,835
Community Operating Expense 1,963,689 1,816,336
--------- ---------
Income from Community
Operations 2,358,294 2,302,499
General and Administrative 382,713 356,174
Interest Expense 404,156 372,121
Interest and Dividend Income (166,610) ( 91,895)
Depreciation 625,615 600,672
Other Expenses 17,190 13,200
--------- ---------
Income before Loss
on Sales of Assets 1,095,230 1,052,227
Loss on Sales
of Assets ( 12,077) ( 1,124)
-------- --------
Net Income $ 1,083,153 $ 1,051,103
========= =========
Net Income Per Share -
Basic and Diluted $ .15 $ .15
========= =========
Weighted Average Shares -
Basic 7,233,984 6,900,252
========= =========
Diluted 7,261,059 6,947,147
========= =========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
-4-
<PAGE>
<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the THREE MONTHS ended
March 31, 1999 and 1998
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,083,153 $ 1,051,103
Non-Cash Adjustments:
Depreciation 625,615 600,672
Amortization 17,190 13,200
Loss on Sales of Assets 12,077 1,124
Changes in Operating Assets
And Liabilities -
Notes and Other Receivables ( 19,431) ( 77,631)
Prepaid Expenses ( 129,782) ( 83,162)
Accounts Payable ( 75,468) ( 84,371)
Accrued Liabilities and Deposits 53,507 99,842
Tenant Security Deposits 7,922 10,941
--------- ---------
Net Cash Provided by Operating Activities 1,574,783 1,700,460
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Investment Property
and Equipment ( 999,423) ( 481,204)
Proceeds from Sales of Assets 93,340 11,700
Additions to Land Development ( 313,077) ( 545,436)
Purchase of Securities Available for Sale (1,436,316) ( 335,855)
--------- ---------
Net Cash Used by Investing Activities (2,655,476) (1,350,795)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Mortgages and Loans 4,306,589 25,692
Principal Payments of Mortgages and Loans ( 991,183) ( 122,780)
Financing Costs on Debt ( 70,416) ( 5,166)
Proceeds from Dividend Reinvestment
and Stock Purchase Plan -0- 815,857
Proceeds from Exercise of Stock Options -0- 75,688
Dividends Paid ( 916,966) ( 734,478)
Purchase of Treasury Stock ( 971,897) -0-
--------- -------
Net Cash Provided by Financing Activities 1,356,127 54,813
--------- -------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 275,434 404,478
CASH & CASH EQUIVALENTS - BEGINNING 832,408 191,319
--------- -------
CASH & CASH EQUIVALENTS - ENDING $1,107,842 $ 595,797
========= =======
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
-5-
<PAGE>
UNITED MOBILE HOMES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
NOTE 1 - ACCOUNTING POLICY
The interim consolidated financial statements furnished herein
reflect all adjustments which were, in the opinion of management,
necessary to present fairly the financial position, results of
operations, and cash flows at March 31, 1999 and for all periods
presented. All adjustments made in the interim period were of a
normal recurring nature. Certain footnote disclosures which
would substantially duplicate the disclosures contained in the
audited consolidated financial statements and notes thereto
included in the annual report of United Mobile Homes, Inc. (the
Company) for the year ended December 31, 1998 have been omitted.
NOTE 2 - NET INCOME PER SHARE AND COMPREHENSIVE INCOME
Diluted net income per share is calculated by dividing net income
by the weighted average number of common shares outstanding plus
the weighted average number of net shares that would be issued
upon exercise of stock options pursuant to the treasury stock
method. Options in the amounts of 27,075 and 46,895 for the
three months ended March 31, 1999 and 1998, respectively, are
included in the diluted weighted average shares outstanding.
Total comprehensive income, including unrealized gains (losses)
on securities available for sale, amounted to $708,126 and
$1,358,766, for the three months ended March 31, 1999 and 1998,
respectively.
NOTE 3 - MORTGAGES PAYABLE
On February 10, 1999, the Company entered into a $4,000,000
mortgage payable to Summit Bank. The interest rate on this
mortgage is fixed at 7.0%. This mortgage loan is due on March 1,
2004. Proceeds of this mortgage were used primarily to retire
existing debt, purchase securities available for sale and
purchase Treasury Stock.
NOTE 4 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On March 15, 1999, the Company paid $1,358,735 as a dividend of
$.1875 per share to shareholders of record as of February 15,
1999.
On March 15, 1999, the Company received $441,769 from the
Dividend Reinvestment and Stock Purchase Plan. There were 47,716
new shares issued.
-6-
<PAGE>
NOTE 5 - TREASURY STOCK
During the three months ended March 31, 1999, the Company
purchased 98,000 shares of its own stock for a total cost of
$971,897. These shares are accounted for under the cost method
and are included as Treasury Stock in the Consolidated Financial
Statements.
NOTE 6 - EMPLOYEE STOCK OPTIONS
During the three months ended March 31, 1999, the following stock
option was granted:
Date of Number of Number of Option Expiration
Grant Employees Shares Price Date
1/5/99 1 25,000 $11.5625 1/5/2004
As of March 31, 1999, there were options outstanding to purchase
409,500 shares and 308,500 shares available for grant under the
Company's Stock Option Plans.
NOTE 7 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the three months ended March 31, 1999 and 1998
for interest was $404,156 and $372,121, respectively.
During the three months ended March 31, 1999 and 1998, land
development costs of $-0- and $250,000, respectively, were
transferred to investment property and equipment and placed in
service.
During the three months ended March 31, 1999 and 1998, the
Company had dividend reinvestments of $441,769 and $468,512,
respectively, which required no cash transfers.
-7-
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
United Mobile Homes, Inc. (the Company) owns and operates twenty-
four manufactured home communities. These manufactured home
communities have been generating increased gross revenues and
increased operating income.
The Company generated $1,574,783 net cash provided by operating
activities. The Company received new capital of $441,769 through
its Dividend Reinvestment and Stock Purchase Plan (DRIP). The
Company repurchased 98,000 shares of its own stock at a cost of
$971,897. The Company purchased $1,436,316 of Securities
Available for Sale. Mortgages Payable increased by $3,008,817 as
a result of a new mortgage of $4,000,000 offset by principal
repayments. Loans payable increased by $306,589 primarily as a
result of new loans for the purchase of securities available for
sale.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Income from community operations increased by $55,795 to
$2,358,294 for the quarter ended March 31, 1999 as compared to
$2,302,499 for the quarter ended March 31, 1998. This represents
a continuing trend of rising income from community operations.
The Company has been raising rental rates by approximately 4 to
5% annually. Rental and related income rose from $4,118,835 for
the quarter ended March 31, 1998 to $4,321,983 for the quarter
ended March 31, 1999. This was the result of higher rents.
Community operating expenses increased from $1,816,336 for the
quarter ended March 31, 1998 to $1,963,689 for the quarter ended
March 31, 1999. Community operating expenses increased due to an
increase in certain expenses associated with filling vacant
expansion sites (i.e. advertising, personnel, etc.). Interest
expense increased by $32,035 for the quarter ended March 31, 1999
compared to the quarter ended March 31, 1998. This was primarily
a result of an increase in the average principal balance on
borrowings outstanding. The balance outstanding of mortgages
payable at March 31, 1999 was $24,420,393 as compared to
$19,988,243 at March 31, 1998.
Funds from operations (FFO), defined as net income, excluding
gains (or losses) from sales of depreciable assets, plus
depreciation increased from $1,652,899 for the quarter ended
March 31, 1998 to $1,720,845 for the quarter ended March 31,
1999. FFO does not replace net income (determined in accordance
with generally accepted accounting principles) as a measure of
performance or net cash flows as a measure of liquidity. FFO
should be considered as a supplemental measure of operating
performance used by real estate investment trusts.
-8-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities decreased from
$1,700,460 for the three months ended March 31, 1998 to
$1,574,783 for the three months ended March 31, 1999. The
Company believes that funds generated from operations together
with the financing and refinancing of its properties will be
sufficient to meet its needs over the next several years.
YEAR 2000
The Company is currently in the process of implementing its Year
2000 compliance plan. The Company has assessed all hardware and
software for Year 2000 readiness. The Company has developed and
is currently implementing renovation plans, including hardware
replacement and software upgrades, to ensure all hardware and
software is year 2000 compliant. The Company has no significant
suppliers and vendors. Renovation and testing are scheduled to
be completed during the first half of 1999.
The Company has developed contingency plans for each of its
critical systems, which includes moving many of the Company's
operations to a manual system. There can be no assurances given
that the Year 2000 compliance plan will be completed successfully
by the Year 2000, in which event the Company could incur
additional costs to implement its contingency plans. Management
does not anticipate that such costs would be significant to the
Company. The total costs associated with the Company's Year 2000
plan are anticipated to be less than $20,000.
Successful and timely completion of the Year 2000 plan is based
on management's best estimates derived from various assumptions
of future events, which are inherently uncertain, including the
effectiveness of remediation and validation plans, and all
vendors and suppliers readiness.
-9-
<PAGE>
PART II
OTHER INFORMATION
Item 1 - Legal Proceedings - none
Item 2 - Changes in Securities - none
Item 3 - Defaults Upon Senior Securities - none
Item 4 - Submission of Matters to a Vote of Security Holders - none
Item 5 - Other Information - none
Item 6 - Exhibits and Reports on Form 8-K -
(a) Exhibits - none
(b) Reports on Form 8-K - none
-10-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
DATE: May 7, 1999 By: /s/Samuel A. Landy
Samuel A. Landy,
President
DATE: May 7, 1999 By: /s/Anna T. Chew
Anna T. Chew,
Vice President and
Chief Financial Officer
<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 PERIOD
ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,107,842
<SECURITIES> 8,813,854
<RECEIVABLES> 877,147
<ALLOWANCES> 122,992
<INVENTORY> 0
<CURRENT-ASSETS> 10,974,148
<PP&E> 64,846,177
<DEPRECIATION> 25,681,541
<TOTAL-ASSETS> 39,164,636
<CURRENT-LIABILITIES> 5,714,810
<BONDS> 24,420,393
<COMMON> 729,430
0
0
<OTHER-SE> 21,302,646
<TOTAL-LIABILITY-AND-EQUITY> 52,167,279
<SALES> 0
<TOTAL-REVENUES> 4,476,516
<CGS> 0
<TOTAL-COSTS> 1,963,689
<OTHER-EXPENSES> 1,025,518
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 404,156
<INCOME-PRETAX> 1,083,153
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,083,153
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,083,153
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
