FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
( x ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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
June 30, 1999 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
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
August 11, 1999 was 7,251,895 shares.
<PAGE>
UNITED MOBILE HOMES, INC.
for the QUARTER ENDED
JUNE 30, 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 JUNE 30, 1999 and DECEMBER 31, 1998
June 30, December 31,
1999 1998
<S> <C> <C>
- -ASSETS-
INVESTMENT PROPERTY AND EQUIPMENT
Land $ 6,797,935 $ 6,797,935
Site and Land Improvements 46,621,802 46,198,257
Buildings and Improvements 2,694,864 2,691,426
Rental Homes and Accessories 7,442,332 5,656,441
---------- ----------
Total Investment Property 63,556,933 61,344,059
Equipment and Vehicles 2,718,161 2,643,774
---------- ----------
Total Investment Property and Equipment 66,275,094 63,987,833
Accumulated Depreciation (26,260,853) (25,091,588)
---------- ----------
Net Investment Property and Equipment 40,014,241 38,896,245
---------- ----------
OTHER ASSETS
Cash and Cash Equivalents 970,239 832,408
Securities Available for Sale 9,838,343 7,752,565
Notes and Other Receivables 1,013,775 734,724
Unamortized Financing Costs 207,394 157,928
Prepaid Expenses -0- 168,515
Land Development Costs 2,149,088 1,504,264
---------- ----------
Total Other Assets 14,178,839 11,150,404
---------- ----------
TOTAL ASSETS $ 54,193,080 $ 50,046,649
========== ==========
- - LIABILITIES AND SHAREHOLDERS' EQUITY -
MORTGAGES PAYABLE $ 24,258,901 $ 21,411,576
---------- ----------
OTHER LIABILITIES
Accounts Payable 188,523 152,011
Loans Payable 4,945,043 3,368,512
Accrued Liabilities and Deposits 1,569,202 1,495,653
Tenant Security Deposits 447,570 406,084
---------- ----------
Total Other Liabilities 7,150,338 5,422,260
---------- ----------
TOTAL LIABILITIES 31,409,239 26,833,836
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock - $.10 par value per share
10,000,000 shares authorized, 7,364,895
and 7,246,580 issued and 7,251,895 and
7,246,580 outstanding, respectively 736,490 724,658
Additional Paid-In Capital 24,491,973 23,427,783
Accumulated Other Comprehensive Loss (112,048) (271,835)
Accumulated Deficit (1,223,839) (667,793)
Treasury Stock, at cost (113,000 shares at
June 30,1999) (1,108,735) -0-
---------- ----------
Total Shareholders' Equity 22,783,841 23,212,813
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 54,193,080 $ 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 AND SIX MONTHS ended
JUNE 30, 1999 and 1998
THREE MONTHS SIX MONTHS
6/30/99 6/30/98 6/30/99 6/30/98
<S> <C> <C> <C> <C>
Rental and Related Income $ 4,451,646 $ 4,179,675 $ 8,773,629 $ 8,298,510
Community Operating Expense 2,060,524 1,830,858 4,024,213 3,647,194
--------- --------- --------- ---------
Income from Community
Operations 2,391,122 2,348,817 4,749,416 4,651,316
General and Administrative 441,386 363,504 824,099 719,678
Interest Expense 435,317 382,008 839,473 754,129
Interest Income (164,488) (82,213) (331,098) (174,108)
Depreciation 600,323 601,063 1,225,938 1,201,735
Other Expenses 23,460 28,770 40,650 41,970
--------- --------- --------- ---------
Income before Gains
On Sales of Assets 1,055,124 1,055,685 2,150,354 2,107,912
Gains on Sales of Assets 16,529 11,052 4,452 9,928
--------- --------- --------- ---------
Net Income $1,071,653 $1,066,737 $2,154,806 $2,117,840
========= ========= ========= =========
Net Income Per Share -
Basic $ .15 $ .16 $ .30 $ .31
========= ========= ========= =========
Diluted $ .15 $ .15 $ .30 $ .30
========= ========= ========= =========
Weighted Average Shares -
Basic 7,210,196 7,029,651 7,225,789 6,918,006
========= ========= ========= =========
Diluted 7,223,525 7,058,715 7,244,232 6,955,017
========= ========= ========= =========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
-4-
<PAGE>
<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the SIX MONTHS ended
June 30, 1999 and 1998
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,154,806 $ 2,117,840
Non-Cash Adjustments:
Depreciation 1,225,938 1,201,735
Amortization 40,650 41,970
Gain on Sales of Securities Available for Sale (53,473) (9,928)
Gain of Sales of Investment Property
and Equipment (4,452) -0-
Changes in Operating Assets
And Liabilities -
Notes and Other Receivables (279,051) (88,431)
Prepaid Expenses 168,515 109,415
Accounts Payable 36,512 (119,282)
Accrued Liabilities and Deposits 73,549 3,668
Tenant Security Deposits 41,486 26,908
--------- ---------
Net Cash Provided by Operating Activities 3,404,480 3,283,895
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Investment Property and Equipment (2,533,022) (811,083)
Proceeds from Sales of Assets 193,540 144,769
Additions to Land Development (644,824) (967,050)
Purchase of Securities Available for Sale (2,290,441) (1,908,443)
Proceeds from Sales of Securities Available
for Sale 417,923 -0-
--------- ---------
Net Cash Used by Investing Activities (4,856,824) (3,541,807)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Mortgages and Loans 5,576,531 3,600,000
Principal Payments of Mortgages and Loans (1,152,675) (2,486,332)
Financing Costs on Debt (90,116) (83,774)
Proceeds from Dividend Reinvestment
And Stock Purchase Plan -0- 1,870,075
Proceeds from Exercise of Stock Options 263,750 75,688
Dividends Paid (1,898,580) (1,566,656)
Purchase of Treasury Stock (1,108,735) -0-
--------- ---------
Net Cash Provided by Financing Activities 1,590,175 1,409,001
--------- ---------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 137,831 1,151,089
CASH & CASH EQUIVALENTS - BEGINNING 832,408 191,319
--------- ---------
CASH & CASH EQUIVALENTS - ENDING $ 970,239 $ 1,342,408
========= =========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
-5-
<PAGE>
UNITED MOBILE HOMES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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 June 30, 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 13,329 and 18,443 for the
three and six months ended June 30, 1999, respectively, and
29,064 and 37,011 for the three and six months ended June 30,
1998, are included in the diluted weighted average shares
outstanding.
Total comprehensive income, including unrealized gains (losses)
on securities available for sale, amounted to $1,606,467 and
$2,314,593, for the three and six months ended June 30, 1999 and
1998, respectively, and $726,514 and $2,085,280 for the three and
six months ended June 30, 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 June 15, 1999, the Company paid $1,352,117 as a dividend of
$.1875 per share to shareholders of record as of May 15, 1999.
The total dividends paid for the six months ended June 30, 1999
amounted to $2,710,852.
On June 15, 1999, the Company received $370,503 from the Dividend
Reinvestment and Stock Purchase Plan. There were 40,599 new
shares issued resulting in 7,251,895 shares outstanding. The
total amount received from the Dividend Reinvestment Plan for the
six months ended June 30, 1999 amounted to $812,272.
-6-
<PAGE>
NOTE 5 - TREASURY STOCK
During the six months ended June 30, 1999, the Company purchased
113,000 shares of its own stock for a total cost of $1,108,735.
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 six months ended June 30, 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
During the six months ended June 30, 1999, two employees
exercised their stock options and purchased 30,000 shares for
total proceeds of $263,750.
As of June 30, 1999, there were options outstanding to purchase
379,500 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 six months ended June 30, 1999 and 1998 for
interest was $839,473 and $814,729, respectively.
During the six months ended June 30, 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 six months ended June 30, 1999 and 1998, the Company
had dividend reinvestments of $812,272 and $947,631,
respectively, which required no cash transfers.
NOTE 8 - SUBSEQUENT EVENTS
On July 28, 1999, the Company entered into a $4,000,000 mortgage
and a $2,500,000 mortgage with First Union Bank. These mortgages
bear interest at an effective rate of 7.86%. These mortgages
mature on August 2, 2004.
-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 $3,404,480 net cash provided by operating
activities. The Company received new capital of $812,272 through
its Dividend Reinvestment and Stock Purchase Plan (DRIP). The
Company repurchased 113,000 shares of its own stock at a cost of
$1,108,735. The Company purchased $2,290,441 of Securities
Available for Sale. Mortgages Payable increased by $2,847,325 as
a result of a new mortgage of $4,000,000 offset by principal
repayments. Loans payable increased by $1,576,531 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 $42,305 to
$2,391,122 for the quarter ended June 30, 1999 as compared to
$2,348,817 for the quarter ended June 30, 1998. Income from
community operations increased by $98,100 to $4,749,416 for the
six months ended June 30, 1999 as compared to $4,651,316 for the
six months ended June 30, 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 $4,179,675 for the quarter
ended June 30, 1998 to $4,451,646 for the quarter ended June 30,
1999. Rental and related income rose from $8,298,510 for the six
months ended June 30, 1998 to $8,773,629 for the six months ended
June 30, 1999. This was the result of higher rents. Community
operating expenses increased from $1,830,858 for the quarter
ended June 30, 1998 to $2,060,524 for the quarter ended June 30,
1999. Community operating expenses increased from $3,647,194 for
the six months ended June 30, 1998 to $4,024,213 for the six
months ended June 30, 1999. Community operating expenses
increased due to an increase in certain expenses associated with
filling vacant expansion sites (i.e. advertising, personnel,
etc.). General and administrative expenses increased from
$363,504 for the quarter ended June 30, 1998 to $441,386 for the
quarter ended June 30, 1999. General and Administrative expenses
increased from $719,678 for the six months ended June 30, 1998 to
$824,099 for the six months ended June 30, 1999. This was
primarily due to an increase in personnel. Interest expense
increased by $53,309 for the quarter ended June 30, 1999 compared
to the quarter ended June 30, 1998 and by $85,344 for the six
months ended June 30, 1999 compared to the six months ended June
30, 1998. This was primarily a result of an increase in the
average principal balance on borrowings outstanding. The balance
outstanding of mortgages payable at June 30, 1999 was $24,258,901
as compared to $21,677,592 at June 30, 1998.
-8-
<PAGE>
Funds from operations (FFO), defined as net income, excluding
gains (or losses) from sales of depreciable assets, plus
depreciation amounted to $1,655,447 for the quarter ended June
30, 1999 and $1,656,748 for the quarter ended June 30, 1998. FFO
amounted to $3,376,292 for the six months ended June 30, 1999 and
$3,309,647 for the six months ended June 30, 1998. FFO does not
replace net income (determined in accordance with generally
accepted accounting principles) as a measure of performance or
net cash flows as a measure of liquidity. FFO should be
considered as a supplemental measure of operating performance
used by real estate investment trusts.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased from
$3,283,895 for the six months ended June 30, 1998 to $3,404,480
for the six months ended June 30, 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 by the third quarter 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 -
The annual meeting of shareholders was held on May 27, 1999 to elect a
Board of Directors for the ensuing year and to approve the selection
of independent auditors. Proxies for the meeting were solicited
pursuant to Regulation 14 under the Securities and Exchange Act of
1934.
Item 5 - Other Information - none
Item 6 - Exhibits and Reports on Form 8-K -
(a) Exhibits - none
(b) Reports on Form 8-K - none
-10-
<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: August 12, 1999 By:/s/Samuel A. Landy
Samuel A. Landy,
President
DATE: August 12, 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 JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 970,239
<SECURITIES> 9,838,343
<RECEIVABLES> 1,117,378
<ALLOWANCES> 103,603
<INVENTORY> 0
<CURRENT-ASSETS> 11,822,357
<PP&E> 66,275,094
<DEPRECIATION> 26,260,853
<TOTAL-ASSETS> 54,193,080
<CURRENT-LIABILITIES> 7,150,338
<BONDS> 24,258,901
<COMMON> 736,490
0
0
<OTHER-SE> 22,047,351
<TOTAL-LIABILITY-AND-EQUITY> 54,193,080
<SALES> 0
<TOTAL-REVENUES> 9,109,179
<CGS> 0
<TOTAL-COSTS> 4,024,213
<OTHER-EXPENSES> 2,090,687
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 839,473
<INCOME-PRETAX> 2,154,806
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,154,806
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,154,806
<EPS-BASIC> .30
<EPS-DILUTED> .30
</TABLE>
