FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
( x ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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
September 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
November 11, 1999 was 7,270,895 shares.
<PAGE>
UNITED MOBILE HOMES, INC.
for the QUARTER ENDED
SEPTEMBER 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 SEPTEMBER 30, 1999 and DECEMBER 31, 1998
September 30, December 31,
1999 1998
<S> <C> <C>
- -ASSETS-
INVESTMENT PROPERTY AND EQUIPMENT
Land $ 6,797,935 $ 6,797,935
Site and Land Improvements 46,778,829 46,198,257
Buildings and Improvements 2,694,864 2,691,426
Rental Homes and Accessories 7,600,547 5,656,441
---------- ----------
Total Investment Property 63,872,175 61,344,059
Equipment and Vehicles 2,831,978 2,643,774
---------- ----------
Total Investment Property and Equipment 66,704,153 63,987,833
Accumulated Depreciation (26,840,539) (25,091,588)
---------- ----------
Net Investment Property and Equipment 39,863,614 38,896,245
---------- ----------
OTHER ASSETS
Cash and Cash Equivalents 2,028,472 832,408
Securities Available for Sale 9,619,741 7,752,565
Notes and Other Receivables 1,127,309 734,724
Unamortized Financing Costs 262,292 157,928
Prepaid Expenses -0- 168,515
Land Development Costs 2,878,134 1,504,264
---------- ----------
Total Other Assets 15,915,948 11,150,404
---------- ----------
TOTAL ASSETS $55,779,562 $50,046,649
========== ==========
- - LIABILITIES AND SHAREHOLDERS' EQUITY -
MORTGAGES PAYABLE $30,567,507 $21,411,576
---------- ----------
OTHER LIABILITIES
Accounts Payable 733,788 152,011
Loans Payable 81,240 3,368,512
Accrued Liabilities and Deposits 1,593,326 1,495,653
Tenant Security Deposits 465,728 406,084
---------- ----------
Total Other Liabilities 2,874,082 5,422,260
---------- ----------
TOTAL LIABILITIES 33,441,589 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 740,772 724,658
Additional Paid-In Capital 24,862,189 23,427,783
Accumulated Other Comprehensive Loss (691,895) (271,835)
Accumulated Deficit (1,464,358) (667,793)
Treasury Stock, at cost (113,000 shares
at September 30,1999) (1,108,735) -0-
---------- ----------
Total Shareholders' Equity 22,337,973 23,212,813
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $55,779,562 $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 NINE MONTHS ended
SEPTEMBER 30, 1999 and 1998
THREE MONTHS NINE MONTHS
9/30/99 9/30/98 9/30/99 9/30/98
<S> <C> <C> <C> <C>
Rental and Related Income $ 4,500,117 $ 4,225,218 $13,220,273 $12,523,728
Community Operating Expense 2,083,270 2,000,636 6,107,483 5,647,830
--------- --------- --------- ---------
Income from Community
Operations 2,416,847 2,224,582 7,112,790 6,875,898
General and Administrative 429,294 423,958 1,253,393 1,143,636
Interest Expense 496,413 377,608 1,335,886 1,131,737
Investment Income (254,874) (153,425) (639,445) (327,533)
Depreciation 578,608 591,802 1,804,546 1,793,537
Other Expenses 26,860 29,895 67,510 71,865
-------- ------- --------- ---------
Income before (Loss) Gains
On Sales of Assets 1,140,546 954,744 3,290,900 3,062,656
(Loss)Gain on Sales of Assets (21,335) 687 (16,883) 10,615
--------- ------- --------- ---------
Net Income $1,119,211 $955,431 $3,274,017 $3,073,271
========= ======= ========= =========
Net Income Per Share -
Basic $ .15 $ .13 $ .45 $ .44
========= ======= ========= =========
Diluted $ .15 $ .13 $ .45 $ .44
========= ======= ========= =========
Weighted Average Shares -
Basic 7,262,601 7,156,058 7,237,903 6,991,239
========= ========= ========= =========
Diluted 7,276,201 7,158,227 7,259,278 7,016,236
========= ========= ========= =========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
-4-
<PAGE>
<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the NINE MONTHS ended
September 30, 1999 and 1998
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 3,274,017 $ 3,073,271
Non-Cash Adjustments:
Depreciation 1,804,546 1,793,537
Amortization 67,510 71,865
Gain on Sales of Securities Available for Sale (53,473) -0-
(Loss) Gain of Sales of Investment
Property and Equipment 16,883 (10,615)
Changes in Operating Assets
And Liabilities -
Notes and Other Receivables (392,585) (226,258)
Prepaid Expenses 168,515 109,415
Accounts Payable 581,777 (103,464)
Accrued Liabilities and Deposits 97,673 122,687
Tenant Security Deposits 59,644 18,566
--------- ----------
Net Cash Provided by Operating Activities 5,624,507 4,849,004
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Investment Property
and Equipment (3,051,732) (1,211,312)
Proceeds from Sales of Assets 262,934 152,978
Additions to Land Development (1,373,870) (1,994,818)
Purchase of Securities Available for Sale (2,651,686) (2,356,357)
Proceeds from Sales of Securities Available
for Sale 417,923 -0-
--------- ---------
Net Cash Used by Investing Activities (6,396,431) (5,409,509)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Mortgages and Loans 10,500,000 3,600,000
Principal Payments of Mortgages and Loans (4,631,341) (2,623,723)
Financing Costs on Debt (171,874) (83,774)
Proceeds from Dividend Reinvestment
And Stock Purchase Plan -0- 1,870,075
Proceeds from Exercise of Stock Options 263,750 165,000
Dividends Paid (2,883,812) (2,448,334)
Purchase of Treasury Stock (1,108,735) -0-
--------- ---------
Net Cash Provided by Financing Activities 1,967,988 479,244
--------- ---------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 1,196,064 (81,261)
CASH & CASH EQUIVALENTS - BEGINNING 832,408 191,319
--------- -------
CASH & CASH EQUIVALENTS - ENDING $2,028,472 $110,058
========= =======
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
-5-
<PAGE>
UNITED MOBILE HOMES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 September 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 13,600 and 21,375 for the
three and nine months ended September 30, 1999, respectively, and
2,169 and 24,997 for the three and nine months ended September
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 $539,364 and
$2,853,957, for the three and nine months ended September 30,
1999, respectively, and $668,730 and $2,754,010 for the three and
nine months ended September 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.
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. Proceeds from these mortgages were
used primarily to retire existing debt, purchase securities
available for sale and fund land development.
-6-
<PAGE>
NOTE 4 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On September 15, 1999, the Company paid $1,359,730 as a dividend
of $.1875 per share to shareholders of record as of August 16,
1999. The total dividends paid for the nine months ended
September 30, 1999 amounted to $4,070,582.
On September 15, 1999, the Company received $374,498 from the
Dividend Reinvestment and Stock Purchase Plan. There were 42,824
new shares issued resulting in 7,294,719 shares outstanding. The
total amount received from the Dividend Reinvestment Plan for the
nine months ended September 30, 1999 amounted to $1,186,770.
NOTE 5 - TREASURY STOCK
During the nine months ended September 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 nine months ended September 30, 1999, the following
stock options were 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
9/28/99 8 36,000 $ 8.8125 9/28/2004
During the nine months ended September 30, 1999, two employees
exercised their stock options and purchased 30,000 shares for
total proceeds of $263,750.
As of September 30, 1999, there were options outstanding to
purchase 415,500 shares and 272,500 shares available for grant
under the Company's Stock Option Plans.
NOTE 7 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the nine months ended September 30, 1999 and
1998 for interest was $1,335,886 and $1,239,937, respectively.
During the nine months ended September 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 nine months ended September 30, 1999 and 1998, the
Company had dividend reinvestments of $1,186,770 and $1,406,650,
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 $5,624,507 net cash provided by operating
activities. The Company received new capital of $1,186,770
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 $2,651,686 of Securities
Available for Sale. Mortgages Payable increased by $9,155,931 as
a result of new mortgages of $10,500,000 offset by principal
repayments. Loans payable decreased by $3,287,272 primarily as a
result of repayments.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Income from community operations increased by $192,265 to
$2,416,847 for the quarter ended September 30, 1999 as compared
to $2,224,582 for the quarter ended September 30, 1998. Income
from community operations increased by $236,892 to $7,112,790 for
the nine months ended September 30, 1999 as compared to
$6,875,898 for the nine months ended September 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 $4,225,218 for the quarter ended September 30, 1998 to
$4,500,117 for the quarter ended September 30, 1999. Rental and
related income rose from $12,523,728 for the nine months ended
September 30, 1998 to $13,220,273 for the nine months ended
September 30, 1999. This was the result of higher rents.
Community operating expenses increased from $2,000,636 for the
quarter ended September 30, 1998 to $2,083,270 for the quarter
ended September 30, 1999. Community operating expenses increased
from $5,647,830 for the nine months ended September 30, 1998 to
$6,107,483 for the nine months ended September 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 remained relatively stable for the quarter ended
September 30, 1999 compared to the quarter ended September 30,
1998. General and Administrative expenses increased from
$1,143,636 for the nine months ended September 30, 1998 to
$1,253,393 for the nine months ended September 30, 1999. This
was primarily due to an increase in personnel. Interest expense
increased by $118,805 for the quarter ended September 30, 1999
compared to the quarter ended September 30, 1998 and by $204,149
for the nine months ended September 30, 1999 compared to the nine
months ended September 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
September 30, 1999 was $30,567,507 as compared to $21,548,840 at
September 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 $1,719,154 for the quarter ended
September 30, 1999 and $1,546,546 for the quarter ended September
30, 1998. FFO amounted to $5,095,446 for the nine months ended
September 30, 1999 and $4,856,193 for the nine months ended
September 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
$4,849,004 for the nine months ended September 30, 1998 to
$5,624,507 for the nine months ended September 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 completing its Year
2000 compliance plan. The Company has assessed all hardware and
software for Year 2000 readiness. The Company has substantially
completed its renovation and testing 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.
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: November 11, 1999 By: /s/Samuel A. Landy
Samuel A. Landy,
President
DATE: November 11, 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
ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,028,472
<SECURITIES> 9,619,741
<RECEIVABLES> 1,229,507
<ALLOWANCES> 102,198
<INVENTORY> 0
<CURRENT-ASSETS> 12,775,522
<PP&E> 66,704,153
<DEPRECIATION> 26,840,539
<TOTAL-ASSETS> 55,779,562
<CURRENT-LIABILITIES> 2,874,082
<BONDS> 30,567,507
0
0
<COMMON> 740,772
<OTHER-SE> 21,597,201
<TOTAL-LIABILITY-AND-EQUITY> 55,779,562
<SALES> 0
<TOTAL-REVENUES> 13,842,835
<CGS> 0
<TOTAL-COSTS> 6,107,483
<OTHER-EXPENSES> 3,125,449
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,335,886
<INCOME-PRETAX> 3,274,017
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,274,017
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,274,017
<EPS-BASIC> .45
<EPS-DILUTED> .45
</TABLE>
