FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
( x ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
( ) 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, 2000 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)
Juniper Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, NJ 07728
Registrant's telephone number, including area code (732) 577-9997
125 Wyckoff Road, Eatontown, New Jersey 07724
(Former name, former address and former fiscal year, if changedsince 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 4, 2000 was 7,351,894 shares.
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UNITED MOBILE HOMES, INC.
for the QUARTER ENDED
JUNE 30, 2000
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
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[CAPTION]
<TABLE>
UNITED MOBILE HOMES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2000 and DECEMBER 31, 1999
June 30, December 31,
2000 1999
<S> <C> <C>
-ASSETS-
INVESTMENT PROPERTY AND EQUIPMENT
Land $ 6,779,335 $ 6,779,335
Site and Land Improvements 49,481,232 49,256,596
Buildings and Improvements 2,702,276 2,697,313
Rental Homes and Accessories 8,220,137 7,888,924
---------- ----------
Total Investment Property 67,182,980 66,622,168
Equipment and Vehicles 3,040,430 2,969,556
---------- ----------
Total Investment Property and Equipment 70,223,410 69,591,724
Accumulated Depreciation (28,654,807) (27,429,461)
---------- ----------
Net Investment Property and Equipment 41,568,603 42,162,263
---------- ----------
OTHER ASSETS
Cash and Cash Equivalents 766,485 724,650
Securities Available for Sale 15,036,620 12,794,514
Notes and Other Receivables 1,454,971 1,082,126
Unamortized Financing Costs 223,848 252,648
Prepaid Expenses 156,973 121,521
Land Development Costs 2,585,635 1,437,590
---------- ----------
Total Other Assets 20,224,532 16,413,049
---------- ----------
TOTAL ASSETS $ 61,793,135 $ 58,575,312
========== ==========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
MORTGAGES PAYABLE $ 30,012,291 $ 30,419,153
---------- ----------
OTHER LIABILITIES
Accounts Payable 290,959 105,215
Loans Payable 6,692,498 4,674,385
Accrued Liabilities and Deposits 1,612,034 1,493,897
Tenant Security Deposits 518,339 491,355
---------- ----------
Total Other Liabilities 9,113,830 6,764,852
---------- ----------
TOTAL LIABILITIES 39,126,121 37,184,005
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock - $.10 par value per share
10,000,000 shares authorized, 7,597,794
and 7,483,196 shares issued and
7,351,894 and 7,312,696 shares
outstanding, respectively 759,779 748,320
Additional Paid-In Capital 25,426,855 24,549,267
Accumulated Other Comprehensive Loss ( 638,038) ( 1,662,178)
Accumulated Deficit ( 710,467) ( 667,793)
Treasury Stock, at cost (245,900 and
170,500 shares, respectively) (2,171,115) ( 1,576,309)
---------- ----------
Total Shareholders' Equity 22,667,014 21,391,307
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $61,793,135 $ 58,575,312
========== ==========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
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[CAPTION]
<TABLE>
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the THREE AND SIX MONTHS ended
JUNE 30, 2000 and 1999
THREE MONTHS SIX MONTHS
6/30/00 6/30/99 6/30/00 6/30/99
<S> <C> <C> <C> <C>
Rental and Related Income $ 4,630,873 $ 4,451,646 $ 9,242,455 $ 8,773,629
Community Operating Expense 1,995,382 2,060,524 3,967,900 4,024,213
--------- --------- --------- ---------
Income from Community
Operations 2,635,491 2,391,122 5,274,555 4,749,416
General and Administrative 493,422 441,386 947,637 824,099
Interest Expense 652,320 435,317 1,289,206 839,473
Investment Income (380,277) (164,488) (927,021) (331,098)
Depreciation 619,512 600,323 1,232,643 1,225,938
Other Expenses 21,900 23,460 43,800 40,650
--------- --------- --------- ---------
Income before Gains on Sales
of Assets 1,228,614 1,055,124 2,688,290 2,150,354
Gain (Loss) on Sales of Assets (8,157) 16,529 16,261 4,452
--------- --------- --------- ---------
Net Income $1,220,457 $1,071,653 $2,704,551 $2,154,806
========= ========= ========= =========
Net Income Per Share -
Basic and Diluted $ .17 $ .15 $ .37 $ .30
========= ========= ========= =========
Weighted Average Shares -
Basic 7,343,622 7,210,196 7,330,368 7,225,789
========= ========= ========= =========
Diluted 7,343,622 7,223,525 7,330,368 7,244,232
========= ========= ========= =========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
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UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the SIX MONTHS ended
June 30, 2000 and 1999
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,704,551 $ 2,154,806
Non-Cash Adjustments:
Depreciation 1,232,643 1,225,938
Amortization 43,800 40,650
Gain on Sales of Securities Available for Sale (143,414) (53,473)
Gain on Sales of Investment Property and Equipment (16,261) (4,452)
Changes in Operating Assets
And Liabilities -
Notes and Other Receivables (372,845) (279,051)
Prepaid Expenses (35,452) 168,515
Accounts Payable 185,744 36,512
Accrued Liabilities and Deposits 118,137 73,549
Tenant Security Deposits 26,984 41,486
--------- ---------
Net Cash Provided by Operating Activities 3,743,887 3,404,480
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Investment Property
and Equipment (673,955) (2,533,022)
Proceeds from Sales of Assets 51,233 193,540
Additions to Land Development (1,148,045) (644,824)
Purchase of Securities Available for Sale (1,576,152) (2,290,441)
Proceeds from Sales of Securities Available for Sale 501,600 417,923
--------- ---------
Net Cash Used by Investing Activities (2,845,319) (4,856,824)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Mortgages and Loans 2,018,113 5,576,531
Principal Payments of Mortgages and Loans (406,862) (1,152,675)
Financing Costs on Debt (15,000) (90,116)
Proceeds from Exercise of Stock Options -0- 263,750
Dividends Paid (1,858,178) (1,898,580)
Purchase of Treasury Stock (594,806) (1,108,735)
------- ---------
Net Cash (Used) Provided by Financing Activiites (856,733) 1,590,175
------- ---------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 41,835 137,831
CASH & CASH EQUIVALENTS - BEGINNING 724,650 832,408
------- -------
CASH & CASH EQUIVALENTS - ENDING $ 766,485 $ 970,239
======= =======
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
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UNITED MOBILE HOMES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(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, 2000 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, 1999 have been omitted.
NOTE 2 - NET INCOME PER SHARE AND COMPREHENSIVE INCOME
Basic net income per share is calculated by dividing net income
by the weighted average shares outstanding for the period.
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 are
included in the diluted weighted average shares outstanding.
Options for 421,500 shares were excluded for the three and six
months ended June 30, 2000 since they were anti-dilutive.
Total comprehensive income, including unrealized gains (losses)
on securities available for sale, amounted to $2,151,948 and
$3,728,691, for the three and six months ended June 30, 2000,
respectively and $1,606,467 and $2,314,593 for the three and six
months ended June 30, 1999, respectively.
NOTE 3 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On June 15, 2000, the Company paid $1,376,095 as a dividend of
$.1875 per share to shareholders of record as of May 15, 2000.
The total dividends paid for the six months ended June 30, 2000
amounted to $2,747,225.
On June 15, 2000, the Company received $467,580 from the Dividend
Reinvestment and Stock Purchase Plan. There were 58,430 new
shares issued under the Plan. The total amount received from the
Dividend Reinvestment and Stock Purchase Plan for the six months
ended June 30, 2000 amounted to $889,047.
NOTE 4 - TREASURY STOCK
During the six months ended June 30, 2000, the Company purchased
75,400 shares of its own stock for a total cost of $594,806.
These shares are accounted for under the cost method and are
included as Treasury Stock in the Consolidated Financial
Statements.
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NOTE 5 - EMPLOYEE STOCK OPTIONS
During the six months ended June 30, 2000, the following stock
option was granted:
Date of Number of Number of Option Expiration
Grant Employees Shares Price Date
1/6/00 1 25,000 $9.0625 1/6/2005
The Company also extended, for an additional five years, stock
options for a total of 75,000 shares which expired on January 5,
2000.
As of June 30, 2000, there were options outstanding to purchase
421,500 shares and 247,500 shares available for grant under the
Company's Stock Option Plans.
NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the six months ended June 30, 2000 and 1999 for
interest was $1,366,206 and $907,073, respectively. Interest
cost capitalized to Land Development was $77,000 and $67,600 for
the six months ended June 30, 2000 and 1999, respectively.
During the six months ended June 30, 2000 and 1999, the Company
had dividend reinvestments of $889,047 and $812,272,
respectively, which required no cash transfers.
NOTE 7 - SUBSEQUENT EVENTS
On July 27, 2000, the Company entered into a $4,000,000 mortgage
with First Union Bank, of which $2,500,000 was taken down. This
mortgage bears interest at LIBOR plus 155 points. This mortgage
matures on August 1, 2002 but may be converted to a fixed rate
mortgage loan for an additional five years.
NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS
In March 2000, the Financial Accounting Standards Board (FASB)
issued Interpretation No. 44 "Accounting for Certain Transactions
Involving Stock Compensation, an Interpretation of APB Opinion
No. 25". The interpretation clarifies certain issues with
respect to the application of Accounting Principles Board Opinion
No. 25 "Accounting for Stock Issued to Employees" (APB Opinion
No. 25). The interpretation results in a number of changes in
the application of APB Opinion No. 25 including, the accounting
for modifications to equity awards as well as extending APB
Opinion No. 25 accounting treatment to options granted to outside
directors for their services as directors. The provisions of the
interpretation were effective July 1, 2000 and apply
prospectively, except for certain modifications to equity awards
made after December 15, 1998. The initial adoption of the
interpretation did not have a significant impact on the Company's
financial statements.
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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 $3,743,887 net cash provided by operating
activities. The Company received new capital of $889,047 through
its Dividend Reinvestment and Stock Purchase Plan (DRIP). The
Company repurchased 75,400 shares of its own stock at a cost of
$594,806. The Company purchased $1,576,152 of securities of
other real estate investment trusts. Mortgages Payable decreased
by $406,862 as a result of principal repayments. Loans payable
increased by $2,018,113 primarily as a result of additional
borrowings to purchase of Securities Available for Sale.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Income from community operations increased by $244,369 to
$2,635,491 for the quarter ended June 30, 2000 as compared to
$2,391,122 for the quarter ended June 30, 1999. Income from
community operations increased by $525,139 to $5,274,555 for the
six months ended June 30, 2000 as compared to $4,749,416 for the
six months ended June 30, 1999. 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 $4,451,646 for the quarter
ended June 30, 1999 to $4,630,873 for the quarter ended June 30,
2000. Rental and related income increased from $8,773,629 for
the six months ended June 30, 1999 to $9,242,455 for the six
months ended June 30, 2000. This was the result of higher rents
and increased occupancy. Community operating expenses remained
relatively stable for the quarter and six months ended June 30,
2000 as compared to the quarter and six months ended June 30,
1999. General and administrative expenses increased from
$441,386 for the quarter ended June 30, 1999 to $493,422 for the
quarter ended June 30, 2000. General and administrative expenses
increased from $824,099 for the six months ended June 30, 1999 to
$947,637 for the six months ended June 30, 2000. This was due to
an increase in personnel costs. Interest expense increased by
$217,003 for the quarter ended June 30, 2000 as compared to the
quarter ended June 30, 1999 and by $449,733 for the six months
ended June 30, 2000 as compared to the six months ended June 30,
1999. 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, 2000 was $30,012,291
as compared to $24,258,901 at June 30, 1999. Investment income
increased from $164,488 for the quarter ended June 30, 1999 to
$380,277 for the quarter ended June 30, 2000 and from $331,098
for the six months ended June 30, 1999 to $927,021 for the six
months ended June 30, 2000. This was due primarily to purchases
of Securities Available for Sale during 1999 and 2000. Included
in Investment income is a realized gain of $143,414 on the sale
of $358,186 of Securities Available for Sale.
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Funds from operations (FFO), defined as net income, excluding
gains (or losses) from sales of depreciable assets, plus
depreciation increased from $1,655,447 for the quarter ended June
30, 1999 to $1,848,126 for the quarter ended June 30, 2000. FFO
increased from $3,376,292 for the six months ended June 30, 1999
to $3,920,933 for the six months ended June 30, 2000. 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
$3,404,480 for the six months ended June 30, 1999 to $3,743,887
for the six months ended June 30, 2000. 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.
IMPACT OF YEAR 2000
The Company has experienced no significant impact of its
operations or its ability to accurately process financial
information due to a Year 2000 related issue. In addition, the
Company has no information that indicates a significant tenant,
vendor or service provider may be unable to meet their rental
obligations, sell goods or provide services to the Company
because of Year 2000 issues. The Company will continue to
monitor its operations for year 2000 related issues.
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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 June 1, 2000 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
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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 10, 2000 By:/s/ Samuel A. Landy
Samuel A. Landy,
President
DATE: August 10, 2000 By:/s/ Anna T. Chew
Anna T. Chew,
Vice President and
Chief Financial Officer
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