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, 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
September 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 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 6, 2000 was 7,346,862 shares.
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UNITED MOBILE HOMES, INC.
for the QUARTER ENDED
SEPTEMBER 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......... 6-8
Item 2 - Management Discussion and Analysis of
Financial Conditions and Results of Operations..... 9-10
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................................. 11
SIGNATURES........................................ 12
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<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2000 and DECEMBER 31, 1999
September 30, December 31,
2000 1999
<S> <C> <C>
-ASSETS-
INVESTMENT PROPERTY AND EQUIPMENT
Land $ 6,779,335 $ 6,779,335
Site and Land Improvements 49,652,369 49,256,596
Buildings and Improvements 2,702,802 2,697,313
Rental Homes and Accessories 8,276,839 7,888,924
---------- ----------
Total Investment Property 67,411,345 66,622,168
Equipment and Vehicles 3,167,558 2,969,556
---------- ----------
Total Investment Property and Equipment 70,578,903 69,591,724
Accumulated Depreciation (29,262,047) (27,429,461)
---------- ----------
Net Investment Property and Equipment 41,316,856 42,162,263
---------- ----------
OTHER ASSETS
Cash and Cash Equivalents 537,638 724,650
Securities Available for Sale 15,762,832 12,794,514
Notes and Other Receivables 1,582,662 1,082,126
Unamortized Financing Costs 232,279 252,648
Prepaid Expenses 457,402 121,521
Land Development Costs 2,731,073 1,437,590
---------- ----------
Total Other Assets 21,303,886 16,413,049
---------- ----------
TOTAL ASSETS $ 62,620,742 $ 58,575,312
========== ==========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
MORTGAGES PAYABLE $ 32,294,464 $ 30,419,153
---------- ----------
OTHER LIABILITIES
Accounts Payable 585,779 105,215
Loans Payable 4,609,764 4,674,385
Accrued Liabilities and Deposits 1,553,000 1,493,897
Tenant Security Deposits 503,950 491,355
--------- ---------
Total Other Liabilities 7,252,493 6,764,852
--------- ---------
TOTAL LIABILITIES 39,546,957 37,184,005
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock - $.10 par value per share
10,000,000 shares authorized, 7,653,762
and 7,483,196 shares issued and 7,346,862
and 7,312,696 shares outtstanding,
respectively 765,376 748,320
Additional Paid-In Capital 25,903,421 24,549,267
Accumulated Other Comprehensive Loss (121,834) (1,662,178)
Accumulated Deficit (759,609) (667,793)
Treasury Stock, at cost (306,900 and
170,500 shares, respectively) (2,713,569) (1,576,309)
--------- ---------
Total Shareholders' Equity 23,073,785 21,391,307
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 62,620,742 $ 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 NINE MONTHS ended
SEPTEMBER 30, 2000 and 1999
THREE MONTHS NINE MONTHS
9/30/00 9/30/99 9/30/00 9/30/99
<S> <C> <C> <C> <C>
Rental and Related Income $ 4,672,427 $ 4,500,117 $13,914,882 $13,220,273
Community Operating Expense 1,950,648 2,083,270 5,918,548 6,107,483
--------- --------- --------- ---------
Income from Community
Operations 2,721,779 2,416,847 7,996,334 7,112,790
General and Administrative 481,961 429,294 1,429,598 1,253,393
Interest Expense 736,860 496,413 2,026,066 1,335,886
Investment Income (481,523) (254,874) (1,408,544) (639,445)
Depreciation 613,131 578,608 1,845,774 1,804,546
Other Expenses 23,000 26,860 66,800 67,510
Income before Gains on
Sales of Assets 1,348,350 1,140,546 4,036,640 3,290,900
Gain (Loss) on Sales of Assets (648) (21,335) 15,613 (16,883)
--------- --------- --------- ---------
Net Income $1,347,702 $1,119,211 $4,052,253 $3,274,017
========= ========= ========= =========
Net Income Per Share -
Basic and Diluted $ .18 $ .15 $ .55 $ .45
========= ========= ========= =========
Weighted Average Shares -
Basic 7,341,811 7,262,601 7,332,392 7,237,903
========= ========= ========= =========
Diluted 7,348,373 7,276,201 7,332,392 7,259,278
========= ========= ========= =========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
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<TABLE>
<CAPTION>
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the NINE MONTHS ended
September 30, 2000 and 1999
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 4,052,253 $ 3,274,017
Non-Cash Adjustments:
Depreciation 1,845,774 1,804,546
Amortization 66,800 67,510
Gain on Sales of Securities Available for Sale (177,149) (53,473)
Gain on Sales of Investment Property and
Equipment (15,613) (16,883)
Changes in Operating Assets
And Liabilities -
Notes and Other Receivables (500,536) (392,585)
Prepaid Expenses (335,881) 168,515
Accounts Payable 480,564 581,777
Accrued Liabilities and Deposits 59,103 97,673
Tenant Security Deposits 12,595 59,644
--------- ---------
Net Cash Provided by Operating Activities 5,487,910 5,624,507
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Investment Property
and Equipment (1,064,707) (3,051,732)
Proceeds from Sales of Assets 79,953 262,934
Additions to Land Development (1,293,483) (1,373,870)
Purchase of Securities Available for Sale (3,712,002) (2,651,686)
Proceeds from Sales of Securities Available
for Sale 2,461,177 417,923
--------- ----------
Net Cash Used by Investing Activities (3,529,062) (6,396,431)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Mortgages and Loans 2,500,000 10,500,000
Principal Payments of Mortgages and Loans (689,310) (4,631,341)
Financing Costs on Debt (46,431) (171,874)
Proceeds from Exercise of Stock Options -0- 263,750
Dividends Paid (2,772,859) (2,883,812)
Purchase of Treasury Stock (1,137,260) (1,108,735)
Net Cash (Used) Provided by Financing --------- ----------
Activities (2,145,860) 1,967,988
--------- ----------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (187,012) 1,196,064
CASH & CASH EQUIVALENTS - BEGINNING 724,650 832,408
------- ---------
CASH & CASH EQUIVALENTS - ENDING $ 537,638 $2,028,472
======= =========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
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UNITED MOBILE HOMES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 September 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 13,600 and 21,375 for the
three and nine months ended September 30, 1999, respectively are
included in the diluted weighted average shares outstanding.
Options in the amount of 6,562 for the three months ended
September 30, 2000 are included in the diluted weighted average
shares outstanding. Options for 433,500 shares were excluded for
the nine months ended September 30, 2000 since they were anti-
dilutive.
Total comprehensive income, including unrealized gains (losses)
on securities available for sale, amounted to $1,863,906 and
$5,592,597, for the three and nine months ended September 30,
2000, respectively and $539,364 and $2,853,957 for the three and
nine months ended September 30, 1999, respectively.
NOTE 3 - MORTGAGES PAYABLE
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 is secured by Fairview Manor and 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 4 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On September 15, 2000, the Company paid $1,396,844 as a dividend
of $.1875 per share to shareholders of record as of August 15,
2000. The total dividends paid for the nine months ended
September 30, 2000 amounted to $4,144,069.
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On September 15, 2000, the Company received $482,163 from the
Dividend Reinvestment and Stock Purchase Plan. There were 55,968
new shares issued under the Plan. The total amount received from
the Dividend Reinvestment and Stock Purchase Plan for the nine
months ended September 30, 2000 amounted to $1,371,210.
NOTE 5 - TREASURY STOCK
During the nine months ended September 30, 2000, the Company
purchased 136,400 shares of its own stock for a total cost of
$1,137,260. 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, 2000, the following
stock options were 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
7/17/00 8 36,000 $8.50 7/17/2005
The Company also extended, for an additional five years, stock
options for a total of 75,000 shares which expired on January 5,
2000.
During the nine months ended September 30, 2000, stock options
for a total of 24,000 shares expired without being exercised.
As of September 30, 2000, there were options outstanding to
purchase 433,500 shares and 415,500 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, 2000 and
1999 for interest was $2,153,066 and $1,450,886, respectively.
Interest cost capitalized to Land Development was $127,000 and
$115,000 for the nine months ended September 30, 2000 and 1999,
respectively.
During the nine months ended September 30, 2000 and 1999, the
Company had dividend reinvestments of $1,371,210 and $1,186,770,
respectively, which required no cash transfers.
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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 $5,487,910 net cash provided by operating
activities. The Company received new capital of $1,371,210
through its Dividend Reinvestment and Stock Purchase Plan (DRIP).
The Company repurchased 136,400 shares of its own stock at a cost
of $1,137,260. The Company purchased $3,712,002 of securities of
other real estate investment trusts. Mortgages Payable increased
by $1,875,311 as a result of a new mortgage of $2,500,000 offset
by principal repayments. Loans payable decreased by $64,621
primarily as a result of repayments.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Income from community operations increased by $304,932 to
$2,721,779 for the quarter ended September 30, 2000 as compared
to $2,416,847 for the quarter ended September 30, 1999. Income
from community operations increased by $883,544 to $7,996,334 for
the nine months ended September 30, 2000 as compared to
$7,112,790 for the nine months ended September 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 $4,500,117 for the quarter ended September 30, 1999 to
$4,672,427 for the quarter ended September 30, 2000. Rental and
related income increased from $13,220,273 for the nine months
ended September 30, 1999 to $13,914,882 for the nine months ended
September 30, 2000. This was the result of higher rents and
increased occupancy. Community operating expenses remained
relatively stable for the quarter and nine months ended September
30, 2000 as compared to the quarter and nine months ended
September 30, 1999. General and administrative expenses
increased from $429,294 for the quarter ended September 30, 1999
to $481,961 for the quarter ended September 30, 2000. General
and administrative expenses increased from $1,253,393 for the
nine months ended September 30, 1999 to $1,429,598 for the nine
months ended September 30, 2000. This was due to an increase in
personnel costs. Interest expense increased by $240,447 for the
quarter ended September 30, 2000 as compared to the quarter ended
September 30, 1999 and by $690,180 for the nine months ended
September 30, 2000 as compared to the nine months ended September
30, 1999. This was primarily a result of an increase in the
average principal balance on borrowings outstanding. The average
balance outstanding of mortgages payable for the nine months
ended September 30, 2000 was $31,356,809 as compared to
$25,989,542 for the nine months ended September 30, 1999.
Investment income increased from $254,874 for the quarter ended
September 30, 1999 to $481,523 for the quarter ended September
30, 2000 and from $639,445 for the nine months ended September
30, 1999 to $1,408,544 for the nine months ended September 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 $177,149 on the sale of $2,284,028
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 $1,719,154 for the quarter ended
September 30, 1999 to $1,961,481 for the quarter ended September
30, 2000. FFO increased from $5,095,446 for the nine months
ended September 30, 1999 to $5,882,414 for the nine months ended
September 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 decreased from
$5,624,507 for the nine months ended September 30, 1999 to
$5,487,910 for the nine months ended September 30, 2000 primarily
due to an increase in Notes and Other Receivables and Prepaid
Expenses. 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 - 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
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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: November 7, 2000 By:/s/Samuel A. Landy
Samuel A. Landy,
President
DATE: November 7, 2000 By:/s/Anna T. Chew
Anna T. Chew,
Vice President and
Chief Financial Officer
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