<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-Q
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NUMBER 1-12496
______________
CHATEAU PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 38-3132038
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
19500 Hall Road, Clinton Township, Michigan 48038
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (810) 286-3600
Securities registered pursuant to section 12(b) of the Act
and listed on the New York Stock Exchange:
COMMON STOCK, $0.01 PAR VALUE
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant: (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
The number of shares outstanding of the Registrant's Common Stock on
August 7, 1996 was 6,099,710 shares.
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CHATEAU PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED JUNE 30, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
_______
<TABLE>
<CAPTION>
Second Quarter First Half
---------------- ----------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Rental income $16,111 $14,826 $31,850 $29,521
Interest and other income 718 445 1,370 988
------- ------- ------- -------
16,829 15,271 33,220 30,509
------- ------- ------- -------
Expenses:
Property operating and maintenance 4,955 4,110 9,009 7,667
Real estate taxes 1,190 1,109 2,375 2,182
Depreciation 2,911 2,725 5,679 5,438
Administrative 999 989 2,019 2,029
Interest and related amortization 3,175 3,091 6,218 6,227
------- ------- ------- -------
13,230 12,024 25,300 23,543
------- ------- ------- -------
Income before extraordinary item and
majority interest 3,599 3,247 7,920 6,966
Extraordinary charge from early extinguishment
of debt - - - (829)
------- ------- ------- -------
Income before majority interest 3,599 3,247 7,920 6,137
Majority interest in Operating Partnership 2,126 1,948 4,677 3,712
------- ------- ------- -------
Net income $ 1,473 $ 1,299 $ 3,243 $ 2,425
======= ======= ======= =======
Earnings per share:
Income before extraordinary item $ .24 $ .22 $ .53 $ .47
Extraordinary item - - - (.05)
------- ------- ------- -------
Net income $ .24 $ .22 $ .53 $ .42
======= ======= ======= =======
Dividend/distribution declared per common
share/OP unit outstanding $ .405 $ .375 $ .81 $ .75
======= ======= ======= =======
Weighted average common shares
outstanding 6,099 5,897 6,098 5,825
======= ======= ======= =======
Weighted average common shares
and OP units outstanding 14,896 14,724 14,892 14,742
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE> 3
CHATEAU PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
_______
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Rental property:
Land $ 33,682 $ 32,891
Land and improvements for expansion sites 3,250 2,434
Depreciable property 250,331 241,098
-------- --------
287,263 276,423
Less accumulated depreciation (75,520) (69,868)
-------- --------
211,743 206,555
Cash and cash equivalents 261 944
Receivables 1,678 2,142
Prepaid expenses and other assets 4,372 2,393
-------- --------
Total assets $218,054 $212,034
======== ========
LIABILITIES
Debt $141,298 $132,700
Accounts payable and accrued expenses 8,609 8,444
Tenants' security deposits and rents received in advance 4,564 4,364
Accrued dividends and distributions 6,031 5,954
-------- --------
Total liabilities 160,502 151,462
Majority interest in Operating Partnership 34,537 36,264
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 2 million shares
authorized; no shares issued or outstanding
Common stock, $.01 par value, 30 million shares authorized;
6,099,710 million shares issued and outstanding 61 61
Additional paid-in capital 30,228 33,152
Dividends in excess of accumulated earnings (6,444) (8,064)
Notes receivable, officers, 43,125 shares (830) (841)
-------- --------
Total shareholders' equity 23,015 24,308
-------- --------
Total liabilities and shareholders' equity $218,054 $212,034
======== ========
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE> 4
CHATEAU PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED JUNE 30, 1996 AND 1995
(DOLLARS IN THOUSANDS)
_______
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,243 $ 2,425
Adjustments to reconcile to net cash
provided by operating activities:
Income attributable to majority interest 4,677 3,712
Extraordinary item - 829
Depreciation 5,679 5,438
Amortization of deferred financing costs 220 264
Decrease (increase) in operating assets (735) 72
Increase (decrease) in operating liabilities 365 2,068
------- --------
Net cash from operating activities 13,449 14,808
Cash flow from financing activities:
Proceeds from issuance of 8 3/4% Senior Notes - 74,866
Net borrowing (repayments) on line of credit 9,200 (28,900)
Repayment of mortgages - (43,952)
Prepayment penalties - (667)
Principal payments (602) (641)
Payment of deferred financing costs - (933)
Dividends/distributions to shareholders/OP unit holders (11,984) (10,930)
OP units reacquired (932) (867)
Other financing activities 89 85
------- --------
Net cash used in financing activities (4,229) (11,939)
Cash flow from investing activities:
Acquisitions of rental properties (8,252) -
Additions to rental property (1,651) (1,527)
------- --------
Net cash used in investing activities (9,903) (1,527)
Increase (decrease) in cash and cash equivalents (683) 1,342
Cash and cash equivalents, beginning of period 944 3,370
------- --------
Cash and cash equivalents, end of period $ 261 $ 4,712
======= ========
Supplemental cash flow information:
OP units issued for rental property and joint
venture investment $ 1,964 $ -
======= ========
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE> 5
CHATEAU PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS
_______
1. BASIS OF PRESENTATION AND FORMATION OF COMPANY:
The accompanying unaudited condensed consolidated financial statements
of Chateau Properties, Inc. (the "Company"), a Real Estate Investment
Trust (REIT), have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a
fair presentation have been included, and such adjustments are of a normal
recurring nature. The year-end condensed consolidated balance sheet was
derived from audited consolidated financial statements, but does not
include all disclosures required by generally accepted accounting
principles. For further information, refer to the consolidated/combined
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1995.
On November 23, 1993, the Company completed a public offering of 5,700,000
shares of $.01 par value common stock (the "Equity Offering").
Simultaneous with the Equity Offering, the Company contributed the net
proceeds from the Equity Offering and was admitted as the sole general
partner in an operating partnership (the "Operating Partnership")
representing the successor owner of manufactured housing community
properties. As a result of the Company's unilateral control and complete
responsibility for management of the Operating Partnership as the sole
general partner, the consolidated financial statements include the accounts
of Chateau Properties, Inc. and the Operating Partnership. All significant
inter-entity balances and transactions have been eliminated in
consolidation.
In order to permit the Company's qualification as a REIT under the Internal
Revenue Code, the operations of four golf courses and a marina were
previously conducted by GC Properties, Inc. ("GCI"), a corporation wholly
owned by an equity owner of the Company. From November 23, 1993 through
December 31, 1995, the Company recognized net lease income from GCI which
was classified as other income. In early 1996, the Company received a
ruling from the Internal Revenue Service allowing it to conduct these
operations. Effective January 1, 1996, as a result of acquiring the
operations of GCI, the Company has consolidated these operations. For the
six months ended June 30, 1996 the Company has included approximately
$776,000 in revenues and $494,000 in operating expenses for these
operations.
Continued
<PAGE> 6
CHATEAU PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
_______
2. COMMON STOCK AND RELATED TRANSACTIONS:
On April 10, 1996, the Company, through its operating partnership, purchased
and retired 43,334 OP units that were issued in connection with the
acquisition of seven communities in November 1994. The purchase, at $21.50
per unit, was made pursuant to the terms of the purchase agreements.
On May 16, 1996, the Company declared a cash dividend/distribution of $.405
per share/OP unit to shareholders and OP unit holders of record as of June
24, 1996. The dividend/distribution was paid on July 15, 1996 and is
included in accrued dividends and distributions in the accompanying
condensed consolidated balance sheet as of June 30, 1996.
On February 29, 1996 the Company declared a cash dividend/distribution of
$.405 per share/OP unit to shareholders and OP unit holders of record as of
March 22, 1996. The dividend/distribution was paid on April 15, 1996.
On November 19, 1995, the Company declared a cash dividend/distribution of
$.40 per share/OP unit to shareholders and OP unit holders of record as of
December 22, 1995. The dividend/distribution was paid on January 13, 1996
and is included in accrued dividends and distributions in the accompanying
condensed consolidated balance sheet as of December 31, 1995.
3. ACQUISITIONS OF RENTAL PROPERTY:
On May 16, 1996, the Company acquired two communities in Manteno, Illinois.
The communities, Maple Valley and Maple Ridge have a combined total of 276
sites. The purchase price of approximately $5.8 million was paid with
approximately $4.8 million in cash, which was borrowed on the Company's line
of credit and approximately $1.0 million through the issuance of 43,884 OP
units.
In connection with the above acquisition, the Company issued an additional
45,506 OP units in return for an investment interest in a joint venture.
The joint venture is currently developing four additional communities
aggregating 2,000 new homesites. The Company may guarantee up to $8 million
of debt of the joint venture in return for a guarantee fee. Also, the
Company will have first rights to purchase the communities when they reach
95 percent occupancy.
Continued
<PAGE> 7
CHATEAU PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS, Continued
_______
3. ACQUISITIONS OF RENTAL PROPERTY, CONTINUED:
On March 27, 1996, the Company acquired 134 occupied sites in the Chestnut
Creek Farm community in Davison, Michigan. The purchase price was
approximately $3.4 million, paid in cash, and was financed through a
borrowing on the Company's line of credit. The Company will acquire
approximately 300 additional sites as they are developed and leased by the
seller.
4. DEBT:
The following table sets forth certain information regarding debt at
June 30, 1996:
<TABLE>
<CAPTION>
Interest Rate Maturity Date Principal Balance
--------------- ---------------- -----------------
<S> <C> <C> <C>
Fixed Rate Mortgages:
Del Tura 8.40% 6/00 $ 33,594
Macomb 9.82% 9/99 16,495
Norton Shores/Ferrand Estates 8.00% 4/99 3,580
Oak Hill 8.00% 9/98 1,273
Other Indebtedness:
Unsecured Senior Notes 8.79% 3/00 75,000
Unsecured Line of Credit - 1/99 9,200
Other notes payable various 1996-2020 2,156
-------
$141,298
========
</TABLE>
5. SUBSEQUENT EVENTS:
In July 1996, the Company and ROC Communities, Inc. ("ROC") signed a
definitive agreement to merge the two companies into a new company called
Chateau Communities, Inc. through a tax-free exchange of stock. Under the
terms of the agreement, the shareholders of Chateau will receive one share
of common stock of Chateau Communities, Inc. for every share they currently
hold in the Company. ROC shareholders will receive 1.042 shares of Chateau
Communities, Inc.'s common stock for every share they currently hold in ROC.
The merger is expected to be completed in the fourth quarter of 1996 and is
subject to approval by the shareholders of both companies as well as
customary regulatory and other conditions.
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis of interim results of operations and
financial condition covers the quarter and first half ended June 30, 1996 and
1995 and should be read in conjunction with the Condensed Consolidated
Financial Statements and Notes thereto included in this report.
RESULTS OF OPERATIONS
Comparison of quarter ended June 30, 1996 to quarter ended June 30, 1995
For the quarter ended June 30, 1996, income before majority interest was
$3,599,000, an increase of $352,000 from the same period in 1995. The increase
was due primarily to increases in net operating income from communities owned
by the Company as of June 30, 1995 and to a lesser extent the acquisition of
four communities since June 30, 1995.
Rental revenue in the second quarter 1996 was $16,111,000, an increase of
approximately $1,285,000 or 8.7 percent from second quarter 1995.
Approximately 32 percent of the increase was due to the acquisition of four
communities since June 30, 1995, 42 percent represented the effect of rent
increases and 26 percent was caused by increased occupancy. Weighted average
occupancy for the second quarter 1996 was 18,854 sites, or 5.4 percent higher
than weighted average occupancy for the second quarter 1995. On a per site
basis, weighted average monthly rental revenue for the second quarter 1996
increased to $285 from $276 in 1995, or 3.1 percent. The occupancy rate was
95.1 percent as of June 30, 1996 on 20,003 sites, increased from 93.1 percent
as of June 30, 1995 on 19,263 sites.
Interest and other income increased approximately $273,000 or 62 percent in
1996 from 1995. The increase is due to the inclusion of the results of
operations of four golf courses and a marina for the period beginning January
1, 1996. These operations were previously conducted by GC Properties, Inc.
("GCI"), a corporation wholly owned by an equity owner of the Company, in order
to permit the Company's qualification as a REIT under the Internal Revenue
Code. From November 23, 1993 through December 31, 1995, the Company recognized
net lease income from GCI which was classified as other income. In early 1996,
the Company received a ruling from the Internal Revenue Service allowing the
Company to conduct these operations. Effective January 1, 1996, as a result of
acquiring the operations of GCI, the Company has consolidated these operations.
The increase of $296,000 due to the inclusion of the golf course and marina
revenues, was partially offset by a decrease in interest income of $35,000 due
to the Company having less available cash to invest in the second quarter of
1996.
Property operating and maintenance expense for the second quarter 1996
increased approximately $845,000 or 21 percent from the same period a year ago.
Approximately $267,000 of the increase represents the operating costs of the
golf course and marina operations as discussed above. Excluding the operating
expenses of the golf course and
<PAGE> 9
marina operations, property operating and maintenance expense increased 15
percent. The remaining increase is due to the acquisition of four communities
over the last year and increases at communities owned as of June 30, 1995. On
a per site basis, monthly weighted average property operating and maintenance
expense increased from $77 in 1995 to $88 in 1996, or 14 percent. The increase
on a per site basis, excluding the golf course and marina operations, was 8.2
percent due primarily to timing of repairs and maintenance spending in 1996 as
compared with 1995.
Real estate taxes in second quarter 1996 increased $81,000 or 7.3 percent from
second quarter 1995. The increase is due primarily to acquisitions and
expansions of communities. On a per site basis, monthly weighted average real
estate taxes were $21.03 in 1996 compared to $20.66 in 1995, an increase of 1.8
percent. The increase was due to general tax increases. Real estate taxes may
increase or decrease due to inflation, expansions and improvements of
communities, as well as changes in taxation in the tax jurisdictions in which
the Company operates.
Administrative expense for second quarter 1996 increased $10,000 from 1995.
Administrative expense in 1996 was 5.9 percent of revenues as compared to 6.5
percent in 1995.
Interest and related amortization costs increased for second quarter 1996 by
$84,000 or 3 percent from second quarter 1995. Interest expense as a percentage
of average debt outstanding remained relatively stable at 8.8 percent.
Depreciation expense in second quarter 1996 increased $186,000 or 7 percent.
The increase is due to the acquisitions and expansions of communities.
Depreciation expense as a percentage of average depreciable rental property in
1996 from 1995 remained relatively constant.
Comparison of first half ended June 30, 1996 to first half ended June 30, 1995
For the first half ended June 30, 1996, income before extraordinary item and
majority interest was $7,920,000, an increase of $954,000 from the same period
in 1995. The increase was due primarily to increases in net operating income
from communities owned by the Company as of June 30, 1995 and to a lesser
extent the acquisition of four communities since June 30, 1995. In the first
quarter 1995, the Company recognized an extraordinary charge of $829,000
related to the early extinguishment of debt.
Rental revenue in the first half 1996 was $31,850,000, an increase of
approximately $2,329,000 or 7.9 percent from first half 1995. Approximately 28
percent of the increase was due to the acquisition of four communities since
June 30, 1995, 44 percent represented the effect of annual rent increases and
28 percent was caused by increased occupancy. Weighted average occupancy for
the first half 1996 was 18,700 sites, or 4.7 percent higher than weighted
average occupancy for the first half 1995. On a per site basis, weighted
average monthly rental revenue for the first half 1996 increased to $284 from
$276 in 1995, or 3.0 percent.
<PAGE> 10
Interest and other income increased approximately $382,000 or 39 percent in
1996 from 1995. The increase is due to the inclusion of the results of
operations of four golf courses and a marina for the period beginning January
1, 1996. These operations were previously conducted by GC Properties, Inc.
("GCI"), a corporation wholly owned by an equity owner of the Company, in order
to permit the Company's qualification as a REIT under the Internal Revenue
Code. From November 23, 1993 through December 31, 1995, the Company recognized
net lease income from GCI which was classified as other income. In early 1996,
the Company received a ruling from the Internal Revenue Service allowing the
Company to conduct these operations. Effective January 1, 1996, as a result of
acquiring the operations of GCI, the Company has consolidated these operations.
The increase of $510,000 due to the inclusion of the golf course and marina
revenues, was partially offset by a decrease in interest income of $145,000 due
to the Company having less available cash to invest in the first half of 1996.
Property operating and maintenance expense for the first half 1996 increased
approximately $1,342,000 or 17.5 percent from the same period a year ago.
Approximately $494,000 of the increase represents the operating costs of the
golf course and marina operations as discussed above. Excluding the operating
expenses of the golf course and marina operations, property operating and
maintenance expense increased 11.1 percent. The remaining increase is due to
the acquisition of four communities since June 30, 1995 and increases at
communities owned as of June 30, 1995. On a per site basis, monthly weighted
average property operating and maintenance expense increased from $72 in 1995
to $80 in 1996, or 12.2 percent. The increase on a per site basis, excluding
the golf course and marina operations, was 6.1 percent due primarily to timing
of repairs and maintenance spending in 1996 as compared with 1995.
Real estate taxes for the first half 1996 increased $193,000 or 8.8 percent
from first half 1995. The increase is due primarily to acquisitions and
expansions of communities. On a per site basis, monthly weighted average real
estate taxes were $21 in 1996 compared to $20 in 1995, an increase of 4.0
percent due to general tax increases. Real estate taxes may increase or
decrease due to inflation, expansions and improvements of communities, as well
as changes in taxation in the tax jurisdictions in which the Company operates.
Administrative expense for first half 1996 remained relatively constant from
1995. Administrative expense in 1996 was 6.1 percent of revenues as compared
to 6.7 percent in 1995.
Interest and related amortization costs remained relatively unchanged for first
half 1996. Interest expense as a percentage of average debt outstanding
decreased in 1996 due to debt refinancing that occurred in first quarter 1995.
Depreciation expense in first half 1996 decreased $241,000 or 4 percent.
Depreciation expense as a percentage of average depreciable rental property in
1996 remained relatively unchanged from 1995.
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $13,449,000 for first half 1996
compared to $14,808,000 for first half 1995. The decrease in cash provided by
operating activities was due primarily to changes in operating assets and
liabilities.
Net cash used in financing activities for first half 1996 was $4,229,000
compared to $11,939,000 for first half 1995. The amount used in 1996 consisted
of dividends and distributions paid to shareholders and OP unitholders of
$11,984,000 and the payment of $932,000 to reacquire 43,334 Operating
Partnership ("OP") units offset by net borrowings of $9,200,000 on the line of
credit to fund the three acquisitions made during the period. The OP units were
reacquired at $21.50 per OP unit pursuant to the terms of purchase agreements
related to the November 1994 acquisition of seven communities.
Net cash used in investing activities in first half 1996 was $9,903,000. This
amount represented the acquisition of 134 filled sites in the Chestnut Creek
Farm community on March 27, 1996, the acquisition of 276 filled sites in the
Maple Valley and Maple Ridge communities on May 16, 1996, capital expenditures
and construction costs. The Chestnut Creek acquisition was financed by
borrowings on the Company's line of credit. The Maple Valley and Maple Ridge
acquisition was financed with approximately $4.8 million borrowed on the line
of credit and approximately $1 million with the issuance of 43,884 OP units. In
connection with the above acquisition, the Company issued an additional 45,506
OP units in return for an investment interest in a joint venture. The joint
venture is currently developing four additional communities aggregating 2,000
new homesites. The Company may guarantee up to $8 million of debt of the joint
venture in return for a guarantee fee. Also, the Company will have first
rights to purchase the communities when they reach 95 percent occupancy.
For the first half 1996, construction and development costs approximated
$1,069,000, while recurring property capital expenditures, other than
construction and development costs, were approximately $436,000. Aggregate
property capital expenditures for 1996 are anticipated to be approximately
$600,000. Capital expenditures have historically been financed with funds from
operations and it is the Company's intention that such future expenditures will
be financed with funds from operations.
Future acquisitions of communities and land for development of sites will be
financed through borrowings on the line of credit, the issuance of additional
equity or debt securities, assumption of existing secured or unsecured
indebtedness, or the issuance of OP units. The development of expansion sites
will be financed primarily by cash flow from operations and borrowings on the
line of credit. Huntington National Bank, as lead agent, along with Bank of
America and NBD Bank, have agreed until January, 1999 to lend the Company up to
$50 million which, subject to customary conditions, is available to finance the
development of expansion sites, the acquisition of additional properties and
for general business obligations. This line of credit is unsecured and
currently bears interest at 150 basis points over LIBOR. At June 30, 1996,
$9,200,000 was outstanding under the line of credit.
<PAGE> 12
The Company expects to meet its short-term liquidity requirements through cash
flow from operations and, if necessary, borrowings under its line of credit.
The Company anticipates meeting its long-term liquidity requirements from
borrowings under the line of credit, proceeds from the issuance of additional
debt or equity securities and cash flows from operations.
OTHER
Management considers Funds from Operations ("FFO") to be a supplemental measure
of the Company's operating performance. FFO is defined by the National
Association of Real Estate Investment Trusts ("NAREIT") as net income excluding
financing costs and gains (or losses) from debt restructuring and sales of
property plus depreciation and amortization and other non-cash items. For all
periods, depreciation of rental property is the only non-cash item. FFO should
not be considered as an alternative to net income, as the primary indicator of
operating performance, or to cash flows as a measure of liquidity nor does it
indicate that cash flows are sufficient to fund all cash needs.
FFO for the second quarter 1996 was $6,486,000 (including depreciation of
$2,887,000) compared to $5,950,000 (including depreciation of $2,703,000) for
the same period in 1995, an increase of $536,000 or 9 percent. The increase in
FFO is due primarily to increased revenues of $1,558,000, partially offset by
increased operating and administrative expenses of $936,000.
FFO for the first half 1996 was $13,554,000 (including depreciation of
$5,634,000) compared to $12,359,000 (including depreciation of $5,393,000) for
the same period in 1995, an increase of $1,195,000 or 9.7 percent. The
increase in FFO is due to increased revenues of $2,711,000, partially offset by
increased operating and administrative expenses of $1,525,000.
In July 1996, the Company and ROC Communities, Inc. ("ROC") signed a definitive
agreement to merge the two companies into a new company called Chateau
Communities, Inc. through a tax-free exchange of stock. Under the terms of the
agreement, the shareholders of Chateau will receive one share of common stock
of Chateau Communities, Inc. for every share they currently hold in the
Company. ROC shareholders will receive 1.042 shares of Chateau Communities,
Inc.'s common stock for every share they currently hold in ROC. The merger is
expected to be completed in the fourth quarter of 1996 and is subject to
approval by the shareholders of both companies as well as meeting customary
regulatory and other conditions.
<PAGE> 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters for a Vote of Security Holders
On May 16, 1996 the Company held its Annual Meeting of Shareholders.
The following matter was voted upon at the meeting:
1) The election of two Class III Directors to serve until the 1999
Annual Meeting of Shareholders or until their respective successors
shall be elected and shall qualify. The results of the election appear
below:
<TABLE>
<CAPTION>
Abstentions
Votes Against and Broker
Name Votes For or Withheld Non-Votes
-------------- --------- ------------- -----------
<S> <C> <C> <C>
John A. Boll 3,712,332 - 8,515
Jay G. Rudolph 3,712,332 - 8,515
</TABLE>
The terms of the following directors continued following this
meeting: Gebran S. Anton, Jr., James M. Lane, Kenneth E. Myers, C.G.
Kellogg and Edward R. Allen.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
99 - Condensed Consolidated Statement of Income.
27 - Financial Data Schedule
No Reports on Form 8-K were filed.
<PAGE> 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, and in the
capacities indicated, on the 14th day of August, 1996.
CHATEAU PROPERTIES, INC.
By: /s/ Tamara D. Fischer
---------------------------
Tamara D. Fischer
Executive Vice President
and Chief Financial Officer
(Duly Authorized Officer and Principal
Financial and Accounting Officer)
<PAGE> 15
EXHIBIT
INDEX
Exhibit Number Exhibit Description
-------------- ------------------------------------------
99 Condensed Consolidated Statement of Income
27 Financial Data Schedule
<PAGE> 1
EXHIBIT (99)
Unaudited Condensed Statement of Income for the twelve-month period ended
June 30, 1996 consisting of the last two quarters of the Company's fiscal
year ended December 31, 1995 and the first two quarters of the Company's
fiscal year ending December 31, 1996. This Statement is intended to
satisfy the requirement for an "earning statement" provided by the last
paragraph of Section 11(a) of the Securities Act of 1933 as interpreted
by Rule 158 promulgated by the Securities and Exchange Commission
pursuant to the Securities Act of 1933.
CHATEAU PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Amounts in thousands, except per share amount)
(Unaudited)
<TABLE>
<CAPTION>
Twelve-month
period ended
June 30, 1996
-------------
<S> <C>
Revenues $64,566
Expenses 49,633
-------
Income before majority interest $14,933
=======
Net income $ 6,121
=======
Net income per common share outstanding $ 1.00
=======
Weighted average common shares outstanding 6,095
=======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 261
<SECURITIES> 0
<RECEIVABLES> 1,678
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,311
<PP&E> 287,263
<DEPRECIATION> 75,520
<TOTAL-ASSETS> 218,054
<CURRENT-LIABILITIES> 19,204
<BONDS> 141,298
0
0
<COMMON> 61
<OTHER-SE> 22,954
<TOTAL-LIABILITY-AND-EQUITY> 218,054
<SALES> 0
<TOTAL-REVENUES> 33,220
<CGS> 0
<TOTAL-COSTS> 11,384
<OTHER-EXPENSES> 7,698
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,218
<INCOME-PRETAX> 7,920
<INCOME-TAX> 0
<INCOME-CONTINUING> 7,920
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,243
<EPS-PRIMARY> .53
<EPS-DILUTED> .53
</TABLE>
