<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
For the quarterly period ended June 30, 1997
-------------
OR
Transition report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
Commission file number 1-12496
-------
CHATEAU COMMUNITIES, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 38-3132038
(State or other jurisdiction (IRS Employer
of incorporation or organization) (Identification No.)
6430 South Quebec Street, Englewood, CO 80111
(Address of principal executive offices, including zip code)
(303) 741-3707
(Registrant's telephone number, including area code)
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: (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, 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 11,
1997 was 25,289,058 shares.
<PAGE>
CHATEAU COMMUNITIES, INC.
FORM 10-Q
INDEX
Page Number
-----------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Statements of Income for the Three
and Six Months Ended June 30, 1997 and 1996 1
Condensed Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996 2
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1997 and 1996 3
Notes to Consolidated Financial Statements 4-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-10
Item 3. Quantitative and Qualitative Disclosures about Market Risk 10
PART II. OTHER INFORMATION 11-12
SIGNATURES 13
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHATEAU COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996.
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
----------------------- -----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 34,817 $ 16,796 $ 63,725 $ 33,146
Management fee, interest and other income 783 33 1,251 74
-------- -------- -------- --------
35,600 16,829 64,976 33,220
Expenses:
Property operating and maintenance 9,746 4,955 17,755 9,009
Real estate taxes 2,565 1,190 4,694 2,375
Depreciation and amortization 8,499 2,911 15,176 5,679
Administrative 2,025 999 3,571 2,019
Interest and related amortization 6,642 3,175 12,070 6,218
-------- -------- -------- --------
29,477 13,230 53,266 25,300
-------- -------- -------- --------
Income before minority interest 6,123 3,599 11,710 7,920
Minority interest in Operating Partnership 560 2,126 1,692 4,677
-------- -------- -------- --------
Net income $ 5,563 $ 1,473 $ 10,018 $ 3,243
-------- -------- -------- --------
-------- -------- -------- --------
Net income per share $ .22 $ .24 $ .45 $ .53
-------- -------- -------- --------
-------- -------- -------- --------
Dividend/distribution declared per common
share/OP unit outstanding $ .43 $ .405 $ .86 $ .81
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average common shares
outstanding 25,253 6,099 22,079 6,097
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average common shares
and OP units outstanding 28,009 14,896 25,809 14,892
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral
part of the financial statements.
1
<PAGE>
CHATEAU COMMUNITIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1997 1996
----------- -----------
<S> <C> <C>
Rental property:
Land $ 111,110 $ 33,821
Land and improvements for expansion sites 12,928 1,988
Depreciable property 685,257 264,822
----------- -----------
809,295 300,631
Less accumulated depreciation 96,259 81,293
----------- -----------
713,036 219,338
Cash and cash equivalents 158 586
Receivables 8,901 5,403
Notes receivable 10,378 90
Prepaid expenses and other assets 10,273 6,649
----------- -----------
Total assets $ 742,746 $ 232,066
----------- -----------
----------- -----------
LIABILITIES
Debt $ 344,431 $ 168,315
Accounts payable and accrued expenses 17,442 10,285
Tenants, security deposits and rents received in advance 5,686 4,852
Accrued dividends and distributions 12,054 5,871
----------- -----------
Total liabilities 379,613 189,323
Limited partners, interest in Operating Partnership 35,766 26,552
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;
25,289,308 and 5,660,960 shares issued and outstanding
at June 30, 1997 and December 31, 1996, respectively 255 57
Additional paid-in capital 350,836 28,187
Dividends in excess of accumulated earnings (22,906) (11,233)
Notes receivable from officers, 43,125 shares (818) (820)
----------- -----------
Total shareholders, equity 327,367 16,191
----------- -----------
Total liabilities and shareholders, equity $ 742,746 $ 232,066
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral
part of the financial statements.
2
<PAGE>
CHATEAU COMMUNITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996.
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1997 1996
---------- ----------
<C> <C>
Cash Flows From Operating Activities:
Net income $ 10,018 $ 3,243
Adjustments to reconcile net income to net cash
provided by operating activities:
Income attributable to limited partners, interest 1,692 4,677
Depreciation and amortization 15,176 5,679
Amortization of deferred financing costs 217 220
Decrease (increase) in operating assets (5,120) (735)
Increase (decrease) in operating liabilities (2,004) 365
---------- ----------
19,979 13,449
Net cash from operating activities
Cash flows from financing activities:
Net borrowing on line of credit 10,710 9,200
Mortgage principal payments (725) (602)
Dividends/distributions to shareholders/OP unit holders (17,878) (11,984)
Common shares/OP units reacquired and retired (19,851) (932)
Proceeds from the issuance of common shares 25,477 -
Other financing activities 1,567 89
---------- ----------
Net cash provided by (used in) financing activities (700) (4,229)
Cash flows from investing activities:
Acquisition of rental properties (2,180) (8,252)
Additions to rental property (6,089) (1,651)
Payment of deferred merger costs (11,438) -
---------- ----------
Net cash used in investing activities (19,707) (9,903)
---------- ----------
Decrease in cash and cash equivalents (428) (683)
Cash and cash equivalents, beginning of period 586 944
---------- ----------
Cash and cash equivalents, end of period $ 158 $ 261
---------- ----------
---------- ----------
Supplemental cash flow information:
OP Units issued in connection with the acquisition $ 98 $ 1,964
of rental properties ---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral
part of the financial statements.
3
<PAGE>
CHATEAU COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND FORMATION OF COMPANY:
The accompanying unaudited condensed consolidated financial statements of
Chateau Communities, 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 financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 1996.
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 Communities, Inc. and the Operating Partnership. All
significant inter-entity balances and transactions have been eliminated in
consolidation.
2. MERGER WITH ROC COMMUNITIES, INC.
In February 1997, the Company completed its merger with ROC Communities,
Inc. (the "Merger"). The Merger and related transactions were accounted for
using the purchase method of accounting in accordance with generally
accepted accounting principles. Accordingly, the assets and liabilities of
ROC were adjusted to fair value for financial accounting purposes and the
results of operations of ROC are included in the results of operations of
the Company beginning February 1, 1997.
In connection with the Merger, the following related transactions occurred:
- The Company repurchased and retired 1,200,000 shares of its common
stock in late 1996 and early 1997.
- ROC purchased 350,000 shares of Chateau common stock, which were
retired at the time of the Merger.
- The Company issued 1.042 shares of its common stock for each 1.0 share
of ROC capital stock outstanding.
4
<PAGE>
- The Company paid a stock dividend equal to .0326 shares of its common
stock per common share/OP Unit outstanding.
- Certain OP Unitholders converted 6,170,908 OP Units into common
shares. These Unitholders waived their right to receive the above
dividend and agreed to the re-allocation to the existing shareholders
resulting in an effective distribution to the common shareholders of
.068 shares of common stock.
- Certain OP Unitholders purchased 984,423 additional shares of common
stock from the Company at $25.88 per share.
In connection with the Merger, the Company issued common stock valued at
approximately $351 million, including the costs incurred to complete the Merger,
which was allocated as follows:
Rental property $ 501.3
Net working capital 15.8
Debt assumed (166.1)
----------
$ 351.0
----------
----------
As of June 30, 1997, the Company owned 128 communities with an aggregate 42,986
residential homesites. In addition, it fee manages 6,953 residential homesites
in 34 communities.
The following unaudited pro forma income statement information has been prepared
as if the Merger and related transactions had occurred on January 1, 1996. In
addition, the pro forma information is presented as if the acquisition of 13
properties made in 1996 by the Company and ROC had occurred on January 1, 1996.
The pro forma income statement information is not necessarily indicative of the
results which actually would have occurred if the Merger had been consummated on
January 1, 1996.
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30,
----------------------- -----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 35,600 $ 33,222 $ 70,728 $ 65,832
Expenses:
Property, operating, maintenance and administrative 14,336 13,746 28,209 26,575
Depreciation and amortization 8,499 8,320 17,035 16,794
Interest and related amortization 6,642 6,413 13,343 12,686
-------- -------- -------- --------
Total expenses 29,477 28,479 58,587 56,055
-------- -------- -------- --------
Income before minority interest 6,123 4,743 12,141 9,777
-------- -------- -------- --------
Per share* $ .22 $ .17 $ .43 $ .35
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average common shares and
(OP Units outstanding) 28,009 27,883 27,960 27,879
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
*Assumes all OP Units are exchanged for common stock.
5
<PAGE>
3. COMMON STOCK AND RELATED TRANSACTIONS:
On May 22, 1997, the Company declared a cash dividend distribution of $.43
per share/OP Unit to shareholders and OP Unitholders of record as of June
30, 1997. The dividend/distribution was paid on July 15, 1997 and is
included in accrued dividends and distributions in the accompanying
condensed consolidated balance sheet as of June 30, 1997.
On March 20, 1997, the Company declared a cash dividend/distribution of
$.43 per share/OP Unit to shareholders and OP Unitholders of record as of
March 31, 1997. The dividend/distribution was paid on April 14, 1997.
On November 13, 1996, the Company declared a cash dividend/distribution of
$.405 per share/OP unit to shareholders and OP Unitholders of record as of
December 31, 1996. The dividend/ distribution was paid on January 15, 1997
and is included in accrued dividends and distributions in the accompanying
condensed consolidated balance sheet as of December 31, 1996.
4. DEBT:
The following table sets forth certain information regarding debt at June
30, 1997.
Weighted
Interest Rate Maturity Date Principal Balance
------------- ------------- -----------------
Fixed Rate Mortgage Debt 7.94% 1998-2011 $ 115,880
Unsecured Senior Notes 8.16% 2000-2003 145,000
Unsecured Lines of Credit 7.24% - 81,544
Other notes payable various - 2,007
------------
$ 344,431
------------
------------
6
<PAGE>
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 three and six months ended June 30, 1997 and 1996
and should be read in conjunction with the Condensed Consolidated Financial
Statements and Notes thereto included in this report. Certain statements in
this report constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company or industry results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
On February 11, 1997, the Company completed its merger ("the "Merger") with ROC
Communities, Inc. ("ROC"). The historical results for the six months ended June1
30, 1997 include the results of operations of ROC for five months.
HISTORICAL RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1997 TO THREE MONTHS ENDED JUNE 30,
1996
For the three months ended June 30, 1997, income before minority interest was
$6,123,000, an increase of $2,524,000 from the three months ended June 30, 1996.
The increase was due primarily to the Merger, as well as acquisitions that were
consummated in 1997 and 1996 by the Company or ROC, and increased net operating
income from communities owned by the Company and ROC on January 1, 1996 (the
"Core 1996 Portfolio"). The increase in net operating income from the Company's
Core 1996 Portfolio was due to increased occupancy and rental increases
partially offset by general operating expense increases.
Rental revenue in the three months ended June 30, 1997 was $34,817,000, an
increase of $18,021,000 from the three months ended June 30, 1996.
Approximately 81 percent of the increase was due to the Merger, and 13 percent
was due to 1997 and 1996 acquisitions made by the Company or ROC. The remaining
6 percent increase was due to rental increases and occupancy gains of the
Company's Core 1996 Portfolio. Management fee, interest and other income
increased approximately $750,000 in 1997 from 1996, due to the Merger and the
increase in income from the Company's sales subsidiary.
Property operating and maintenance expense for the three months ended June 30,
1997 increased by $4,791,000 or 97 percent from the same period a year ago. The
majority of the increase was due to the Merger and 1997 and 1996 acquisitions.
The remaining increase was due to increases in the Company's Core 1996
Portfolio.
Real estate taxes for the three months ended June 30, 1997, increased by
$1,375,000 or 116 percent from the three months ended June 30, 1996. The
increase is due primarily to the Merger, acquisitions and expansions of
communities and general 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 the three months ended June 30, 1997 increased due to
the Merger. Administrative expense in 1997 was 5.7 percent of revenues as
compared to 5.9 percent in 1996.
7
<PAGE>
Interest and related amortization costs increased for the three months ended
June 30, 1997 by $3,467,000, as compared with the three months ended June 30,
1996. The increase is attributable to the indebtedness incurred in connection
with the Merger and to finance the 1997 and 1996 acquisitions. Interest expense
as a percentage of average debt outstanding decreased to approximately 7.7
percent in 1997 from approximately 8.8 percent in 1996. The decrease is due
primarily to the ROC debt assumed in the Merger having a lower average interest
rate as well as much of the financing in connection with the Merger and the 1997
and 1996 acquisitions being done with the Company's lines of credit which have a
lower average interest rate.
Depreciation expense for the three months ended June 30, 1997, increased
$5,588,000 from the same period a year ago. The increase is directly
attributable to the Merger. Depreciation expense as a percentage of average
depreciable rental property in 1997 remained relatively unchanged from 1996.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 TO SIX MONTHS ENDED JUNE 30, 1996
For the six months ended June 30, 1997, income before minority interest was
$11,710,000, an increase of $3,790,000 from the six months ended June 30, 1996.
The increase was due primarily to the Merger, as well as acquisitions that were
consummated in 1997 and 1996 by the Company or ROC, and increased net operating
income from the Core 1996 Portfolio. The increase in net operating income from
the Company's Core 1996 Portfolio was due to increased occupancy and rental
increases partially offset by general operating expense increases.
Rental revenue in the first half 1997 was $63,725,000, an increase of
$30,579,000 from first half 1996. Approximately 77 percent of the increase was
due to the Merger, and 12 percent was due to 1997 and 1996 acquisitions made by
the Company or ROC. The remaining 11 percent increase was due to rental
increases and occupancy gains of the Company's Core 1996 Portfolio. Management
fee, interest and other income increased approximately $1,177,000 in 1997 from
1996, due to the Merger and the increase in income from the Company's sales
subsidiary.
Property operating and maintenance expense for the six months ended June 30,
1997 increased by $8,746,000 or 97 percent from the same period a year ago. The
majority of the increase was due to the Merger and 1997 and 1996 acquisitions.
The remaining increase was due to increases in the Company's Core 1996
Portfolio.
Real estate taxes for the six months ended June 30, 1997, increased by
$2,319,000 or 98 percent from the six months ended June 30, 1996. The increase
is due primarily to the Merger, acquisitions and expansions of communities and
general 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 the first half of 1997 increased due to the Merger.
Administrative expense in 1997 was 5.5 percent of revenues as compared to 6.1
percent in 1996.
8
<PAGE>
Interest and related amortization costs increased for the six months ended June
30, 1997 by $5,852,000, as compared with the six months ended June 30, 1996.
The increase is attributable to the indebtedness incurred in connection with the
Merger and to finance the 1997 and 1996 acquisitions. Interest expense as a
percentage of average debt outstanding decreased to approximately 7.6 percent in
1997 from approximately 8.9 percent in 1996. The decrease is due primarily to
the ROC debt assumed in the Merger having a lower average interest rate as well
as much of the financing in connection with the Company's Merger and the 1997
and 1996 acquisitions being done with the Company's lines of credit which have a
lower average interest rate.
Depreciation expense for the six months ended June 30, 1997, increased
$9,497,000 from the same period a year ago. The increase is directly
attributable to the Merger. Depreciation expense as a percentage of average
depreciable rental property in 1997 remained relatively unchanged from 1996.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $19,979,000 for the six months
ended June 30, 1997, compared to $13,449,000 for the six months ended June 30,
1996. The increase in cash provided by operating activities was due primarily
to the increase in net operating income.
Net cash used in financing activities for the six months ended June 30, 1997 was
$700,000. Use of cash included distributions made to shareholders/OP
Unitholders of $17,878,000; net borrowings on the lines of credit of $10,710,000
and the payment of $19,851,000 to repurchase and retire 750,000 shares of the
Company's common stock in connection with the Merger. The shares were
repurchased in February 1997 at an average price of approximately $26.47 per
share. This use of cash was offset partially by proceeds of $25,477,000 from
the issuance of 984,423 shares of the Company's common stock at approximately
$25.88 per share.
Net cash used in investing activities for the six month ended June 30, 1997 was
$19,707,000. This amount represented joint venture investments, acquisitions,
capital expenditures and construction and development costs. For the six months
ended June 30, 1997, construction and development costs, including joint
ventures, were approximately $4,000,000, while recurring property capital
expenditures, other than construction and development costs, were approximately
$1,000,000. Recurring property capital expenditures in 1997 increased due to
the Merger. 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. At June 30, the Company had two available credit facilities
aggregating $100 million, each of which is unsecured and bears interest at 150
basis points over LIBOR. As of June 30, 1997, there was $81.5 million
outstanding under the lines of credit.
In July 1997, the Company renegotiated its existing lines of credit and
consolidated them into one line for $75 million which also includes a term loan
for $25 million. The line of credit has First Chicago/NBD acting as lead agent,
is unsecured and bears interest at 110 basis points over LIBOR.
9
<PAGE>
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 its line of credit, from the issuance of additional debt or
equity securities and cash flows from operations.
OTHER
Funds from operations ("FFO") is defined by the National Association of Real
Estate Investment Trusts ("NAREIT") as net income excluding gains (or losses)
from debt restructuring and sales of property plus rental property depreciation
and amortization. Management believes that FFO is an important and widely used
measure of the operating performance of REITs which provides a relevant basis
for comparison among REITs. FFO (i) does not represent cash flow from
operations as defined by generally accepted accounting principles; (ii) should
not be considered as an alternative to net income as a measure of operating
performance or to cash flows from operating, investing and financing activities;
and (iii) is not an alternative to cash flows as a measure of liquidity. FFO is
calculated as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Income before extraordinary item $ 6,123 $ 3,599 $ 11,710 $ 7,920
Depreciation of rental property 8,319 2,887 14,878 5,634
Amortization of other intangibles 111 - 186 -
--------- --------- --------- ---------
Funds from operations $ 14,553 $ 6,486 $ 26,774 $ 13,554
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
On a pro forma basis, FFO is calculated as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Income before minority interest $ 6,123 $ 4,743 $ 12,142 $ 9,777
Depreciation of rental property 8,319 8,152 16,688 16,456
Amortization of other intangibles 111 111 222 227
--------- --------- --------- ---------
Funds from operations $ 14,553 $ 13,006 $ 29,052 $ 26,460
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
10
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Three separate purported class actions have been filed against the Company and
its directors in the Circuit Court of Montgomery County, Maryland alleging
breaches of fiduciary duty for agreeing to the Merger with ROC and refusing to
endorse alternative transactions proposed by Manufactured Home Communities, Inc.
or Sun Communities, Inc. The three class actions are entitled HARBOR FINANCE
PARTNERS V. CHATEAU PROPERTIES, et al. (Case No. 157467), NILES V. CHATEAU
PROPERTIES, ET AL. (Case No. 158284), AND ZSA ASSET ALLOCATION FUND V. BOLL, ET
AL. (Case No. 158652) and were filed on or about September 12, 1996, September
27, 1996 and October 4, 1996, respectively.
The Company believes that such litigation (which has been consolidated) is
entirely without merit and intends to vigorously defend such litigation if
pursued.
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 22, 1997, the Company held its annual meeting of shareholders.
The following matters were voted upon at the meeting:
1) The Proposal to change the Company's name to Chateau Communities,
Inc.:
Abstentions
Votes for Votes Against and Broker Non-Votes
--------- ------------- --------------------
22,907,471 19,087 31,182
2) The Proposal to increase the Company's authorized shares of
common stock to 90,000,000 shares:
Abstentions
Votes for Votes Against and Broker Non-Votes
--------- ------------- --------------------
18,083,982 4,812,283 61,475
3) The proposal to approve the Company's 1997 Equity Compensation
Plan:
Abstentions
Votes for Votes Against and Broker Non-Votes
--------- ------------- --------------------
22,156,665 679,551 121,524
11
<PAGE>
4) The proposal to elect certain directors of the Company:
WITHHELD
CLASS FOR AUTHORITY
I i McDaniel 22,775,924 181,816
ii Anton 22,775,148 182,592
iii Lane 22,744,970 182,770
iv Hogan 22,744,398 213,342
II i Hankins 22,774,977 182,763
ii Miller 22,775,713 182,027
III i Clayton 22,776,018 181,722
ii Davis 22,775,396 182,344
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K filed on June 16, 1997
Exhibit No. Description of Document
----------- -----------------------
5.1 Opinion of Rogers & Wells
5.2 Opinion of Piper & Marbury L.L.P.
8 Opinion of Rogers & Wells Regarding Tax Matters
23.1 Consent of Rogers & Wells (included as part of
Exhibit 5.1)
23.2 Consent of Piper & Marbury L.L.P. (included as
part of Exhibit 5.2)
23.3 Consent of Coopers & Lybrand L.L.P.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities 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, 1997.
CHATEAU COMMUNITIES, 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)
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED BALANCE SHEETS FOUND ON PAGES
1 AND 2 OF THE COMPANY'S 10Q FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 158
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 809,295
<DEPRECIATION> 96,259
<TOTAL-ASSETS> 742,746
<CURRENT-LIABILITIES> 0
<BONDS> 379,613
0
0
<COMMON> 0
<OTHER-SE> 327,367
<TOTAL-LIABILITY-AND-EQUITY> 742,746
<SALES> 0
<TOTAL-REVENUES> 35,600
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 22,835
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,642
<INCOME-PRETAX> 5,563
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,563
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,563
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
