<PAGE> 1
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.
OR
[ ] Transition pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NUMBER 1-2616
SUN COMMUNITIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Maryland 38-2730780
(State of Incorporation) (I.R.S. Employer Identification No.)
31700 Middlebelt Road 48334
Suite 145 (Zip Code)
Farmington Hills, MI
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (248) 932-3100
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
17,502,078 shares of Common Stock, $.01 par value as of July 28, 2000
Page 1 of 17
<PAGE> 2
SUN COMMUNITIES, INC.
INDEX
<TABLE>
<CAPTION>
PAGES
-----
PART I
------
<S> <C> <C>
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 2000 and
December 31, 1999 3
Consolidated Statements of Income for the Periods
Ended June 30, 2000 and 1999 4
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2000 and 1999 5
Notes to Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-14
PART II
-------
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6.(a) Exhibits required by Item 601 of Regulation S-K 15
Item 6.(b) Reports on Form 8-K 15
Signatures 16
</TABLE>
2
<PAGE> 3
SUN COMMUNITIES, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS 2000 1999
--------------- -------------
<S> <C> <C>
Investment in rental property, net $ 781,133 $ 755,138
Cash and cash equivalents 6,706 11,330
Notes and other receivables 106,945 93,428
Investment in and advances to affiliates 26,422 18,841
Other assets 26,264 25,295
--------------- -------------
Total assets $ 947,470 $ 904,032
=============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Line of credit $ 92,000 $ 47,000
Debt 353,501 354,564
Accounts payable and accrued expenses 16,732 17,616
Deposits and other liabilities 9,337 8,660
--------------- -------------
Total liabilities 471,570 427,840
--------------- -------------
Minority interests 140,423 137,834
--------------- -------------
Stockholders' equity:
Preferred stock, $.01 par value, 10,000 shares
authorized; no shares issued and outstanding -- --
Common stock, $.01 par value, 100,000 shares
authorized; 17,501 and 17,459 issued and
outstanding in 2000 and 1999, respectively 175 174
Paid-in capital 393,474 393,360
Officers' notes (11,257) (11,452)
Unearned compensation (5,146) (5,459)
Distributions in excess of accumulated earnings (41,769) (38,265)
--------------- -------------
Total stockholders' equity 335,477 338,358
--------------- -------------
Total liabilities and stockholders'
equity $ 947,470 $ 904,032
=============== =============
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
<PAGE> 4
SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED JUNE 30, 2000
(IN THOUSANDS EXCEPT FOR PER SHARE DATA)
------------
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Income from property $ 32,947 $ 30,567 $ 66,076 $ 61,941
Other income, principally interest 3,117 2,194 6,021 3,820
------------ ----------- ----------- -----------
Total revenues 36,064 32,761 72,097 65,761
------------ ----------- ----------- -----------
Expenses:
Property operating and maintenance 6,703 6,440 13,875 13,289
Real estate taxes 2,271 2,206 4,518 4,411
Property management 709 646 1,449 1,257
General and administrative 1,001 952 2,052 1,862
Depreciation and amortization 7,678 7,135 15,224 14,017
Interest 7,306 6,655 14,153 13,260
------------ ----------- ----------- -----------
Total expenses 25,668 24,034 51,271 48,096
------------ ----------- ----------- -----------
Income before minority interests 10,396 8,727 20,826 17,665
Less income allocated to minority interests:
Preferred OP Units 1,956 626 3,871 1,252
Common OP Units 1,135 1,137 2,293 2,314
------------ ----------- ----------- -----------
Net income $ 7,305 $ 6,964 $ 14,662 $ 14,099
============ =========== =========== ===========
Earnings per common share:
Basic $ 0.42 $ 0.40 $ 0.85 $ 0.82
============ =========== =========== ===========
Diluted $ 0.42 $ 0.40 $ 0.84 $ 0.81
============ =========== =========== ===========
Weighted average common shares
outstanding - basic 17,310 17,160 17,298 17,137
============ =========== =========== ===========
Distributions declared per common
share outstanding $ 0.53 $ -- $ 1.04 $ 0.51
============ =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE> 5
SUN COMMUNITIES, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
2000 1999
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 14,662 $ 14,099
Adjustments to reconcile net income to net
cash provided by operating activities:
Income allocated to minority interests 2,293 2,314
Depreciation and amortization 15,224 14,017
Amortization of deferred financing costs 317 404
Increase in other assets (3,140) (3,410)
Decrease in accounts payable and other liabilities (207) (2,792)
------------- ------------
Net cash provided by operating activities 29,149 24,632
------------- ------------
Cash flows from investing activities:
Investment in rental properties (35,565) (28,395)
Investment in and advances to affiliate (18,592) (3,323)
Investments in notes receivable, net (2,311) (16,927)
------------- ------------
Net cash used in investing activities (56,468) (48,645)
------------- ------------
Cash flows from financing activities:
Borrowings on line of credit, net 45,000 38,000
Repayments on notes payable and other debt (1,063) (976)
Issuance (repurchase) of common stock
and operating partnership units, net (267) 918
Distributions (20,975) (20,083)
Payments for deferred financing costs -- (244)
------------- ------------
Net cash provided by financing activities 22,695 17,615
------------- ------------
Net decrease in cash and cash equivalents (4,624) (6,398)
Cash and cash equivalents, beginning of period 11,330 9,646
------------- ------------
Cash and cash equivalents, end of period $ 6,706 $ 3,248
============= ============
Supplemental Information:
Conversion of partnership interest to notes receivable $ 11,011 $ --
Preferred OP Units issued for rental properties $ 3,564 $ --
Debt assumed for rental properties $ -- $ 1,700
Capitalized lease obligation for rental properties $ -- $ 10,605
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
5
<PAGE> 6
SUN COMMUNITIES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
These unaudited condensed consolidated financial statements of Sun
Communities, Inc., a Maryland corporation, (the "Company"), have been
prepared pursuant to the Securities and Exchange Commission ("SEC") rules
and regulations and should be read in conjunction with the financial
statements and notes thereto of the Company as of December 31, 1999. The
following notes to consolidated financial statements present interim
disclosures as required by the SEC. The accompanying consolidated
financial statements reflect, in the opinion of management, all
adjustments necessary for a fair presentation of the interim financial
statements. All such adjustments are of a normal and recurring nature.
Certain reclassifications have been made to the prior period financial
statements to conform with current period presentation.
The Company owns 100 percent of the preferred stock of an affiliate, Sun
Home Services, Inc. ("Sun Homes"), is entitled to 95 percent of the
operating cash flow of Sun Homes, and accounts for its investment
utilizing the equity method of accounting. The common stock of Sun Homes
is owned by two officers of the Company and the estate of a former
officer of the Company who collectively are entitled to receive 5 percent
of the operating cash flow of Sun Homes.
As of June 30, 2000, "SunChamp", a joint venture among the Company and
Champion Enterprises, Inc., owned ten communities under initial
development. The Company accounts for its investment utilizing the equity
method of accounting.
2. RENTAL PROPERTY:
The following summarizes rental property (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
-------------- -----------------
<S> <C> <C>
Land $ 78,121 $ 76,069
Land improvements and buildings 747,078 720,662
Furniture, fixtures, equipment 17,730 16,943
Land held for future development 16,331 17,046
Property under development 27,565 16,976
------------- ---------------
886,825 847,696
Accumulated depreciation 105,692 92,558
------------- ---------------
Rental property, net $ 781,133 $ 755,138
============= ===============
</TABLE>
6
<PAGE> 7
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. NOTES AND OTHER RECEIVABLES:
Notes receivable consisted of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- ---------------
<S> <C> <C>
Mortgage notes receivable with minimum monthly interest payments
ranging from 7% to LIBOR + 3.25%, maturing from May 2002 through
June 2012, collateralized by four communities $ 29,555 $ 15,093
Note receivable, bears interest at LIBOR
+ 2.35% and payable on demand 41,307 40,794
Note receivable, bears interest at 9.75% and
matures September 2005 4,000 4,000
Installment loans on manufactured homes with interest payable monthly
at a weighted average interest rate and maturity of 11%
and 21 years, respectively. 17,348 18,635
Notes receivable, other, various interest rates
ranging from 6% to 9.5% or
prime + 1.5%, various maturity dates
through December 31, 2003. 1,562 1,562
Other receivables 13,173 13,344
------------- ---------------
$ 106,945 $ 93,428
============= ===============
</TABLE>
Officers' notes which are presented in stockholders' equity are 10 year, LIBOR +
1.75% notes, with a minimum and maximum interest rate of 6% and 9%,
respectively, collateralized by 366,206 shares of the Company"s common stock and
127,794 OP Units with substantial personal recourse.
7
<PAGE> 8
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. DEBT:
The following table sets forth certain information regarding debt (in
thousands):
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
-------------- ---------------
<S> <C> <C>
Collateralized term loan, interest at 7.01%,
due September 9, 2007 $ 43,664 $ 43,927
Senior notes, interest at 7.375%, due May 1, 2001 65,000 65,000
Senior notes, interest at 7.625%, due May 1, 2003 85,000 85,000
Senior notes, interest at 6.97%, due December 3, 2007 35,000 35,000
Callable/redeemable notes, interest at 6.77%, due
May 14, 2015, callable/redeemable May 16, 2005 65,000 65,000
Capitalized lease obligations, interest ranging from
5.5% to 6.3%, due June 2001 through
January 2004 36,326 36,620
Mortgage notes, other 23,511 24,017
--------------- ---------------
$ 353,501 $ 354,564
=============== ===============
</TABLE>
The Company had $33 million available to borrow under its $125 million line of
credit at June 30, 2000. Borrowings under the line of credit bear interest at
the rate of LIBOR plus 1.0% and mature January 1, 2003.
5. EARNINGS PER SHARE (IN THOUSANDS):
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Earnings used for basic and diluted
earnings per share computation $ 7,305 $ 6,964 $ 14,662 $ 14,099
============ =========== =========== ===========
Total shares used for basic earnings
per share 17,310 17,160 17,298 17,137
Dilutive securities, principally
stock options 123 193 91 155
------------ ----------- ----------- -----------
Total shares used for diluted earnings
per share computation 17,433 17,353 17,389 17,292
============ =========== =========== ===========
</TABLE>
Diluted earnings per share reflect the potential dilution that would occur if
securities were exercised or converted into common stock. Convertible Preferred
OP Units are excluded from the computations as their inclusion would have an
antidilutive effect on earnings per share in 2000 and 1999.
8
<PAGE> 9
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion and analysis of the consolidated financial condition
and results of operations should be read in conjunction with the consolidated
financial statements and the notes thereto. Capitalized terms are used as
defined elsewhere in this Form 10-Q.
RESULTS OF OPERATIONS
Comparison of the six months ended June 30, 2000 and 1999
For the six months ended June 30, 2000, income before minority interests
increased by 17.9 percent from $17.7 million to $20.8 million, when compared to
the six months ended June 30, 1999. The increase was due to increased revenues
of $6.3 million while expenses increased by $3.2 million.
Income from property increased by $4.1 million from $62.0 million to $66.1
million, or 6.7 percent, due primarily to rent increases and other community
revenues ($3.2 million), lease up of manufactured home sites including new
developments ($1.8 million), and acquisitions ($1.5 million), offset by a
revenue reduction of $2.4 million due to the sale of four communities during
1999.
Other income increased by $2.2 million from $3.8 million to $6.0 million due
primarily to an increase in interest income.
Property operating and maintenance expenses increased by $0.6 million from $13.3
million to $13.9 million, or 4.4 percent, due primarily to acquisitions.
Real estate taxes increased by $0.1 million from $4.4 million to $4.5 million
primarily due to acquisitions and changes in property tax assessments.
Property management expenses increased by $0.2 million from $1.2 million to $1.4
million representing 2.2 percent and 2.0 percent of income from property in 2000
and 1999, respectively.
General and administrative expenses increased by $0.2 million from $1.9 million
to $2.1 million, representing 2.8 percent of total revenues in 2000 and 1999.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased by $5.3 million from $44.9 million to $50.2 million. EBITDA as a
percent of revenues increased to 69.6 percent in 2000 compared to 68.3 percent
in 1999.
Depreciation and amortization increased by $1.2 million from $14.0 million to
$15.2 million, or 8.6 percent, due primarily to acquisitions and development of
communities in 2000 and 1999.
Interest expense increased by $0.9 million from $13.3 million to $14.2 million,
or 6.7 percent, due primarily to investment in rental property and investment in
and advances to affiliates.
9
<PAGE> 10
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS, CONTINUED
Comparison of the three months ended June 30, 2000 and 1999
For the three months ended June 30, 2000, income before minority interests
increased by 19.1 percent from $8.7 million to $10.4 million, when compared to
the three months ended June 30, 1999. The increase was due to increased revenues
of $3.3 million while expenses increased by $1.6 million.
Income from property increased by $2.4 million from $30.6 million to $33.0
million, or 7.8 percent, due primarily to rent increases and other community
revenues ($1.5 million), lease up of manufactured home sites including new
developments ($1.1 million), and acquisitions ($0.9 million), offset by a
revenue reduction of $1.1 million due to the sale of four communities during
1999.
Other income increased by $0.9 million from $2.2 million to $3.1 million due
primarily to an increase in interest income.
Property operating and maintenance expenses increased by $0.3 million from $6.4
million to $6.7 million, or 4.1 percent, due primarily to acquisitions.
Real estate taxes increased by $0.1 million from $2.2 million to $2.3 million
primarily due to acquisitions and changes in property tax assessments.
Property management expenses increased by $0.1 million from $0.6 million to $0.7
million representing 2.2 percent and 2.1 percent of income from property in 2000
and 1999, respectively.
General and administrative expenses remained constant at $1.0 million,
representing 2.8 percent and 2.9 percent of total revenues in 2000 and 1999,
respectively.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased by $2.9 million from $22.5 million to $25.4 million. EBITDA as a
percent of revenues increased to 70.4 percent in 2000 compared to 68.7 percent
in 1999.
Depreciation and amortization increased by $0.5 million from $7.1 million to
$7.7 million, or 7.6 percent, due primarily to acquisitions and development of
communities in 2000 and 1999.
Interest expense increased by $0.6 million from $6.7 million to $7.3 million, or
9.8 percent, due primarily to investment in rental property and investment in
and advances to affiliates.
10
<PAGE> 11
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SAME PROPERTY INFORMATION
The following table reflects property-level financial information as of and for
the six months ended June 30, 2000 and 1999. The "Same Property" data represents
information regarding the operation of communities owned as of January 1, 1999
and June 30, 2000. Site, occupancy, and rent data for those communities is
presented as of the last day of each period presented. The table includes sites
where the Company is providing financing and managing the properties. Such
amounts relate to the total portfolio data and include 923 sites in 2000 and
1999.
<TABLE>
<CAPTION>
SAME PROPERTY TOTAL PORTFOLIO
------------------------- ----------------------------
2000 1999 2000 1999
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Income from property $ 49,712 $ 47,103 $ 66,076 $ 61,941
----------- ---------- ------------ -----------
Property operating expenses:
Property operating and maintenance 3,870 3,553 13,875 13,289
Real estate taxes 8,831 8,445 4,518 4,411
----------- ---------- ------------ -----------
Property operating expenses 12,701 11,998 18,393 17,700
----------- ---------- ------------ -----------
Property EBITDA $ 37,011 $ 35,105 $ 47,683 $ 44,241
=========== ========== ============ ===========
Number of operating properties 88 88 118 (2) 108
Developed sites 30,000 29,463 39,896 (2) 38,500
Occupied sites 28,623 28,054 36,631 35,600
Occupancy % 95.4% 95.2% 95.4% (1) 94.7% (1)
Weighted average monthly rent per site $ 287 $ 274 $ 284 (1) $ 274 (1)
Sites available for development 1,711 2,156 9,434 (3) 7,763
Sites planned for development in current year 267 723 1,830 (3) 2,343
</TABLE>
(1) Occupancy % and weighted average rent relates to manufactured housing
sites, excluding recreational vehicle sites and sites owned through a joint
venture.
(2) Includes 7 communities and 1,255 developed sites owned through joint
ventures.
(3) Includes 3,590 sites available for development and 640 sites planned for
development owned through joint ventures.
On a same property basis, property revenues increased by $2.6 million from $47.1
million to $49.7 million, or 5.5 percent, due primarily to increases in rents
and occupancy related charges including water and property tax pass through.
Also contributing to revenue growth was the increase of 569 leased sites at June
30, 2000 compared to June 30, 1999.
Property operating expenses increased by $0.7 million from $12.0 million to
$12.7 million or 5.9 percent, due to increased occupancies and costs. Property
EBITDA increased by $1.9 million from $35.1 million to $37.0 million, or 5.4
percent.
11
<PAGE> 12
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $4.6 million to $6.7 million at June 30,
2000 compared to $11.3 million at December 31, 1999 because cash used in
investing activities exceeded cash provided by operating and financing
activities.
Net cash provided by operating activities increased by $4.5 million to $29.1
million for the six months ended June 30, 2000 compared to $24.6 million for the
same period in 1999. This increase was primarily due to a $2.8 million change in
accounts payable and other liabilities and other assets and a $1.7 million
increase in income before minority interests and depreciation and amortization.
Net cash used in investing activities increased by $7.8 million to $56.5 million
from $48.7 million primarily due to a $15.2 million increase in investment in
and advances to affiliates and a $7.2 million increase in rental property
acquisition activities offset by a $14.6 million decrease in investments in
notes receivable, net.
Net cash provided by financing activities increased by $5.1 million to $22.7
million for the six months ended June 30, 2000 compared to $17.6 million for the
same period in 1999. This increase was primarily because of a $7.0 million
increase in borrowings on the line of credit offset by a $1.2 million reduction
in proceeds from common stock and operating partnership units and a $0.9 million
increase in distributions.
The Company expects to meet its short-term liquidity requirements generally
through its working capital provided by operating activities. The Company
expects to meet certain long-term liquidity requirements such as scheduled debt
maturities and property acquisitions through the issuance of equity or debt
securities, or interests in the Operating Partnership. The Company considers
these sources to be adequate and anticipates they will continue to be adequate
to meet operating requirements, capital improvements, investment in development,
and payment of distributions by the Company in accordance with REIT requirements
in both the short and long term. The Company may also meet these short-term and
long-term requirements by utilizing its $125 million line of credit which bears
interest at LIBOR plus 1.0% and is due January 1, 2003. See "Special Note
Regarding Forward-Looking Statements."
At June 30, 2000, the Company"s debt to total market capitalization ratio
approximated 36.5% (assuming conversion of all Common and Preferred OP Units
into shares of common stock). The debt has a weighted average maturity of
approximately 5.3 years and a weighted average interest rate of 7.2%.
Recurring capital expenditures approximated $2.0 million for the six months
ended June 30, 2000.
12
<PAGE> 13
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OTHER
Funds from operations ("FFO") is defined by the National Association of Real
Estate Investment Trusts ("NAREIT") as "net income (computed in accordance with
generally accepted accounting principles) excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures." Industry
analysts consider FFO to be an appropriate supplemental measure of the operating
performance of an equity REIT primarily because the computation of FFO excludes
historical cost depreciation as an expense and thereby facilitates the
comparison of REITs which have different cost bases in their assets. Historical
cost accounting for real estate assets implicitly assumes that the value of real
estate assets diminishes predictably over time, whereas real estate values have
instead historically risen or fallen based upon market conditions. FFO does not
represent cash flow from operations as defined by generally accepted accounting
principles and is a supplemental measure of performance that does not replace
net income as a measure of performance or net cash provided by operating
activities as a measure of liquidity. In addition, FFO is not intended as a
measure of a REIT"s ability to meet debt principal repayments and other cash
requirements, nor as a measure of working capital. The following table
calculates FFO for the periods ended June 30, 2000 and 1999 (in thousands):
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income available to common
shareholders $ 7,305 $ 6,964 $ 14,662 $ 14,099
Add:
Minority interest in earnings to
common OP Unit holders 1,135 1,137 2,293 2,314
Depreciation and amortization, net
of corporate office depreciation 7,613 7,075 15,094 13,897
------------ ----------- ----------- -----------
Funds from operations $ 16,053 $ 15,176 $ 32,049 $ 30,310
============ =========== =========== ===========
Weighted average OP Units outstanding
used for basic FFO per share/unit 19,999 19,964 20,003 19,950
Dilutive securities:
Stock options and awards 123 193 91 155
Covertible preferred OP Units -- 1,183 -- 1,230
------------ ----------- ----------- -----------
Weighted average OP Units used for
diluted FFO per share/unit 20,122 21,340 20,094 21,335
============ =========== =========== ===========
FFO, per share/unit
Basic $ 0.80 $ 0.76 $ 1.60 $ 1.52
============ =========== =========== ===========
Diluted $ 0.80 $ 0.74 $ 1.60 $ 1.48
============ =========== =========== ===========
</TABLE>
13
<PAGE> 14
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OTHER CONTINUED:
Year 2000 Update
In February 2000, the Company officially concluded its Year 2000 compliance
program as no events had occurred that significantly affected either the
Company's operation or its financial statements.
Special Note Regarding Forward-Looking Statements
This Form 10-Q contains various "forward-looking statements" within the meaning
of the Securities Act of 1933 and the Securities Exchange Act of 1934, and the
Company intends that such forward-looking statements be subject to the safe
harbors created thereby. The words "may", "will", "expect", "believe",
"anticipate", "should", "estimate", and similar expressions identify
forward-looking statements. These forward-looking statements reflect the
Company's current views with respect to future events and financial performance,
but are based upon current assumptions regarding the Company's operations,
future results and prospects, and are subject to many uncertainties and factors
relating to the Company's operations and business environment which may cause
the actual results of the Company to be materially different from any future
results expressed or implied by such forward-looking statements. Such
uncertainties and factors include the ability of manufactured home buyers to
obtain financing, the level of repossessions by manufactured home lenders, and
those referenced in the section entitled "Risk Factors" of the Company's
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission on February 15, 2000.
Such factors include, but are not limited to, the following: (i) changes in the
general economic climate; (ii) increased competition in the geographic areas in
which the Company owns and operates manufactured housing communities; (iii)
changes in government laws and regulations affecting manufactured housing
communities; (iv) the ability of manufactured home buyers to obtain financing;
(v) the level of repossessions by manufactured home lenders; and (vi) the
ability of the Company to continue to identify, negotiate and acquire
manufactured housing communities and/or vacant land which may be developed into
manufactured housing communities on terms favorable to the Company. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements whether as a result of new information, future events, or otherwise.
Recent Accounting Pronouncements
In June 1998, FASB issued SFAS No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). This statement establishes accounting and
reporting standards for derivative instruments including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. This statement will be effective
January 1, 2001. There is no effect from the application of SFAS 133 on the
earnings and financial position of the Company as the Company had no derivative
instruments at June 30, 2000 and December 31, 1999.
14
<PAGE> 15
SUN COMMUNITIES, INC.
PART II
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 14, 2000, the Company held its Annual Meeting of Shareholders. The
following matters were voted upon at the meeting:
(a) The election of two directors to serve until the 2003 Annual Meeting
of Shareholders or until their respective successors shall be elected
and shall qualify. The results of the election appear below:
<TABLE>
<CAPTION>
Votes Against Abstentions or
Name Votes For or Withheld Broker Non-Votes
------------------- ------------- ------------------ ----------------
<S> <C> <C> <C>
Paul D. Lapides 14,821,669 0 22,482
Ted J. Simon 14,820,169 0 23,982
</TABLE>
ITEM 6.(A) - EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule
ITEM 6.(B) - REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the period covered by
this Form 10-Q.
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<PAGE> 16
SUN COMMUNITIES, INC.
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.
Dated: August 4, 2000
SUN COMMUNITIES, INC.
BY: /s/ Jeffrey P. Jorissen
-----------------------------------------------
Jeffrey P. Jorissen, Chief Financial Officer
and Secretary
16
<PAGE> 17
SUN COMMUNITIES, INC.
EXHIBIT INDEX
PAGE
FILED NUMBER
EXHIBIT NO. DESCRIPTION HEREWITH HEREIN
27 Financial Data Schedule X
17
