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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, 2002
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period ended _________________________
For Quarter Ended Commission File Number
June 30, 2002 0-13130
UNITED MOBILE HOMES, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-1890929
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
Juniper Business Plaza,3499 Route 9 North, Suite 3-C,Freehold,
NJ 07728
Registrant's telephone number, including area code (732) 577-9997
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ________
The number of shares outstanding of issuer's common stock as of
August 1, 2002 was 7,626,926 shares.
UNITED MOBILE HOMES, INC.
for the QUARTER ENDED
JUNE 30, 2002
PART I - FINANCIAL INFORMATION Page No.
Item 1 - Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6-7
Item 2 - Management Discussion and Analysis of
Financial Conditions and Results of 8-9
Operations
Item 3 - Quantitative and Qualitative Disclosures
About Market Risk
There have been no material changes to
information required regarding quantitative
and qualitative disclosures about market
risk from the end of the preceding year to
the date of this Form 10-Q.
PART II OTHER INFORMATION 10
SIGNATURES 11
2
UNITED MOBILE HOMES, INC
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2002 AND DECEMBER 31, 2001
-ASSETS- June 30, December 31,
2002 2001
INVESTMENT PROPERTY AND EQUIPMENT
Land $ 7,212,035 7,212,035
Site and Land Improvements 54,916,370 54,640,298
Buildings and Improvements 2,745,194 2,745,194
Rental Homes and Accessories 8,643,585 8,432,068
__________ __________
Total Investment Property 73,517,184 73,029,595
Equipment and Vehicles 3,840,954 3,611,353
__________ __________
Total Investment Property and
Equipment 77,358,138 76,640,948
Accumulated Depreciation (33,666,130) (32,349,006)
__________ __________
Net Investment Property and Equipment 43,692,008 44,291,942
__________ __________
OTHER ASSETS
Cash and Cash Equivalents 1,222,422 1,567,831
Securities Available for Sale 30,052,232 25,917,748
Inventory of Manufactured Homes 2,736,743 2,782,665
Notes and Other Receivables 4,370,617 3,291,355
Unamortized Financing Costs 451,076 467,107
Prepaid Expenses 439,365 113,680
Land Development Costs 2,246,896 1,902,516
__________ __________
Total Other Assets 41,519,351 36,042,902
__________ __________
TOTAL ASSETS $85,211,359 $80,334,844
========== ==========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
LIABILITIES:
MORTGAGES PAYABLE $44,943,733 $38,652,025
OTHER LIABILITIES __________ __________
Accounts Payable 430,689 836,588
Loans Payable 7,096,632 10,692,683
Accrued Liabilities and Deposits 2,210,737 1,711,232
Tenant Security Deposits 496,305 477,782
__________ __________
Total Other Liabilities 10,234,363 13,718,285
__________ __________
Total Liabilities 55,178,096 52,370,310
__________ __________
SHAREHOLDERS' EQUITY:
Common Stock - $.10 par value per
share, 10,000,000 shares authorized,
7,981,326 and 7,888,632 shares issued
and 7,624,926 and 7,542,332 shares
outstanding as of June 30, 2002
and December 31, 2001, respectively 798,133 788,863
Additional Paid-In Capital 28,491,909 27,409,361
Accumulated Other
Comprehensive Income 4,734,827 3,541,001
Accumulated Deficit (603,759) (667,793)
Treasury Stock at Cost (356,400 and
346,300 shares at June 30, 2002 and
December 31, 2001, respectively) (3,238,347) (3,106,898)
Notes Receivable from Officers (149,500) -0-
__________ __________
Total Shareholders' Equity 30,033,263 27,964,534
__________ __________
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $85,211,359 $80,334,844
========== ==========
-UNAUDITED-
See Accompanying Notes to Consolidated Financial Statements
3
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2002 AND 2001
THREE MONTHS SIX MONTHS
6/30/02 6/30/01 6/30/02 6/30/01
REVENUES:
Rental and Related
Income $5,007,991 $4,784,766 $9,994,979 $9,550,754
Sales of Manufactured
Homes 1,563,144 1,714,722 2,476,662 1,714,722
Interest and Dividend
Income 718,962 467,836 1,337,077 991,475
Gain on Securities
Available for Sales
Transactions, net 169,919 368,948 702,738 330,774
Other Income 30,068 40,247 47,985 40,247
_________ _________ __________ __________
Total Revenues 7,490,084 7,376,519 14,559,441 12,627,972
_________ _________ __________ __________
EXPENSES:
Community Operating
Expenses 2,335,933 2,239,563 4,530,175 4,228,281
Cost of Sales of
Manufactured Homes 1,269,464 1,445,610 2,080,214 1,445,610
Selling Expenses 283,541 197,048 460,483 197,048
General and
Administrative
Expenses 535,126 493,645 1,071,524 1,032,200
Interest Expense 816,603 698,076 1,590,506 1,350,624
Depreciation Expense 698,020 659,167 1,400,025 1,325,606
Amortization of
Financing Costs 26,700 19,500 53,400 39,000
_________ _________ __________ __________
Total Expenses 5,965,387 5,752,609 11,186,327 9,618,369
_________ _________ __________ __________
Income before Gain
on Sales of
Investment Property
and Equipment 1,524,697 1,623,910 3,373,114 3,009,603
(Loss) Gain on Sales
of Investment
Property and
Equipment (4,352) (9,336) (1,025) 981
_________ _________ __________ __________
Net Income $1,520,345 $1,614,574 $3,372,089 $3,010,584
========= ========= ========= =========
Net Income per Share -
Basic $ 0.20 $ 0.22 $ 0.45 $ 0.41
========= ========= ========= =========
Diluted $ 0.20 $ 0.21 $ 0.44 $ 0.40
========= ========= ========= =========
Weighted Average
Shares Outstanding -
Basic 7,590,344 7,440,720 7,569,767 7,420,800
========= ========= ========= =========
Diluted 7,682,489 7,475,853 7,657,560 7,458,535
========= ========= ========= =========
-UNAUDITED-
See Accompanying Notes to Consolidated Financial Statements
4
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30, 2002 AND 2001
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $3,372,089 $3,010,584
Non-Cash Adjustments:
Depreciation 1,400,025 1,325,606
Amortization 53,400 39,000
Gain on Securities Available for Sale
Transactions (702,738) (330,774)
Loss (Gain) on Sales of Investment
Property and Equipment 1,025 (981)
Changes in Operating Assets and
Liabilities:
Inventory of Manufactured Homes 45,922 (2,164,994)
Notes and Other Receivables (1,079,262) (432,348)
Prepaid Expenses (325,685) 13,965
Accounts Payable (405,899) (50,943)
Accrued Liabilities and Deposits 499,505 231,311
Tenant Security Deposits 18,523 6,901
_________ _________
Net Cash Provided by Operating Activities 2,876,905 1,647,327
_________ _________
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Investment Property
And Equipment (952,830) (1,166,281)
Proceeds from Sales of Assets 151,714 35,953
Additions to Land Development (344,380) (351,638)
Purchase of Securities Available for Sale (5,044,831) (5,331,992)
Proceeds from Sales of Securities
Available for Sale 2,806,911 3,125,688
_________ _________
Net Cash Used by Investing Activities (3,383,416) (3,688,270)
_________ _________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Mortgages and Loans 6,862,500 3,502,050
Principal Payments of Mortgages and Loans (4,166,843) (456,058)
Financing Costs on Debt (37,369) -0-
Proceeds from Exercise of Stock Options 117,050 107,500
Dividends Paid (2,482,787) (1,972,898)
Purchase of Treasury Stock (131,449) (296,731)
_________ _________
Net Cash Provided by Financing Activities 161,102 883,863
_________ _________
NET DECREASE IN CASH
AND CASH EQUIVALENTS (345,409) (1,157,080)
CASH & CASH EQUIVALENTS - BEGINNING 1,567,831 1,399,259
_________ _________
CASH & CASH EQUIVALENTS - ENDING $1,222,422 $242,179
========= =========
-UNAUDITED-
See Accompanying Notes to Consolidated Financial Statements
5
UNITED MOBILE HOMES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
(UNAUDITED)
NOTE 1 - ACCOUNTING POLICY
The interim consolidated financial statements furnished herein
reflect all adjustments which were, in the opinion of management,
necessary to present fairly the financial position, results of
operations, and cash flows at June 30, 2002 and for all periods
presented. All adjustments made in the interim period were of a
normal recurring nature. Certain footnote disclosures which
would substantially duplicate the disclosures contained in the
audited consolidated financial statements and notes thereto
included in the annual report of United Mobile Homes, Inc. (the
Company) for the year ended December 31, 2001 have been omitted.
Effective April 1, 2001, the Company, through its wholly-owned
taxable subsidiary, UMH Sales and Finance, Inc. (S&F), began to
conduct manufactured home sales in its communities. This company
was established to enhance the occupancy of the communities. The
consolidated financial statements of the Company include S&F and
all of its other wholly-owned subsidiaries. All intercompany
transactions and balances have been eliminated in consolidation.
Certain reclassifications have been made to the financial
statements for prior periods to conform to the current period
presentation.
NOTE 2 - NET INCOME PER SHARE AND COMPREHENSIVE INCOME
Basic net income per share is calculated by dividing net income
by the weighted average shares outstanding for the period.
Diluted net income per share is calculated by dividing net income
by the weighted average number of common shares outstanding plus
the weighted average number of net shares that would be issued
upon exercise of stock options pursuant to the treasury stock
method. Options in the amount of 92,145 and 87,793 shares for
the three and six months ended June 30, 2002, respectively, and
35,133 and 37,735 for the three and six months ended June 30,
2001, respectively, are included in the diluted weighted average
shares outstanding.
Total comprehensive income, including unrealized gains (losses)
on securities available for sale, amounted to $2,232,710 and
$4,565,915 for the three and six months ended June 30, 2002,
respectively, and $2,844,917 and $6,374,718 for the three and six
months ended June 30, 2001, respectively.
NOTE 3 - MORTGAGES PAYABLE
On June 20, 2002, the Company took down the additional $1,500,000
on the Fairview Manor mortgage. The total balance of $4,000,000
was converted to a fixed rate mortgage with an effective interest
rate of 6.39%. This mortgage is due July 27, 2007.
On March 28, 2002, the Company obtained a $5,362,500 mortgage
with Prudential Mortgage Capital Company. This mortgage is at an
interest rate of 7.36% for a ten-year term with a thirty year
amortization schedule. This loan is secured by Port Royal
Village in Belle Vernon, Pennsylvania.
6
NOTE 4 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On June 17, 2002, the Company paid $1,705,309 as a dividend of
$.215 per share to shareholders of record as of May 15, 2002.
The total dividends paid for the six months ended June 30, 2002
amounted to $3,308,055. On June 17, 2002, the Company received
$414,716 from the Dividend Reinvestment and Stock Purchase Plan.
There were 33,676 new shares issued under the Plan. The total
amount received from the Dividend Reinvestment and Stock Purchase
Plan for the six months ended June 30, 2002 amounted to $825,268.
NOTE 5 - TREASURY STOCK
During the six months ended June 30, 2002, the Company purchased
10,100 shares of its own stock for a total cost of $131,449.
These shares are accounted for under the cost method and are
included as Treasury Stock in the Consolidated Financial
Statements.
NOTE 6 - EMPLOYEE STOCK OPTIONS
During the six months ended June 30, 2002, the following stock
options were granted:
Date of Number of Number of Option Expiration
Grant Employees Shares Price Date
1/04/02 1 25,000 $12.95 1/4/10
6/20/02 12 43,000 $12.60 6/20/10
During the six months ended June 30, 2002, seven employees
exercised their stock options and purchased 23,700 shares for a
total of $266,550. Of this amount, 13,000 shares for a total of
$149,500, were exercised through the issuance of notes receivable
from officers. These notes receivable are at an interest rate of
5%, mature on June 25, 2007 and are collateralized by the
underlying common shares.
NOTE 7 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the six months ended June 30, 2002 and 2001 for
interest was $1,656,106 and $1,430,924, respectively. Interest
cost capitalized to Land Development was $65,600 and $80,300 for
the six months ended June 30, 2002 and 2001, respectively.
During the six months ended June 30, 2002 and 2001, the Company
had dividend reinvestments of $825,268 and $936,276,
respectively, which required no cash transfers.
During the six months ended June 30, 2002, two officers exercised
their stock options for 13,000 shares through the issuance of
$149,500 of notes receivable.
7
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
United Mobile Homes, Inc. (the Company) owns and operates twenty-
five manufactured home communities. These manufactured home
communities have been generating increased gross revenues and
increased operating income. The Company also purchases and holds
securities of other real estate investment trusts.
The Company generated $2,876,905 net cash provided by operating
activities. The Company received new capital of $825,268 through
its Dividend Reinvestment and Stock Purchase Plan (DRIP). The
Company purchased $5,044,831 of securities of other real estate
investment trusts. The Company had a decrease in inventory of
manufactured homes of $45,922. Effective April 1, 2001, the
Company through its wholly-owned taxable subsidiary, UMH Sales
and Finance, Inc. (S&F) began to conduct manufactured home sales
in its communities. Mortgages Payable increased by $6,291,708 as
a result of new mortgages of $6,862,500 partially offset by
principal repayments of $570,792.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Rental and related income increased from $4,784,766 for the
quarter ended June 30, 2001 to $5,007,991 for the quarter ended
June 30, 2002. Rental and related income increased from
$9,550,754 for the six months ended June 30, 2001 to $9,994,979
for the six months ended June 30, 2002. This was primarily due
to the acquisition of a new community in September, 2001 and the
rental increases to residents. The Company has been raising
rental rates by approximately 3% to 4% annually. Sales of
manufactured homes amounted to $1,563,144 and $2,476,662 for the
quarter and six months, ended June 30, 2002, respectively, as
compared to $1,714,722 for the quarter and six months ended June
30, 2001. Effective April 1, 2001, the Company began to conduct
manufactured home sales in its communities. Interest and
dividend income rose from $467,836 for the quarter ended June
30, 2001 to $718,962 for the quarter ended June 30, 2002.
Interest and dividend income rose from $991,475 for the six
months ended June 30, 2001 to $1,377,077 for the six months ended
June 30, 2002. This was due primarily to purchases of Securities
available for sale during 2002 and 2001. Gain on securities
available for sale transactions amounted to $169,919 and $702,738
for the quarter and six months ended June 30, 2002,
respectively, as compared to $368,948 and $330,774 for the
quarter and six months ended June 30, 2001, respectively.
Included in the Gain on securities available for sale
transactions for the quarter and six months ended June 30, 2001
was a writedown of $31,130 and $132,949, respectively, of
Securities available for sale which were considered other than
temporarily impaired. Other income amounted to $30,068 and
$47,985 for the quarter and six months ended June 30, 2002,
respectively, as compared to $40,247 for the quarter and six
months ended June 30, 2001. This represents miscellaneous income
generated by S&F.
Community operating expenses increased from $2,239,563 for the
quarter ended June 30, 2001 to $2,335,933 for the quarter ended
June 30, 2002. Community operating expenses increased from
$4,228,281 for the six months ended June 30, 2001 to $4,530,175
for the six months ended June 30, 2002. This was primarily due
to the acquisition of a new community and increased insurance
expense and personnel costs. Cost of sales of manufactured homes
amounted to $1,269,464 and $2,080,214 for the quarter and six
months ended June 30, 2002, respectively, as compared to
$1,445,610 for the quarter and six months ended June 30, 2001.
8
This change is directly attributable to the change in
sales. Selling expenses amounted to $283,541 and
$460,483 for the quarter and six months ended June 30, 2002,
respectively, as compared to $197,048 for the quarter and six
months ended June 30, 2001. This increase is due to additional
personnel costs and advertising. General and administrative
expenses remained relatively stable for the quarter and six
months ended June 30, 2002 as compared to the quarter and six
months ended June 30, 2001. Interest expense increased from
$698,076 for the quarter ended June 30, 2001 to $816,603 for the
quarter ended June 30, 2002. Interest expense increased from
$1,350,624 for the six months ended June 30, 2001 to $1,590,506
for the six months ended June 30, 2002. This was primarily due
to increased borrowings. Depreciation expense increased from
$659,167 for the quarter ended June 30, 2001 to $698,020 for the
quarter ended June 30, 2002. Depreciation expense increased from
$1,325,606 for the six months ended June 30, 2001 to $1,400,025
for the six months ended June 30, 2002. This was primarily due
to the acquisition of a new community. Amortization of financing
costs remained relatively stable for the quarter and six months
ended June 30, 2002 as compared to the quarter and six months
ended June 30, 2001.
Funds from operations (FFO), defined as net income, excluding
gains (or losses) from sales of depreciable assets, plus
depreciation remained relatively stable for the quarter ended
June 30, 2002 as compared to the quarter ended June 30, 2001. FFO
increased from $4,335,209 for the six months ended June 30, 2001
to $4,773,139 for the six months ended June 30, 2002. FFO does
not replace net income (determined in accordance with generally
accepted accounting principles) as a measure of performance or
net cash flows as a measure of liquidity. FFO should be
considered as a supplemental measure of operating performance
used by real estate investment trusts.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased from
$1,647,327 for the six months ended June 30, 2001 to $2,876,905
for the six months ended June 30, 2002. The Company believes
that funds generated from operations together with the financing
and refinancing of its properties will be sufficient to meet its
needs over the next several years.
9
PART II
OTHER INFORMATION
Item 1 - Legal Proceedings - none
Item 2 - Changes in Securities - none
Item 3 - Defaults Upon Senior Securities - none
Item 4 - Submission of Matters to a Vote of Security Holders -
The annual meeting of shareholders was held on June 6,
2002 to elect a Board of Directors for the ensuing
year and to approve the selection of independent
auditors. Proxies for the meeting were solicited
pursuant to Regulation 14 under the Securities and
Exchange Act of 1934.
Item 5 - Other Information - none
Item 6 - Exhibits and Reports on Form 8-K -
(a) Exhibits -
99.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
99.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
(b) Reports on Form 8-K - none
10
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
DATE: August 2, 2002 By /s/ Samuel A. Landy,
President
DATE: August 2, 2002 By /s/ Anna T. Chew,
Vice President and
Chief Financial Officer
11