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Form 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the transition period ____________________ to _____________________
Commission File Number 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)
125 Wyckoff Road, Eatontown, New Jersey 07724
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (908) 389-3890
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
$.10 par value
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
Indicate by check if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K X .
Based upon the assumption that directors and executive officers of the
registrant are not affiliates of the registrant, the aggregate market value
of the voting stock of the registrant held by nonaffiliates of the
registrant at March 14, 1997 was $78,190,196. Presuming that such
directors and executive officers are affiliates of the registrant, the
aggregate market value of the voting stock of the registrant held by
nonaffiliates of the registrant at March 14, 1997 was $57,228,933.
The number of shares outstanding of issuer's common stock as of March 14,
1997 was 6,448,676 shares.
Documents Incorporated by Reference:
- - Exhibits incorporated by reference are listed in Part IV, Item (a)(3).
PART I
ITEM I - BUSINESS
General Development of Business
United Mobile Homes, Inc. (the Company) owns and operates twenty-three
manufactured home communities containing 5,261 sites. The communities are
located in New Jersey, New York, Ohio, Pennsylvania and Tennessee.
The Company was incorporated in the State of New Jersey in 1968. Its
executive offices are located at 125 Wyckoff Road, Eatontown, New Jersey
07724. Its telephone number is (908) 389-3890.
Effective January 1, 1992, the Company elected to be taxed as a real
estate investment trust (REIT) under Sections 856-858 of the Internal
Revenue Code. The Company received from the Internal Revenue Service a
favorable revenue ruling that it qualified as a REIT. The Company will not
be taxed on the portion of its income which is distributed to shareholders,
provided it distributes at least 95% of its taxable income, has at least
75% of its assets in real estate investments and meets certain other
requirements for qualification as a REIT.
Background
Monmouth Capital Corporation, a publicly-owned Small Business
Investment Corporation, that had owned approximately 66% of the Company's
stock, spun off to its shareholders in a registered distribution three
shares of United Mobile Homes, Inc. for each share of Monmouth Capital
Corporation. The Company in 1984 and 1985 issued additional shares through
rights offerings. The Company has been in operation for twenty-eight
years, the last twelve of which have been as a publicly-owned corporation.
Narrative Description of Business
The Company's primary business is the ownership and operation of
manufactured home communities - leasing manufactured home spaces on a month-
to-month basis to private manufactured home owners. The Company also
leases homes to residents.
A manufactured home community is designed to accommodate detached,
single family manufactured housing units, which are produced off-site by
manufacturers and delivered by truck to the site. Such dwellings, referred
to as manufactured homes (which should be distinguished from travel
trailers), are manufactured in a variety of styles and sizes. Manufactured
homes, once located, are rarely transported to another site; typically, a
manufactured home remains on site and is sold by its owner to a subsequent
occupant. This transaction is commonly handled through a broker in the
same manner that the more traditional single-family residence is sold.
Each owner of a manufactured home leases the site on which the home is
located from the Company.
Manufactured homes are being accepted by the public as a viable and
economically attractive alternative to common stick-built single-family
housing. During the past five years, approximately one-fifth of all single-
family homes built and sold in the nation have been manufactured homes.
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The size of a modern manufactured home community is limited, as are
other residential communities, by factors such as geography, topography,
and funds available for development. Generally, modern manufactured home
communities contain buildings for recreation, green areas, and other common
area facilities, which, as distinguished from resident owned manufactured
homes, are the property of the community owner. In addition to such
general improvements, certain manufactured home communities include
recreational improvements such as swimming pools, tennis courts and
playgrounds. Municipal water and sewer services are available to some
manufactured home communities, while other communities supply these
facilities on site. The housing provided by the manufactured home
community, therefore, includes not only the manufactured dwelling unit
(owned by the resident), but also the physical community framework and
services provided by the manufactured home community.
The community manager interviews prospective residents, ensures
compliance with community regulations, maintains public areas and community
facilities and is responsible for the overall appearance of the community.
The manufactured home community, once fully occupied, tends to achieve a
stable rate of occupancy. The cost and effort in moving a home once it is
located in a community encourages the owner of the manufactured home to
resell his manufactured home there rather than to remove it from the
community. This ability to produce relatively predictable income, together
with the location of the community, its condition and its appearance, are
factors in the long-term appreciation of the community.
The long-term industry trend may be toward condominium conversions. A
change from investor community ownership to resident ownership would
enhance the value of existing manufactured home communities. All of the
Company's communities are located in areas of the country that have not yet
accepted this concept. Condominium conversion is a long-term possibility
and has no impact on the Company's current operations.
Investment and Other Policies of the Company
The Company may invest in improved and unimproved real property and
may develop unimproved real property. Such properties may be located
throughout the United States. In the past, it has concentrated on the
northeast. The Company may also invest in the securities of other REITs.
The Company has no restrictions on how it finances new manufactured
home communities. It may finance communities by purchase money mortgages
or other financing, including first liens, wraparound mortgages or
subordinated indebtedness. In connection with its ongoing activities, the
Company may issue notes, mortgages or other senior securities. The Company
intends to use both secured and unsecured lines of credit.
The Company may issue securities for property, however, this has not
occurred to date, and it may repurchase or reacquire its shares from time
to time if in the opinion of the Board of Directors such acquisition is
advantageous to the Company.
Property Maintenance and Improvement Policies
It is the policy of the Company to properly maintain, modernize,
expand, and make improvements to its properties when required. The Company
anticipates that renovation expenditures with respect to its present
properties over the next five years will be consistent with 1996
expenditures. It is the policy of the Company to maintain adequate
insurance coverage on all of its properties; and, in the opinion of the
Company, all of its properties are adequately insured where such insurance
is available at a reasonable cost as determined by management.
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General Risks of Real Estate Ownership
The Company's investments will be subject to the risks generally
associated with the ownership of real property, including the uncertainty
of cash flow to meet fixed obligations, adverse changes in national
economic conditions, changes in the relative popularity (and thus the
relative price) of the Company's real estate investments when compared to
other investments, adverse local market conditions due to changes in
general or local economic conditions or neighborhood values, changes in
interest rates and in the availability of mortgage funds, costs and terms
of mortgage funds, the financial conditions of residents and sellers of
properties, changes in real estate tax rates and other operating expenses
(including corrections of potential environmental issues as well as more
stringent governmental regulations regarding the environment), governmental
rules and fiscal policies including possible proposals for rent controls,
as well as expenses resulting from acts of God, uninsured losses and other
factors which are beyond the control of the Company. The Company's
investments are primarily in rental properties and are subject to the risk
or inability to attract or retain residents with a consequent decline in
rental income as a result of adverse changes in local real estate markets
or other factors.
Competition for Manufactured Home Community Investments
The Company will be competing for manufactured home community
investments with numerous other real estate entities, such as individuals,
corporations, real estate investment trusts and other enterprises engaged
in real estate activities, possibly including certain affiliates of the
Company. In many cases, the competing concerns may be larger and better
financed than the Company, making it difficult for the Company to secure
new manufactured home community investments. Competition among private and
institutional purchasers of manufactured home community investments has
increased substantially in recent years, with resulting increases in the
purchase price paid for manufactured home communities and consequent higher
fixed costs.
Environmental, Regulatory and Energy Problems
The availability of suitable investments and the cost of construction
and operation of manufactured home communities in which the Company may
invest may be adversely affected by legislative, regulatory, administrative
and enforcement action at the local, state and national levels in the
areas, among others, of housing and environmental controls. In addition to
possible increasingly restrictive zoning regulations and related land use
controls, such restrictions may relate to air, ground and water quality
standards, wetlands regulations, noise pollution and indirect environmental
impacts such as increased motor vehicle activity.
The Company owns and operates 11 manufactured home communities which
either have their own waste water treatment facility, water distribution
system, or both. At these locations, the Company is subject to compliance
of monthly, quarterly and yearly testing for contaminants as outlined by
the individual state's Department of Environmental Protection Agencies.
The Company must also comply with certain Federal Environmental
Protection Agency Regulations which may be more stringent than the state
and local governmental regulations. The costs of such testing are included
in the Company's operating expenses. As of the date of this report, there
are no enforcement actions pending by any federal, state or local
environmental agencies and management believes that the Company is in
compliance with all such regulations.
-3-
Currently, the Company is not subject to radon or asbestos monitoring
requirements.
In its normal course of business, the Company does not incur costs
related to local or state zoning issues. However, zoning regulations often
restrict expansion of the Company's communities, but allow continuing
operation of existing communities.
Rent control affects only two of the Company's manufactured home
communities which are in New Jersey and has resulted in a slower growth of
earnings from these properties.
Number of Employees
On March 1, 1997, the Company had approximately 75 employees,
including Officers. During the year, the Company hires approximately 20
part-time and full-time temporary employees as lifeguards, grounds keepers
and for emergency repairs.
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ITEM 2 - PROPERTIES
United Mobile Homes, Inc. is engaged in the ownership and operation of
manufactured home communities located in New Jersey, New York, Ohio,
Pennsylvania and Tennessee. The Company owns twenty-three manufactured
home communities. The following is a brief description of the properties
owned by the Company:
Number 1996 Current
of Average Rent Per
Name of Community Sites Occupancy Month Per Site
Allentown 414 82% $199
4912 Raleigh-Millington Rd.
Memphis, TN 38128
Brookview Village 133 93% $285
Route 9N
Greenfield Center, NY 12833
Cedarcrest 283 99% $313
1976 North East Avenue
Vineland, NJ 08360
Cranberry Village 201 98% $270
201 North Court
Mars, PA 16046
Cross Keys Village 133 100% $218
Old Sixth Avenue Rd.
RD #1
Duncansville, PA 16635
D & R Village 234 99% $322
Route 146, RD 13
Clifton Park, NY 12065
Edgewood Estates 218 79% $180
700 Edgewood Estates
Apollo, PA 15613
Fairview Manor 160 99% $315
2110 Mays Landing Rd.
Millville, NJ 08360
Forest Park Village 252 97% $236
724 Slate Avenue
Cranberry Twp., PA 16066
Heather Highlands 457 70% $179
109 S. Main Street
Pittston, PA 18640
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Number 1996 Current
of Average Rent Per
Name of Community Sites Occupancy Month Per Site
Highland Estates 192 97% $302
60 Old Route 22
Kutztown, PA 19530
Kinnebrook 212 95% $302
Route 17-B
Monticello, NY 12701
Lake Sherman Village 210 98% $221
7227 Beth Avenue, SW
Navarre, OH 44662
Memphis Mobile City 168 85% $193
3894 N. Thomas Street
Memphis, TN 38127
Oxford Village 224 100% $311
2 Dolinger Drive
West Grove, PA 19390
Pine Ridge Village 137 97% $266
147 Amy Drive
Carlisle, PA 17013
Port Royal Village 402 86% $196
400 Patterson Lane
Belle Vernon, PA 15012
River Valley Estates 183 89% $167
2066 Victory Rd.
Marion, OH 43302
Sandy Valley Estates 327 97% $199
801 First, Route #2
Magnolia, OH 44643
Southwind Village 250 96% $243
435 E. Veterans Highway
Jackson, NJ 08527
Spreading Oaks Village 153 92% $147
7140-29 Selby Road
Athens, OH 45701
Woodlawn Village 157 99% $388
Route 35
Eatontown, NJ 07724
Wood Valley 161 91% $167
1493 N. Whetstone River Rd.
Caledonia, OH 43314
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Occupancy rates are very stable with little year-to-year changes
once the community is filled (generally 90% or greater occupancy). It is
the Company's experience that, once home is set up in the community, it is
seldom moved. The home if sold, is sold on-site to a new owner.
Residents generally rent on a month-to-month basis. Some residents
have one-year leases. Southwind Village and Woodlawn Village (both in New
Jersey) are the only communities subject to local rent control laws.
There are 14 sites at Sandy Valley which are under a consent order
with the Federal Government. This order provides that, as sites become
vacant, they cannot be reused. The restrictions on use were known at the
time of purchase, and the item is not material to the operation of Sandy
Valley Estates.
In connection with the operation of its 5,261 sites, the Company
operates approximately 340 rental units. These are homes owned by the
Company and rented to residents. The Company engages in the rental of
manufactured homes primarily in areas where the communities have existing
vacancies. The rental homes produce income on both the home and for the
site which might otherwise be non-income producing. The Company sells the
older rental homes when the opportunity arises.
The Company has approximately 800 sites in various stages of
engineering/construction. Due to the difficulties involved in the approval
and construction process, it is difficult to predict the number of sites
which will be completed in a given year. During 1996, 27 sites were
completed at River Valley Estates.
Significant Properties
The Company operates approximately $51,000,000 (at original cost) in
manufactured home properties. These consist of 23 separate manufactured
home communities and related equipment and improvements. There are 5,261
sites in the 23 communities. No one community constitutes more than 10% of
the total assets of the Company. Port Royal Village with 402 sites, Sandy
Valley Estates with 327 sites, Cedarcrest with 283 sites, Allentown with
414 sites and Heather Highlands with 457 sites are the larger properties.
The following is a description of these properties:
PORT ROYAL VILLAGE
The Company acquired Port Royal Village in 1984. This is a 402-space
manufactured home community located in Belle Vernon, Pennsylvania. The
Company believes this to be a sound acquisition for the following reasons:
(a) the community is well-maintained with city water and its own sewer
plant, as well as a swimming pool and community building; (b) the community
has approximately 86% occupancy; and (c) the community generates
substantial revenues and net operating income. Management believes that
this community is a successful and valuable manufactured home community.
SANDY VALLEY ESTATES
The Company acquired Sandy Valley Estates in 1985. This is a 327-
space manufactured home community located in Magnolia, Ohio. The Company
believes this to be an excellent community because (a) the community is
well-maintained with municipal sewer; (b) the community has its own well
system; (c) the community has approximately 97% occupancy; and (d) the
community generates revenues with an average monthly rental of $199 per
site, which rents are competitive with the other manufactured home
communities in the area. The Company believes that it is an excellent
investment.
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CEDARCREST
On July 15, 1986 the Company paid $760,000 to acquire 94.05% of the
partnership interest in a limited partnership that owned a 283-space
manufactured home community located in Vineland, New Jersey. On June 30,
1988 the Company paid $40,000 to acquire an additional 4.95% of the
partnership interest, bringing the Company's total ownership to 99%.
During 1989 the Company acquired the remaining 1% interest.
The Company believes this to be an excellent community for the
following reasons: (a) the community is well-maintained, (b) the community
has municipal sewer and water service; and (c) the community is 99%
occupied. Rents average $313 per month per site and they are competitive
with other communities in the area.
ALLENTOWN
On September 15, 1986 the Company paid $850,000 to all of the limited
partners to acquire 97% of the partnership interests in a limited
partnership that owned a 414-space manufactured home community located in
Memphis, Tennessee.
Royal Green, Inc., the General Partner of this partnership, retained
its 3% interest in the partnership until January, 1990 at which time the
Company purchased the 3% interest for $25,500.
The Company believes this to be a sound investment for the following
reasons: (a) the property is well maintained; (b) the community has
municipal sewer and water service; and (c) rents are competitive with other
manufactured home communities in the area. Current occupancy is
approximately 82%. This is a 9% increase from the prior year. The Company
is continuing its effort to bring occupancy to 90% or higher. In the
future, the Company anticipates that it will be able to increase occupancy.
The community has the potential to be fully occupied in one of the nicest
areas in Memphis.
HEATHER HIGHLANDS
On January 30, 1992, the Company acquired an 88.36% interest in a
limited partnership operating a 457-space manufactured home community
located in Pittston, Pennsylvania. This partnership has partners who are
also officers, directors and/or shareholders of the Company. Mr. Eugene
Landy, Chairman of the Board, retained the remaining 11.64% limited
partnership interest. The purchase price included total payments to the
original limited partners of $972,400, $35,000 to Burtenn Inc., General
Partner and assumption of net liabilities of approximately $1,500,000 for a
total purchase price of approximately $2,500,000. This purchase was based
on an independent appraisal of fair market value. In January 1995, the
Company purchased the remaining 11.64% partnership interest for $132,600.
This price per unit was the same price previously paid to non-affiliated
sellers.
The Company anticipates that the community will ultimately have 415
sites since the use of double wide units reduce the total number of
available sites.
The Company believes this to be a sound investment for the following
reasons: (a) the property is well maintained; (b) the community has
municipal sewer and water service; and (c) rents are competitive with other
manufactured home communities in the area.
Mortgages on Properties
The Company has mortgages on various properties. The maturity dates
of these mortgages are all in the year 2000. Interest varies from fixed
rates of 7.5% to 10.5%. The aggregate balances of these mortgages total
$17,351,030 at December 31, 1996. (For additional information, see Part
IV, Item 14(a)(1)(vi), Note 5 of the Notes to Consolidated Financial
Statements - Notes and Mortgages Payable).
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ITEM 3 - LEGAL PROCEEDINGS
Legal proceedings are incorporated herein by reference and filed as
Part IV, Item 14(a)(1)(vi), Note 13 of the Notes to Consolidated Financial
Statements - Legal Matters.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of 1996 to a vote
of security holders through the solicitation of proxies or otherwise.
-9-
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company became publicly owned on January 3, 1985. As of January
5, 1994, shares of the Company were traded on the American Stock Exchange
(symbol UMH). The per share range of high and low quotes for the Company's
stock for each quarterly period is as follows:
1996 1995 1994
HIGH LOW HIGH LOW HIGH LOW
First Quarter 14 9-5/8 7-3/4 7-1/8 8-1/2 6-3/4
Second Quarter 13-3/8 10-1/4 8-7/16 7-1/2 8-1/4 7
Third Quarter 12-1/2 10-1/2 10-1/8 8-1/4 8 6-7/8
Fourth Quarter 12-1/2 11 10-1/2 9-5/8 7-1/2 7
On March 14, 1997 the closing price of the Company's stock was
$12.125.
As of December 31, 1996, there were approximately 1,051 holders of the
Company's common stock based on the number of record owners.
For the years ended December 31, 1996, 1995 and 1994, total dividends
paid by the Company amounted to $3,630,891 or $.60 per share, $2,954,847 or
$.525 per share and $2,277,742 or $.425 per share, respectively.
On January 15, 1997, the Company declared a dividend of $.175 per
share to be paid on March 17, 1997 to shareholders of record February 17,
1997.
Future dividend policy will depend on the Company's earnings, capital
requirements, financial condition, availability and cost of bank financing
and other factors considered relevant by the Board of Directors. The
Company elected REIT status beginning in 1992. As a REIT, the Company must
pay out at least 95% of its taxable income in the form of a cash
distribution to shareholders.
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ITEM 6 - SELECTED FINANCIAL DATA
December 31,
1996 1995 1994 1993 1992
Income Statement Data:
Rental and
Related Income $14,533,218 $13,332,961 $12,318,467 $11,521,677 $10,895,680
Income from Community
Operations 8,311,469 7,449,168 6,864,080 6,407,937 6,069,885
Gains on Sales of
Assets 333,647 5,758 59,941 17,022 57,259
Net Income 3,729,526 2,491,581 2,141,279 1,346,219 1,028,551
Net Income
Per Share .61 .44 .40 .26 .21
..............................................................................
Balance Sheet Data:
Total Assets $35,875,206 $29,758,397 $25,404,015 $25,274,685 $26,024,656
Mortgages
Payable 17,351,030 17,707,635 15,637,325 17,936,230 20,072,037
Shareholders'
Equity 16,426,145 10,290,487 7,721,783 6,229,453 4,612,025
..............................................................................
Average Number
of Shares
Outstanding 6,155,018 5,693,001 5,395,733 5,099,089 4,837,526
Funds from
Operations * $ 5,693,631 $ 4,358,765 $ 3,880,507 $ 3,145,859 $ 2,749,280
Funds from Operations *
Per share .93 .77 .72 .62 .57
Cash Dividends
Per Share .60 .525 .425 .325 .225
* Defined as net income, excluding gains (or losses) from sales of
depreciable assets, plus depreciation. Includes gain on sale of
land of $290,303 in 1996.
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ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Revenue and Expense
1996 vs. 1995
Rental and related income increased from $13,332,961 for the year ended
December 31, 1995 to $14,533,218 for the year ended December 31, 1996
primarily due to rental increases to residents, increased occupancy and the
acquisition of two new communities. During 1996, the Company was able to
obtain rent increases of $5.00 to $16.00 per month on most of its occupied
sites.
Overall occupancy rates are satisfactory with only six manufactured home
communities experiencing vacancies over ten percent. Progress has been made
to increase occupancy at these communities. The Company has purchased two
communities in 1996. The Company has also completed a 27 site expansion at
River Valley Estates and is evaluating further expansion at selected
communities in order to increase the number of available sites. Some of
these communities are in various stages of expansion.
Community operating expenses increased from $5,883,793 for the year
ended December 31, 1995 to $6,221,749 for the year ended December 31, 1996
primarily as a result of the acquisitions of two additional communities.
Community operating expenses decreased from 44% to 43% of gross revenues.
The Company's income from community operations continues to show steady
growth rising from $7,449,168 in 1995 to $8,311,469 in 1996.
General and administrative expenses increased from $1,228,850 in 1995 to
$1,512,623 in 1996 primarily as a result of an increase in personnel costs.
Interest expense decreased from $1,675,998 in 1995 to $1,434,875 in
1996. This was primarily as a result of a decrease in the interest rate.
During 1995, the Company negotiated new long-term debt. Interest rates
dropped from prime plus 1% to a fixed rate of 7.5% on a substantial portion
of the Company's debt.
Interest and dividend income increased from $65,999 in 1995 to $93,579
in 1996 due to purchases of securities available for sale during 1996.
Depreciation expense increased from $1,872,942 in 1995 to $2,007,449 in
1996 due to the addition of two new communities.
Other expenses decreased from $251,554 in 1995 to $54,222 in 1996 due to
a decrease in amortization expenses.
Gain on sale of assets increased from $5,758 in 1995 to $333,647 in 1996
primarily due to the sale of 5.5 acres of vacant land at a gain of
approximately $290,000.
For the year ended December 31, 1996, the Company reported net income of
$3,729,526 as compared to net income of $2,491,581 for the year ended
December 31, 1995. The Company is currently experiencing modest inflation.
Modest inflation is believed to have a favorable impact on the Company's
financial performance. With modest inflation, the Company believes that it
can increase rents sufficiently to match increases in operating expenses.
High rates of inflation (more than 10%) could result in an inability to raise
rents to meet rising costs and could create political problems such as the
imposition of rent controls. The Company anticipates continuing profits in
1997.
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Revenue and Expense
1995 vs. 1994
Rental and related income increased from $12,318,467 for the year ended
December 31, 1994 to $13,332,961 for the year ended December 31, 1995
primarily due to rental increases to residents, increased occupancy and the
acquisition of a new community in January 1995. During 1995, the Company was
able to obtain rent increases of $7.00 to $16.00 per month on most of its
occupied sites.
Overall occupancy rates are satisfactory with only five manufactured
home communities experiencing vacancies over ten percent. Progress has been
made to increase occupancy at these communities. The Company has purchased
one community in 1995 and has negotiated for the purchase of a 161-space
community, which closed in January 1996. The Company is also evaluating
further expansion at selected communities in order to increase the number of
available sites. Some of these communities are in various stages of
expansion.
Community operating expenses increased from $5,454,387 for the year
ended December 31, 1994 to $5,883,793 for the year ended December 31, 1995
primarily as a result of the acquisition of an additional community.
Community operating expenses remained at 44% of gross revenues.
The Company's income from community operations continues to show steady
growth rising from $6,864,080 in 1994 to $7,449,168 in 1995.
General and administrative expenses decreased by 6% to $1,228,850 in
1995 primarily as a result of a decrease in personnel costs.
Interest expense increased to $1,675,998 in 1995 from $1,519,527 in
1994. This was primarily as a result of an increase in the principal amount
outstanding offset by a decrease in the interest rate. During 1995, the
Company negotiated new long-term debt. Interest rates dropped from prime
plus 1% to a fixed rate of 7.5%.
Depreciation expense increased from $1,799,169 in 1994 to $1,872,942 in
1995 due to the addition of a new community.
For the year ended December 31, 1995, the Company reported net income of
$2,491,581 as compared to net income of $2,141,279 for the year ended
December 31, 1994. The Company is currently experiencing modest inflation.
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Liquidity and Capital Resources
As a real estate company, the Company uses funds for real estate
acquisitions, real property improvements and amortization of debt incurred in
connection with such acquisitions and improvements. The Company generates
funds through cash flow from properties, mortgages on properties and
increases in shareholder investments. The Company has liquidity available
from a combination of short and long-term sources. The Company currently has
mortgages payable totaling $17,351,030 secured by seven communities. The
Company also has a $500,000 line of credit with Summit Bank, all of which was
available at December 31, 1996. The Company believes that its 23
manufactured home communities have market values in excess of historical
cost. Management believes that this provides significant additional
borrowing capacity.
Net cash provided by operating activities increased from $4,343,548 in
1994 to $4,642,256 in 1995 to $5,823,597 in 1996. Cash flow was primarily
used for capital improvements, payment of dividends, purchases of securities
available for sale, and purchases of two additional communities in 1996. The
Company meets maturing mortgage obligations by using a combination of cash
flow and refinancing. The dividend payments were primarily made from cash
flow from operations.
In addition to normal operating expenses, the Company requires cash for
additional investments in manufactured home communities, capital
improvements, purchase of manufactured homes for rent, scheduled mortgage
amortization and dividend distributions. As a REIT, the Company must
distribute at least 95% of its taxable income.
The Company estimates that it will purchase in 1997 approximately 25
manufactured homes to be used as rentals for a total cost of $400,000.
Management believes that these manufactured homes will each generate
approximately $300 per month in rental income in addition to lot rent.
Capital improvements include amounts needed to meet environmental and
regulatory requirements in connection with the manufactured home communities
that provide water or sewer service. Excluding expansions, the Company is
budgeting approximately $1,000,000 in capital improvements for 1997.
The Company has a Dividend Reinvestment and Stock Purchase Plan (Plan).
Cash received from the Plan is a significant additional source of liquidity
and capital resources. During 1996, the Company paid $3,630,891 in
dividends. Amounts received under the Plan amounted to $5,672,022. The
success of the Plan resulted in a substantial improvement in the Company's
liquidity and capital resources in 1996.
The Company has undeveloped land which it could develop over the next
three years. During 1996, additional acreage was purchased in Vineland, New
Jersey which will be used for expansion in the future. In addition, the
Company plans to continue acquiring additional manufactured home communities.
During 1996, the Company purchased two additional communities totaling 314
sites.
The Company believes that funds generated from operations, together
with the financing and refinancing of its properties, will be adequate to
meet its needs over the next several years.
-14-
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data listed in Part IV, Item
14(a)(1) are incorporated herein by reference.
The following is the Unaudited Selected Quarterly Financial Data:
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
THREE MONTHS ENDED
1996 MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
Rental & Related
Income $ 3,561,274 $ 3,582,925 $ 3,671,970 $ 3,717,049
Income from Community
Operations 2,025,485 2,084,359 1,968,868 2,232,757
Net Income 1,063,209 916,854 784,134 965,329
Net Income Per Share .18 .15 .12 .16
THREE MONTHS ENDED
1995 MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
Rental & Related
Income $ 3,247,040 $ 3,304,765 $ 3,382,423 $ 3,398,733
Income from Community
Operations 1,839,493 1,814,328 1,838,716 1,956,631
Net Income 589,940 558,878 629,741 713,022
Net Income per Share .11 .10 .11 .12
THREE MONTHS ENDED
1994 MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
Rental & Related
Income $ 3,001,056 $ 3,053,201 $ 3,109,779 $ 3,154,431
Income from Park
Operations 1,658,699 1,684,324 1,745,954 1,775,103
Net Income 502,854 496,185 571,045 571,195
Net Income per Share .09 .09 .11 .11
ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE MATTERS
None.
-15-
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Name, Age & Principal Occupation Director Shares Owned Percent
Office Held During Past Five Years Since Beneficially(1) of Stock
Robert A. Anderson Vice President of The 1980 14,882 0.23%
Age: 74 David Cronheim Company;
Director past President of the
Industrial Real Estate
Brokers Association of New
York and New Jersey.
Ernest V. Bencivenga Financial Consultant; 1969 18,420 (2) 0.28%
Age: 78 Treasurer and Director
Secretary/Treasurer (1961 to present) and Secretary
Director (1967 to present) of Monmouth
Capital Corporation;
Treasurer and Director (1968
to present) of Monmouth Real
Estate Investment Corporation.
Anna T. Chew Certified Public 1994 16,038 (3) 0.25%
Age: 38 Accountant; Controller (1991 to
Vice President and present) and Director (1993 to
Chief Financial present) of Monmouth Real Estate
Officer Investment Corporation; Controller
Director (1991 to present) and Director
(1994 to present) of Monmouth
Capital Corporation; Senior Manager
(1987 to 1991) of KPMG Peat Marwick LLP
Charles P. Kaempffer Investor; Director 1969 57,159 (4) 0.89%
Age: 59 (1970 to present) of Monmouth
Director Capital Corporation; Director
(1975 to present) of Monmouth Real
Estate Investment Corporation;
Director (1989 to 1996) of Sovereign
Community Bank (formerly Colonial
Bank)
-16-
Name, Age & Principal Occupation Director Shares Owned Percent
Office Held During Past Five Years Since Beneficially(1) of Stock
Eugene W. Landy Attorney at Law for the 1969 840,884 (5) 13.04%
Age: 63 firm of Landy & Landy;
Chairman of the President and Director
Board and (1961 to present) of Monmouth
Director Capital Corporation;
President and Director (1968
to present) of Monmouth Real
Estate Investment Corporation.
Samuel A. Landy Attorney at Law for the 1992 240,564 (6) 3.73%
Age: 36 firm of Landy & Landy;
President and Director (1990 to present) of
Director Monmouth Real Estate Investment
Corporation; Director (1994 to
present) of Monmouth Capital
Corporation.
Richard A. Molke Vice President of Remsco 1986 319,114 (7) 4.95%
Age: 70 Associates, Inc.,
Director a construction firm.
Eugene Rothenberg Obstetrician and 1977 81,116 (8) 1.26%
Age: 63 Gynecologist; President
Director (1988 to 1989) of the Medical
Staff of Monmouth Medical Center.
Robert G. Sampson Investor; Director 1969 130,589 (9) 2.02%
Age: 69 (1968 to present) of Monmouth Real
Director Estate Investment Corporation;
Director (1963 to present) of
Monmouth Capital Corporation,;
Director (1972 to 1993) of
United Jersey Bank;
General Partner (1983 to
present) of Sampco, Ltd., an
investment group.
TOTALS............1,718,766 26.65%
-17-
1.) Beneficial ownership, as defined herein, includes common stock as to
which a person has or shares voting and/or investment power as of March 14,
1997.
2.) Includes 8,857 shares held by Mr. Bencivenga's wife and 1,604 shares
held in the United Mobile Homes, Inc. 401(k) Plan.
3.) Includes 14,300 shares held jointly with Ms. Chew's husband and 1,738
shares held in the United Mobile Homes, Inc. 401(k) Plan.
4.) Includes (a) 55,159 shares held as Trustee for Defined Benefit Pension
Plan for which Mr. Kaempffer has power to vote and (b) 2,000 shares held by
Mr. Kaempffer's wife.
5.) Includes (a) 51,910 shares held by Mr. Landy's wife, (b) 172,607
shares held by Landy Investments, Ltd. in which Mr. Landy has a beneficial
interest, (c) 49,343 shares held in the Landy & Landy, Employee's Pension
Plan, of which Mr. Landy is a Trustee with power to vote, and (d) 102,987
shares held in the Landy & Landy, Employees' Profit Sharing Plan, of which
Mr. Landy is a Trustee with power to vote. Excludes 198,511 shares held by
Mr. Landy's adult children in which he disclaims any beneficial interest.
6.) Includes (a) 23,173 shares held jointly with Mr. Samuel A. Landy's
wife, (b) 13,216 in a custodial account for his sons, and (c) 3,869 shares
held in the United Mobile Homes, Inc. 401(k) Plan.
7.) Includes 156,869 shares held by Mr. Richard Molke's wife. Excludes
3,333 shares held by Mr. Richard Molke's adult children in which he
disclaims any beneficial interest.
8.) Includes (a) 56,878 shares held by Rothenberg Investment, Ltd. in
which Dr. Rothenberg has a beneficial interest and (b) 20,173 shares held
as Trustee for a Profit Sharing Plan of which Dr. Rothenberg has power to
vote.
9.) Includes (a) 32,400 shares held by the Estate of Helen Haskell Sampson
and (b) 48,492 shares held by Sampco, Ltd. in which he has a beneficial
interest.
-18-
ITEM 11 - EXECUTIVE COMPENSATION
Summary Compensation Table.
The following Summary Compensation Table shows compensation paid by
the Company for services rendered during 1996, 1995 and 1994 to the
Chairman of the Board, President and Vice President. There were no other
executive officers whose aggregate cash compensation exceeded $100,000:
Name and Annual Compensation
Principal Position Options Year Salary Bonus All Other
Eugene W. Landy - 1996 $ - $ - $347,350 (1)
Chairman of the 50,000 1995 $ - $ - $310,160 (1)
Board - 1994 $ - $ - $361,842 (1)
Samuel A. Landy 25,000 1996 $165,000 $ 10,846 $ 18,880 (2)
President 25,000 1995 $150,000 $ 15,769 $ 16,674 (2)
25,000 1994 $150,000 $ 7,769 $ 9,513 (2)
Anna T. Chew 10,000 1996 $ 86,650 $ 10,333 $ 13,509 (3)
Vice President 10,000 1995 $ 76,650 $ 10,948 $ 11,428 (3)
Chief Financial 10,000 1994 $ 73,000 $ 7,807 $ 5,224 (3)
Officer
(1) Represents base compensation of $150,000 in 1996, 1995 and
1994, and a bonus of $15,000 in 1996, as well as Directors'
fees and legal fees.
Includes an accrual of $160,000, $130,000 and $190,000 for
1996, 1995 and 1994, respectively for pension and other
benefits in accordance with Eugene W. Landy's employment
contract.
(2) Represents Directors' fees, fringe benefits and
discretionary contributions by the Company to the Company's
401(k) Plan allocated to an account of the named executive
officer.
(3) Represents Directors' fees and discretionary contributions
by the Company to the Company's 401(k) Plan allocated to
an account of the named executive officer.
-19-
Stock Option Plan.
The following table sets forth, for the executive officers named in
the Summary Compensation Table, information regarding individual grants of
stock options made during the year ended December 31, 1996:
Potential Realized
% of Total Price Value at Assumed
Options Granted to Per Expiration Annual Rates for
Name Granted Employees Share Date 5% 10%
Samuel A. Landy 25,000 40% $10.625 1/10/01 $41,475 $121,900
Anna T. Chew 10,000 16% $10.75 6/27/01 $29,700 $ 65,630
The following table sets forth for the executive officers named in the
Summary Compensation Table, information regarding stock options outstanding
at December 31, 1996:
Value of
Unexercised
Options
Number of Unexercised at Year-End
Shares Value Options at Year-End Exercisable/
Name Exercised Realized Exercisable/Unexercisable Unexercisable
Eugene W. Landy -0- N/A 50,000 / -0- $156,250/$ -0-
Samuel A. Landy 50,000 $290,625 50,000 / 25,000 $134,375/$18,750
Anna T. Chew -0- N/A 40,000 / 10,000 $188,750/$ 6,250
Compensation of Directors.
Effective January 1, 1996, the Directors receive a fee of $1,000 for
each Board meeting attended. Directors also receive a fixed annual fee of
$7,600, payable $1,900 quarterly. Directors appointed to house committees
receive $150 for each meeting attended. Those specific committees are
Compensation Committee, Audit Committee and Stock Option Committee.
Employment Contracts.
On December 14, 1993, the Company and Eugene W. Landy entered into an
Employment Agreement under which Mr. Eugene Landy receives an annual base
compensation of $150,000 plus bonuses and customary fringe benefits,
including health insurance, participation in the Company's 401(k) Plan,
stock options, five weeks vacation and use of an automobile. In lieu of
annual increases in compensation, there will be additional bonuses voted by
the Board of Directors.
On severance of employment for any reason, Mr. Eugene Landy will
receive severance pay of $450,000 payable $150,000 on severance and
$150,000 on the first and second anniversaries of severance. If employment
is terminated following a change in control of the Company, Mr. Eugene
Landy will be entitled to severance pay only if actually severed either at
the time of merger or subsequently.
In the event of disability, Mr. Eugene Landy's compensation shall
continue for a period of three years, payable monthly.
On retirement, Mr. Eugene Landy shall receive a pension of $50,000 a
year for ten years, payable in monthly installments.
-20-
In the event of death, Mr. Eugene Landy's designated beneficiary shall
receive $450,000, $100,000 thirty days after death and the balance one year
after death.
The Employment Agreement terminates December 31, 1998. Thereafter,
the term of the Employment Agreement shall be automatically renewed and
extended for successive one-year periods.
Effective January 1, 1996, the Company and Samuel A. Landy entered
into a three-year Employment Agreement under which Mr. Samuel Landy
receives an annual base salary of $165,000 for 1996, $181,500 for 1997 and
$199,650 for 1998 plus bonuses and customary fringe benefits. Bonuses
shall be at the discretion of the Board of Directors and shall be based on
certain guidelines. Mr. Samuel Landy will also receive four weeks
vacation, use of an automobile, and stock options for 25,000 shares in each
year of the contract.
The Company agrees to loan to Mr. Samuel Landy $100,000 at the
Company's corporate borrowing rate with a 5-year maturity and a 15-year
principal amortization. Additional amounts, secured by Company stock, may
be borrowed at the same terms for the exercise of stock options.
On severance and disability, Mr. Samuel Landy is entitled to one
year's pay.
Effective January 1, 1997, the Company and Anna T. Chew entered into a
three-year Employment Agreement under which Ms. Chew receives an annual
base salary of $100,000 for 1997, $110,000 for 1998 and $121,000 for 1999
plus bonuses and customary fringe benefits. On severance for any reason,
Ms. Chew is entitled to one year's pay. In the event of disability, her
salary shall continue for a period of two years.
Report of Board of Directors.
Overview and Philosophy
The Company has a Compensation Committee consisting of three
independent outside Directors. This Committee is responsible for making
recommendations to the Board of Directors concerning executive
compensation. The Compensation Committee takes into consideration three
major factors in setting compensation.
The first consideration is the overall performance of the Company.
The Board believes that the financial interests of the executive officers
should be aligned with the success of the Company and the financial
interests of its shareholders. Increases in funds from operations, the
enhancement of the Company's equity portfolio, and the success of the
Dividend Reinvestment and Stock Purchase Plan all contribute to increases
in stock prices thereby maximizing shareholders' return.
The second consideration is the individual achievements made by each
officer. The Company is a small real estate investment trust (REIT). The
Board of Directors is aware of the contributions made by each officer and
makes an evaluation of individual performance based on their own
familiarity with the officer.
The final criteria in setting compensation is comparable wages in the
industry. In this regard, the REIT industry maintains excellent
statistics.
-21-
Evaluation
The Company had an excellent year. The stock price rose from 9-3/4 at
December 31, 1995 to 11-3/8 at December 31, 1996. The Committee reviewed
the progress made by Mr. Eugene W. Landy, Chairman of the Board, in
reducing the Company's costs of funds. Mr. Eugene Landy was successful in
bringing the Company's long-term debt from a variable rate of prime plus 1%
to a fixed rate of 7.5%. Mr. Eugene Landy also completed the purchase of
two additional communities during 1996. Mr. Eugene Landy is under an
employment agreement with the Company. His base compensation under this
contract is $150,000 per year. (The Summary Compensation Table shows an
annual compensation to Mr. Eugene Landy of $150,000, $15,000 bonus plus
$22,350 in director's and other legal fees plus $160,000 accrual for
pension and other benefits for a total of $347,350 in 1996.) The Committee
granted Mr. Eugene Landy a bonus of $15,000 for 1995 which was paid during
1996.
The Committee also reviewed the progress made by Mr. Samuel A. Landy,
President. Net income and funds from operations increased by approximately
50% and 31%, respectively. Mr. Samuel Landy is under an employment
agreement with the Company. His base compensation under this contract is
$165,000 for 1996 and will increase to $181,500 for 1997. The Committee
granted Mr. Samuel Landy a bonus of $4,500 for 1995 which was paid in 1996.
Other Information.
The Company had mortgages payable to Royal Green, Ltd., a partnership
in which Mr. Eugene W. Landy has a significant ownership interest. These
mortgages were repaid during 1994. Interest expense on these mortgages
amounted to $30,717 in 1994.
COMPARATIVE STOCK PERFORMANCE.
The line graph compares the total return of the Company's common stock
for the last five years to the NAREIT All REIT Total Return Index published
by the National Association of Real Estate Investment Trusts (NAREIT) and
to the S&P 500 Index for the same period. The total return reflects stock
price appreciation and dividend reinvestment for all three comparative
indices. The information herein has been obtained from sources believed to
be reliable, but neither its accuracy nor its completeness is guaranteed.
1991 1992 1993 1994 1995 1996
United Mobile Homes, Inc. 100 156 253 277 389 479
NAREIT All REIT 100 112 133 134 159 215
S & P 500 100 108 118 120 165 203
-22-
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On March 14, 1997, no person owned of record, or was known by the
Company to own beneficially more than five percent (5%) of the shares of
the Company, except the following:
Percent
Name and Address Shares Owned of
Title of Class of Beneficial Owner Beneficially Class
Common Stock Beechmont Co., as Agent 394,400 6.12%
122 East 42nd St.
New York, NY 10168
Common Stock Eugene W. Landy 840,884 13.04%
20 Tuxedo Road
Rumson, NJ 07760
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Certain relationships and related party transactions are incorporated
herein by reference to Part IV, Item 14(a)(1)(vi), Note 8 of the Notes to
Consolidated Financial Statements - Related Party Transactions.
-23-
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
(a) (1) The following Financial Statements are filed as part of this
report.
Page(s)
(I) Independent Auditors' Report 26
(ii) Consolidated Balance Sheets as of December 31, 1996 27
and 1995
(iii) Consolidated Statements of Income for the years 28
ended December 31, 1996, 1995 and 1994
(iv) Consolidated Statements of Shareholders' Equity for 29
the years ended December 31, 1996, 1995 and 1994
(v) Consolidated Statements of Cash Flows for the years 30
ended December 31, 1996, 1995 and 1994
(vi) Notes to Consolidated Financial Statements 31-41
(a) (2) The following Financial Statement Schedule for the
years ended December 31, 1996, 1995 and 1994 is
filed as part of this report.
(i) Schedule III - Real Estate and Accumulated 42
Depreciation
All other schedules are omitted for the reason that they are not
required, are not applicable, or the required information is set forth in
the financial statements or notes thereto.
-24-
PART IV
(a) (3) The Exhibits set forth in the following index of Exhibits are filed
as a part of this Report.
Exhibit No. Description
(3) Articles of Incorporation and By-Laws: Articles
of Incorporation and By-Laws, Certificate of Incorporation
and Amendments thereto are incorporated by reference to the
Company's Registration Statement No. 2-92896-NY, and
Amendments thereto, filed with the SEC on August 22, 1984.
(10) Material Contracts:
(a) Stock Option Plan is incorporated by
reference to the Company's Proxy Statement dated April 25,
1994 filed with the SEC April 27, 1994.
(b) 401(k) Plan Document and Adoption Agreement
effective April 1, 1992 is incorporated by reference to that
filed with the Company's 1992 Form 10-K filed with the SEC
on March 9, 1993.
(c) Employment contract with Mr. Eugene W. Landy
dated December 14, 1993 is incorporated by reference to that
filed with the Company's 1993 Form 10-K filed with the SEC
on March 28, 1994.
(d) Employment contract with Mr. Ernest V.
Bencivenga dated November 9, 1993 is incorporated by
reference to that filed with the Company's 1993 Form 10-K
filed with the SEC on March 28, 1994.
(e) Employment contract with Mr. Samuel A. Landy
effective January 1, 1996 is incorporated by reference to
that filed with the Company's 1995 Form 10-K filed with the
SEC on March 28, 1996.
(f) Employment contract with Ms. Anna T. Chew
effective January 1, 1997.
(22) Subsidiaries of the Registrant:
The Company operates through wholly-owned multiple
subsidiaries carrying on the same line of business. The
parent company is the Registrant. The line of business is
the operation of manufactured home communities. The Company
operates through subsidiaries. A full and complete list of
operating subsidiaries, listed by trade name is incorporated
by reference to the Company's Registration Statement No. 33-
1396-NY and Amendments thereto, filed with the SEC on
November 6, 1985.
(23) Consent of Independent Accountants
(a)(3)(b) Reports of Form 8-K
None.
-25-
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
United Mobile Homes, Inc.:
We have audited the consolidated financial statements of United Mobile
Homes, Inc. as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of United
Mobile Homes, Inc. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the years in the three-year
period ended December 31, 1996 in conformity with generally accepted
accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
Short Hills, New Jersey
February 28, 1997
/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
-26-
UNITED MOBILE HOMES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
1996 1995
- ASSETS -
INVESTMENT PROPERTY AND EQUIPMENT
Land $ 5,927,136 $ 5,194,402
Site and Land Improvements 35,983,165 32,456,359
Buildings and Improvements 1,930,345 1,755,407
Rental Homes and Accessories 4,907,832 3,912,918
__________ __________
Total Investment Property 48,748,478 43,319,086
Equipment and Vehicles 2,163,179 1,853,398
__________ __________
Total Investment Property and Equipment 50,911,657 45,172,484
Accumulated Depreciation (21,024,163) (19,145,830)
__________ __________
Net Investment Property and Equipment 29,887,494 26,026,654
__________ __________
OTHER ASSETS
Cash and Cash Equivalents 1,195,095 2,043,282
Securities Available for Sale 1,441,037 -0-
Notes and Other Receivables 507,199 547,779
Unamortized Financing Costs 160,744 199,103
Prepaid Expenses 284,993 272,704
Land Development Costs 2,398,644 668,875
__________ __________
Total Other Assets 5,987,712 3,731,743
__________ __________
TOTAL ASSETS $ 35,875,206 $ 29,758,397
========== ==========
-LIABILITIES AND SHAREHOLDERS' EQUITY-
LIABILITIES:
MORTGAGES PAYABLE $ 17,351,030 $ 17,707,635
__________ __________
OTHER LIABILITIES
Accounts Payable 206,426 197,357
Accrued Liabilities and Deposits 1,520,641 1,243,686
Tenant Security Deposits 370,964 319,232
__________ __________
Total Other Liabilities 2,098,031 1,760,275
__________ __________
Total Liabilities 19,449,061 19,467,910
__________ __________
SHAREHOLDERS' EQUITY:
Common Stock - $.10 par value per share,
10,000,000 shares authorized, 6,433,676
and 5,850,631 issued and outstanding as
of December 31, 1996 and 1995,
respectively 643,368 585,063
Additional Paid-In Capital 16,275,434 10,373,217
Unrealized Holding Gains on
Securities Available for Sale 76,501 -0-
Accumulated Deficit (569,158) (667,793)
__________ __________
Total Shareholders' Equity 16,426,145 10,290,487
__________ __________
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 35,875,206 $ 29,758,397
========== ==========
See Accompanying Notes to
Consolidated Financial Statements
-27-
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
Rental and Related Income $ 14,533,218 $ 13,332,961 $ 12,318,467
Community Operating Expenses 6,221,749 5,883,793 5,454,387
__________ __________ __________
Income from Community
Operations 8,311,469 7,449,168 6,864,080
Other Expenses (Income):
General and Administrative 1,512,623 1,228,850 1,308,724
Interest Expense 1,434,875 1,675,998 1,519,527
Interest and Dividend Income ( 93,579) ( 65,999) ( 25,474)
Depreciation Expense 2,007,449 1,872,942 1,799,169
Other 54,222 251,554 180,796
_________ _________ _________
Income Before Gains
on Sales of Assets 3,395,879 2,485,823 2,081,338
Gains on Sales of Assets 333,647 5,758 59,941
_________ _________ _________
Net Income $ 3,729,526 $ 2,491,581 $ 2,141,279
========= ========= =========
Net Income Per Share $ .61 .44 .40
========= ========= =========
Weighted Average Shares
Outstanding 6,155,018 5,693,001 5,395,733
========= ========= =========
See Accompanying Notes to
Consolidated Financial Statements
-28-
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Unrealized
Holding
Gains on
Additional Securities
Common Stock Paid-In Available Accumulated
Number Amount Capital for Sale Deficit
Balance 12/31/93 5,275,596 $527,560 $ 6,369,686 $ -0- $(667,793)
Common Stock Issued
with the Dividend
Reinvestment and
Stock Purchase Plan 220,567 22,056 1,606,737 -0- -0-
Distributions -0- -0- ( 136,463) (2,141,279)
Net Income -0- -0- -0- -0- 2,141,279
_________ _______ _________ ___ _________
Balance 12/31/94 5,496,163 549,616 7,839,960 -0- ( 667,793)
Common Stock Issued
with the Dividend
Reinvestment and
Stock Purchase Plan 354,468 35,447 2,996,523 -0- -0-
Distributions -0- -0- ( 463,266) -0- (2,491,581)
Net Income -0- -0- -0- -0- 2,491,581
_________ _______ _________ ___ _________
Balance 12/31/95 5,850,631 585,063 10,373,21 -0- ( 667,793)
Common Stock Issued
with the Dividend
Reinvestment and
Stock Purchase Plan 526,045 52,605 5,619,417 -0- -0-
Common Stock Issued
through the Exercise of
Stock Option 57,000 5,700 282,800 -0- -0-
Distributions -0- -0- -0- -0- (3,630,891)
Net Income -0- -0- -0- -0- 3,729,526
Unrealized Holding
Gains on Securities
Available for Sale -0- -0- -0- 76,501 -0-
_________ _______ __________ ______ _________
Balance 12/31/96 6,433,676 $643,368 $16,275,434 $76,501 $( 569,158)
========= ======= ========== ====== =========
See Accompanying Notes to
Consolidated Financial Statements
-29-
UNITED MOBILE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 3,729,526 $ 2,491,581 $ 2,141,279
Depreciation 2,007,449 1,872,942 1,799,169
Amortization 54,222 251,554 60,579
Minority Interest -0- -0- 12,217
Gains on Sales of Assets ( 333,647) ( 5,758) ( 59,941)
Changes in Operating Assets
and Liabilities -
Notes and Other Receivables 40,580 ( 129,475) ( 29,320)
Prepaid Expenses ( 12,289) 13,444 ( 4,123)
Accounts Payable 9,069 45,809 2,884
Accrued Liabilities & Deposits 276,955 76,955 411,841
Tenant Security Deposits 51,732 25,204 8,963
_________ _________ _________
Net Cash Provided by Operating
Activities 5,823,597 4,642,256 4,343,548
_________ _________ _________
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Manufactured Home
Communities (3,435,506) (1,810,906) -0-
Acquisition of Minority Interest -0- ( 132,600) -0-
Purchase of Investment Property
and Equipment (2,217,809) (1,778,402) (1,556,297)
Proceeds from Sales of Assets 636,731 288,494 305,018
Additions to Land Development Costs (2,247,827) ( 955,546) ( 556,763)
Purchase of Securities Available
for Sale (1,364,536) -0- -0-
_________ _________ _________
Net Cash Used by Investing Activities (8,628,947) (4,388,960) (1,808,042)
_________ _________ _________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Mortgages and Loans 1,300,000 18,700,000 5,400,000
Net Proceeds from (Repayments of)
Short-Term Borrowings -0- ( 500,000) 500,000
Principal Payments of Mortgages
and Loans (1,656,605) (16,629,690) (7,698,905)
Financing Costs on Debt ( 15,863) ( 214,994) ( 94,577)
Proceeds from Dividend Reinvestment
and Stock Purchase Plan 4,219,869 1,729,159 1,088,034
Proceeds from Exercise of Stock Options 288,500 -0- -0-
Dividends Paid (2,178,738) ( 1,652,036) (1,736,983)
_________ _________ _________
Net Cash Provided (Used) by
Financing Activities 1,957,163 1,432,439 (2,542,431)
_________ _________ _________
NET INCREASE (DECREASE) IN CASH ( 848,187) 1,685,735 ( 6,925)
CASH & CASH EQUIVALENTS - BEGINNING 2,043,282 357,547 ( 364,472)
_________ _________ _________
CASH & CASH EQUIVALENTS - ENDING $ 1,195,095 $ 2,043,282 $ 357,547
========= ========= =========
See Accompanying Notes to
Consolidated Financial Statements
-30-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ELECTION TO BE TAXED AS A REAL ESTATE INVESTMENT TRUST
Effective January 1, 1992, United Mobile Homes, Inc. (the Company)
elected to be taxed as a Real Estate Investment Trust (REIT) under Sections
856-858 of the Internal Revenue Code. The Company will not be taxed on the
portion of its income which is distributed to shareholders, provided it
distributes at least 95% of its taxable income, has at least 75% of its
assets in real estate investments and meets certain other requirements for
qualification as a REIT.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE BUSINESS - The Company owns and operates twenty-
three manufactured home communities containing 5,261 sites. The
communities are located in New Jersey, New York, Ohio, Pennsylvania
and Tennessee.
These manufactured home communities are listed by trade names as
follows:
MANUFACTURED HOME COMMUNITY LOCATION
Allentown Memphis, Tennessee
Brookview Village Greenfield Center, New York
Cedarcrest Vineland, New Jersey
Cranberry Village Cranberry Twp., Pennsylvania
Cross Keys Village Duncansville, Pennsylvania
D & R Village Clifton Park, New York
Edgewood Estates Apollo, Pennsylvania
Fairview Manor Millville, New Jersey
Forest Park Village Cranberry Township, Pennsylvania
Heather Highlands Inkerman, Pennsylvania
Highland Estates Kutztown, Pennsylvania
Kinnebrook Monticello, New York
Lake Sherman Village Navarre, Ohio
Memphis Mobile City Memphis, Tennessee
Oxford Village West Grove, Pennsylvania
Pine Ridge Village Carlisle, Pennsylvania
Port Royal Village Belle Vernon, Pennsylvania
River Valley Estates Marion, Ohio
Sandy Valley Estates Magnolia, Ohio
Southwind Village Jackson, New Jersey
Spreading Oaks Village Athens, Ohio
Woodlawn Village Eatontown, New Jersey
Wood Valley Caledonia, Ohio
BASIS OF PRESENTATION - The consolidated financial statements of the
Company include all of its wholly-owned subsidiaries. All intercompany
transactions and balances have been eliminated in consolidation.
USE OF ESTIMATES - In preparing the consolidated financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities, as well as contingent assets
and liabilities as of the dates of the consolidated balance sheets and
revenue and expenses for the years then ended. Actual results could differ
significantly from these estimates and assumptions.
-31-
INVESTMENT PROPERTY AND EQUIPMENT AND DEPRECIATION - Property and equipment
are carried at cost. Depreciation for Sites and Building (15 to 27.5 years)
is computed principally on the straight-line method over the estimated
useful lives of the assets. Depreciation of Improvements to Sites and
Buildings, Rental Homes and Equipment and Vehicles (3 to 27.5 years) is
computed principally on the straight-line method. Land Development Costs
are not depreciated until they are put in use, at which time they are
capitalized as Sites or Site Improvements. Maintenance and repairs are
charged to income as incurred and improvements are capitalized. The costs
and related accumulated depreciation of property sold or otherwise disposed
of are removed from the accounts and any gain or loss is reflected in the
current year's results of operations. If there is an event or change in
circumstances that indicates that the basis of an investment property may
not be recoverable, management assesses the possible impairment of value
through evaluation of the estimated future cash flows of the property, on
an undiscounted basis, as compared to the property's current carrying
value. A property's carrying value would be adjusted, if necessary, to
reflect an impairment in the value of the property.
UNAMORTIZED FINANCING COSTS - Legal fees and loan processing fees for new
and restructured mortgages are being amortized over the life of the related
debt. Amortization expenses charged to Other Expenses for the years ended
December 31, 1996, 1995 and 1994 were $54,222, $251,554 and $60,579,
respectively.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include certificates
of deposit and bank repurchase agreements with maturities of 90 days or
less.
SECURITIES AVAILABLE FOR SALE - The Company's securities are classified as
available-for-sale and are carried at fair value. Gains or losses on the
sale of securities are based on identifiable cost and are accounted for on
a trade date basis. Unrealized holding gains and losses are excluded from
earnings and reported as a separate component of Shareholders' Equity until
realized.
MINORITY INVESTMENTS - The Company consolidates the results of certain
operations that have minority interests. On January 30, 1992, the Company
acquired an 88.36% interest in a limited partnership. On February 3, 1995,
the Company acquired the remaining 11.64% interest in this limited
partnership.
REVENUE RECOGNITION - The Company derives its income from the rental of
manufactured home sites. The Company also owns approximately 340 rental
units which are rented to residents. Revenue is recognized on the accrual
basis.
EARNINGS PER SHARE - Net income per share is computed using the weighted
average number of shares outstanding, adjusted for the exercise, or
potential exercise, of any dilutive outstanding stock options (See Note 6).
STOCK OPTION PLANS - Prior to January 1, 1996, the Company accounted for
its stock option plans in accordance with the provisions of Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. As such, compensation expense was
recorded on the date of grant only if the current market price of the
underlying stock exceeded the exercise price. On January 1, 1996, the
Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation",
which permits entities to recognize as expense over the vesting period the
fair value of all stock-based awards on the date of grant. Alternatively,
SFAS No. 123 also allows entities to continue to apply the provisions of
APB Opinion No. 25 and provide pro forma net income and pro forma earnings
per share disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method defined in SFAS No. 123 had
been applied. The Company has elected to continue to apply the provisions
of APB Opinion No. 25 and provide the pro forma disclosure provisions of
SFAS No. 123. During the initial phase-in period, the effects of applying
SFAS 123 in providing pro forma disclosures may not be representative of
the effects on the reported pro forma amounts in future years.
-32-
NOTE 3 - INVESTMENT PROPERTY AND EQUIPMENT
On January 26, 1995, the Company acquired Edgewood Estates, a 218-
space manufactured home community located in Apollo, Pennsylvania. This
manufactured home community was purchased from a partnership whose partners
are also officers, directors and shareholders of the Company. The purchase
price, including closing costs, totaled $1,810,906. An additional $200,000
plus interest at 8% is to be paid if the community generates, within a
three year time limit, $195,000 per year or more in operating income. This
purchase was based on an independent appraisal of fair market value.
On February 3, 1995, the Company purchased the remaining 11.64%
interest in Heather Highlands Mobile Home Village Associates, L.P. from Mr.
Eugene W. Landy for $132,600. This price per unit was the same price
previously paid to non-affiliated sellers, which was based on an
independent appraisal of fair market value.
On September 15, 1995, the Company purchased approximately ten acres
of vacant land adjacent to one of its communities in Vineland, New Jersey
for a purchase price of $32,500.
On January 10, 1996, the Company acquired Wood Valley from an
unrelated entity. This acquisition is a 161-space manufactured home
community located in Caledonia, Ohio. The purchase price, including
closing costs, totaled $2,013,706.
On March 28, 1996, the Company sold 5.5 acres of excess vacant land at
a sales price of $385,000 for a net gain of $290,303.
On August 1, 1996, the Company acquired Spreading Oaks Village, a 153-
space manufactured home community located in Athens, Ohio. This community
was purchased from a partnership whose partners are also officers,
directors and shareholders of the Company. The purchase price, including
closing costs totaled $1,421,800. This purchase was based on an
independent appraisal of fair market value.
On October 11, 1996, the Company purchased approximately sixty-five
acres of vacant land adjacent to one of its communities in Vineland, New
Jersey for a purchase price of $390,000.
The Company is currently conducting an expansion program at a number
of its communities. Contracts have been signed totaling approximately
$1,200,000 for these expansions.
The following is a summary of accumulated depreciation by major
classes of assets:
December 31, 1996 December 31, 1995
Site & Land Improvements $ 17,528,736 $ 16,061,667
Buildings & Improvements 1,026,567 942,710
Rental Homes & Accessories 1,099,786 1,015,358
Equipment & Vehicles 1,369,074 1,126,095
__________ __________
Total Accumulated
Depreciation $ 21,024,163 $ 19,145,830
========== ==========
-33-
NOTE 4 - SECURITIES AVAILABLE FOR SALE
The following is a summary of securities available for sale at
December 31, 1996:
Description Quantity Cost Market Value
Equity Securities:
HRE Properties 9,000 $ 129,038 $ 162,000
IRT Property Co. 5,000 48,100 57,500
Mid America Realty Inv. Inc. 10,000 83,915 95,000
Monmouth Capital Corp. * 18,195 44,561 45,488
Monmouth Real Estate Inv. Corp. * 72,433 415,587 416,486
Sizeler Property Inv. Inc. 5,000 47,375 48,125
_______ _______
768,576 824,599
_______ _______
Debt Securities:
First Union Real Estate
Equities Sr. Notes 8.875% 10/01/03 100,000 94,000 98,500
Haagen Alexander
Properties Conv. Sub Deb. 7.50% 01/01/03 300,000 272,450 279,000
IRT Property Co. Sub Deb 7.3% 08/05/03 50,000 48,000 50,563
Pacific Gulf Property Inv. 8.375% 02/15/01 50,000 50,000 51,125
Sizeler Property
Inv. Sub Deb 8% 07/15/03 150,000 131,510 137,250
________ _________
595,960 616,438
________ _________
$1,364,53 $1,441,037
======== =========
* Related company - See Note 8.
Gross unrealized gains on the above securities amounted to $76,501.
NOTE 5 - MORTGAGES PAYABLE
The following is a summary of mortgages payable at December 31, 1996
and 1995:
Interest
Mortgages Due Date Rate 1996 1995
D & R Village 09-01-00 8.45% $ 1,815,738 $ 1,837,606
Sandy Valley 05-01-00 10.50% 878,944 893,993
Various (5 properties) 12-01-00 7.50% 14,656,34 14,976,036
__________ __________
TOTAL MORTGAGES PAYABLE $17,351,030 $17,707,635
========== ==========
At December 31, 1996 and 1995, mortgages are collateralized by real
property with a carrying value depreciation of $15,038,668 and $14,830,665,
respectively, before accumulated depreciation and amortization.
REVOLVING LINE OF CREDIT
On March 4, 1994, the Company received a $10,000,000 revolving line of
credit from Summit Bank (formerly United Jersey Bank N.A.). This line of
credit expired on July 7, 1995.
-34-
UNSECURED LINE OF CREDIT
The Company has available a $500,000 unsecured line of credit with Summit
Bank, all of which was available at December 31, 1996. The interest rate
on this line of credit is prime plus 1/2%. This line of credit expires on
December 20, 1997 but may be extended by Summit Bank for additional one
year periods.
RECENT FINANCING
On January 26, 1995, the Company utilized $3,700,000 ($2,000,000 on
Woodlawn Village and $1,700,000 on Southwind Village) of the Summit Bank
revolving line of credit. Proceeds from these advances were primarily used
to retire existing debt and to purchase Edgewood Estates. This borrowing
was subsequently repaid.
On May 1, 1995, the mortgagee extended the Sandy Valley mortgage. The
new maturity date is May 1, 2000.
On November 29, 1995, the Company entered into a $15,000,000 mortgage
payable to Summit Bank secured by Woodlawn Village, Southwind Village,
Cedarcrest, Oxford Village and Port Royal Village. The interest rate on
this mortgage loan is fixed at 7.5%. This mortgage loan is due on December
1, 2000 but may be extended by the Company for an additional five years.
Proceeds of this mortgage were primarily used to retire existing debt.
On January 9, 1996, the Company entered into a $1,000,000 mortgage
payable (River Valley mortgage) to Bank One at an interest rate of prime.
Proceeds from this mortgage were used to purchase Wood Valley. This
mortgage was repaid in March 1996.
The aggregate principal payments of all mortgages payable are scheduled
as follows:
1997 - $ 389,651
1998 - 421,090
1999 - 455,083
2000 - 491,839
2001 - 531,585
Thereafter - 15,061,782
__________
Total - $ 17,351,030
==========
NOTE 6 - EMPLOYEE STOCK OPTIONS
Effective January 1, 1984, the shareholders approved a Stock Option Plan
for officers and key employees. This plan expired during 1994. As of
December 31, 1996 and 1995, 41,000 and 98,000 shares, respectively, of
stock options previously granted remained outstanding under this plan.
On May 26, 1994, the shareholders approved and ratified the Company's
1994 Stock Option Plan authorizing the grant to officers and key employees
of options to purchase up to 750,000 shares of common stock. Options may
be granted any time up to December 31, 2003. No option shall be available
for exercise beyond ten years. All options are exercisable after one year
from the date of grant. The option price shall not be below the fair
market value at date of grant. Cancelled or expired options are added back
to the "pool" of shares available under the plan.
-35-
The Company elected to continue following APB Opinion No. 25 in
accounting for its stock option plans and, accordingly, no compensation
cost has been recognized. Had compensation cost been determined consistent
with SFAS No. 123, the Company's net income and earnings per share would
have been reduced to the pro forma amounts as follows:
1996 1995
Net Income As reported $3,729,526 $2,491,581
Pro forma 3,603,216 2,349,981
Net Income As reported .61 .44
Per Share Pro forma .59 .41
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-
average assumptions used for grants in 1995 and 1996: dividend yield of 5
percent; expected volatility of 25 percent; risk-free interest rates of 6.5
percent; and expected lives of five years.
A summary of the status of the Company's stock option plans as of
December 31, 1996, 1995 and 1994 and changes during the years then ended
are as follows:
1996 1995 1994
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Outstanding at
beginning of year 272,000 $ 7.08 160,000 $ 6.23 98,000 $ 5.15
Granted 63,000 10.70 112,000 8.29 62,000 7.93
Exercised ( 57,000) 5.06 -0- -0- -0- -0-
_______ _______ ______
Outstanding at
end of year 278,000 8.31 272,000 7.08 160,000 6.23
======= ======= =======
Options exercisable
at end of year 215,000 160,000 98,000
======= ======= =======
Weighted-average
fair value of
options granted
during the year 2.08 1.61 N/A
-36-
The following is a summary of stock options outstanding as of December
31, 1996:
Date of Number of Number of Option Expiration
Grant Employees Shares Price Date
09/02/92 5 19,000 * $ 4.625 09/27/97
07/27/93 7 11,000 * 5.625 07/27/98
09/27/93 2 15,000 * 6.50 09/27/98
05/31/94 1 25,000 * 9.125 05/31/99
10/18/94 9 35,000 * 7.125 10/18/99
01/05/95 2 75,000 * 8.25 01/05/00
08/03/95 7 20,000 * 8.375 08/03/00
08/17/95 2 15,000 * 8.375 08/17/00
01/10/96 1 25,000 10.625 01/10/01
06/27/96 8 38,000 10.75 06/27/01
_______
278,000
=======
* Exercisable
As of December 31, 1996, there were 513,000 shares available for grant
under these plans.
NOTE 7 - 401(K) PLAN
Effective April 1, 1992, the Company instituted a 401(k) Plan (Plan).
All full-time employees who are over 21 years old and have completed one
year of service (as defined) are eligible for the Plan. Under this Plan,
an employee may elect to defer his/her compensation (up to a maximum of
18%) and have it contributed to the Plan. Employer contributions to the
Plan are at the discretion of the Company. During 1996, 1995 and 1994, the
Company made matching contributions to the Plan of up to 50% of the first
6% of employee salary. This amounted to $36,445, $34,056 and $27,543 for
1996, 1995 and 1994, respectively.
NOTE 8 - RELATED PARTY TRANSACTIONS AND OTHER MATTERS
TRANSACTIONS WITH AFFILIATED PARTNERSHIPS
The Company had mortgages payable to Royal Green, Ltd., a partnership in
which Mr. Eugene W. Landy has a significant ownership interest. These
mortgages were repaid during 1994. Interest expense on these mortgages
amounted to $30,717 in 1994.
In addition, Royal Green Ltd. owns 30 homes located in Allentown in
Memphis, Tennessee. The Company charges Royal Green, Ltd. market rent on
each occupied unit.
During 1995, the Company acquired the remaining 11.64% interest in
Heather Highlands Mobile Home Village Associates, L.P. from Mr. Eugene W.
Landy (See Note 3).
TRANSACTIONS WITH MONMOUTH REAL ESTATE INVESTMENT CORPORATION
The Company had a $10,000,000 mortgage funding line with MREIC. This
line expired during 1994. There are five Directors of the Company who are
also Directors and shareholders of MREIC. Interest expense on these
mortgages amounted to $45,719 in 1994.
During 1996, the Company purchased 72,433 shares of MREIC common stock at
a cost of $415,587 primarily through its Dividend Reinvestment and Stock
Purchase Plan.
-37-
TRANSACTIONS WITH MONMOUTH CAPITAL CORPORATION AND THE MOBILE HOME STORE,
INC.
During 1996, the Company purchased 18,195 shares of Monmouth Capital
Corporation (MCC) common stock at a cost of $44,561 primarily through its
Dividend Reinvestment and Stock Purchase Plan. Six directors of the
Company are also directors and shareholders of MCC.
The Company receives rental income from The Mobile Home Store, Inc.
(MHS), a wholly-owned subsidiary of MCC. MHS sells and finances the sales
of manufactured homes.
MHS pays the Company market rent on sites where MHS has a home for sale.
Total site rental income from MHS amounted to $98,167, $40,623 and $5,572,
respectively for the years ended December 31, 1996 and 1995 and 1994.
Effective April 1, 1995, the Company and MHS entered into an agreement
whereby MHS leases space from the Company to be used as sales lots, at
market rates, at most of the Company's communities. Total rental income
relating to these leases amounted to $90,000 and $67,500 for the years
ended December 31, 1996 and 1995, respectively.
As a REIT, the Company cannot be in the business of selling manufactured
homes for profit. During 1996, 1995 and 1994, the Company had
approximately $64,000, $180,000 and $115,000 respectively, of rental homes
that were sold to MHS at book value.
During 1996 and 1995, the Company purchased 13 and 10 homes, respectively
totalling $298,025 and $196,952, respectively to be used as rental homes
from MHS at its cost.
DIRECTORS', MANAGEMENT AND LEGAL FEES
During the years ended December 31, 1996, 1995 and 1994, Directors',
management, and legal fees to Mr. Eugene W. Landy and the law firm of Landy
& Landy amounted to $187,350, $180,160 and $171,842, respectively.
OTHER MATTERS
During 1994, the Company entered into a three-year employment agreement
and a five-year employment agreement with two of its executive officers.
The agreements provide for base compensation, bonuses and fringe benefits,
in addition to specified severance and retirement benefits. The Company is
accruing these benefits over the terms of the agreements. Included in
general and administrative expense for the years ended December 31, 1996,
1995 and 1994 were $174,050, $155,650 and $197,350, respectively, relating
to these agreements.
NOTE 9 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Effective April 17, 1989, the Company implemented a Dividend Reinvestment
and Stock Purchase Plan (DRIP). Under the terms of the DRIP, shareholders
who participate may reinvest all or part of their dividends in additional
shares of the Company at approximately 95% of the market price.
Shareholders may also purchase additional shares at approximately 95% of
their market price by making optional cash payments. Generally, dividend
reinvestments and purchases of shares are made quarterly on March 15, June
15, September 15 and December 15.
Amounts received and shares issued in connection with the DRIP for the
years ended December 31, 1996, 1995 and 1994 were as follows:
1996 1995 1994
Amounts Received/Dividends $5,672,022 $3,031,970 $1,628,793
Reinvested
Number of Shares Issued 526,045 354,468 220,567
-38-
NOTE 10 - DISTRIBUTIONS
The following dividends were paid to shareholders during the years ended
December 31, 1996, 1995 and 1994:
1996 1995 1994
Quarter Ended Amount Per Share Amount Per Share Amount Per Share
March 31 $ 877,906 $ .15 $ 687,020 $ .125 $ 527,560 $ .100
June 30 894,971 .15 696,425 .125 532,110 .100
September 30 915,813 .15 707,884 .125 538,278 .100
December 31 942,201 .15 863,518 .150 679,794 .125
_________ ___ _________ ____ _________ ____
$3,630,891 $ .60 $2,954,847 $ .525 $2,277,742 $.425
========= === ========= ==== ========= ====
Total distributions to shareholders for 1996 amounted to $3,630,891, or
$.60 per share, all of which was taxed as ordinary income. This amount
does not include the dividend resulting from the discount on shares
purchased through the Company's Dividend Reinvestment and Stock Purchase
Plan, which is considered a reduction in basis.
On January 15, 1997, the Company declared a dividend of $.175 per share
to be paid on March 17, 1997 to shareholders of record February 17, 1997.
NOTE 11 - FEDERAL INCOME TAXES
Effective January 1, 1992, the Company elected to be taxed as a REIT. As
the Company has distributed all of its income currently, no provision has
been made for Federal income or excise taxes for the years ended December
31, 1996, 1995 and 1994.
NOTE 12 - ENVIRONMENTAL ISSUES
In 1990, the Company converted the remaining oil heated manufactured
homes at Cedarcrest to gas heat. To avoid any potential leakage into the
surrounding soils, the remainder of the oil tanks was removed. In order to
encourage tenants' full cooperation, the Company entered into an agreement
with South Jersey Gas Company to finance the tenants' purchase of new
appliances and the actual cost of converting. The Company guaranteed up to
$190,000 of the payments by the tenants. In addition, the Company
reimbursed each tenant up to $530 for conversion costs. The $190,000
guarantee was in the form of a cash deposit remitted to the utility
company. As of December 31, 1995, all of this deposit was returned to the
Company.
NOTE 13 - LEGAL MATTERS
There are no lawsuits pending against the Company that management
believes will have a material effect on the financial condition or results
of operations of the Company.
The Company is a Defendant in various personal injury cases, all of which
are being defended by our insurance company.
The Company was also a Defendant in a case Jackson Township v. Southwind
Village. The Township alleged that the Company was wrongfully refusing to
comply with the Township ordinance requiring operation of the community as
a "senior citizen" manufactured home community. The Company believed that
under Federal law, the Company cannot exclude families from the community.
On June 15, 1995, the Company was granted a Summary Judgment Order
allowing families into Southwind Village in Jackson, New Jersey. In
January 1996, the Company was awarded $70,000 for legal fees and other
damages.
-39-
The Company was a Plaintiff in a lawsuit, United Mobile Homes, Inc., et
al v. Bondy Oil, Inc., et al. The Company spent approximately $200,000 in
1990 and 1991 to remedy contamination to soil from home heating oil.
United Mobile Homes, Inc. seeks to recover that money from the oil
suppliers. This case was settled for $80,000 in January 1996.
The Company was a Plaintiff in a lawsuit, Heather Highlands v. Jenkins
Township Sanitary Authority. Jenkins Township Sanitary Authority
constructed public sewers and attempted to extract connection fees from the
Company of over $150,000. The Company challenged the legality of the
proposed fees. The Company settled this matter and has paid Jenkins
Township Sanitary Authority $104,760 plus interest for a total of $111,042.
On June 7, 1995, a lawsuit was filed against the Company by Stults and
Associates, Inc. seeking payment of $49,000 for engineering services plus
attorneys fees and punitive damages for a total claim of approximately
$200,000 pertaining to the expansion of River Valley Estates in Marion,
Ohio. The Company does not believe that any monies are owed and is
vigorously defending the suit. The Company has filed a counter-claim.
Management believes that the outcome of this lawsuit will not have a
material effect on the financial condition or results of operations of the
Company.
On January 17, 1996, a home owned by a resident at one of the Company's
communities was damaged due to a propane gas explosion in the resident's
home. This explosion damaged other surrounding resident owned homes.
Along with the gas company, the Company was named in a lawsuit by a
resident. This suit is in discovery stages and is being defended by our
insurance company.
NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company is required to disclose certain information about fair values
of financial instruments, as defined in SFAS No. 107, "Disclosures About
Fair Value of Financial Instruments."
Limitations
Estimates of fair value are made at a specific point in time, based upon,
where available, relevant market prices and information about the financial
instrument. Such estimates do not include any premium or discount that
could result from offering for sale at one time the Company's entire
holdings of a particular financial instrument. For a portion of the
Company's financial instruments, no quoted market value exists. Therefore,
estimates of fair value are necessarily based on a number of significant
assumptions (many of which involve events outside the control of
management). Such assumptions include assessments of current economic
conditions, perceived risks associated with these financial instruments and
their counterparties, future expected loss experience and other factors.
Given the uncertainties surrounding these assumptions, the reported fair
values represent estimates only and, therefore, cannot be compared to the
historical accounting model. Use of different assumptions or methodologies
is likely to result in significantly different fair value estimates.
The fair value of cash and cash equivalents and notes receivables
approximates their current carrying amounts since all such items are short-
term in nature. The fair value of securities available for sale is based
upon quoted market values. The fair value of mortgages payable
approximates their current carrying amounts since such amounts payable are
at a current market rate of interest.
-40-
NOTE 15 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the years ended December 31, 1996, 1995 and 1994 for
interest was $1,434,875, $1,701,454 and $1,509,707, respectively.
During the years ended December 31, 1996, 1995 and 1994, land development
costs of $518,058, $843,448 and $294,283, respectively were transferred to
investment property and equipment and placed in service.
During the year ended December 31, 1995, the Company purchased Edgewood
Estates. This purchase calls for an additional $200,000 payment if certain
conditions are met. This amount, which is included in accrued liabilities,
has been added to investment property and equipment.
During the years ended December 31, 1996, 1995 and 1994, the Company had
dividend reinvestments of $1,452,153, $1,302,811 and $540,759, respectively
which required no cash transfers.
-41-
UNITED MOBILE HOMES, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
Column A Column B Column C Column D
Year of Acquisition
Site, Land Capitalization
& Building Subsequent to
Description Encumbrances Land Improvements Acquisition
Memphis, TN $ -0- $250,000 $ 2,569,101 $ 733,012
Greenfield Center, NY -0- 37,500 232,547 1,349,100
Vineland, NJ (3) 320,000 1,866,323 567,520
Cranberry Township, PA -0- 181,930 1,922,931 170,674
Duncansville, PA -0- 60,774 378,093 230,459
Clifton Park, NY 1,815,738 391,724 704,021 288,629
Apollo, PA -0- 670,000 1,336,600 251,859
Millville, NJ -0- 216,000 1,166,517 815,387
Zelienople, PA -0- 75,000 977,225 953,669
Inkerman, PA -0- 572,500 2,151,569 678,450
Kutztown, PA -0- 145,000 1,695,041 501,059
Monticello, NY -0- 235,600 1,402,572 1,295,423
Navarre, OH -0- 290,000 1,457,673 564,065
Memphis, TN -0- 78,435 810,477 1,104,416
West Grove, PA (3) 175,000 990,515 833,351
Carlisle, PA -0- 37,540 198,321 632,075
Belle Vernon, PA (3) 150,000 2,491,796 1,021,456
Marion, OH -0- 236,000 785,293 799,296
Magnolia, OH 878,944 270,000 1,941,430 579,207
Jackson, NJ (3) 100,095 602,820 1,196,085
Athens, OH -0- 67,000 1,326,800 8,527
Caledonia, OH -0- 260,000 1,753,206 30,373
Eatontown, NJ (3) 157,421 280,749 110,526
__________ _________ __________ __________
2,694,682 $4,977,519 $29,041,620 $14,714,618
Various 14,656,348 ========= ========== ==========
__________
$17,351,030
==========
-42-
UNITED MOBILE HOMES, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
Column A Column E(1)(2) Column F(1)
Gross Amount at Which
Carried at 12/31/96
Site, Land
& Building Accumulated
Description Land Improvements Total Depreciation
Memphis, TN $ 250,000 $ 3,302,113 $ 3,552,113 $ 1,633,098
Greenfield Center, NY 37,500 1,581,647 1,619,147 803,966
Vineland, NJ 408,206 2,345,637 2,753,843 1,140,591
Cranberry Twp., PA 181,930 2,093,605 2,275,535 1,049,419
Duncansville, PA 60,774 608,552 669,326 507,011
Clifton Park, NY 391,724 992,650 1,384,374 829,175
Apollo, PA 670,000 1,588,459 2,258,459 101,300
Millville, NJ 630,767 1,567,137 2,197,904 827,771
Zelienople, PA 75,000 1,930,894 2,005,894 1,374,547
Inkerman, PA 572,500 2,830,019 3,402,519 509,567
Kutztown, PA 422,839 1,918,261 2,341,100 603,904
Monticello, NY 318,472 2,615,123 2,933,595 653,243
Navarre, OH 290,000 2,021,738 2,311,738 717,045
Memphis, TN 78,435 1,914,893 1,993,328 715,821
West Grove, PA 175,000 1,823,866 1,998,866 1,294,379
Carlisle, PA 145,473 722,463 867,936 637,156
Belle Vernon, PA 150,000 3,513,252 3,663,252 2,549,190
Marion, OH 236,000 1,584,589 1,820,589 540,228
Magnolia, OH 270,000 2,520,637 2,790,637 1,376,037
Jackson, NJ 100,095 1,798,905 1,899,000 1,329,862
Athens, OH 67,000 1,335,327 1,402,327 18,339
Caledonia, OH 260,000 1,783,579 2,043,579 60,810
Eatontown, NJ 135,421 413,275 548,696 373,903
_________ __________ __________ __________
$5,927,136 $42,806,621 $48,733,757 $19,646,362
========= ========== ========== ==========
-42a-
UNITED MOBILE HOMES, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
Column A Column G Column H Column I
Date of Date Depreciable
Description Construction Acquired Life
Memphis, TN prior to 1980 1986 3 to 27.5
Greenfield Center, NY prior to 1970 1977 3 to 27.5
Vineland, NJ 1973 1986 3 to 27.5
Cranberry Twp., PA 1974 1986 5 to 27.5
Duncansville, PA 1961 1979 3 to 27.5
Clifton Park, NY 1972 1978 3 to 27.5
Apollo, PA prior to 1980 1995 5 to 27.5
Millville, NJ prior to 1980 1985 3 to 27.5
Zelienople, PA prior to 1980 1982 3 to 27.5
Inkerman, PA 1970 1992 5 to 27.5
Kutztown, PA 1971 1979 5 to 27.5
Monticello, NY 1972 1988 5 to 27.5
Navarre, OH prior to 1980 1987 5 to 27.5
Memphis, TN 1955 1985 3 to 27.5
West Grove, PA 1971 1974 5 to 27.5
Carlisle, PA 1961 1969 3 to 27.5
Belle Vernon, PA 1973 1983 3 to 27.5
Marion, OH 1950 1986 3 to 27.5
Magnolia, OH prior to 1980 1985 5 to 27.5
Jackson, NJ 1969 1969 3 to 27.5
Athens, OH prior to 1980 1996 5 to 27.5
Caledonia, OH prior to 1980 1996 5 to 27.5
Eatontown, NJ 1964 1978 3 to 27.5
-42b-
/------FIXED ASSETS-----/
(1) Reconciliation: 12/31/96 12/31/95 12/31/94
Balance - Beginning of Year $ 43,300,828 $ 39,505,503 $ 38,362,956
__________ __________ __________
Additions:
Acquisitions 3,407,006 2,006,600 -0-
Improvements 2,410,284 2,237,114 1,567,553
Depreciation -0- -0- -0-
__________ __________ __________
Total Additions 5,817,290 4,243,714 1,567,553
__________ __________ __________
Deletions 384,361 448,389 425,006
__________ __________ __________
Balance - End of Year $ 48,733,757 $ 43,300,828 $ 39,505,503
========== ========== ==========
/--ACCUMULATED DEPRECIATION---/
12/31/96 12/31/95 12/31/94
Balance - Beginning of Year $ 18,013,841 $ 16,544,208 $15,135,095
__________ __________ __________
Additions:
Acquisitions -0- -0- -0-
Improvements -0- -0- -0-
Depreciation 1,743,042 1,649,255 1,627,948
__________ __________ __________
Total Additions 1,743,042 1,649,255 1,627,948
__________ __________ __________
Deletions 110,521 179,622 218,835
__________ __________ __________
Balance - End of Year $ 19,646,362 $ 18,013,841 $16,544,208
========== ========== ==========
(2) The aggregate cost for Federal tax purposes approximates historical
cost.
(3) Represents one mortgage note payable secured by five properties.
-42c-
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.
UNITED MOBILE HOMES, INC.
By:/s/Eugene W. Landy
EUGENE W. LANDY
Chairman of the Board
Dated: March 7, 1997
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been duly signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated.
Title Date
/s/Eugene W. Landy Chairman of the Board and March 7, 1997
EUGENE W. LANDY Director
/s/Samuel A. Landy President and Director March 7, 1997
SAMUEL A. LANDY
/s/Anna T. Chew Vice President and March 7, 1997
ANNA T. CHEW Chief Financial Officer
and Director
/s/Ernest V. Bencivenga Secretary/Treasurer March 7, 1997
ERNEST V. BENCIVENGA and Director
/s/Robert J. Anderson Director March 7, 1997
ROBERT J. ANDERSON
/s/Charles P. Kaempffer Director March 7, 1997
CHARLES P. KAEMPFFER
/s/Richard H. Molke Director March 7, 1997
RICHARD H. MOLKE
/s/Eugene Rothenberg Director March 7, 1997
EUGENE ROTHENBERG
/s/Robert G. Sampson Director March 7, 1997
ROBERT G. SAMPSON
-43-
EXHIBIT 10 (f)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Employment Agreement") is made
and entered into this 23rd day of January, 1997, by and between UNITED
MOBILE HOMES, INC., a New Jersey corporation (the "Company") and ANNA T.
CHEW, an individual ("Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Employee, and Employee
desires to be employed by the Company upon the terms and subject to the
conditions set forth in this Employment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree
as follows:
Section 1. Employment. The Company hereby employs Employee,
and Employee hereby accepts employment with the Company, upon the terms and
subject to the conditions set forth in this Employment Agreement.
Section 2. Description of Employment. Employee is employed
as Vice President of the Company. It is agreed that Employee may also
serve as an officer of Monmouth Real Estate Investment Corporation and of
Monmouth Capital Corporation.
Section 3. Term of Employment. Unless sooner terminated in
accordance with the provisions hereof, the term of this Employment
Agreement shall be for a three-year period commencing January 1, 1997 and
terminating December 31, 1999. Thereafter, the term of this Employment
Agreement shall be automatically renewed and extended for successive one-
year periods except that either party may, at least ninety (90) days prior
to such expiration date or any anniversary thereof, give written notice to
the other party electing that this Employment Agreement not be renewed or
extended, in which event this Employment Agreement shall expire as of the
expiration date or anniversary date, respectively. In the event of a
merger of the Company, sale or change of control, Employee shall have the
right to extend and renew this Employment Agreement so that the expiration
date will be three years from the date of merger, sale or change of
control.
Section 4. Place of Employment. Employee's principal place
of employment shall be located at such offices of the Company in central
New Jersey as the Board of Directors may, from time to time, determine.
Section 5. Compensation. As compensation for all services to
be rendered by Employee under this Employment Agreement, the Company shall
pay to Employee a base salary as follows:
For 1997: $100,000
For 1998: $110,000
For 1999: $121,000
Said base salaries are to be paid in such intervals (at least
monthly) as salaries are paid generally to other executive officers of the
Company. Any bonus will be at the discretion of the President.
As compensation on severance of employment for any reason,
including death, Employee shall be entitled to the payment of one year's
salary. In the event of disability of Employee, her salary shall continue
for a period of two (2) years, payable monthly.
Section 6. Benefits. Employee shall participate in all
health, dental, insurance and similar plans of the Company and shall also
be eligible to participate in the Company's 401(k) or other Plan
established by the Company. Employee shall be entitled to four (4) weeks
vacation and the same holidays as provided for the other members of the
staff. The Company provides the 401(k) Plan in lieu of pension, severance
or other benefits (except such benefits as specifically provided in this
agreement).
Section 7. Review of Performance. The President of the
Company may annually review and evaluate the performance of Employee under
this Employment Agreement with Employee.
Section 8. Termination. This Employment Agreement may be
terminated by the Company at any time by reason of the death or disability
of Employee or for cause. A termination with "cause" shall mean a
termination of this Employment Agreement by reason of a good faith
determination by the Board of Directors of the Company that Employee (i)
failed to substantially perform his duties with the Company (if not due to
death or disability), or (ii) has engaged in conduct, the consequences of
which are materially adverse to the Company, monetarily or otherwise.
"Disability" shall mean a physical or mental illness which, in the judgment
of the Company after consultation with the licensed physician attending the
Employee, impairs Employee's ability to substantially perform his duties
under this Employment Agreement as an employee, and as a result of which he
shall have been absent from his duties with the Company on a full time
basis for six (6) consecutive months.
The termination provisions shall not, in any way, affect the
disability benefits provided for in this Employment Agreement.
Section 9. Notices. For the purpose of this Employment
Agreement, notices and all other communications provided for in this
Employment Agreement shall be in writing and shall be deemed to have been
duly given when personally delivered or sent by certified mail, return
receipt requested, postage prepaid, or by expedited (overnight) courier
with an established national reputation, shipping prepaid or billed to
sender, in either case addressed to the address last given by each party to
the other (provided that all notices to the Company shall be directed to
the attention of the Board of Directors of the Company with a copy to the
Secretary of the Company) or to such other address as either party may have
furnished to the other in writing in accordance herewith.
Section 10. Successors. This Employment Agreement shall be
binding on the Company and any successor to any of its businesses or
assets.
Section 11. Binding Effect. This Employment Agreement shall
insure to the benefit of and be enforceable by Employee's personal and
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
Section 12. Modification and Waiver. No provision of this
Employment Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by
Employee and such officer as may be specifically designated by the Board of
Directors of the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition
or provision of this Employment Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
Section 13. Headings. Headings used in this Employment
Agreement are for convenience only and shall not be used to interpret its
provisions.
Section 14. Waiver of Breach. The waiver of either the
Company or Employee of a breach of any provision of this Employment
Agreement shall not operate or be construed as a waiver of any subsequent
breach by either the Company or Employee.
Section 15. Amendments. No amendments or variations of the
terms and conditions of this Employment Agreement shall be valid unless the
same is in writing and signed by all of the parties hereto.
Section 16. Severability. The invalidity or unenforceability
of any provision of this Employment Agreement, whether in whole or in part,
shall not in any way affect the validity and/or enforceability of any other
provision herein contained. Any invalid or unenforceable provision shall
be deemed severable to the extent of any such invalidity or enforceability.
It is expressly understood and agreed that, while the Company and Employee
consider the restrictions contained in this Employment Agreement reasonable
for the purpose of preserving for the Company the good will, other
proprietary rights and intangible business value of the company if a final
judicial determination is made by a court having jurisdiction that the time
or territory or any other restriction contained in this Employment
Agreement is an unreasonable or otherwise unenforceable restriction against
Employee, the provisions of such clause shall not be rendered void but
shall be deemed amended to apply as to maximum time and territory and to
such other extent as such court may judicially determine or indicate to be
reasonable.
Section 17. Governing Law. This Employment Agreement shall be
construed and enforced pursuant to the laws of the State of New Jersey.
Section 18. Binding Arbitration and Damages Limitation. It is
expressly agreed by all parties to this contract that any dispute between
the parties will be determined by binding arbitration performed under the
rules of The American Arbitration Association. It is expressly agreed
that in no event can the Employee seek damages exceeding the greater of the
dollar amount of salary and benefits from the time of the dispute to the
end of the contract employment period; or one year's pay. This provision
applies to any and all claims arising from Employee's employment except for
matters solely and directly caused by workers compensation insurance.
IN WITNESS WHEREOF, this Employment Agreement has been duly
executed by the Company and Employee as of the date first above written.
United Mobile Homes, INC.
ATTEST: By:/s/Samuel A. Landy
Samuel A. Landy
President
/s/Ernest V. Bencivenga
Ernest V. Bencivenga
Secretary /s/Anna T. Chew
Anna T. Chew
WITNESS: Employee
/s/Ernest V. Bencivenga
Exhibit 23
INDEPENDENT ACCOUNTANT'S CONSENT
The Board of Directors
United Mobile Homes, Inc.
We consent to incorporation by reference in the Registration Statement (No.
333-13053) on Form S-8 of our report dated February 28, 1997, relating to
the consolidated balance sheets of United Mobile Homes, Inc. as of December
31, 1996 and 1995 and the related consolidated statements of income,
changes in shareholders' equity, and cash flows for each of the years in
the three-year period ended December 31, 1996, and the related schedule,
which report appears in the December 31, 1996 annual report on Form 10-K of
United Mobile Homes, Inc.
/s/KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Short Hills, New Jersey
March 26, 1997