Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2003 Commission File No. 0-16701
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2702802
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
280 DAINES STREET, BIRMINGHAM, MICHIGAN 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
units of beneficial assignments of limited partnership interest
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 mark 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-Q or any amendment to this
Form 10-Q [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes [ ] No [X]
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
Page
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
June 30, 2003 (Unaudited) and
December 31, 2002 3
Statements of Income Six month ended June 30, 2003 and 2002
Three months ended June 30, 2003
and 2002 (Unaudited) 4
Statement of Partners Equity
Six months ended June 30, 2003(Unaudited) 4
Statements of Cash Flows
Six month ended June 30, 2003 5
Notes to Financial Statements
June 30, 2003 (Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK 9
ITEM 4. CONTROLS AND PROCEDURES 10
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
CERTIFICATION EXHIBITS 10
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS JUNE 30,2003 DECEMBER 31, 2002
------------ -----------------
(UNAUDITED)
Properties:
Land $11,666,645 $11,647,745
Buildings And Improvements 51,344,772 51,212,057
Furniture And Fixtures 623,085 616,662
------- -------
63,634,502 63,476,464
Less Accumulated Depreciation 26,453,775 25,618,711
---------- ----------
37,180,727 37,857,753
Cash And Cash Equivalents 3,245,079 3,118,034
Unamortized Finance Costs 526,362 536,820
Manufactured Homes & Improvements 1,297,450 1,110,202
Other Assets 1,503,950 1,508,047
--------- ---------
Total Assets $43,753,568 $44,130,856
----------- -----------
LIABILITIES & PARTNER EQUITY JUNE 30,2003 DECEMBER 31, 2002
------------ -----------------
(UNAUDITED)
Accounts Payable $185,852 $178,328
Other Liabilities 910,976 704,535
Notes Payable 28,047,348 28,273,124
---------- ----------
Total Liabilities $29,144,176 $29,155,987
----------- -----------
Partners' Equity:
General Partner 332,148 320,607
Unit Holders 14,277,244 14,654,262
---------- ----------
Total Partners' Equity 14,609,392 14,974,869
---------- ----------
Total Liabilities And
Partners' Equity $43,753,568 $44,130,856
----------- -----------
See Notes to Financial Statements
3
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF INCOME SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 2003 JUNE 30, 2002 JUNE 30,2003 JUNE 30, 2002
------------- ------------- ------------ -------------
(unaudited) (unaudited) (unaudited) (unaudited)
Income:
Rental Income $5,863,051 $5,953,389 2,938,849 2,949,429
Other 349,635 410,281 204,947 263,944
Home Sale Income 794,101 363,000 611,800 194,564
------- ------- ------- -------
Total Income $7,006,787 $6,726,670 3,755,596 3,407,937
---------- ---------- --------- ---------
Operating Expenses:
Administrative Expenses
(Including $309,459, $311,545, $156,528 and $156,921,
in Property Management
Fees Paid to an Affiliate for the Six and Three Month
Period Ending
June 30, 2003 and 2002 Respectively) 1,643,519 1,569,913 816,345 729,171
Property Taxes 537,456 540,330 268,704 270,096
Utilities 407,117 426,073 205,704 211,258
Property Operations 754,994 875,055 402,767 459,383
Depreciation And Amortization 884,411 880,328 443,504 449,101
Interest 903,291 918,647 453,997 460,601
Home Sale Expense 721,918 358,437 532,811 173,342
------- ------- ------- -------
Total Operating Expenses $5,852,706 $5,568,783 $3,123,832 $2,752,952
---------- ---------- ---------- ----------
Net Income $1,154,081 $1,157,887 $631,764 $654,985
---------- ---------- -------- --------
Income Per Unit: 0.35 0.35 0.19 0.20
Distribution Per Unit: 0.46 0.44 0.23 0.23
Weighted Average Number Of Units
Of Beneficial Assignment Of Limited Partnership
Interest Outstanding During The Period Ending
June 30, 2003 and 2002 3,303,387 3,303,387 3,303,387 3,303,387
STATEMENT OF PARTNERS' EQUITY (UNAUDITED)
General Partner Unit Holders Total
--------------- ------------ -----
Balance, January 1, 2003 $320,607 $14,654,262 $14,974,869
Distributions 0 (1,519,558) (1,519,558)
Net Income 11,541 1,142,540 $1,154,081
------ --------- ----------
Balance as of June 30, 2003 $332,148 $14,277,244 $14,609,392
-------- ----------- -----------
See Notes to Financial Statements
4
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
JUNE 30, 2003 JUNE 30,2002
------------- ------------
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net Income $1,154,081 $1,157,887
---------- ----------
Adjustments To Reconcile Net Income
To Net Cash Provided By
Operating Activities:
Depreciation 873,953 869,870
Amortization 10,458 10,458
Gain on Sale of Equipment (8,846) (107,688)
(Increase) Decrease in Manufactured Homes and Improvements (187,248) (320,196)
(Increase) Decrease In Other Assets 4,097 (8,286)
Increase (Decrease) In Accounts Payables 7,524 (170,032)
Increase (Decrease) In Other Liabilities 206,441 209,449
------- -------
Total Adjustments 906,379 483,575
------- -------
Net Cash Provided By
Operating Activities 2,060,460 1,641,462
--------- ---------
Cash Flows From Investing Activities:
Capital Expenditures (196,927) (349,228)
Proceeds from sale of Equipment 8,846 122,468
----- -------
Net Cash Used In
Investing Actvities (188,081) ($226,760)
-------- ---------
Cash Flows From Financing Activities:
Distributions To Partners (1,519,558) (1,453,490)
Payment On Mortgage (225,776) (330,945)
-------- --------
Net Cash Used In
Financing Activities (1,745,334) (1,784,435)
---------- ----------
Increase (Decrease) In Cash and Equivalents 127,045 (369,733)
Cash and Equivalents, Beginning 3,118,034 3,741,016
--------- ---------
Cash and Equivalents, Ending $3,245,079 $3,371,283
---------- ----------
See Notes to Financial Statements
5
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
June 30, 2003 (Unaudited)
1. BASIS OF PRESENTATION:
The accompanying unaudited 2003 financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date. Operating results for the six months
ended June 30, 2003 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2003, or for any other interim period.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Partnership's Form 10-K for the year ended
December 31, 2002.
-6-
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its nine manufactured
home communities. On August 20, 1998, the Partnership refinanced seven of its
nine properties with GMAC Commercial Mortgage Corporation (the "Refinancing").
Liquidity
As a result of the Refinancing, seven of the Partnership's nine properties are
mortgaged. At the time of the Refinancing, the aggregate principal amount due
under the seven mortgage notes was $30,000,000 and the aggregate fair market
value of the Partnership's mortgaged properties was $66,000,000. The Partnership
expects to meet its short-term liquidity needs generally through its working
capital provided by operating activities.
Partnership liquidity is based, in part, upon its investment strategy. Upon
acquisition, the Partnership anticipated owning the properties for seven to ten
years. All of the properties have been owned by the Partnership for more than
ten years. The General Partner may elect to have the Partnership own the
properties for as long as, in the opinion of the General Partner, it is in the
best interest of the Partnership to do so.
Distributable Cash from Operations totaled $1,075,268 and $1,104,086 for the
quarters ended June 30, 2003 and 2002, respectively. Distributable Cash from
Operations is defined as net income computed in accordance with generally
accepted accounting principals ("GAAP"), plus real estate related depreciation
and amortization. Distributable Cash from Operations does not represent cash
generated from operating activities in accordance with GAAP and is not
necessarily indicative of cash available to fund cash needs. Distributable Cash
from Operations should not be considered as an alternative to net income as the
primary indicator of the Partnership's operating performance nor as an
alternative to cash flow as a measure of liquidity. From Distributable Cash from
Operations the General Partner has decided to distribute $759,779, or $.23 per
unit, to the unit holders as of June 30, 2003. The General Partner will continue
to monitor cash flow generated by the Partnership's nine properties during the
coming quarters. If cash flow generated is greater or lesser than the amount
needed to maintain the current distribution level, the General Partner may elect
to reduce or increase the level of future distributions paid to Unit Holders.
While the Partnership is not required to maintain a working capital reserve, the
Partnership has not distributed all the Distributable Cash from Operations in
order to build reserves. The remaining $315,489 was added to reserves, as of
June 30, 2003, the Partnership's
-7-
cash reserves amounted to $3,245,079. The level of cash reserves maintained is
at the discretion of the General Partner.
Results of Operations
Overall, as illustrated in the following table, the Partnership's nine
properties reported combined occupancy of 82% at the end of June 2003, versus
85% for June 2002. The average monthly homesite rent as of June 30, 2003 was
approximately $393, versus $380, an increase of 3% from June 2002.
TOTAL OCCUPIED OCCUPANCY AVERAGE*
CAPACITY SITES RATE RENT
Ardmor Village 339 313 93% $383
Camelot Manor 335 262 79% 372
Country Roads 312 239 77% 271
Dutch Hills 278 259 94% 367
El Adobe 367 279 76% 449
Paradise Village 614 372 61% 335
Stonegate Manor 308 241 79% 370
Sunshine Village 356 332 94% 493
West Valley 421 351 84% 494
--- --- -- ---
TOTAL ON 6/30/03: 3,330 2,648 82% $393
TOTAL ON 6/30/02: 3,329 2,783 85% $380
*NOT A WEIGHTED AVERAGE
GROSS REVENUES NET INCOME
6/30/03 6/30/02 6/30/03 6/30/02
Ardmor Village $692,951 $545,206 $209,174 $310,540
Camelot Manor 386,277 306,823 180,894 135,744
Country Roads 248,032 202,124 85,987 71,783
Dutch Hills 305,638 322,892 153,124 166,969
El Adobe 371,515 351,616 195,227 157,592
Paradise Village 427,806 494,600 108,535 119,696
Stonegate Manor 271,672 261,348 117,358 123,807
Sunshine Village 455,853 462,616 275,913 282,561
West Valley 591,195 452,442 348,047 345,186
--------- --------- --------- ---------
3,750,939 3,399,667 1,674,259 1,713,878
Partnership Management: 4,657 8,270 (80,919) (50,575)
Other Non Recurring expenses: -- -- (64,075) (98,616)
Debt Service (453,997) (460,601)
Depreciation and Amortization -- -- (443,504) (449,101)
--------- --------- --------- ---------
$3,755,596 $3,407,937 $631,764 $654,985
-8-
COMPARISON OF THREE MONTHS AND QUARTER ENDED JUNE 30, 2003 TO THREE MONTHS AND
QUARTER ENDED JUNE 30, 2002
Gross revenues for the three months increased $347,659 to $3,755,596 in 2003, as
compared to $3,407,937 in 2002. The increase was primarily the result of an
increase in home sale revenue.
(See table on previous page.)
As described in the Statements of Income, Total Operating Expenses for the three
months increased to $3,123,832, in 2003, as compared to $2,752,952 for the same
three months in 2002. The increase is due to higher home sale expenses.
As a result of the aforementioned factors, Net Income for the three month period
decreased to $631,764, compared to $654,985 in 2002.
COMPARISON OF SIX MONTHS AND QUARTER ENDED JUNE 30, 2003 TO SIX MONTHS AND
QUARTER ENDED JUNE 30, 2002
Gross revenues for the six months increased $280,117 to $7,006,787 in 2003, as
compared to $6,726,670 in 2002. The increase was primarily the result of an
increase in home sale revenue. (See table on previous page.)
As described in the Statements of Income, Total Operating Expenses for the six
months increased to $5,852,706, in 2003, as compared to $5,568,783 for the same
six months in 2002. The increase is due to higher home sale expenses.
As a result of the aforementioned factors, Net Income for the six month period
decreased to $1,154,081, compared to $1,157,887 in 2002.
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate rise primarily through its borrowing
activities. There is inherent roll over risk for borrowings as they mature and
are renewed at current market rates. The extent of this risk is not quantifiable
or predictable because of the variability of future interest rates and the
Partnership's future financing requirements.
Note Payable: At June 30, 2003 the Partnership had a note payable outstanding in
the amount of $28,047,348. Interest on this note is at a fixed annual rate of
6.37% through March 2009.
The Partnership does not enter into financial instruments transactions for
trading or other speculative purposes or to manage its interest rate exposure.
-9-
ITEM 4. CONTROLS AND PROCEDURE'S
Evaluation of Disclosure Controls and Procedures
The Director and Chief Financial Officer of Uniprop, Inc. have reviewed
and evaluated the effectiveness of our disclosure controls and procedures ( as
defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c) ) within 90 days
before the filing of this quarterly report. Based on that evaluation, we have
concluded that our current disclosure controls and procedures are effective and
timely, providing them with material information relating to that required to be
disclosed in the reports we file or submit under the Exchange Act.
Changes in Internal Controls
There have not been any significant changes in our internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation. We are not aware of any significant deficiencies
or material weaknesses, therefore no corrective actions were taken.
PART II - OTHER INFORMATION
ITEM 6. REPORTS ON FORM 8-K
(a) Reports on Form 8-K
There were no reports filed on Form 8-K during
the three months ended June 30, 2003.
-10-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Uniprop Manufactured Housing Communities
Income Fund II, a Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
General Partner
BY: Uniprop, Inc.,
its Managing General Partner
By: /s/ Paul M. Zlotoff
---------------------------------------------
Paul M. Zlotoff, President
By: /s/ Gloria A. Koster
---------------------------------------------
Gloria A. Koster, Principal Financial Officer
Dated: August 12, 2003
-11-
10-Q EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
EX-31.1 Certification of Chief Executive Officer pursuant to Section
302.
EX-31.2 Certification of Chief Financial Officer pursuant to Section
302.
EX-32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EX-32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.