SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ( x ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period ended _________________________ For Quarter Ended Commission File Number June 30, 1998 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 Registrant's telephone number, including area code (732) 389-3890 __________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ________ The number of shares outstanding of issuer's common stock as of July 24, 1998 was 7,137,887 shares.
UNITED MOBILE HOMES, INC. for the QUARTER ENDED JUNE 30, 1998 PART I - FINANCIAL INFORMATION Page No. Item 1 - Financial Statements Consolidated Balance Sheets..................... 3 Consolidated Statements of Income............... 4 Consolidated Statements of Cash Flows........... 5 Notes to Consolidated Financial Statements...... 6-7 Item 2 - Management Discussion and Analysis of Financial Conditions and Results for Operations. 8-9 PART II - OTHER INFORMATION 10 SIGNATURES 11
<TABLE> <CAPTION> UNITED MOBILE HOMES, INC. CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1998 and DECEMBER 31, 1997 June 30, December 31, 1998 1997 <S> <C> <C> - -ASSETS- INVESTMENT PROPERTY AND EQUIPMENT Land $ 6,351,506 $ 6,351,506 Site and Land Improvements 44,317,269 43,927,856 Buildings and Improvements 2,661,587 2,592,125 Rental Homes and Accessories 5,606,722 5,339,857 ---------- ---------- Total Investment Property 58,937,084 58,211,344 Equipment and Vehicles 2,480,151 2,416,402 ---------- ---------- Total Investment Property and Equipment 61,417,235 60,627,746 Accumulated Depreciation (23,983,659) (22,918,677) ---------- ---------- Net Investment Property and Equipment 37,433,576 37,709,069 ---------- ---------- OTHER ASSETS Cash and Cash Equivalents 1,342,408 191,319 Securities Available for Sale 5,423,119 3,547,236 Notes and Other Receivables 766,711 678,280 Unamortized Financing Costs 214,498 172,694 Prepaid Expenses -0- 109,415 Land Development Costs 1,908,296 1,191,246 ---------- ---------- Total Other Assets 9,655,032 5,890,190 ---------- ---------- TOTAL ASSETS $ 47,088,608 $ 43,599,259 ========== ========== - LIABILITIES AND SHAREHOLDERS' EQUITY - MORTGAGES PAYABLE $ 21,677,592 $ 20,111,023 ---------- ---------- OTHER LIABILITIES Accounts Payable 103,192 222,474 Loans Payable 126,072 578,973 Accrued Liabilities and Deposits 1,481,523 1,477,855 Tenant Security Deposits 405,301 378,393 ---------- ---------- Total Other Liabilities 2,116,088 2,657,695 ---------- ---------- TOTAL LIABILITIES 23,793,680 22,768,718 ---------- ---------- SHAREHOLDERS' EQUITY Common Stock - $.10 par value per share 713,789 686,531 10,000,000 shares authorized, 7,137,887 and 6,865,312 issued and outstanding, respectively Additional Paid-In Capital 23,438,922 20,572,786 Accumulated Other Comprehensive Income 206,457 239,017 Accumulated Deficit ( 1,064,240) ( 667,793) ---------- ---------- Total Shareholders' Equity 23,294,928 21,830,541 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 47,088,608 $ 43,599,259 ========== ========== </TABLE> -UNAUDITED- See Notes to Consolidated Financial Statements -3-
<TABLE> <CAPTION> UNITED MOBILE HOMES, INC. CONSOLIDATED STATEMENTS OF INCOME For the THREE AND SIX MONTHS ended JUNE 30, 1998 and 1997 THREE MONTHS SIX MONTHS 6/30/98 6/30/97 6/30/98 6/30/97 <S> <C> <C> <C> <C> Rental and Related Income $4,179,675 $3,804,373 $ 8,298,510 $ 7,570,093 Community Operating Expense 1,830,858 1,693,851 3,647,194 3,223,646 --------- --------- --------- --------- Income from Community 2,348,817 2,110,522 4,651,316 4,346,447 Operations General and Administrative 363,504 328,821 719,678 672,925 Interest Expense 382,008 337,604 754,129 673,030 Interest Income ( 82,213) ( 53,785) ( 174,108) ( 92,810) Depreciation 601,063 526,365 1,201,735 1,046,085 Other Expenses 28,770 10,500 41,970 21,000 --------- --------- --------- --------- Income before Gains On Sales of Assets 1,055,685 961,017 2,107,912 2,026,217 Gains on Sales of Assets 11,052 14,277 9,928 22,031 --------- --------- --------- --------- Net Income $1,066,737 $ 975,294 $2,117,840 $2,048,248 ========= ========= ========= ========= Net Income Per Share - Basic $ .16 .15 .31 .31 ========= ========= ========= ========= Diluted $ .15 .15 .30 .31 ========= ========= ========= ========= Weighted Average Shares - Basic 7,029,651 6,565,181 6,918,006 6,512,536 ========= ========= ========= ========= Diluted 7,058,715 6,636,365 6,955,017 6,583,720 ========= ========= ========= ========= </TABLE> -UNAUDITED- See Notes to Consolidated Financial Statements -4-
<TABLE> <CAPTION> UNITED MOBILE HOMES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS for the SIX MONTHS ended JUNE 30, 1998 and 1997 1998 1997 <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 2,117,840 $ 2,408,248 Non-Cash Adjustments Depreciation 1,201,735 1,046,085 Amortization 41,970 21,000 Gain on Sales of Assets ( 9,928) ( 22,031) Changes in Operating Assets And Liabilities - Notes and Other Receivables ( 88,431) ( 107,385) Prepaid Expenses 109,415 212,451 Accounts Payable ( 119,282) ( 108,425) Accrued Liabilities & Deposits 3,668 ( 190,054 Tenant Security Deposits 26,908 13,450 --------- --------- Net Cash Provided by Operating Activities 3,283,895 2,913,339 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Investment Property And Equipment ( 811,083) (1,125,556) Proceeds from Sales of Assets 144,769 228,002 Additions to Land Development ( 967,050) (1,490,117) Purchase of Securities Available for Sale (1,908,443) (1,531,396) --------- --------- Net Cash Used by Investing Activities (3,541,807) (3,919,067) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Mortgages and Loans 3,600,000 300,000 Principal Payments of Mortgages and Loans (2,486,332) ( 195,733) Financing Costs on Debt ( 83,774) -0- Proceeds from Dividend Reinvestment And Stock Purchase Plan 1,870,075 1,072,796 Proceeds from Exercise of Stock Options 75,688 215,750 Dividends Paid (1,566,656) (1,378,996) --------- --------- Net Cash Provided by Financing Activities 1,409,001 13,817 --------- --------- NET INCREASE (DECREASE) IN CASH 1,151,089 ( 991,911) AND CASH EQUIVALENTS CASH & CASH EQUIVALENTS - BEGINNING 191,319 1,195,095 --------- --------- CASH & CASH EQUIVALENTS - ENDING $ 1,342,408 $ 203,184 ========= ========= </TABLE> -UNAUDITED- See Notes to Consolidated Financial Statements -5-
UNITED MOBILE HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1998 (UNAUDITED) NOTE 1 - ACCOUNTING POLICY The interim consolidated financial statements furnished herein reflect all adjustments which were, in the opinion of management, necessary to present fairly the financial position, results of operations, and cash flows at June 30, 1998 and for all periods presented. All adjustments made in the interim period were of a normal recurring nature. Certain footnote disclosures which would substantially duplicate the disclosures contained in the audited consolidated financial statements and notes thereto included in the annual report of United Mobile Homes, Inc. (the Company) for the year ended December 31, 1997 have been omitted. Effective January 1, 1998, the Company adopted the provisions of Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Under SFAS 130, comprehensive income is divided into net income and other comprehensive income. Other comprehensive income includes items previously recorded directly in equity, such as unrealized gains or losses on securities available for sale. Comparative financial statements provided for earlier periods have been reclassified to reflect application of the provisions of SFAS 130. SFAS 130 requires total comprehensive income and its components to be displayed on the face of a financial statement for annual financial statements. For interim financial statements, SFAS 130 requires only total comprehensive income to be reported and allows such disclosure to be presented in the notes to the interim financial statements. Total comprehensive income, including unrealized gains on securities available for sale, amounted to $726,514 and $2,085,280, for the three and six months ended June 30, 1998, respectively, and $978,772 and $1,997,323, for the three and six months ended June 30, 1997, respectively. NOTE 2 - NET INCOME PER SHARE Diluted net income per share is calculated by dividing net income by the weighted average number of common shares outstanding plus the weighted average number of net shares that would be issued upon exercise of stock options pursuant to the treasury stock method. Options in the amount of 29,064 and 37,011 for the three and six months ended June 30, 1998, respectively, and 71,184 for both the three and six months ended June 30, 1997, are included in the diluted weighted average shares outstanding. NOTE 3 - MORTGAGES PAYABLE On April 28, 1998, the Company entered into a $3,600,000 mortgage payable to Summit Bank. The interest rate on this mortgage is fixed at 7.5%. This mortgage loan is due on May 1, 2003. Proceeds of this mortgage were used to retire existing debt and to purchase securities available for sale. -6-
NOTE 4 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN On June 15, 1998, the Company paid $1,311,297 as a dividend of $.1875 per share to shareholders of record as of May 15, 1998. The total dividends paid for the six months ended June 30, 1998 amounted to $2,514,287. On June 15, 1998, the Company received $1,609,025 from the Dividend Reinvestment and Stock Purchase Plan. There were 144,314 new shares issued resulting in 7,137,887 shares outstanding. The total amount received from the Dividend Reinvestment Plan for the six months ended June 30, 1998 amounted to $2,893,394. Effective June 24, 1998, the Company amended the Dividend Reinvestment and Stock Purchase Plan. Shareholders may no longer purchase additional shares by making optional cash payments. The dividend reinvestment feature of the Plan remains unchanged. NOTE 5 - EMPLOYEE STOCK OPTIONS During the six months ended June 30, 1998, the following stock option was granted: Date of Number of Number of Option Expiration Grant Employees Shares Price Date 1/08/98 1 25,000 $12.75 1/08/2003 During the six months ended June 30, 1998, two employees exercised their stock options and purchased 11,500 shares for total proceeds of $75,688. One option for 1,000 shares expired and was added back to the "pool"of shares available for grant. As of June 30, 1998, there were options outstanding to purchase 349,000 shares and 381,000 shares available for grant under the Company's Stock Option Plans. NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the six months ended June 30, 1998 and 1997 for interest was $814,729 and $673,030, respectively. During the six months ended June 30, 1998 and 1997, land development costs of $250,000 and $572,648, respectively, were transferred to investment property and equipment and placed in service. During the six months ended June 30, 1998 and 1997, the Company had dividend reinvestments of $947,631 and $894,788, respectively, which required no cash transfers. -7-
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS MATERIAL CHANGES IN FINANCIAL CONDITION United Mobile Homes, Inc. (the Company) owns and operates twenty-four manufactured home communities. These manufactured home communities have been generating increased gross revenues and increased operating income. The Company generated $3,283,895 net cash provided by operating activities. The Company received new capital of $2,817,706 through its Dividend Reinvestment and Stock Purchase Plan (DRIP). The Company purchased $1,908,443 of Securities Available for Sale. Mortgages Payable increased by $1,566,569 as a result of a new mortgage of $3,600,000 offset by principal repayments. Loans payable decreased by $452,901 as a result of principal repayments. MATERIAL CHANGES IN RESULTS OF OPERATIONS Income from community operations increased by $238,295 to $2,348,817 for the quarter ended June 30, 1998 as compared to $2,110,522 for the quarter ended June 30, 1997. Income from community operations increased by $304,869 to $4,651,316 for the six months ended June 30, 1998 as compared to $4,346,447 for the six months ended June 30, 1997. This represents a continuing trend of rising income from community operations. The Company has been raising rental rates by approximately 5% annually. Rental and related income rose from $3,804,373 for the quarter ended June 30, 1997 to $4,179,675 for the quarter ended June 30, 1998. Rental and related income rose from $7,570,093 for the six months ended June 30, 1997 to $8,298,510 for the six months ended June 30, 1998. This was the result of higher rents, an increase in occupancy, and the purchase of Waterfalls Village during the fourth quarter of 1997. Community operating expenses increased from $1,693,851 for the quarter ended June 30, 1997 to $1,830,858 for the quarter ended June 30, 1998. Community operating expenses increased from $3,223,646 for the six months ended June 30, 1997 to $3,647,194 for the six months ended June 30, 1998. Community operating expenses increased due to the purchase of Waterfalls Village and an increase in certain expenses associated with filling vacant expansion sites (i.e. advertising, personnel, etc.). Interest expense increased by $44,404 for the quarter ended June 30, 1998 compared to the quarter ended June 30, 1997 and by $81,099 for the six months ended June 30, 1998 compared to the six months ended June 30, 1997. This was primarily a result of an increase in the average principal balance on borrowings outstanding. The balance outstanding at June 30, 1998 was $21,677,592 as compared to $17,155,297 at June 30, 1997. Funds from operations (FFO), defined as net income, excluding gains (or losses) from sales of depreciable assets, plus depreciation increased from $1,487,382 for the quarter ended June 30, 1997 to $1,656,748 for the quarter ended June 30, 1998 and from $3,072,302 for the six months ended June 30, 1997 to $3,309,647 for the six months ended June 30, 1998. FFO does not replace net income (determined in accordance with generally accepted accounting principles) as a measure of performance or net cash flows as a measure of liquidity. FFO should be considered as a supplemental measure of operating performance used by real estate investment trusts. -8-
LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities increased from $2,913,339 for the six months ended June 30, 1997 to $3,283,895 for the six months ended June 30, 1998. The Company believes that funds generated from operations together with the financing and refinancing of its properties will be sufficient to meet its need over the next several years. -9-
PART II OTHER INFORMATION Item 1 - Legal Proceedings - none Item 2 - Changes in Securities - none Item 3 - Defaults Upon Senior Securities - none Item 4 - Submission of Matters to a Vote of Security Holders - The annual meeting of shareholders was held on May 28, 1998 to elect a Board of Directors for the ensuing year and to approve the selection of independent auditors. Proxies for the meeting were solicited pursuant to Regulation 14 under the Securities and Exchange Act of 1934. Item 5 - Other Information - none Item 6 - Exhibits and Reports on Form 8-K - (a) Exhibits - none (b) Reports on Form 8-K - none -10-
SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATE: August 6, 1998 By:/s/Samuel A. Landy Samuel A. Landy, President DATE: August 6, 1998 By:/s/Anna T. Chew Anna T. Chew, Vice President and Chief Financial Officer -11-