-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, POAmhcitgfzpLsa49Ke6TrihUa0M2jXafMJg/rLF9S8rcDjmf3fM3Ngwz+/lAZoP oavGrg8yU81TAI5YZh7e2w== 0000752642-97-000002.txt : 19970328 0000752642-97-000002.hdr.sgml : 19970328 ACCESSION NUMBER: 0000752642-97-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970327 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED MOBILE HOMES INC CENTRAL INDEX KEY: 0000752642 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 221890929 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12690 FILM NUMBER: 97565175 BUSINESS ADDRESS: STREET 1: 125 WYCKOFF RD CITY: EATONTOWN STATE: NJ ZIP: 07724 BUSINESS PHONE: 9083893890 MAIL ADDRESS: STREET 1: P O BOX 335 STREET 2: 125 WYCKOFF ROAD CITY: EATONTOWN STATE: NJ ZIP: 07724 10-K 1 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. -1- 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. -2- 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. -4- 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 -5- 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 -6- 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. -7- 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). -8- 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. -10- 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.
-11- 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. -12- 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. -13- 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 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF UNITED MOBILE HOMES, INC. AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 12-MOS DEC-31-1996 DEC-31-1996 1,195,095 1,441,037 606,965 99,766 0 3,428,324 50,911,657 21,024,163 35,875,206 2,098,031 17,351,030 643,368 0 0 15,782,777 35,875,206 0 14,960,444 0 6,221,749 3,574,294 0 1,434,875 3,729,526 0 3,729,526 0 0 0 3,729,526 .61 .61
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