SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 2003 Commission
File No. 0-15940
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
a Michigan Limited Partnership
(Exact name of registrant as specified in its charter)
| MICHIGAN | | 38-2593068
|
| (State or other jurisdiction of | | (I.R.S. employer
|
| incorporation or organization) | | identification number)
|
280 Daines Street, Birmingham, Michigan 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
$1,000 per unit, units of limited partnership interest
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
Page
PART I FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
|
| Balance Sheets
|
| September 30, 2003(Unaudited) and
|
| December 31, 2002 | | | 3
|
|
| Statements of Income
|
| Nine months ended September 30, 2003 and 2002(Unaudited)
|
| Three months ended September 30, 2003
|
| and 2002(Unaudited) | | | 4
|
|
| Statement of Partners' Deficit
|
| Nine months ended September 30, 2003(Unaudited) | | | 4
|
|
|
| Statements of Cash Flows
|
| Nine months ended September 30, 2003
|
| and 2002(Unaudited) | | | 5
|
|
|
| Notes to Financial Statements | | |
|
| September 30, 2003(Unaudited) | | | 6
|
|
|
| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS
|
| OF FINANCIAL CONDITION AND RESULTS
|
| OF OPERATIONS | | | 7
|
| ITEM 3. | QUANTITATIVE AND QUALITATIVE
|
| DISCLOSURES ABOUT MARKET RISK | | | 10
|
| ITEM 4. | CONTROLS AND PROCEDURES
| | | 11
|
PART II OTHER INFORMATION
| ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K | | |
12
|
|
|
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
September 30, 2003(Unaudited)
1. Basis of Presentation:
The accompanying unaudited 2003 financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date. Operating results for the nine months ended September 30,
2003 are not necessarily indicative of the results that may be expected for the year ending December 31,
2003, or for any other interim period. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Partnership's Form 10-K for the year ending December 31,
2002.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its four manufactured housing communities. On
March 25, 1997 the Partnership borrowed $33,500,000 from Nomura Asset Capital Corporation (the
"Financing"). It secured the Financing by placing liens on its four communities. As a result of the
Financing, the Partnership distributed $30,000,000 to the Limited Partners, which represented a full
return of the original capital contributions of $1,000 per unit.
Liquidity
As a result of the Financing, the Partnership's four properties are mortgaged. At the time of the
Financing, the aggregate principal amount due under the four mortgage notes was $33,500,000 and the
aggregate fair market value of the Partnership's mortgaged properties was $53,200,000. The Partnership
expects to meet its short-term liquidity needs generally through its working capital provided by
operating activities.
The Partnership's long-term liquidity is based, in part, upon its investment strategy. The properties
owned by the Partnership were anticipated to be held for seven to ten years after their acquisition. All
of the properties have been owned by the Partnership more than ten years. The General Partner may elect
to have the Partnership own the properties for as long as, in the opinion of the General Partner, it is
in the best interest of the Partnership to do so.
The Partnership has a renewable $1,000,000 line of credit with National City Bank of Michigan/Illinois
(formerly First of America Bank). The interest rate, on such line of credit, floats 180 basis points
above 1 month LIBOR, which on September 30, 2003 was 1.12%. The sole purpose of the line of credit is to
purchase new and used homes to be used as model homes offered for sale within the Partnership's
communities. Over the past three years, sales of the new and used model homes has been growing and the
General Partner believes that continuing the model home program is in the best interest of the
Partnership. As of September 30, 2003 the outstanding balance on the line of credit was $105,000.
Net Cash from Operations available for aggregate distributions to all Partners in UMHCIF during the
quarter ended September 30, 2003 amounted to $395,427.
The amount available during the same period in 2002 was $468,372. Net Cash from
Operations is meant to be a supplemental measure of the Partnership's operating performance. Net Cash
from Operations is defined as net income computed in accordance with generally accepted accounting
principles ("GAAP"), plus real estate related depreciation and amortization.
Net Cash from Operations does not represent cash generated from operating activities in accordance with
GAAP and is not necessarily indicative of cash available to fund cash needs. Net Cash from Operations
should not be considered as an alternative to net income as the primary indicator of the Partnership's
operating performance nor as an alternative to cash flow as a measure of liquidity.
The quarterly Partnership Management Distribution paid to the General Partner during the third quarter
based on second quarter results was $150,875, or one-fourth of 1.0% of the most recent appraised value of
the properties held by the Partnership ($60,350,000 x .01 = $603,500 / 4 = $150,875).
The cash available after payment of the Partnership Management Distribution amounted to $395,427. From
this amount, the General Partner elected to make a total distribution of $112,500 for the third quarter
of 2003 equal to the amount distributed for the third quarter of 2002, 80.0% or $90,000, was paid to the
Limited Partners and 20.0% or $22,500 was paid to the General Partner.
While the Partnership is not required to maintain a working capital reserve, the Partnership has not
distributed all the cash generated from operations in order to build cash reserves. As of September 30,
2003, the Partnership's cash balance amounted to $321,893. The amount placed in reserves is at the
discretion of the General Partner.
Results of
Operations
Overall,
as illustrated in the tables below, the four properties had a combined average occupancy of 89% at the
end of September 2003 compared to 93% in 2002 for the same period. The average monthly rent in September
2003 was approximately $485, or 7% more than the $453 average monthly rent in September 2002 (average
rent not a weighted average).
|
| Total Capacity | Occupied Sites
| Occupancy Rate | Average Rent*
|
| Aztec Estates | 645 | 516 | 80% | $505
|
| Kings Manor | 314 | 307 | 98% | 495
|
| Old Dutch Farms | 293 | 252 | 86% | 447
|
| Park of the Four Seasons | 572 | 527 | 92% | 493
|
|
| Total on 9/30/03: | 1,824 | 1,602 | 89% |
$485
|
| Total on 9/30/02: | 1,824 | 1,689 | 93% |
$453
|
*Not a weighted average
For the three months ending September 30, 2003
Gross Revenues Net Income
9/30/03 9/30/02 9/30/03 9/30/02
Aztec Estates $890,323 $1,016,123 $348,807 $ 396,110
Kings Manor 535,653 517,827 286,211 287,313
Old Dutch Farms 349,630 408,057 184,186 189,621
Park of the Four Seasons 783,923 731,842 397,049 404,959
2,559,529 2,673,849 1,216,253 $1,278,003
Partnership Management: 1,954 4,047 (53,788) (43,236)
Other Non Recurring expenses: ----- ---- (99,396) (91,284)
Debt Service (667,642) (675,111)
Depreciation and Amortization ----- ---- (243,029) (227,550)
$2,561,483 $ 2,677,896 $152,398 $240,822
Comparison of Quarter ended September 30, 2003 to Quarter ended September 30, 2002
Gross revenues decreased $116,413 to $2,561,483 in 2003, as compared to $2,677,896 in 2002. (See table
in previous section). The decrease in revenue was due to decreases in site rental and income from home
sales.
As described in the Statements of Income, total operating expenses were lower,
decreasing from $2,437,074 in 2002 to $2,409,085 in 2003. This was due primarily to a decrease in Home
Sale Expense.
As a result of the aforementioned factors, Net Income decreased 37% for the third quarter of 2003
compared to the same quarter of the prior year, decreasing from $240,822 for 2002 to $152,398 for 2003.
Comparison of nine months Ended September 30, 2003 and nine months ended September 30, 2002
For the first nine months of 2003, Gross Revenues were $7,924,235, a decrease of $374,947 compared to
$8,299,182 for the same period of 2002. The decrease was due to a decrease in site rental and income
from home sales. Total Operating Expenses for the first three quarters of 2003 were $7,199,553, a
decrease of $272,342 compared to $7,471,895 for 2002. Net Income for the first nine months ending
September 30, 2002 was $827,287 a decrease of $102,605 compared to the $724,682 reported for the first
nine months ending September 30, 2002.
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate rise primarily through its borrowing activities. There is
inherent roll over risk for borrowings as they mature and are renewed at current market rates. The
extent of this risk is not quantifiable or predictable because of the variability of future interest
rates and the Partnership's future financing requirements.
Note Payable: At September 30, 2003 the Partnership had a note payable outstanding in the amount of
$31,664,590. Interest on this note is at a fixed annual rate of 8.24% through June 2007.
Line-of-Credit: At September 30, 2003 the Partnership owed $105,000 under its line-of-credit agreement,
whereby interest is charged at a variable rate of 1.80% in excess of LIBOR.
A 10% adverse change in interest rates on the portion of the Partnership's debt bearing interest at
variable rates would result in an increase in interest expense of less than $10,000 annually.
The Partnership does not enter into financial instruments transactions for trading or other speculative
purposes or to manage its interest rate exposure.
ITEM 4.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Director and Chief Financial Officer of Uniprop, Inc. have reviewed and evaluated the effectiveness
of our disclosure controls and procedures ( as defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c)
) within 90 days before the filing of this quarterly report. Based on that evaluation, we have concluded
that our current disclosure controls and procedures are effective and timely, providing them with
material information relating to that required to be disclosed in the reports we file or submit under the
Exchange Act.
Changes in Internal Controls
There have not been any significant changes in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation. We are not aware of any
significant deficiencies or material weaknesses, therefore no corrective actions were taken.
PART II - OTHER INFORMATION
ITEM 6. Reports on Form 8-K
(A) Reports of Form 8-K
There were no reports filed on Form 8-K during
the three months ended September 30, 2003.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned. We the undersigned certify to the best of our
knowledge neither the report nor the financial statements therein, contain any untrue statements of
material fact. The financial information included in the report fairly represents the financial
condition and result of operations for the periods presented herein.
Uniprop Manufactured Housing
Communities Income Fund,
A Michigan Limited Partnership
BY: P.I. Associates Limited Partnership,
A Michigan Limited Partnership,
its General Partner
BY: /s/ Paul M. Zlotoff
Paul M. Zlotoff, General Partner
BY: /s/ Gloria A. Koster
Gloria A. Koster, Principal Financial Officer
Dated: November 12, 2003
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Uniprop Manufactured Housing Income Fund (the "Company") on
Form 10-Q for the period ending September 30, 2003 as filed with the Securities and Exchange Commission
on the date hereof (the "Report"), I, Paul M Zlotoff, General Partner of the Partnership, Gloria A.
Koster, Principal Financial Officer, certify, pursuant to U.S.C. ss. 1350, as adopted pursuant to ss. 906
of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company as of September 30, 2003.
P.I. Associates Limited Partnership its General Partner
/s/ Paul M. Zlotoff
__________________________
By: Paul M Zlotoff, its General Partner
/s/ Gloria A. Koster
_____________________________________
By: Gloria A. Koster, its Principal Financial Officer
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul M Zlotoff, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Uniprop Manufactured Housing Income Fund;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by
the quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this
quarterly report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date
within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the of the
disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent
evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could
adversely affect the registrant's ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in this quarterly report whether
or not there were significant changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 12, 2003 Signature: /s/ Paul M. Zlotoff
Paul M. Zlotoff, Principal Executive Officer
President & Director of GP P.I. Associates Corp.
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gloria A. Koster, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Uniprop Manufactured Housing
Income Fund;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by
the quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this
quarterly report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a. designed such disclosure controls and procedures to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date
within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the effectiveness of the of the
disclosure controls and procedures based on our evaluation as the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based on our most recent
evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a. all significant deficiencies in the design or operation of internal controls which could
adversely affect the registrant's ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in this quarterly report whether
or not there were significant changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 12, 2003 Signature: /s/ Gloria A. Koster
Gloria A. Koster, Chief Financial Officer