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, 2002 Commission
File No. 0-16701
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
a Michigan Limited Partnership
(Exact name of registrant as specified in its charter)
| MICHIGAN | | 38-2702802
|
| (State or other jurisdiction of | | (I.R.S. employer
|
| incorporation or organization) | | identification number)
|
280 Daines Street, Birmingham, Michigan 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
units of 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 II,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
| | | | Page
|
| ITEM 1. | FINANCIAL STATEMENTS |
|
| Balance Sheets
|
| September 30, 2002 and
|
| December 31, 2001 | 3
|
|
| Statements of Income
|
| Nine months ended September 30, 2002 and 2001
|
| Three months ended September 30, 2002
|
| and 2001 | 4
|
|
| Statement of Partners' Equity
|
| Nine months ended September 30, 2002(Unaudited) | 4
|
|
|
| Statements of Cash Flows
|
| Nine months ended September 30, 2002
|
| and 2001(Unaudited) | 5
|
|
|
| Notes to Financial Statements
|
| September 30, 2002(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 | 10
|
PART II OTHER
INFORMATION
10
| ITEM 5. | EXHIBITS AND REPORTS ON FORM 8-K | | |
10
|
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
September 30, 2002(Unaudited)
1. Basis of Presentation:
The accompanying unaudited 2002 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, 2001 has been derived from the
audited financial statements at that date. Operating results for the nine months ended September 30,
2002 are not necessarily indicative of the results that may be expected for the year ending December 31,
2002, or for any other interim period. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Partnership's Form 10-K for the year ended December 31,
2001.
2. Reclassifications:
Certain prior year amounts have been reclassified in the financial statements to conform with current
year presentation with respect to manufactured homes and the sales of those homes. As of result, total
revenue and total operating expenses in the statement of income for the nine months and quarter ended
September 30, 2001 increased by $1,072,004 and $474,980, respectively; net income was not affected by the
reclassification.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its nine manufactured home communities. On
August 20, 1998, the Partnership refinanced seven of its nine properties with GMAC Commercial Mortgage
Corporation (the "Refinancing").
Liquidity
As a result of the Refinancing, seven of the Partnership's nine properties are mortgaged. At the time of
the Refinancing, the aggregate principal amount due under the seven mortgage notes was $30,000,000 and
the aggregate fair market value of the Partnership's mortgaged properties was $66,000,000. The
Partnership expects to meet its short-term liquidity needs generally through its working capital provided
by operating activities.
Partnership liquidity is based, in part, upon its investment strategy. Upon acquisition, the Partnership
anticipated owning the properties for seven to ten years. All of the properties have been owned by the
Partnership for more than ten years. The General Partner may elect to have the Partnership own the
properties for as long as, in the opinion of the General Partner, it is in the best interest of the
Partnership to do so.
Net Cash from Operations totaled $874,768 and $951,848 for the quarters ended September 30, 2002 and
2001, respectively. Net Cash from Operations is defined as net income computed in accordance with
generally accepted accounting principals ("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. From
Net Cash from Operations the General Partner has decided to distribute $759,779, or $.23 per unit, to the
unit holders during the quarter ending September 30, 2002. The General Partner will continue to monitor
cash flow generated by the Partnership's nine properties during the coming quarters. If cash flow
generated is greater or lesser than the amount needed to maintain the current distribution level, the
General Partner may elect to reduce or increase the level of future distributions paid to Unit Holders.
While the Partnership is not required to maintain a working capital reserve, the Partnership has not
distributed all the Distributable Cash from Operations in order to build reserves. As of September 30,
2002, the Partnership's cash reserves amounted to $3.3 million.
Results of Operations
Overall, as illustrated in the following table, the Partnership's nine properties reported combined
occupancy of 84% (2,796/3,329 sites) at the end of September 2002, versus 87% (2,908/3,329) for September
2001. The average monthly homesite rent as of September 30, 2002 was approximately $382, versus $372, an
increase of 3% from September 2001.
|
| Total Capacity | Occupied Sites
| Occupancy Rate | Average Rent*
|
| Ardmor Village | 339 | 327 | 94% | 369
|
| Camelot Manor | 335 | 276 | 81% | 363
|
| Country Roads | 311 | 261 | 82% | 261
|
| Dutch Hills | 278 | 269 | 94% | 358
|
| El Adobe | 367 | 291 | 77% | 432
|
| Paradise Village | 614 | 404 | 65% | 325
|
| Stonegate Manor | 308 | 262 | 83% | 362
|
| Sunshine Village | 356 | 341 | 94% | 477
|
| West Valley | 421 | 365 | 85% |
494
|
|
| Total on 9/30/02: | 3,329 | 2,796 | 84% |
$382
|
| Total on 9/30/01: | 3,329 | 2,908 | 87% |
$372
|
*Not a weighted average
| Gross Revenues | | Net Income
|
| 9/30/02 | 9/30/01 |
9/30/02 | 9/30/01
|
| Ardmor Village | $ 424,075 | $ 543,132 | $
184,097 | $ 218,295
|
| Camelot Manor | 347,861 | 347,291 | 122,594
| 151,471
|
| Country Roads | 203,426 | 210,666 |
90,515 | 54,865
|
| Dutch Hills | 352,476 | 274,630 | 129,161 |
125,872
|
| El Adobe | 387,119 | 380,335 | 182,444
| 203,879
|
| Paradise Village | 439,567 | 457,380 |
63,642 | 122,061
|
| Stonegate Manor | 305,257 | 337,691 | 120,744 | 145,599
|
| Sunshine Village | 548,944 | 566,182 | 277,063 | 248,481
|
| West Valley | 524,898 | 559,596 | 325,209 | 337,140
|
| 3,494,623 | 3,676,903 | 1,495,469 | 1,607,663
|
| Partnership Management: | 7,672 | 24,827 |
(43,045) | (70,655)
|
| Other Non Recurring expenses: | ----- | ---- |
(114,888) | (113,730)
|
| Debt Service | | |
(462,768) | (471,430)
|
| Depreciation and Amortization | ----- | ---- |
(443,134) | (442,880)
|
| $ 3,502,295 | $ 3,701,730 | $431,634 | $508,968
|
Comparison of Nine Months and Quarter Ended September 30, 2002 to Nine Months and Quarter Ended
September 30, 2001
Gross revenues for the first nine months of 2002 decreased to $10,228,965 as compared to $10,842,529 for
the same nine months of 2001. Gross revenues for the quarter ended September 30, 2002 decreased to
$3,502,295 in 2002, as compared to $3,701,730 the same three months of 2001. The decrease was the result
of the decrease in site rentals and income from home sales.
As described in the Statements of Income, Total Operating Expenses for the first nine months of 2002 were
$8,639,444 a 6% decrease from $9,179,866 for the same nine months of 2001. Total Operating Expenses for
the three months ended September 30, 2002 decreased $122,101, or 3.8%, to $3,070,661 in 2002, as
compared to $3,192,762 in 2001.
As a result of the aforementioned factors, Net Income for the nine month period decreased to $1,589,521,
compared to $1,662,663 in 2001. Net Income for the three months ended September 30,2002 decreased to
$431,634 compared to $508,968 for the same three months of 2001, a 15% decrease.
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, 2002 the Partnership had a
note payable outstanding in the amount
of $28,383,320. Interest on this note is at a fixed annual rate of 6.37% through March 2009.
The Partnership does not enter into financial instruments transactions for trading or other speculative
purposes or to manage its interest rate exposure
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The General Partner and Principal Financial Officer 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)) as of a
date within 90 days before the filing date of this quarterly report. Based on that evaluation, The
General Partner and Principal Financial Officer the have concluded that our current disclosure controls
and procedures are effective and timely, providing them with material information relating to us 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 of 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, 2002.
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 II,
A Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
General Partner
BY: Uniprop, Inc.,
its Managing General Partner
BY: /s/ Paul M. Zlotoff
Paul M. Zlotoff, General Partner
BY: /s/ Gloria A. Koster
Gloria A. Koster, Principal Financial Officer
Dated: November 13, 2002
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 II (the
"Partnership") on Form 10-Q for the period ending September 30, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Paul M Zlotoff, General Partner of
the Partnership, 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, 2002.
Genensis Associates Limited Partnership,
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