SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2003 Commission
File No. 0-16701
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
a Michigan Limited Partnership
(Exact name of registrant as specified in its charter)
| MICHIGAN | | 38-2702802
|
| (State or other jurisdiction of | | (I.R.S. employer
|
| incorporation or organization) | | identification number)
|
280 Daines Street, Birmingham, Michigan 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
units of 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
|
| June 30, 2003 and
|
| December 31, 2002 | 3
|
|
| Statements of Income
|
| Six months ended June 30, 2003 and 2002
|
| Three months ended June 30, 2003
|
| and 2002(Unaudited) | 4
|
|
| Statement of Partners' Equity
|
| Six months ended June 30, 2003(Unaudited) | 4
|
|
|
| Statements of Cash Flows
|
| Six months ended June 30, 2003
|
| and 2002(Unaudited) | 5
|
|
|
| Notes to Financial Statements
|
| June 30, 2003(Unaudited) | 6
|
|
|
| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS
|
| OF FINANCIAL CONDITION AND RESULTS
|
| OF OPERATIONS | 7
|
| ITEM 3. | QUANTITATIVE AND QUALITATIVE
|
| DISCLOSURES ABOUT MARKET RISK | 9
|
| ITEM 4. | CONTROLS AND PROCEDURES | 10
|
PART II OTHER
INFORMATION
| ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K
| | |
10
|
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
June 30, 2003(Unaudited)
1. Basis of Presentation:
The accompanying unaudited 2003 financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date. Operating results for the six months ended June 30, 2003 are
not necessarily indicative of the results that may be expected for the year ending December 31, 2003, or
for any other interim period. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Partnership's Form 10-K for the year ended December 31, 2002.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its nine manufactured home communities. On
August 20, 1998, the Partnership refinanced seven of its nine properties with GMAC Commercial Mortgage
Corporation (the "Refinancing").
Liquidity
As a result of the Refinancing, seven of the Partnership's nine properties are mortgaged. At the time of
the Refinancing, the aggregate principal amount due under the seven mortgage notes was $30,000,000 and
the aggregate fair market value of the Partnership's mortgaged properties was $66,000,000. The
Partnership expects to meet its short-term liquidity needs generally through its working capital provided
by operating activities.
Partnership liquidity is based, in part, upon its investment strategy. Upon acquisition, the Partnership
anticipated owning the properties for seven to ten years. All of the properties have been owned by the
Partnership for more than ten years. The General Partner may elect to have the Partnership own the
properties for as long as, in the opinion of the General Partner, it is in the best interest of the
Partnership to do so.
Distributable Cash from Operations totaled $1,075,268 and $1,104,086 for the quarters ended June 30, 2003
and 2002, respectively. Distributable Cash from Operations is defined as net income computed in
accordance with generally accepted accounting principals ("GAAP"), plus real estate related depreciation
and amortization. Distributable Cash from Operations does not represent cash generated from operating
activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash
needs. Distributable Cash from Operations should not be considered as an alternative to net income as
the primary indicator of the Partnership's operating performance nor as an alternative to cash flow as a
measure of liquidity. From Distributable Cash from Operations the General Partner has decided to
distribute $759,779, or $.23 per unit, to the unit holders as of June 30, 2003. The General Partner will
continue to monitor cash flow generated by the Partnership's nine properties during the coming quarters.
If cash flow generated is greater or lesser than the amount needed to maintain the current distribution
level, the General Partner may elect to reduce or increase the level of future distributions paid to Unit
Holders.
While the Partnership is not required to maintain a working capital reserve, the Partnership has not
distributed all the Distributable Cash from Operations in order to build reserves. The remaining
$315,489 was added to reserves, as of June 30, 2003, the Partnership's cash reserves amounted to
$3,245,079. The level of cash reserves maintained is at the discretion of the General Partner.
Results of Operations
Overall, as illustrated in the following table, the Partnership's nine properties reported combined
occupancy of 82% at the end of June 2003, versus 85% for June 2002. The average monthly homesite rent as
of June 30, 2003 was approximately $393, versus $380, an increase of 3% from June 2002.
|
| Total Capacity | Occupied Sites
| Occupancy Rate | Average Rent*
|
| Ardmor Village | 339 | 313 | 93% |
383
|
| Camelot Manor | 335 | 262 | 79% |
372
|
| Country Roads | 312 | 239 | 77% |
271
|
| Dutch Hills | 278 | 259 | 94%
| 367
|
| El Adobe | 367 | 279 | 76%
| 449
|
| Paradise Village | 614 | 372 | 61%
| 335
|
| Stonegate Manor | 308 | 241 | 79% |
370
|
| Sunshine Village | 356 | 332 | 94%
| 493
|
| West Valley | 421 | 351 | 84% | 494
|
|
| Total on
6/30/03: | 3,330 | 2,648 | 82% |
$393
|
| Total on
6/30/02: | 3,329 | 2,783 | 85% |
$380
|
*Not a weighted average
| Gross Revenues | | Net Income
|
| 6/30/03 | 6/30/02 |
6/30/03 | 6/30/02
|
| Ardmor Village
| $ 692,951
| $ 545,206
| $ 209,174
| $ 310,540
|
| Camelot Manor
| 386,277 | 306,823 | 180,894 | 135,744
|
| Country Roads
| 248,032 | 202,124 | 85,987 | 71,783
|
| Dutch Hills
| 305,638 | 322,892 | 153,124 | 166,969
|
| El Adobe
| 371,515 | 351,616 | 195,227 | 157,592
|
| Paradise Village
| 427,806 | 494,600 | 108,535 | 119,696
|
| Stonegate Manor
| 271,672 | 261,348 | 117,358 | 123,807
|
| Sunshine Village
| 455,853 | 462,616 | 275,913 | 282,561
|
| West Valley
| 591,195 | 452,442 | 348,047 | 345,186
|
|
| 3,750,939 | 3,399,667 | 1,674,259 | 1,713,878
|
| Partnership Management:
| 4,657 | 8,270 | (80,919) | (50,575)
|
| Other Non Recurring expenses:
| ----- | ---- | (64,075) | (98,616)
|
| Debt Service
|
|
| (453,997) | (460,601)
|
| Depreciation and Amortization
| ----- | ----
| (443,504) | (449,101)
|
|
| $ 3,755,596 | $ 3,407,937 | $631,764 | $654,985
|
Comparison of Three Months and Quarter Ended June 30, 2003 to Three Months and Quarter Ended June 30,
2002
Gross revenues for the three months increased $347,659 to $3,755,596 in 2003, as compared to $3,407,937
in 2002. The increase was primarily the result of an increase in home sale revenue.
(See table on previous page.)
As described in the Statements of Income, Total Operating Expenses for the three months increased to
$3,123,832, in 2003, as compared to $2,752,952 for the same three months in 2002. The increase is due
to higher home sale expenses.
As a result of the aforementioned factors, Net Income for the three month period decreased to $631,764,
compared to $654,985 in 2002.
Comparison of Six Months and Quarter Ended June 30, 2003 to Six Months and Quarter Ended June 30, 2002
Gross revenues for the six months increased $280,117 to $7,006,787 in 2003, as compared to $6,726,670 in
2002. The increase was primarily the result of an increase in home sale revenue.
(See table on previous page.)
As described in the Statements of Income, Total Operating Expenses for the six months increased to
$5,852,706, in 2003, as compared to $5,568,783 for the same six months in 2002. The increase is due
to higher home sale expenses.
As a result of the aforementioned factors, Net Income for the six month period decreased to $1,154,081,
compared to $1,157,887 in 2002.
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate rise primarily through its borrowing activities.
There is inherent roll over risk for borrowings as they mature and are renewed at
current market rates. The extent of this risk is not quantifiable or predictable because of the
variability of future interest rates and the Partnership's future financing requirements
Note Payable:
At June 30, 2003 the Partnership had a note payable outstanding in the amount of $28,047,348. Interest
on this note is at a fixed annual rate of 6.37% through March 2009.
The Partnership does not enter into financial instruments transactions for trading or other speculative
purposes or to manage its interest rate exposure.
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 of Form 8-K
(A) Reports of Form 8-K
There were no reports filed on Form 8-K during
the three months ended June 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 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: August 12, 2003
I, Paul M Zlotoff, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Uniprop Manufactured Housing Income Fund II;
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: August 12, 2003 Signature: /s/ Paul M. Zlotoff
Paul M. Zlotoff, Principal Executive Officer
President & Director of GP Genesis 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 II.
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 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 and 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: August 12, 2003 Signature: /s/ Gloria A. Koster
Gloria A. Koster, Chief Financial Officer