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, 2004 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, 2004(Unaudited) and
|
| December 31, 2003 | 3
|
|
| Statements of Income
|
| Six months ended June 30, 2004 and 2003
|
| Three months ended June 30, 2004
|
| and 2003(Unaudited) | 4
|
|
| Statement of Partners' Equity
|
| Six months ended June 30, 2004(Unaudited)
| 4
|
|
|
| Statements of Cash Flows
|
| Six months ended June 30, 2004(Unaudited)
|
|
|
| Notes to Financial Statements
|
| June 30, 2004(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
| | |
11
|
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
June 30, 2004(Unaudited)
1. Basis of Presentation:
The accompanying unaudited 2004 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, 2003 has been derived from the
audited financial statements at that date. Operating results for the six months ended June 30, 2004 are
not necessarily indicative of the results that may be expected for the year ending December 31, 2004, 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, 2003.
ITEM 2.
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.
The General Partner has decided to distribute $759,779, or $.23 per unit, to the unit holders as of June
30, 2004. 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.
As of June 30, 2004, the Partnership's cash reserves amounted to $2,427,152. The level of cash reserves
maintained is at the discretion of the General Partners.
Results of Operations
Overall, as illustrated in the following table, the Partnership's nine properties reported combined
occupancy of 72% at the end of June 2004, versus 82% for June 2003. The average monthly homesite rent as
of June 30, 2004 was approximately $404, versus $393 in June 2003.
|
| Total Capacity | Occupied Sites
| Occupancy Rate | Average Rent*
|
| Ardmor Village | 339 | 288 | 85% |
403
|
| Camelot Manor | 335 | 236 | 70% |
397
|
| Country Roads | 311 | 205 | 66% |
277
|
| Dutch Hills | 278 | 232 | 84%
| 380
|
| El Adobe | 367 | 252 | 69%
| 437
|
| Paradise Village | 614 | 335 | 55%
| 340
|
| Stonegate Manor | 308 | 218 | 71% |
381
|
| Sunshine Village | 356 | 321 | 90%
| 512
|
| West Valley | 421 | 324 | 77% | 509
|
|
| Total on
6/30/04: | 3,329 | 2,411 | 72% |
$404
|
| Total on
6/30/03: | 3,330 | 2,648 | 82% |
$393
|
*Not a weighted average
Gross Revenues Net Income Gross Revenues Net Income
6/30/04 6/30/03 6/30/04 6/30/03 6/30/04 6/30/03 6/30/04 6/30/03
three months ended six months ended
Ardmor Village $414,656 $692,951 $214,757 $209,174 $780,537 $1,133,351 $417,902 $386,300
Camelot Manor 272,202 386,277 138,348 180,894 611,138 662,023 295,363 316,843
Country Roads 207,985 248,032 45,048 85,987 406,932 444,024 114,391 162,771
Dutch Hills 274,573 305,638 150,106 53,124 574,900 582,837 269,340 307,398
El Adobe 375,432 371,515 241,227 195,227 730,455 726,140 416,138 384,214
Paradise Village 368,265 427,806 114,404 108,535 777,491 845,618 221,633 203,704
Stonegate Manor 294,506 271,672 84,660 117,358 593,276 567,751 212,708 249,681
Sunshine Village 514,177 455,853 271,819 275,913 971,464 908,197 536,774 549,421
West Valley 510,922 591,195 315,080 348,047 998,049 1,127,581 586,968 672,738
3,232,718 3,750,939 1,575,449 1,674,259 6,444,242 6,997,522 3,071,217 3,233,070
Partnership Management: 1,437 4,657 (102,210) (80,919) 2,977 9,265 (231,305)(173,726)
Other expenses: ___ ____ (86,924) (64,075) ___ ____ (175,398)(117,561)
Interest Exspense ___ ___ (446,557) (453,997) ___ ___ (893,485)(903,291)
Depreciation and Amortization --- --- (455,354) (443,504) --- ---- (909,480)(884,411)
$3,234,155 $3,755,596 $484,404 $631,764 $6,447,219 $7,006,787 $861,549 $1,154,081
Comparison of Three Months and Quarter Ended June 30, 2004 to Three Months and Quarter Ended June 30,
2003
Gross revenues for the three months decreased $521,441 to $3,234,155 in 2004, as compared to $3,755,596
in 2003. The decrease was primarily the result of lower occupancy.
As described in the Statements of Income, Total Operating Expenses for the three months decreased by
$374,081 from $3,123,832 in 2003 , as compared to $2,749,751 for the same three months in 2004. The
decrease is due primarily to lower home sale expense.
As a result of the aforementioned factors, Net Income for the three month period decreased to $484,404,
compared to $631,764 in 2003.
Comparison of Six Months and Quarter Ended June 30, 2004 to Six Months and Quarter Ended June 30, 2003
Gross revenues for the six months decreased $559,568 to $6,447,219 in 2004, as compared to $7,006,787 in
2003. The decrease was primarily the result of a decrease in home sale revenue as well as rent income
due to lower occupancy.
(See table on previous page.)
As described in the Statements of Income, Total Operating Expenses for the six months decreased to
$5,585,670, in 2004, as compared to $5,852,706 for the same six months in 2003. The decrease is due
to lower home sale expenses.
As a result of the aforementioned factors, Net Income for the six month period of 2004 decreased to
$861,549, compared to $1,154,081 in 2003.
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, 2004 the Partnership had a note payable outstanding in the amount of $27,583,636. 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
As of the end of the period covered by this report, the Partnership carried out an evaluation, under the
supervision and with the participation of the Principal Executive Officer and the Principal Financial
Officer, of the effectiveness of the design and operation of our disclosure controls and procedures
pursuant to Exchange Act Rule 13a-15. Based upon, and as of the date of, this evaluation, the Principal
Executive Officer and the Principal Financial Officer concluded that our disclosure controls and
procedures are effective to ensure that information required to be disclosed in the quarterly report is
recorded, processed, summarized and reported as and when required.
There was no change in the Partnership's internal controls over financial reporting that occurred during
the most recent completed quarter that has materially affected, or is reasonably likely to materially
affect, the Partnership's internal control over financial reporting.
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, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
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/ Joel Schwartz
Joel Schwartz, Principal Financial Officer
Dated: August 11, 2004
Exhibit 31.1
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 the end
of the period covered by this 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;
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 11, 2004 Signature: /s/ Paul M. Zlotoff
Paul M. Zlotoff, Principal Executive Officer
President & Director of GP Genesis Corp.
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Joel Schwartz, 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 the end
of the period covered by this 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 11,2004 Signature: /s/ /s/ Joel Schwartz,
Joel Schwartz, Principal Financial Officer
GP Genesis Corp.
Exhibit 32.1
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 Communities Income Fund II (the
"Company") on Form 10-Q for the period ending June 30, 2004 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I Paul M Zlotoff, Principal Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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 Act
of 1934; and
2. The information contained in the Report fairly presents, in all material respect, the financial
condition and results of operations of the Company.
/s/ Paul M Zlotoff
Principal Executive Officer,
General Partner to Genesis Associates Limited Partnership
President & Director of GP Genesis Corp.
August 11, 2004
Exhibit 32.2
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 Communities Income Fund II (the
"Company") on Form 10-Q for the period ending June 30, 2004 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I Gloria A. Koster, Principal Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 that:
3. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Act
of 1934; and
4. The information contained in the Report fairly presents, in all material respect, the financial
condition and results of operations of the Company.
/s/ Joel Schwartz
Principal Financial Officer,
Chief Financial Officer of Uniprop, Inc.
August 11, 2004