1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001.
OR
|_| Transition pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
COMMISSION FILE NUMBER 1-2616
SUN COMMUNITIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Maryland 38-2730780
(State of Incorporation) (I.R.S. Employer Identification No.)
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (248) 932-3100
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Number of shares of Common Stock, $.01 par value per share, outstanding
as of July 31, 2001: 17,492,389
Page 1 of 17
2
SUN COMMUNITIES, INC.
INDEX
PAGES
-----
PART I
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 2001 and
December 31, 2000 3
Consolidated Statements of Income for the Periods
Ended June 30, 2001 and 2000 4
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2001 and 2000 5
Notes to Consolidated Financial Statements 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-15
PART II
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 6.(a) Exhibits required by Item 601 of Regulation S-K 16
Item 6.(b) Reports on Form 8-K 16
Signatures 17
2
3
SUN COMMUNITIES, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2001 AND DECEMBER 31, 2000
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
ASSETS 2001 2000
--------------- -------------
Investment in rental property, net $ 783,735 $ 751,820
Cash and cash equivalents 7,665 18,466
Notes and other receivables 136,888 156,349
Investment in and advances to affiliates 11,230 7,930
Other assets 28,556 32,063
--------------- -------------
Total assets $ 968,074 $ 966,628
=============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Line of credit $ 73,000 $ 12,000
Debt 389,494 452,508
Accounts payable and accrued expenses 19,195 16,304
Deposits and other liabilities 9,699 8,839
--------------- -------------
Total liabilities 491,388 489,651
--------------- -------------
Minority interests 145,636 140,943
--------------- -------------
Stockholders' equity:
Preferred stock, $.01 par value, 10,000 shares
authorized; no shares issued and outstanding -- --
Common stock, $.01 par value, 100,000 shares
authorized; 17,694 and 17,516 issued and
17,492 and 17,509 outstanding for 2001
and 2000, respectively 177 175
Paid-in capital 397,116 393,771
Officers' notes (11,136) (11,257)
Unearned compensation (7,550) (4,746)
Distributions in excess of accumulated earnings (41,173) (41,688)
Treasury stock, at cost, 202 and 7 shares for 2001 and
2000, respectively (6,384) (221)
--------------- -------------
Total stockholders' equity 331,050 336,034
--------------- -------------
Total liabilities and stockholders'
equity $ 968,074 $ 966,628
=============== =============
The accompanying notes are an integral part of the consolidated financial
statements.
3
4
SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED JUNE 30, 2001 AND 2000
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
------------ ----------- ----------- -----------
Revenues:
Income from property $ 34,616 $ 32,947 $ 69,241 $ 66,076
Other income 3,532 3,117 7,998 6,021
------------ ----------- ----------- -----------
Total revenues 38,148 36,064 77,239 72,097
------------ ----------- ----------- -----------
Expenses:
Property operating and maintenance 6,975 6,703 14,386 13,875
Real estate taxes 2,334 2,271 4,590 4,518
Property management 652 709 1,436 1,449
General and administrative 1,200 1,001 2,342 2,052
Depreciation and amortization 8,216 7,678 16,070 15,224
Interest 7,886 7,306 16,266 14,153
------------ ----------- ----------- -----------
Total expenses 27,263 25,668 55,090 51,271
------------ ----------- ----------- -----------
Income before gain from property
dispositions, net and
minority interests 10,885 10,396 22,149 20,826
Gain from property dispositions, net 758 -- 4,275 --
------------ ----------- ----------- -----------
Income before minority interest 11,643 10,396 26,424 20,826
Less income allocated to minority interests:
Preferred OP Units 2,041 1,956 4,017 3,871
Common OP Units 1,282 1,135 2,983 2,293
------------ ----------- ----------- -----------
Net income $ 8,320 $ 7,305 $ 19,424 $ 14,662
============ =========== =========== ===========
Earnings per common share:
Basic $ 0.48 $ 0.42 $ 1.12 $ 0.85
============ =========== =========== ===========
Diluted $ 0.48 $ 0.42 $ 1.11 $ 0.84
============ =========== =========== ===========
Weighted average common shares outstanding:
Basic 17,203 17,310 17,284 17,298
============ =========== =========== ===========
Diluted 17,375 17,433 17,433 17,389
============ =========== =========== ===========
Distributions declared per common
share outstanding $ 0.55 $ 0.53 $ 1.08 $ 1.04
============ =========== =========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
4
5
SUN COMMUNITIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(IN THOUSANDS)
2001 2000
------------- ------------
Cash flows from operating activities:
Net income $ 19,424 $ 14,662
Adjustments to reconcile net income to net
cash provided by operating activities:
Income allocated to minority interests 2,983 2,293
Gain from property dispositions, net (4,275) --
Depreciation and amortization 16,070 15,224
Amortization of deferred financing costs 524 317
(Increase) decrease in other assets 857 (3,140)
Increase (decrease) in accounts payable and other liabilities 3,751 (207)
------------- ------------
Net cash provided by operating activities 39,334 29,149
------------- ------------
Cash flows from investing activities:
Investment in rental properties (41,376) (35,565)
Proceeds related to property dispositions 17,331 --
Investment in and advances to affiliates (3,300) (18,592)
Repayments of (investments in) notes receivable, net 19,582 (2,311)
------------- ------------
Net cash used in investing activities (7,763) (56,468)
------------- ------------
Cash flows from financing activities:
Borrowings on line of credit, net 61,000 45,000
Repayments on notes payable and other debt (75,514) (1,063)
Treasury stock and operating partnership unit purchases, net (6,066) (267)
Distributions (21,792) (20,975)
------------- ------------
Net cash provided by (used in) financing activities (42,372) 22,695
------------- -------------
Net decrease in cash and cash equivalents (10,801) (4,624)
Cash and cash equivalents, beginning of period 18,466 11,330
------------- ------------
Cash and cash equivalents, end of period $ 7,665 $ 6,706
============= ============
Supplemental Information:
Preferred OP Units issued for rental properties $ 4,612 $ 3,564
Conversion of partnership interest to notes receivable -- $ 11,011
Debt assumed for rental properties $ 12,500 $ --
Restricted common stock issued as unearned
compensation, net of cancellations $ 3,233 $ --
The accompanying notes are an integral part of the consolidated financial
statements
5
6
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
These unaudited condensed consolidated financial statements of Sun
Communities, Inc., a Maryland corporation, (the "Company"), have been
prepared pursuant to the Securities and Exchange Commission ("SEC") rules
and regulations and should be read in conjunction with the financial
statements and notes thereto of the Company as of December 31, 2000. The
following notes to consolidated financial statements present interim
disclosures as required by the SEC. The accompanying consolidated
financial statements reflect, in the opinion of management, all
adjustments necessary for a fair presentation of the interim financial
statements. All such adjustments are of a normal and recurring nature.
Certain reclassifications have been made to the prior period financial
statements to conform with current period presentation.
The Company owns 100 percent of the preferred stock of an affiliate, Sun
Home Services, Inc. ("Sun Homes"), is entitled to 95 percent of the
operating cash flow of Sun Homes, and accounts for its investment
utilizing the equity method of accounting. The common stock is owned by
two officers of the Company and the estate of a former officer of the
Company who are entitled to receive five percent of the operating cash
flow.
2. RENTAL PROPERTY:
The following summarizes rental property (in thousands):
June 30, December 31,
2001 2000
-------------- -----------------
Land $ 78,381 $ 76,120
Land improvements and buildings 767,426 739,858
Furniture, fixtures, equipment 18,587 17,498
Land held for future development 16,174 12,042
Property under development 29,094 21,859
------------- ---------------
909,662 867,377
Accumulated depreciation (125,927) (115,557)
------------- ---------------
Rental property, net $ 783,735 $ 751,820
============= ===============
In April 2001, in conjunction with a property acquisition, the Company
issued 46,117 Series B-1 Preferred OP Units at a $100 mandatory
redemption price with interest rates ranging from 6.85 percent to 9.19
percent and a maturity of April 16, 2012. The Series B-1 Preferred OP
Units are subject to earlier redemption subsequent to April 15, 2006
or upon specified events.
6
7
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. NOTES RECEIVABLE:
Notes receivable consisted of the following (in thousands):
June 30, December 31,
2001 2000
------------- ---------------
Mortgage notes receivable with minimum monthly
interest payments at LIBOR based floating rates
of approximately LIBOR + 3.0%, maturing at various
dates from September 2001 through June 2012,
collateralized by manufactured home communities. $ 57,762 $ 60,491
Note receivable, subordinated, collateralized by all assets of
the borrower, bears interest at the higher of LIBOR
+ 2.30% or 8% and payable on demand 32,083 35,849
Note receivable, subordinated, bears interest at 9.75%
and matures September 2005. 4,000 4,000
Installment loans on manufactured homes with interest
payable monthly at a weighted average interest rate
and maturity of 8.6% and 18 years, respectively. 14,757 32,426
Other receivables 28,286 23,583
------------- ---------------
$ 136,888 $ 156,349
============= ===============
Officers' notes, presented as a reduction to stockholders' equity in the
balance sheet, are 10 year, LIBOR + 1.75% notes, with a minimum and
maximum interest rate of 6% and 9%, respectively, collateralized by
366,206 shares of the Company's common stock and 127,794 OP Units with
substantial personal recourse.
7
8
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. DEBT:
The following table sets forth certain information regarding debt (in
thousands):
June 30, December 31,
2001 2000
-------------- --------------
Collateralized term loan, interest at 7.01%,
due September 9, 2007 $ 43,112 $ 43,393
Senior notes, interest at 8.20%, due August 15, 2008 100,000 100,000
Senior notes, interest at 7.375%, due May 1, 2001 -- 65,000
Senior notes, interest at 7.625%, due May 1, 2003 85,000 85,000
Senior notes, interest at 6.97%, due December 3, 2007 35,000 35,000
Callable/redeemable notes, interest at 6.77%, due
May 14, 2015, callable/redeemable May 16, 2005 65,000 65,000
Capitalized lease obligations, interest at 6.1%, due
through December 2003 26,333 36,009
Mortgage notes, other 35,049 23,106
--------------- ---------------
$ 389,494 $ 452,508
=============== ===============
The Company had $52 million of its $125 million line of credit available
to borrow at June 30, 2001. Borrowings under the line of credit bear
interest at the rate of LIBOR plus 1.0% and mature January 1, 2003.
5. OTHER INCOME:
The components of other income are as follows for the periods ended June
30, 2001 and 2000 (in thousands):
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
---------- --------- ---------- ---------
Interest income $ 2,668 $ 2,174 $ 6,121 $ 4,398
Income (loss) from affiliate (27) 172 138 91
Other income 891 771 1,739 1,532
---------- ---------- ---------- ----------
$ 3,532 $ 3,117 $ 7,998 $ 6,021
========== ========== ========== ==========
8
9
SUN COMMUNITIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. EARNINGS PER SHARE (IN THOUSANDS):
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
------------ ----------- ----------- -----------
Earnings used for basic and diluted
earnings per share computation $ 8,320 $ 7,305 $ 19,424 $ 14,662
============ =========== =========== ===========
Total shares used for basic earnings
per share 17,203 17,310 17,284 17,298
Dilutive securities, principally
stock options 172 123 149 91
------------ ----------- ----------- -----------
Total weighted average shares used for
diluted earnings per share computation 17,375 17,433 17,433 17,389
============ =========== =========== ===========
Diluted earnings per share reflect the potential dilution that would
occur if dilutive securities were exercised or converted into common
stock. Convertible POP Units are excluded from the computations as their
inclusion would have an anti-dilutive effect on earnings per share in
2001 and 2000.
9
10
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion and analysis of the consolidated financial condition
and results of operations should be read in conjunction with the consolidated
financial statements and the notes thereto. Capitalized terms are used as
defined elsewhere in this Form 10-Q.
RESULTS OF OPERATIONS
Comparison of the six months ended June 30, 2001 and 2000
For the six months ended June 30, 2001, income before gain from property
dispositions, net and minority interests increased by 6.4 percent from $20.8
million to $22.1 million, when compared to the six months ended June 30, 2000.
The increase was due to increased revenues of $5.1 million while expenses
increased by $3.8 million.
Income from property increased by $3.1 million from $66.1 million to $69.2
million, or 4.8 percent, due to rent increases and other community revenues
($3.2 million) and acquisitions ($2.1 million), offset by a revenue reduction of
$2.2 million due to property dispositions.
Other income increased by $2.0 million from $6.0 million to $8.0 million due
primarily to an increase in interest income.
Property operating and maintenance expenses increased by $0.5 million from $13.9
million to $14.4 million, or 3.7 percent, representing general cost increases
($0.8 million) and acquisitions ($0.3 million) offset by an expense reduction of
$0.6 million due to property dispositions.
Real estate taxes increased by $0.1 million from $4.5 million to $4.6 million.
Property management expenses remained constant at approximately $1.4 million for
both periods representing 2.1 percent and 2.2 percent of income from property in
2001 and 2000, respectively.
General and administrative expenses increased by $0.3 million from $2.0 million
to $2.3 million, representing 3.0 percent and 2.8 percent of total revenues in
2001 and 2000, respectively.
Earnings before interest, taxes, depreciation and amortization ("EBITDA", an
alternative financial performance measure that may not be comparable to
similarly titled measures reported by other companies, defined as total revenues
less property operating and maintenance, real estate taxes, property management,
and general and administrative expenses) increased by $4.3 million from $50.2
million to $54.5 million. EBITDA as a percent of revenues increased to 70.5
percent in 2001 compared to 69.6 percent in 2000.
Depreciation and amortization increased by $0.8 million from $15.2 million to
$16.1 million, or 5.6 percent, due primarily to the net additional investment in
rental properties.
Interest expense increased by $2.1 million from $14.2 million to $16.3 million,
or 14.9 percent, due primarily to financing additional investments in rental
property.
10
11
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS, CONTINUED
Comparison of the three months ended June 30, 2001 and 2000
For the three months ended June 30, 2001, income before gain from property
dispositions, net and minority interests increased by 4.7 percent from $10.4
million to $10.9 million, when compared to the three months ended June 30, 2000.
The increase was due to increased revenues of $2.1 million while expenses
increased by $1.6 million.
Income from property increased by $1.7 million from $32.9 million to $34.6
million, or 5.1 percent, due to rent increases and other community revenues
($1.5 million) and acquisitions ($1.3 million), offset by a revenue reduction of
$1.1 million due to property dispositions.
Other income increased by $0.4 million from $3.1 million to $3.5 million due
primarily to an increase in interest income.
Property operating and maintenance expenses increased by $0.3 million from $6.7
million to $7.0 million, or 4.1 percent, representing general cost increases
($0.4 million) and property acquisitions ($0.2 million), offset by an expense
reduction of $0.2 million due to property dispositions.
Real estate taxes remained constant at $2.3 million for both periods.
Property management expenses remained constant at approximately $0.7 million for
both periods representing 1.9 percent and 2.2 percent of income from property in
2001 and 2000, respectively.
General and administrative expenses increased by $0.2 million from $1.0 million
to $1.2 million, representing 3.1 percent and 2.8 percent of total revenues in
2001 and 2000, respectively.
EBITDA, increased by $1.6 million from $25.4 million to $27.0 million. EBITDA as
a percent of revenues increased to 70.7 percent in 2001 compared to 70.4 percent
in 2000.
Depreciation and amortization increased by $0.5 million from $7.7 million to
$8.2 million, or 7.0 percent, due primarily to the net additional investment in
rental properties.
Interest expense increased by $0.6 million from $7.3 million to $8.4 million, or
7.9 percent, due primarily to financing additional investments in rental
property.
11
12
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SAME PROPERTY INFORMATION
The following table reflects property-level financial information as of and for
the six months ended June 30, 2001 and 2000. The "Same Property" data represents
information regarding the operation of communities owned as of January 1, 2000
and June 30, 2001. Site, occupancy, and rent data for those communities is
presented as of the last day of each period presented. The "Total Portfolio"
column differentiates from the "Same Property" column by including financial
information for managed but not owned communities, recreational vehicle
communities, new development and acquisition communities.
Same Property Total Portfolio
------------------------ -------------------------
2001 2000 2001 2000
----------- ---------- ----------- ----------
Income from property $52,245 $49,437 $69,241 $66,076
------- ------- ------- -------
Property operating expenses:
Property operating and maintenance 8,993 8,726 14,386 13,875
Real estate taxes 3,902 3,720 4,590 4,518
------- ------- ------- -------
Property operating expenses 12,895 12,446 18,976 18,393
------- ------- ------- -------
Property EBITDA $39,350 $36,991 $50,265 $47,683
======= ======= ======= =======
Number of operating properties 90 90 112 111
Developed sites 30,196 29,981 39,010 38,641
Occupied sites 28,677 28,641 36,087 36,631
Occupancy % 95.0% 95.5% 94.5%(1) 95.4%(1)
Weighted average monthly rent per site $ 298 $ 285 $ 296 (1) $ 284 (1)
Sites available for development 2,564 2,159 5,109 5,844
Sites planned for development in current year 345 427 753 1,190
(1) Occupancy % and weighted average rent relates to manufactured housing sites,
excluding recreational vehicle sites.
On a same property basis, property EBITDA increased by $2.4 million from $37.0
million to $39.4 million, or 6.4 percent. Property revenues increased by $2.8
million from $49.4 million to $52.2 million, or 5.7 percent, due primarily to
increases in rents and occupancy related charges including water and property
tax pass through.
Property operating expenses increased by $0.4 million from $12.5 million to
$12.9 million or 3.6 percent, due to increased occupancies and costs.
12
13
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $10.8 million to $7.7 million at June 30,
2001 from $18.5 million at December 31, 2000 because cash used for financing and
investing activities exceeded cash provided by operating activities.
Net cash provided by operating activities increased by $10.2 million to $39.3
million for the six months ended June 30, 2001 compared to $29.1 million for the
same period in 2000. This increase was primarily due to accounts payable and
other liabilities increasing by $4.0 million, other assets decreasing by $4.0
million and a $2.2 million increase in income before minority interests,
depreciation and amortization and gain from property dispositions, net.
Net cash used in investing activities decreased by $48.7 million to $7.8 million
for the six months ended June 30, 2001 compared to $56.5 million for the same
period in 2000. This decrease was primarily due to a $21.9 million decrease in
investments in notes receivable, net, proceeds related to property dispositions
of $17.3 million and $15.3 million related to investments in and advances to
affiliates, offset by a $5.8 million increase in rental property acquisition
activities.
Net cash used in financing activities was $42.4 million for the six months ended
June 30, 2001 compared to $22.7 million provided by financing activities during
the same period in 2000. This change was primarily because of $74.5 million in
additional repayments on notes payable and other debt, treasury stock and
operating partnership unit purchases increasing by $5.8 million, distributions
increasing by $0.8 million, offset by $16.0 million in additional line of credit
borrowings.
The Company expects to meet its short-term liquidity requirements generally
through its working capital provided by operating activities. The Company
expects to meet certain long-term liquidity requirements such as scheduled debt
maturities and property acquisitions through the issuance of equity or debt
securities, or interests in the Operating Partnership. The Company considers
these sources to be adequate and anticipates they will continue to be adequate
to meet operating requirements, capital improvements, investment in development,
and payment of distributions by the Company in accordance with REIT requirements
in both the short and long term. The Company may also meet these short-term and
long-term requirements by utilizing its $125 million line of credit which bears
interest at LIBOR plus 1.0% and is due January 1, 2003.
At June 30, 2001, the Company's debt to total market capitalization approximated
36.1% (assuming conversion of all Common OP Units to shares of common stock and
including Preferred OP Units). The debt has a weighted average maturity of
approximately 5.9 years and a weighted average interest rate of 7.0%.
Recurring capital expenditures approximated $1.9 million and $2.0 million for
the six months ended June 30, 2001 and 2000, respectively.
13
14
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OTHER
Funds from operations ("FFO") is defined by the National Association of Real
Estate Investment Trusts ("NAREIT") as "net income (computed in accordance with
generally accepted accounting principles) excluding gains (or losses) from sales
of property, plus rental property depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures." Industry
analysts consider FFO to be an appropriate supplemental measure of the operating
performance of an equity REIT primarily because the computation of FFO excludes
historical cost depreciation as an expense and thereby facilitates the
comparison of REITs which have different cost bases in their assets. Historical
cost accounting for real estate assets implicitly assumes that the value of real
estate assets diminishes predictably over time, whereas real estate values have
instead historically risen or fallen based upon market conditions. FFO does not
represent cash flow from operations as defined by generally accepted accounting
principles and is a supplemental measure of performance that does not replace
net income as a measure of performance or net cash provided by operating
activities as a measure of liquidity. In addition, FFO is not intended as a
measure of a REIT's ability to meet debt principal repayments and other cash
requirements, nor as a measure of working capital. The following table
calculates FFO for both basic and diluted purposes for the periods ended June
30, 2001 and 2000 (in thousands):
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
------------ ----------- ----------- -----------
Net income $ 8,320 $ 7,305 $ 19,424 $ 14,662
Deduct gain from property dispositions, net (758) -- (4,275) --
Add:
Minority interest in earnings to
common OP Unit holders 1,282 1,135 2,983 2,293
Depreciation and amortization, net
of corporate office depreciation 8,141 7,613 15,920 15,094
------------ ----------- ----------- -----------
Funds from operations $ 16,985 $ 16,053 $ 34,052 $ 32,049
============ =========== =========== ===========
Weighted average common shares OP
Units outstanding used for basic per
share/unit data 19,856 19,999 19,940 20,003
Dilutive securities:
Stock options and awards 172 123 149 91
------------ ----------- ----------- -----------
Weighted average common shares and OP Units
used for diluted per share/unit data 20,028 20,122 20,089 20,094
============ =========== =========== ===========
14
15
SUN COMMUNITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OTHER CONTINUED:
Special Note Regarding Forward-Looking Statements
This Form 10-Q contains various "forward-looking statements" within the meaning
of the Securities Act of 1933 and the Securities Exchange Act of 1934, and the
Company intends that such forward-looking statements be subject to the safe
harbors created thereby. The words "may", "will", "expect", "believe",
"anticipate", "should", "estimate", and similar expressions identify
forward-looking statements. These forward-looking statements reflect the
Company's current views with respect to future events and financial performance,
but are based upon current assumptions regarding the Company's operations,
future results and prospects, and are subject to many uncertainties and factors
relating to the Company's operations and business environment which may cause
the actual results of the Company to be materially different from any future
results expressed or implied by such forward-looking statements. Please see the
section entitled "Factors That May Affect Future Results" of the Company's
Annual Report on Form 10-K for the year ended December 31,2000 filed with the
Securities and Exchange Commission for a list of uncertainties and factors.
Such factors include, but are not limited to, the following: (i) changes in the
general economic climate; (ii) increased competition in the geographic areas in
which the Company owns and operates manufactured housing communities; (iii)
changes in government laws and regulations affecting manufactured housing
communities; and (iv) the ability of the Company to continue to identify,
negotiate and acquire manufactured housing communities and/or vacant land which
may be developed into manufactured housing communities on terms favorable to the
Company. The Company undertakes no obligation to publicly update or revise any
forward-looking statements whether as a result of new information, future
events, or otherwise.
Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") approved
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS 141
requires, among other things, that the purchase method of accounting for
business combinations be used for all business combinations initiated after June
30, 2001. SFAS 142 addresses the accounting for goodwill and other intangible
assets subsequent to their acquisition. SFAS 142 requires, among other things,
that goodwill and other indefinite-lived intangible assets no longer be
amortized and that such assets be tested for impairment at least annually. SFAS
142 is effective for fiscal years beginning after December 15, 2001. The Company
is currently evaluating the impact these standards will have on its financial
statements.
In June 1998, FASB issued SFAS No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. The Company adopted SFAS 133 as amended
by SFAS 137 and 138 effective January 1, 2001. There was no effect from the
application of SFAS 133 on the earnings and financial position of the Company as
the Company had no derivative instruments at June 30, 2001 and December 31,
2000.
15
16
SUN COMMUNITIES, INC.
PART II
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 22, 2001, the Company held its Annual Meeting of Shareholders. The
following matters were voted upon at the meeting:
(a) The election of two directors to serve until the 2004 Annual
Meeting of Shareholders or until their respective successors shall
be elected and shall qualify. The results of the election appear
below:
Votes Against Abstentions or
Name Votes For or Withheld Broker Non-Votes
------------------- ------------- ------------------ ----------------
Clunet R. Lewis 14,307,806 0 46,838
Arthor A. Weiss 14,308,456 0 46,187
ITEM 6.(a) - EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
None
ITEM 6.(b) - REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the period covered by
this Form 10-Q.
16
17
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 thereunto duly authorized.
Dated: August 13, 2001
SUN COMMUNITIES, INC.
BY: /s/ Jeffrey P. Jorissen
--------------------------------------------------------
Jeffrey P. Jorissen, Chief Financial Officer
and Secretary
(Duly authorized officer and principal
financial officer)
17