================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 APRIL 30, 2004 (Date of Report) MANUFACTURED HOME COMMUNITIES, INC. (Exact name of registrant as specified in its Charter) 1-11718 (Commission File No.) MARYLAND 36-3857664 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606 (Address of principal executive offices) (Zip Code) (312) 279-1400 (Registrant's telephone number, including area code) ================================================================================
ITEM 2. ACQUISITION OF ASSETS Manufactured Home Communities, Inc. and its subsidiaries (the "Company") have acquired or invested in 58 manufactured home communities ("Communities") and park model communities ("Resorts") during the period from January 1, 2004 through April 30, 2004. Of these communities, 30 were reported on Form 8-K dated March 2, 2004, and 28 were reported on Form 8-K dated March 3, 2004. The combined investment in these 58 properties was approximately $377.4 million.
MANUFACTURED HOME COMMUNITIES, INC. PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS REQUIRED UNDER ITEM 7(b) OF FORM 8-K
MANUFACTURED HOME COMMUNITIES, INC. PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED The following unaudited Pro Forma Condensed Consolidated Balance Sheet presents the effect of the acquisition of ten properties from Diversified Investments, Inc. ("Diversified"), the NHC Portfolio ("NHC Portfolio"), and O'Connell's, Spring Gulch, Paradise, Twin Lakes, and Lakeside ("Other 2004 Acquisitions"). The Pro Forma also includes the investment of $29.7 million in preferred equity interest in six entities controlled by Diversified Investments, Inc. and the $1.4 million investment in the Diversified entities managing these properties (the "Mezzanine Investments"), the $1.4 million investment in the Lake Myers, Pine Haven, Twin Mills and Plymouth Rock joint ventures ("Joint Ventures"), the payment of a one-time special distribution of $8.00 per share, and an additional borrowing of $35 million under the Company's line of credit. Related to the acquisition of the NHC portfolio, beginning in 1996, a series of partnerships were formed between "NHC" entities and "PAMI" (the former General Partner of NHC) entities. A trial on all claims between NHC and PAMI, including whether NHC had the authority to consummate the transaction with the Company was held on April 15 and 16, 2004. The Company continues to believe in the merit of NHC's claims and defenses. Under the terms and conditions of the partnership agreements, $69 million was paid to acquire the PAMI entities' interests. Principals of the NHC entities will continue to operate the properties under a management agreement with the Company and maintain a minority equity position in the new entity. The existing dispute is related to the PAMI entities' desire to liquidate their investments. While the possibility of additional litigation and its attendant risks remain, we believe that providing liquidity to the NHC entities to acquire the PAMI interests may assist in resolving the dispute. The Company, after advice from its legal counsel, believes that there is substantial merit to its' position that the NHC Portfolio transaction is valid. Accordingly, the Company has treated the NHC Portfolio transaction as an acquisition in the financial statements. The following unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2003 presents the effect of the following acquisitions as if they had occurred on January 1, 2003: Diversified, NHC, and the Other 2004 Acquisitions; and the income from the Mezzanine Investments and Joint Ventures. The following unaudited Pro Forma Condensed Consolidated Financial Statements are not necessarily indicative of the results of future operations, nor the results of historical operations, had all the transactions occurred as described above on January 1, 2003. The unaudited Pro Forma Condensed Consolidated Financial Statements should be read in conjunction with the accompanying Notes to Pro Forma Condensed Consolidated Financial Statements and Combined Statements of Revenue and Certain Expenses (included elsewhere herein).
MANUFACTURED HOME COMMUNITIES, INC PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2003 (unaudited) (amounts in thousands) Other 2004 Diversified NHC Acquisitions Adjustments Historical (A) (B) (C) (D) Pro Forma ------------ ----------- ---------- ----------- ----------- ----------- ASSETS Investment in real estate: Land $ 282,803 $ 14,559 $ 58,798 $ 11,837 $ - $ 367,997 Land improvements 911,176 43,673 176,545 33,711 - 1,165,105 Buildings and other depreciable property 121,117 0 0 0 0 121,117 --------------------------------------------------------------------------------- 1,315,096 58,232 235,343 45,548 - 1,654,219 Accumulated depreciation (272,497) 0 0 0 0 (272,497) --------------------------------------------------------------------------------- Net investment in real estate 1,042,599 58,232 235,343 45,548 - 1,381,722 Cash and cash equivalents 325,740 (15,144) (65,326) (9,513) (228,008) 7,749 Notes receivable 11,551 - 31 - 11,582 Investment in and advances to joint ventures 18,828 - - - 31,079 49,907 Rents receivable, net 2,385 - 547 - 2,932 Deferred financing costs, net 14,164 - - - 14,164 Inventory 31,604 - 718 419 32,741 Prepaid expenses and other assets 27,044 - 4,343 - 7,233 38,620 --------------------------------------------------------------------------------- Total assets $ 1,473,915 $ 43,088 $ 175,656 $ 36,454 $ (189,696) 1,539,417 ================================================================================= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 1,076,183 $ 41,550 $ 159,003 $ 33,626 $ - $ 1,310,362 Unsecured term loan - - - - - - Unsecured line of credit - - - - 35,000 35,000 Other notes payable 113 - - - - 113 Accounts payable and accrued expenses 27,815 421 4,388 432 - 33,056 Accrued interest payable 5,978 - 614 - - 6,592 Rents received in advance and security deposits 6,616 1,117 6,051 2,396 - 16,180 Distributions payable 224,696 - - - (224,696) - --------------------------------------------------------------------------------- Total liabilities 1,341,401 43,088 170,056 36,454 (189,696) 1,401,303 --------------------------------------------------------------------------------- Commitments and contingencies Minority interest - Common OP Units and other 1,716 - 5,600 - - 7,316 Minority interest - Perpetual Preferred OP Units 125,000 - - - - 125,000 - - Stockholders' equity: - Common stock, $.01 par value 222 - - - - 222 Paid-in capital 263,066 - - - - 263,066 Deferred compensation (494) - - - - (494) Distributions in excess of accumulated earnings (256,996) - - - - (256,996) --------------------------------------------------------------------------------- Total stockholders' equity 5,798 - - - - 5,798 --------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 1,473,915 $ 43,088 $ 175,656 $ 36,454 $ (189,696) $ 1,539,417 --------------------------------------------------------------------------------- - ------------- (A) Reflects the acquisition of ten properties from Diversified Investments, Inc. on February 5, 2004 for a total purchase price of $64 million. The amounts presented include the initial purchase price and subsequent closing costs and were allocated based on the fair value of the assets acquired and liabilities assumed. (B) Reflects the acquisition of the NHC Portfolio on February 17, 2004 for a total purchase price of $235 million. The amounts presented include the initial purchase price and subsequent closing costs and were allocated based on the fair value of the assets acquired and liabilities assumed. (C) Reflects the acquisitions of O'Connell's on January 15, 2004, Spring Gulch on January 30, 2004, Paradise on February 3, 2004, Twin Lakes on February 18, 2004, and Lakeside on February 19, 2004. The amounts presented include the initial purchase price and subsequent closing costs and were allocated based on the fair value of the assets acquired and liabilities assumed. (D) Reflects the Mezzanine Investment, the investment in the Joint Ventures, an additional borrowing of $35.0 million under the Company's line of credit, payment of the one-time special distribution of approximately $225 million, and approximately $5.8 million related to the Diversified acquisition which is being held in escrow contingent upon future revenues.
MANUFACTURED HOME COMMUNITIES, INC PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 (unaudited) (amounts in thousands, except per share data) Other 2004 Diversified NHC Acquisitions Adjustments Historical (A) (B) (C) (D) Pro Forma ----------- ----------- --------- ------------ ----------- ----------- PROPERTY OPERATIONS: Community base rental income $ 196,919 661 $ 197,580 Resort base rental income 11,780 5,565 32,083 5,368 54,796 Utility and other income 20,150 462 4,927 697 26,236 ---------------------------------------------------------------------------- Property operating revenues 228,849 6,027 37,010 6,726 - 278,612 Property operating & maintenance 64,996 2,577 17,659 4,239 89,471 Real estate taxes 18,917 392 2,533 181 22,023 Property management 9,373 9 9,382 ---------------------------------------------------------------------------- Property operating expenses 93,286 2,969 20,192 4,429 - 120,876 ---------------------------------------------------------------------------- Income from property operations 135,563 3,058 16,818 2,297 0 157,736 HOME SALES OPERATIONS: Gross revenues from inventory home sales 36,606 1,093 37,699 Cost of inventory home sales (31,767) (960) (32,727) ---------------------------------------------------------------------------- Gross profit from inventory home sales 4,839 0 0 133 0 4,972 Brokered resale revenues, net 1,724 1,724 Home selling expenses (7,360) (108) (7,468) Ancillary services revenues, net 216 823 1,039 ---------------------------------------------------------------------------- Income (loss) from home sales operations (581) - - 848 - 267 OTHER INCOME AND EXPENSES: Interest income 1,695 1,695 Equity in income of unconsolidated joint ventures 2,065 3,706 5,771 General and administrative (8,060) (8,060) Interest and related amortization (58,402) (13,502) (71,904) Depreciation on corporate assets (1,240) (1,240) Depreciation on real estate assets and other costs (38,034) (8,717) (46,751) ---------------------------------------------------------------------------- Total other income and expenses (101,976) - - - (18,513) (120,489) ---------------------------------------------------------------------------- MINORITY INTERESTS: (Income) allocated to Common OP Units (4,330) (852) (5,182) (Income) allocated to Perpetual Preferred OP Units (11,252) (11,252) ---------------------------------------------------------------------------- Income from continuing operations 17,424 3,058 16,818 3,145 (19,365) 21,080 DISCONTINUED OPERATIONS: Discontinued operations 1,043 1,043 Depreciation on discontinued operations (135) (135) Gain on sale of properties and other 10,826 10,826 Minority interests on discontinued operations (2,144) (2,144) ---------------------------------------------------------------------------- Income from discontinued operations 9,590 - - - - 9,590 ---------------------------------------------------------------------------- NET INCOME AVAILABLE TO COMMON SHARES 27,014 3,058 16,818 3,145 (19,365) 30,670 ============================================================================ EARNINGS PER COMMON SHARE - BASIC Income from continuing operations $ 0.79 $ 0.95 ========= ========== Income from discontinued operations $ 0.43 $ 0.43 ========= ========== Income available for Common Shares $ 1.22 $ 1.39 ========= ========== EARNINGS PER COMMON SHARE - FULLY DILUTED Income from continuing operations $ 0.78 $ 0.94 ========= ========== Income from discontinued operations $ 0.42 $ 0.42 ========= ========== Income available for Common Shares $ 1.20 $ 1.36 ========= ========== Weighted average common shares outstanding - basic 22,077 22,077 ========= ========== Weighted average common shares outstanding - fully diluted 28,002 28,002 ========= ========== - --------------- (A) Reflects the audited results of operations of the Diversified portfolio. The amounts presented represent the historical amounts for certain revenues and expenses for the periods from January 1, 2003 through December 31, 2003. (B) Reflects the audited results of operations of the NHC Portfolio. The amounts presented represent the historical amounts for certain revenues and expenses for the periods from January 1, 2003 through December 31, 2003. (C) Reflects the results of operations of the Other 2004 Acquisitions. The amounts presented represent the historical amounts for certain revenues and expenses for the periods from January 1, 2003 through December 31, 2003 for each of the properties
(D) Reflects the following adjustments: Equity in income of unconsolidated joint ventures: Income on $29.7 million Mezzanine Investments $ 3,155 Income on $1.4 million Joint Venture investments 551 -------- $ 3,706 ======== Interest and related amortization: Interest associated with debt assumed in Diversified transaction bearing interest at an average rate of 5.81% which reflects effective rates (2,454) Interest associated with debt assumed in NHC Portfolio transaction bearing interest at an average rate of 5.14%, which reflects effective rates (8,173) Interest associated with debt assumed in Other 2004 Acquisitions bearing interest at an average rate of 5.6%, which reflects effective rates (1,870) Interest associated with borrowings under the Company's line of credit bearing interest at LIBOR plus 1.65%, which based on the 30-day LIBOR rate at the time of borrowings was 2.87% (1,005) -------- $(13,502) ======== Depreciation: Depreciation based on real property acquired in the amount $339 million less approximately 25% allocated to land, in the amount of $254 million, and depreciated over a 30-year life for real property $ (8,500) Reflects the Company's 25% interest in the depreciation on the Joint Ventures (8) Reflects 7.59% minority interest in net income of NHC of $2.8 million (209) -------- $ (8,717) ======== Income allocated to minority interests: Reflects allocation of proforma net income to Common OP Units $ (852) ========
SIGNATURE 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. MANUFACTURED HOME COMMUNITIES, INC. BY: \s\ Thomas P. Heneghan ------------------------------------- Thomas P. Heneghan President and Chief Executive Officer BY: \s\ Michael B. Berman ------------------------------------ Michael B. Berman Vice President, Treasurer and Chief Financial Officer DATE: April 30, 2004
Manufactured Home Communities, Inc. Diversified Investments Companies Portfolio - Sacramento, California Statement of Revenue and Certain Expenses For The Year Ended December 31, 2003 Report of Independent Auditors The Board of Directors of Manufactured Home Communities, Inc. We have audited the accompanying combined statement of revenue and certain expenses of the Diversified Investments Companies Portfolio (the Properties) as described in Note 2 for the year ended December 31, 2003. The combined statement of revenue and certain expenses is the responsibility of the Properties' management. Our responsibility is to express an opinion on the combined statement of revenue and certain expenses based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined statement of revenue and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures made in the combined statement of revenue and certain expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the combined statement of revenue and certain expenses. We believe that our audit provides a reasonable basis for our opinion. The accompanying combined statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Manufactured Home Communities, Inc. as described in Note 1, and is not intended to be a complete presentation of the Properties' combined revenue and expenses. In our opinion, the combined statement of revenue and certain expenses referred to above presents fairly, in all material respects, the combined revenue and certain expenses as described in Note 1 of the Properties for the year ended December 31, 2003 in conformity with accounting principles generally accepted in the United States. ERNST & YOUNG LLP Chicago, Illinois April 1, 2004 1
Diversified Investments Companies Portfolio - Sacramento, California Statement of Revenue and Certain Expenses For The Year Ended December 31, 2003 REVENUE Rental income $5,564,827 Other income 462,483 ----------- 6,027,310 CERTAIN EXPENSES General and administrative 381,502 Utilities 808,744 Repairs and maintenance 227,284 Real estate taxes 392,374 Insurance 261,120 Payroll and benefits 823,082 Marketing 75,690 ----------- 2,969,796 ----------- Revenue in excess of certain expenses $ 3,057,514 =========== See accompanying notes. 2
Diversified Investments Companies Portfolio - Sacramento, California Statement of Revenue and Certain Expenses For The Year Ended December 31, 2003 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying combined statement of revenue and certain expenses for the year ended December 31, 2003 was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the Current Report on Form 8-K of Manufactured Home Communities, Inc. The accompanying financial statements are not representative of the actual operations of the acquired Properties for the period presented as certain expenses, which may not be comparable to the expenses to be incurred by Manufactured Home Communities, Inc. in the proposed future operations of the Properties, have been excluded. Expenses excluded consist of interest expense depreciation and amortization, professional fees and other costs not directly related to the future operations of the Properties. Revenue and Expense Recognition Rental income attributable to leases is recorded when earned from tenants. Expenses are recognized in the period in which they are incurred. Use of Estimates The preparation of the combined statement of revenue and certain expenses in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of the combined revenue and expenses during the reporting period. Actual results could differ from these estimates. 2. DESCRIPTION OF PROPERTIES The accompanying combined statements of revenue and certain expenses relate to the combined operations of the Diversified Investments Companies Portfolio (the "Properties"), which are located in Arizona, Florida and North Carolina. The Properties have been presented on a combined basis because the Properties were under common ownership and management prior to acquisition. The Properties listed below were acquired on February 5, 2004 for $64 million by Manufactured Home Communities, Inc. from an unrelated party. Property Name Location Number of Sites - ------------- -------- --------------- (unaudited) Shangri-La MHP Largo, FL 160 Coachwood Colony MHP Leesburg, FL 200 Southernaire MHP Mount Dora, FL 134 Sixth Avenue MHP Zephyrhills, FL 140 Topics RV Community Spring Hill, FL 230 Waterway RV Park Cedar Point, NC 336 Goose Creek Resort Newport, NC 598 Desert Paradise RV Yuma, AZ 260 Suni Sands RV Resort Yuma, AZ 336 Terra Ceia Village Palmetto, FL 203 ----- 2,597 3
Manufactured Home Communities, Inc. NHC Corporation Portfolio - Scottsdale, Arizona Combined Statement of Revenue and Certain Expenses For The Year Ended December 31, 2003 Report of Independent Auditors The Board of Directors of Manufactured Home Communities, Inc. We have audited the accompanying combined statement of revenue and certain expenses of the NHC Corporation Portfolio (the Properties) as described in Note 2 for the year ended December 31, 2003. The combined statement of revenue and certain expenses is the responsibility of the Properties' management. Our responsibility is to express an opinion on the combined statement of revenue and certain expenses based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenue and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures made in the statement of revenue and certain expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the combined statement of revenue and certain expenses. We believe that our audit provides a reasonable basis for our opinion. The accompanying combined statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Manufactured Home Communities, Inc. as described in Note 1, and is not intended to be a complete presentation of the Properties' combined revenue and expenses. In our opinion, the combined statement of revenue and certain expenses referred to above presents fairly, in all material respects, the combined revenue and certain expenses as described in Note 1 of the Properties for the year ended December 31, 2003 in conformity with accounting principles generally accepted in the United States. ERNST & YOUNG LLP Chicago, Illinois April 15, 2004 1
NHC Corporation Portfolio - Scottsdale, Arizona Combined Statement of Revenue and Certain Expenses For The Year Ended December 31, 2003 REVENUE Rental income $32,083,332 Other income 4,927,261 ----------- 37,010,593 CERTAIN EXPENSES General and administrative 2,849,777 Utilities 5,444,927 Repairs and maintenance 1,568,194 Real estate taxes 2,533,121 Insurance 1,355,148 Payroll and Benefits 6,441,433 ----------- 20,192,600 ----------- Revenue in excess of certain expenses $16,817,993 =========== See accompanying notes. 2
NHC Corporation Portfolio - Scottsdale, Arizona Combined Statement of Revenue and Certain Expenses For The Year Ended December 31, 2003 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying combined statement of revenue and certain expenses for the year ended December 31, 2003 was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the Current Report on Form 8-K of Manufactured Home Communities, Inc. The accompanying financial statements are not representative of the actual operations of the acquired Properties for the period presented as certain expenses, which may not be comparable to the expenses to be incurred by Manufactured Home Communities, Inc. in the proposed future operations of the Properties, have been excluded. Expenses excluded consist of interest expense depreciation and amortization, professional fees and other costs not directly related to the future operations of the Properties. Revenue and Expense Recognition Rental income attributable to leases is recorded when earned from tenants. Expenses are recognized in the period in which they are incurred. Use of Estimates The preparation of the combined statement of revenue and certain expenses in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of the combined revenue and expenses during the reporting period. Actual results could differ from these estimates. 2. DESCRIPTION OF PROPERTIES The accompanying combined statements of revenue and certain expenses relate to the combined operations of the NHC Corporation Portfolio (the "Properties"), which are located in Texas, Florida and California. The Properties have been presented on a combined basis because the Properties were under common ownership and management prior to acquisition. The Properties listed below were acquired on February 17, 2004 for approximately $235 million by Manufactured Home Communities, Inc. from an unrelated party. Property Name Location Sites Property Name Location Sites (unaudited) (unaudited) - --------------------------------------------------------- ----------------------------------------------------------------- Encore Harlingen Harlingen, TX 1,027 Encore Orlando Orlando, FL 471 Sunburst Harlingen Harlingen, TX 301 Fort Myers Beach Fort Myers, FL 306 Paradise Park Harlingen, TX 563 Encore Daytona Beach North Ormond Beach, FL 349 Southern Comfort Weslaco, TX 403 Silver Dollar Odessa, FL 385 Sunburst Weslaco Weslaco, TX 390 Sunburst Lake Placid Lake Placid, FL 408 Encore Mercedes Mercedes, TX 493 Encore Sarasota North Bradenton, FL 415 Encore Tampa North Lutz, FL 255 Sunburst Port Richey Hudson, FL 392 Sunshine Key Fun Ohio Key, FL 409 Sunburst St Petersburg Largo, FL 293 Sunburst Fort Myers Fort Myers Beach, FL 246 Encore Sarasota South Nokomis, FL 548 Sunburst Florida Keys Sugarloaf Key, FL 100 Encore Port Charlotte Port Charlotte, FL 528 Sunburst North Fort Myers Fort Myers, FL 733 Park City West Fort Lauderdale, FL 363 Tropical Palms Fun Kissimmee, FL 585 Encore Punta Gorda Punta Gorda, FL 206 Encore Vero Beach Sebastian, FL 300 Pacific Dunes Ranch Oceana, CA 215 Encore Crystal River Crystal River, FL 260 Tahoe Valley South Lake Tahoe, CA 413 3