10-K 1 umh10k.txt Form 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period ___________________ to _____________________ Commission File Number 0-13130 United Mobile Homes, Inc. (Exact name of registrant as specified in its charter) New Jersey 22-1890929 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification number) 3499 Route 9, Suite 3C, Freehold, New Jersey 07728 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (732) 577-9997 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock $.10 par value 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 Indicate by check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K X . Based upon the assumption that directors and executive officers of the registrant are not affiliates of the registrant, the aggregate market value of the voting stock of the registrant held by nonaffiliates of the registrant at March 14, 2002 was $92,016,450. Presuming that such directors and executive officers are affiliates of the registrant, the aggregate market value of the voting stock of the registrant held by nonaffiliates of the registrant at March 14, 2002 was $64,529,936. The number of shares outstanding of issuer's common stock as of March 14, 2002 was 7,542,332 shares. Documents Incorporated by Reference: - Exhibits incorporated by reference are listed in Part IV, Item (a)(3). PART I ITEM I - BUSINESS General Development of Business United Mobile Homes, Inc. (the Company) owns and operates twenty-five manufactured home communities containing 5,979 sites. The communities are located in New Jersey, New York, Ohio, Pennsylvania and Tennessee. The Company was incorporated in the State of New Jersey in 1968. Its executive offices are located at 3499 Route 9, Suite 3C, Freehold, New Jersey 07728. Its telephone number is (732) 577-9997. Effective January 1, 1992, the Company elected to be taxed as a real estate investment trust (REIT) under Sections 856-858 of the Internal Revenue Code. The company received from the Internal Revenue Service a favorable revenue ruling that it qualified as a REIT. The Company will not be taxed on the portion of its income which is distributed to shareholders, provided it distributes at least 95% of its taxable income (90% effective for the year ended December 31, 2001), has at least 75% of its assets in real estate investments and meets certain other requirements for qualification as a REIT. Background Monmouth Capital Corporation, a publicly-owned Small Business Investment Corporation, that had owned approximately 66% of the Company's stock, spun off to its shareholders in a registered distribution three shares of United Mobile Homes, Inc. for each share of Monmouth Capital Corporation. The Company in 1984 and 1985 issued additional shares through rights offerings. The Company has been in operation for thirty-two years, the last sixteen of which have been as a publicly-owned corporation. Narrative Description of Business The Company's primary business is the ownership and operation of manufactured home communities - leasing manufactured home spaces on a month-to-month basis to private manufactured home owners. The Company also leases homes to residents. A manufactured home community is designed to accommodate detached, single family manufactured housing units, which are produced off-site by manufacturers and delivered by truck to the site. Such dwellings, referred to as manufactured homes (which should be distinguished from travel trailers), are manufactured in a variety of styles and sizes. Manufactured homes, once located, are rarely transported to another site; typically, a manufactured home remains on site and is sold by its owner to a subsequent occupant. This transaction is commonly handled through a broker in the same manner that a more traditional single-family residence is sold. Each owner of a manufactured home leases the site on which the home is located from the Company. Page 2 Manufactured homes are being accepted by the public as a viable and economically attractive alternative to common stick- built single-family housing. During the past five years, approximately one-fifth of all single-family homes built and sold in the nation have been manufactured homes. The size of a modern manufactured home community is limited, as are other residential communities, by factors such as geography, topography, and funds available for development. Generally, modern manufactured home communities contain buildings for recreation, green areas, and other common area facilities, which, as distinguished from resident owned manufactured homes, are the property of the community owner. In addition to such general improvements, certain manufactured home communities include recreational improvements such as swimming pools, tennis courts and playgrounds. Municipal water and sewer services are available to some manufactured home communities, while other communities supply these facilities on site. The housing provided by the manufactured home community, therefore, includes not only the manufactured dwelling unit (owned by the resident), but also the physical community framework and services provided by the manufactured home community. The community manager interviews prospective residents, ensures compliance with community regulations, maintains public areas and community facilities and is responsible for the overall appearance of the community. The manufactured home community, once fully occupied, tends to achieve a stable rate of occupancy. The cost and effort in moving a home once it is located in a community encourages the owner of the manufactured home to resell the manufactured home rather than to remove it from the community. This ability to produce relatively predictable income, together with the location of the community, its condition and its appearance, are factors in the long-term appreciation of the community. Effective April 1, 2001, the Company, through its wholly- owned taxable subsidiary, UMH Sales and Finance, Inc. (S&F), began to conduct manufactured home sales in its communities. This company was established to enhance the occupancy of the communities. Investment and Other Policies of the Company The Company may invest in improved and unimproved real property and may develop unimproved real property. Such properties may be located throughout the United States. In the past, it has concentrated on the northeast. The Company has no restrictions on how it finances new manufactured home communities. It may finance communities by purchase money mortgages or other financing, including first liens, wraparound mortgages or subordinated indebtedness. In connection with its ongoing activities, the Company may issue notes, mortgages or other senior securities. The Company intends to use both secured and unsecured lines of credit. The Company may issue securities for property, however, this has not occurred to date, and it may repurchase or reacquire its shares from time to time if, in the opinion of the Board of Directors, such acquisition is advantageous to the Company. During 2001, the Company purchased 29,400 shares of its own stock at a total cost of $307,792. Page 3 The Company also invests in both debt and equity securities of other REITs. The Company from time to time may purchase these securities on margin when the interest and dividend yields exceed the cost of funds. At December 31, 2001 and 2000, the Company had $25,917,748 and $15,494,918, respectively, of securities available for sale. Included in these securities are Preferred Stock and Debt securities of $15,219,657 and $1,452,413, respectively, at December 31, 2001 and $6,946,426 and $1,393,400, respectively, at December 31, 2000. The unrealized gain (loss) on securities available for sale at December 31, 2001 and 2000 amounted to $3,541,001 and $(490,795), respectively. Property Maintenance and Improvement Policies It is the policy of the Company to properly maintain, modernize, expand and make improvements to its properties when required. The Company anticipates that renovation expenditures with respect to its present properties during 2002 will be consistent with 2001 expenditures. It is the policy of the Company to maintain adequate insurance coverage on all of its properties; and, in the opinion of the Company, all of its properties are adequately insured. Risk Factors Real Estate Industry and Competition Risks The Company's investments will be subject to the risks generally associated with the ownership of real property, including the uncertainty of cash flow to meet fixed obligations, adverse changes in national economic conditions, changes in the relative popularity (and thus the relative price) of the Company's real estate investments when compared to other investments, adverse local market conditions due to changes in general or local economic conditions or neighborhood values, changes in interest rates and in the availability of mortgage funds, costs and terms of mortgage funds, the financial conditions of residents and sellers of properties, changes in real estate tax rates and other operating expenses (including corrections of potential environmental issues as well as more stringent governmental regulations regarding the environment), governmental rules and fiscal policies including possible proposals for rent controls, as well as expenses resulting from acts of God, uninsured losses and other factors which are beyond the control of the Company. The Company's investments are primarily in rental properties and are subject to the risk or inability to attract or retain residents with a consequent decline in rental income as a result of adverse changes in local real estate markets or other factors. The Company will be competing for manufactured home community investments with numerous other real estate entities, such as individuals, corporations, REITs and other enterprises engaged in real estate activities, possibly including certain affiliates of the Company. In many cases, the competing concerns may be larger and better financed than the Company, making it difficult for the Company to secure new manufactured home community investments. Competition among private and institutional purchasers of manufactured home community investments has increased substantially in recent years, with resulting increases in the purchase price paid for manufactured home communities and consequent higher fixed costs. Page 4 Governmental Regulations Local zoning and use laws, environmental statutes and other governmental requirements may restrict expansion, rehabilitation and reconstruction activities. These regulations may prevent the Company from taking advantage of economic opportunities. Legislation such as the Americans with Disabilities Act may require the Company to modify its properties. Future legislation may impose additional requirements. No prediction can be made as to what requirements may be enacted or what changes may be implemented to existing legislation. Rent control affects only two of the Company's manufactured home communities which are in New Jersey and has resulted in a slower growth of earnings from these properties. Environmental Liability Risks Current and former real estate owners and operators may be required by law to investigate and clean up hazardous substances released at the properties they own or operate or have owned or operated. They may be liable to the government or to third parties for property damage, investigation costs and cleanup costs. Contamination may adversely affect the owner's ability to sell or lease real estate or to borrow using the real estate as collateral. There is no way of determining at this time the magnitude of any potential liability to which the Company may be subject arising out of unknown environmental conditions or violations with respect to the properties it owns. Environmental laws today can impose liability on a previous owner or operator of a property that owned or operated the property at a time when hazardous or toxic substances were disposed of, or released from, the property. A conveyance of the property, therefore, does not relieve the owner or operator from liability. The Company is not aware of any environmental liabilities relating to its properties which would have a material adverse effect on its business, assets, or results of operations. However, no assurance can be given that environmental liabilities will not arise in the future. The Company owns and operates 11 manufactured home communities which either have their own wastewater treatment facility, water distribution system, or both. At these locations, the Company is subject to compliance of monthly, quarterly and yearly testing for contaminants as outlined by the individual state's Department of Environmental Protection Agencies. The Company must also comply with certain Federal Environmental Protection Agency Regulations which may be more stringent than the state and local governmental regulations. The costs of such testing are included in the Company's operating expenses. As of the date of this report, there are no enforcement actions pending by any federal, state or local environmental agencies and management believes that the Company is in compliance with all such regulations. Currently, the Company is not subject to radon or asbestos monitoring requirements. Page 5 Insurance Considerations The Company generally maintains insurance policies related to its business, including casualty, general liability and other policies covering business operations, employees and assets. The Company may be required to bear all losses that are not adequately covered by insurance. Although management believes that the Company's insurance programs are adequate, no assurance can be given that the Company will not incur losses in excess of its insurance coverage, or that the Company will be able to obtain insurance in the future at acceptable levels and reasonable cost. Financing Risks The Company finances a portion of its investments through debt. This debt creates risks, including a) rising interest rates on floating rate debt; b) failure to repay or refinance existing debt as it matures, which may result in forced disposition of assets on disadvantageous terms; c) refinancing terms less favorable than the terms of the existing debt; and d) failure to meet required payments of principal and/or interest. Amendment of Business Policies The Board of Directors determines the growth, investment, financing, capitalization, borrowing, REIT status, operating and distribution policies. Although the Board of Directors has no present intention to amend or revise any of these policies, these policies may be amended or revised without notice to shareholders. Accordingly, shareholders may not have control over changes in Company policies. Qualification as a REIT The Company intends to qualify as a REIT. If it fails to do so, it will not be allowed to deduct distributions to shareholders in computing taxable income and will be subject to Federal and state income taxes, including any applicable alternative minimum tax, at regular corporate rates. In addition, the Company may be barred from qualification as a REIT for the four years following disqualification. The additional tax incurred at regular corporate rates would reduce significantly the cash flow available for distribution to shareholders and for debt service. Furthermore, the Company would no longer be required to make any distributions to shareholders as a condition to REIT qualification. Any distributions to shareholders that otherwise would have been subject to tax as a capital gain dividend would be taxable as ordinary income to the extent of the Company's current and accumulated earnings and profits. Corporate distributees, however, may be eligible for the dividends received deduction on the distributions, subject to limitations under the Internal Revenue Code. To qualify as a REIT, the Company must comply with certain highly technical and complex requirements. Management cannot be certain that the Company has complied with these requirements since there are few judicial and administrative interpretations of these provisions. In addition, facts and circumstances that may be beyond the Company's control may Page 6 affect the Company's ability to qualify as a REIT. No assurance can be given that new legislation, regulations, administrative interpretations or court decisions will not change the tax laws significantly with respect to qualification as a REIT or with respect to the Federal Income tax consequences of qualification. The company intends to qualify as a REIT. However, no assurance can be given that the Company qualifies as a REIT or will remain qualified as a REIT. Notwithstanding the Company's status as a REIT, the Company is subject to various Federal, state and local taxes on income and property. The Company will be taxed at regular corporate rates on any undistributed taxable income, including undistributed net capital gains, provided, however, that properly designated undistributed capital gains will effectively avoid taxation at the stockholder level. The Company may also have to pay some state income or franchise taxes because not all states treat REITS in the same manner as they are treated for Federal income tax purposes. Number of Employees On March 14, 2001, the Company had approximately 100 employees, including Officers. During the year, the Company hires approximately 20 part-time and full-time temporary employees as lifeguards, grounds keepers and for emergency repairs. Page 7 ITEM 2 - PROPERTIES United Mobile Homes, Inc. is engaged in the ownership and operation of manufactured home communities located in New Jersey, New York, Ohio, Pennsylvania and Tennessee. The Company owns twenty-five manufactured home communities containing 5,979 sites. The following is a brief description of the properties owned by the Company:

Number of 2001 Current Rent Average Per Name of Community Sites Occupancy Month Per Site Allentown 414 89% $257 4912 Raleigh-Millington Road Memphis, TN 38128 Brookview Village 133 84% $310 Route 9N Greenfield Center, NY 12833 Cedarcrest 283 98% $373 1976 North East Avenue Vineland, NJ 08360 Cranberry Village 201 92% $345 201 North Court Cranberry Township, PA 16066 Cross Keys Village 133 92% $232 Old Sixth Avenue Road, RD #1 Duncansville, PA 16635 D & R Village 244 94% $359 Route 146, RD 13 Clifton Park, NY 12065 Fairview Manor 276 79% $363 2110 Mays Landing Road Millville, NJ 08332 Forest Park Village 252 93% $297 724 Slate Avenue Cranberry Township, PA 16066 Heather Highlands 457 66% $225 109 S. Main Street Pittston, PA 18640 Highland Estates 269 87% $359 60 Old Route 22 Kutztown, PA 19530 Kinnebrook 212 88% $364 201 Route 17B Monticello, NY 12701

Page 8

Number of 2001 Current Rent Average Per Name of Community Sites Occupancy Month Per Site Lake Sherman Village 210 97% $276 7227 Beth Avenue, SW Navarre, OH 44662 Laurel Woods 220 73% $200 1943 St. Joseph Street Cresson, PA 16630 Memphis Mobile City 168 83% $224 3894 N. Thomas Street Memphis, TN 38127 Oxford Village 224 100% $396 2 Dolinger Drive West Grove, PA 19390 Pine Ridge Village 137 93% $330 147 Amy Drive Carlisle, PA 17013 Pine Valley Estates 218 82% $230 700 Pine Valley Estates Apollo, PA 15613 Port Royal Village 427 82% $257 400 Patterson Lane Belle Vernon, PA 15012 River Valley Estates 214 92% $207 2066 Victory Road Marion, OH 43302 Sandy Valley Estates 364 95% $251 801 First, Route #2 Magnolia, OH 44643 Southwind Village 250 97% $271 435 E. Veterans Highway Jackson, NJ 08527 Spreading Oaks Village 153 93% $182 7140-29 Selby Road Athens, OH 45701 Waterfalls Village 202 98% $344 3450 Howard Road Hamburg, NY 14075 Woodlawn Village 157 99% $465 Route 35 Eatontown, NJ 07724 Wood Valley 161 96% $208 1493 N. Whetstone River Road Caledonia, OH 43314

Page 9 Occupancy rates are very stable with little year-to-year changes once the community is filled (generally 90% or greater occupancy). It is the Company's experience that, once a home is set up in the community, it is seldom moved. The home if sold, is sold on-site to a new owner. Residents generally rent on a month-to-month basis. Some residents have one-year leases. Southwind Village and Woodlawn Village (both in New Jersey) are the only communities subject to local rent control laws. There are 14 sites at Sandy Valley which are under a consent order with the Federal Government. This order provides that, as these sites become vacant, they cannot be reused. As of December 31, 2001, 12 of these sites were vacant. The restrictions on use were known at the time of purchase, and the item is not material to the operation of Sandy Valley Estates. In connection with the operation of its 5,979 sites, the Company operates approximately 470 rental units. These are homes owned by the Company and rented to residents. The Company engages in the rental of manufactured homes primarily in areas where the communities have existing vacancies. The rental homes produce income on both the home and for the site which might otherwise be non-income producing. The Company sells the older rental homes when the opportunity arises. The Company has approximately 700 sites in various stages of engineering/construction. Due to the difficulties involved in the approval and construction process, it is difficult to predict the number of sites which will be completed in a given year. Significant Properties The Company operates approximately $73,000,000 (at original cost) in manufactured home properties. These consist of 25 separate manufactured home communities and related equipment and improvements. There are 5,979 sites in the 25 communities. No one community constitutes more than 10% of the total assets of the Company. Port Royal Village with 427 sites, Sandy Valley Estates with 364 sites, Cedarcrest with 283 sites, Fairview Manor with 276 sites, Highland Estates with 269 sites, Allentown with 414 sites and Heather Highlands with 457 sites are the larger properties. Mortgages on Properties The Company has mortgages on various properties. The maturity dates of these mortgages range from the year 2003 to 2011. Interest varies from fixed rates of 6.36% to 7.86% with one mortgage at a variable rate of LIBOR plus 155 basis points. The aggregate balances of these mortgages total $38,652,025 at December 31, 2001. (For additional information, see Part IV, Item 14(a)(1)(vi), Note 5 of the Notes to Consolidated Financial Statements - Notes and Mortgages Payable). Page 10 ITEM 3 - LEGAL PROCEEDINGS Legal proceedings are incorporated herein by reference and filed as Part IV, Item 14(a)(1)(vi), Note 13 of the Notes to Consolidated Financial Statements - Legal Matters. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted during the fourth quarter of 2001 to a vote of security holders through the solicitation of proxies or otherwise. Page 11 PART II ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's shares are traded on the American Stock Exchange (symbol UMH). The per share range of high and low quotes for the Company's stock for each quarterly period is as follows: 2001 2000 1999 HIGH LOW HIGH LOW HIGH LOW First Quarter 12.75 9.63 8-7/8 7 10-15/16 9-3/16 Second Quarter 12.35 10.65 8-1/2 7-3/8 10 8-1/4 Third Quarter 11.95 10.50 9-1/2 8-1/8 9-1/2 8-5/8 Fourth Quarter 12.50 10.25 9-3/4 8-3/8 9 8 On March 14, 2002, the closing price of the Company's stock was $12.20. As of December 31, 2001, there were approximately 1,000 shareholders of the Company's common stock based on the number of record owners. For the years ended December 31, 2001, 2000 and 1999, total dividends paid by the Company amounted to $5,980,540 or $.8025, $5,555,941 or $.7575 per share and $5,441,904 or $.75 per share, respectively. On January 16, 2002, the Company declared a dividend of $.2125 per share to be paid on March 15, 2002 to shareholders of record February 15, 2002. Future dividend policy will depend on the Company's earnings, capital requirements, financial condition, availability and cost of bank financing and other factors considered relevant by the Board of Directors. The Company elected REIT status beginning in 1992. As a REIT, the Company must pay out at least 95% of its taxable income (90% effective for the year ended December 31, 2001) in the form of a cash distribution to shareholders. Page 12 ITEM 6 - SELECTED FINANCIAL DATA

December 31, 2001 2000 1999 1998 1997 Income Statement Data: Total Revenues $26,882,399 $20,644,731 $18,807,085 $17,193,278 $15,663,811 Total Expenses 21,303,647 15,418,042 14,248,985 13,004,682 11,456,007 (Loss) Gain on Sales Of Investment Property and Equipment (28,264) (37,318) (1,964) 13,095 (10,546) Net Income 5,550,488 5,189,371 4,556,136 4,201,691 4,197,258 Net Income Per Share- Basic and Diluted .74 .71 .63 .60 .63 .............................................................................. Balance Sheet Data: Total Assets $80,334,844 $62,945,597 $58,575,312 $50,046,649 $43,599,259 Mortgages Payable 38,652,025 32,055,839 30,419,153 21,411,576 20,111,023 Shareholders' Equity 27,964,534 22,839,426 21,391,307 23,212,813 20,830,541 .............................................................................. Average Number of Shares Outstanding 7,457,636 7,339,684 7,252,774 7,042,701 6,617,479 Funds from Operations * $ 8,263,308 $7,845,529 $ 7,010,633 6,591,995 $ 6,324,536 Cash Dividends Per Share .8025 .7575 .75 .7375 .70

* Defined as net income, excluding gains (or losses) from sales of depreciable assets, plus depreciation. Funds from Operations do not replace net income determined in accordance with generally accepted accounting principles (GAAP) as a measure of performance or net cash flows as a measure of liquidity. Funds from Operations is not a GAAP measure of operating performance and should be considered as a supplemental measure of operating performance used by real estate investment trusts. Page 13 ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Revenue and Expense 2001 vs. 2000 Rental and related income increased from $18,640,335 for the year ended December 31, 2000 to $19,291,611 for the year ended December 31, 2001 primarily due to the acquisition of a new community and rental increases to residents. During 2001, the Company was able to obtain an average rent increase of approximately 3.5%. Overall occupancy rates are satisfactory with ten manufactured home communities experiencing vacancies over ten percent. Some of these vacancies are the result of expansions. The Company is also evaluating further expansion at selected communities in order to increase the number of available sites. Some of these communities are in various stages of expansion. Effective April 1, 2001, the Company, through its wholly- owned taxable subsidiary, UMH Sales and Finance, Inc. (S&F), began to conduct manufactured home sales in its communities. This company was established to enhance the occupancy of the communities. Sales of manufactured homes, other income, cost of sales of manufactured homes and selling expenses are directly related to this operation. Interest and dividend income increased from $1,747,254 in 2000 to $2,188,430 in 2001 due to purchases of securities available for sale during 2000 and 2001. Gains on sales of securities available for sale increased from $257,142 in 2000 to $530,324 in 2001. Community operating expenses increased from $8,233,356 for the year ended December 31, 2000 to $9,004,164 for the year ended December 31, 2001 primarily as a result of the acquisition of a new community and increased insurance expense and personnel costs. Management anticipates that the increase in insurance costs will continue into 2002. General and administrative expenses increased from $1,852,309 in 2000 to $2,015,685 in 2001 primarily as a result of an increase in personnel and occupancy costs. Interest expense increased from $2,624,801 in 2000 to $2,825,894 in 2001. This was primarily as a result of a higher average principal balance outstanding. Interest capitalized on construction in progress amounted to $146,000 and $180,600 for 2001 and 2000, respectively. Depreciation expense increased from $2,618,839 for the year ended December 31, 2000 to $2,684,556 for the year ended December 31, 2001 primarily as a result of the acquisition of a new community and the completion of the expansions. Amortization of financing costs remained relatively stable in 2001 and 2000. For the year ended December 31, 2001, the Company reported net income of $5,550,488 as compared to net income of $5,189,371 for the year ended December 31, 2000. The Company is currently Page 14 experiencing modest inflation. Modest inflation is believed to have a favorable impact on the Company's financial performance. With modest inflation, the Company believes that it can increase rents sufficiently to match increases in operating expenses. High rates of inflation (more than 10%) could result in an inability to raise rents to meet rising costs and could create political problems such as the imposition of rent controls. The Company anticipates continuing profits in 2002. 2000 vs. 1999 Rental and related income increased from $17,752,823 for the year ended December 31, 1999 to $18,640,335 for the year ended December 31, 2000 primarily due to rental increases to residents and increased occupancy. During 2000, the Company was able to obtain an average rent increase of approximately 3.3%. Overall occupancy rates are satisfactory with only ten manufactured home communities experiencing vacancies over ten percent. Some of these vacancies are the result of expansions completed toward the end of 1999. The Company has completed a 79 site expansion at Fairview Manor, a 40 site expansion at Highland Estates, and a 25 site expansion at Port Royal Village. The Company is also evaluating further expansion at selected communities in order to increase the number of available sites. Some of these communities are in various stages of expansion. Community operating expenses increased from $7,992,273 for the year ended December 31, 1999 to $8,233,356 for the year ended December 31, 2000 primarily as a result of increased expenses, such as advertising, associated with the expansions. General and administrative expenses increased from $1,621,479 in 1999 to $1,852,309 in 2000 primarily as a result of an increase in personnel and occupancy costs. Interest expense increased from $2,105,546 in 1999 to $2,624,801 in 2000. This was primarily as a result of a higher average principal balance outstanding. Interest capitalized on construction in progress amounted to $180,600 and $179,000 for 2000 and 1999, respectively. Interest and dividend income increased from $1,000,789 in 1999 to $1,747,254 in 2000 due to purchases of securities available for sale during 1999 and 2000. Gains on sales of securities available for sale increased from $53,473 in 1999 to $257,142 in 2000 due to increased sales. Depreciation expense increased from $2,452,533 for the year ended December 31, 1999 to $2,618,839 for the year ended December 31, 2000 primarily as a result of the completion of the expansions. Amortization of financing costs remained relatively stable in 2000 and 1999. Loss on sales of investment property and equipment increased from a loss of $1,964 for the year ended December 31, 1999 to a loss of $37,318 for the year ended December 31, 2000 primarily as a result of the sale of certain older rental units. Page 15 For the year ended December 31, 2000, the Company reported net income of $5,189,371 as compared to net income of $4,556,136 for the year ended December 31, 1999. Liquidity and Capital Resources The Company uses funds for real estate acquisitions, real property improvements, amortization of debt incurred in connection with such acquisitions and improvements, purchase of inventory of manufactured homes and investment in debt and equity securities of other REITs. The Company generates funds through cash flow from properties, sales of manufactured homes and its securities portfolio, mortgages on properties and increases in shareholder investments. The Company has liquidity available from a combination of short and long-term sources. The Company currently has mortgages payable totaling $38,652,025 secured by twelve communities and loans payable totaling $10,692,683 primarily secured by investment securities and inventory of manufactured homes. The Company has a $2,000,000 line of credit with Fleet Bank, all of which was available at December 31, 2001. The Company believes that its 25 communities have market values in excess of historical cost. Management believes that this provides significant additional borrowing capacity. Net cash provided by operating activities increased from $6,770,625 in 1999 to $7,171,086 in 2000 and decreased to $4,277,851 in 2001. Cash flow was primarily used for capital improvements, payment of dividends, purchases of securities available for sale, purchase of inventory of manufactured homes, purchase of a manufactured home community and expansion of existing communities. The Company meets maturing mortgage obligations by using a combination of cash flow and refinancing. The dividend payments were primarily made from cash flow from operations. In addition to normal operating expenses, the Company requires cash for additional investments in manufactured home communities, capital improvements, purchase of manufactured homes for rent, scheduled mortgage amortization and dividend distributions. The Company also invests in debt and equity securities of other REITs. During 2001, the Company purchased approximately $9,900,000 in these securities. The securities portfolio at December 31, 2001 has experienced an approximate 16% increase in value from cost. The Company estimates that in 2002 it will purchase approximately 25 manufactured homes to be used as rentals for a total cost of $500,000. Management believes that these manufactured homes will each generate approximately $300 per month in rental income in addition to lot rent. Once rental homes reach 10 years old, the Company generally sells them. Capital improvements include amounts needed to meet environmental and regulatory requirements in connection with the manufactured home communities that provide water or sewer service. Excluding expansions, the Company is budgeting approximately $1,000,000 in capital improvements for 2002. The Company has a Dividend Reinvestment and Stock Purchase Plan (Plan). Dividends reinvested is a significant additional source of liquidity and capital resources. During 2001, the Company paid $5,980,540 in dividends. Amounts received under the Page 16 Plan amounted to $1,686,031. The success of the Plan resulted in a substantial improvement in the Company's liquidity and capital resources in 2001. The Company has undeveloped land which it could develop over the next several years. The Company is also exploring the utilization of vacant land for town houses. The Company continues to analyze the highest and best use of its vacant land, and uses it accordingly. The Company believes that funds generated from operations, together with the financing and refinancing of its properties, will be adequate to meet its needs over the next several years. The Company's most critical accounting policies relate to the evaluation of impairment of real estate and investment securities. The Company evaluates the need for an impairment loss on its real estate assets when indicators of impairment are present and the undiscounted cash flows are not sufficient to recover the asset's carrying amount. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. In addition, estimates are used when accounting for the allowance for doubtful accounts, potentially excess and obsolete inventory and contingent liabilities, among others. These estimates are susceptible to change and actual results could differ from these estimates. The effects of changes in these estimates are recognized in the period they are determined. The Company evaluates other than temporary impairment on individual securities in its investment portfolio when a security has experienced a sustained decline in fair value below amortized cost. Management considers several factors, including the length of time such security has experienced a decline, the relationship to peer group stock performance and the financial condition and near-term prospects of the issuer. These evaluations are subjective in nature. Other than temporary declines in value result in a charge to net income reducing the carrying value of the security. Safe Harbor Statement This Form 10-K 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 finance 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. 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. Page 17 ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to interest rate changes primarily as a result of its line of credit and long-term debt used to maintain liquidity and fund capital expenditures and expansion of the Company's real estate investment portfolio and operations. The Company's interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives, the Company borrows primarily at fixed rates. The following table sets forth information as of December 31, 2001, concerning the Company's debt obligations, including principal cash flow by scheduled maturity, weighted average interest rates and estimated fair value.

For the year ending December 31, ________________________________ Fair 2002 2003 2004 Thereafter Total Value Long-term Debt: Fixed rate 6,141,833 9,890,281 20,119,911 36,152,025 36,219,558 Average interest rate 7.6% 7.5% 7.1% 7.3% Variable rate 2,500,000 2,500,000 2,500,000 Average interest rate 3.4% 3.4% Total Long- term Debt 2,500,000 6,141,833 9,890,281 20,119,911 38,652,025 38,719,558

The Company has assessed the market risk for its variable rate and believes that a 1% increase in LIBOR rates would result in an approximate $25,000 increase in interest expense based on $2.5 million of variable rate debt outstanding at December 31, 2001. The Company also has approximately $10.7 million in variable rate debt due on demand. This debt is primarily a margin loan secured by marketable securities. The interest rate on this margin loan was 3.875% at December 31, 2001. The carrying value of the Company's variable rate debt approximates fair value at December 31, 2001. The Company also invests in both debt and equity securities of other REITs and is primarily exposed to equity price risk from adverse changes in market rates and conditions. All securities are classified as available for sale and are carried at fair value. The Company has no significant interest rate risk relating to debt securities as they are short-term in nature. Page 18 ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary data listed in Part IV, Item 14(a)(1) are incorporated herein by reference. The following is the Unaudited Selected Quarterly Financial Data: SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) THREE MONTHS ENDED

2001 March 31 June 30 September 30 December 31 Total Revenues $5,251,453 $7,376,519 $7,772,824 $6,481,603 Total Expenses 3,865,760 5,752,609 6,006,204 5,679,074 Net Income 1,396,010 1,614,574 1,750,748 789,156 (1) Net Income per Share- Basic and Diluted .19 .22 .23 .10 2000 March 31 June 30 September 30 December 31 Total Revenues $5,158,326 $5,011,150 $5,153,950 $5,321,305 Total Expenses 3,698,650 3,782,536 3,805,600 4,131,256 Net Income 1,484,094 1,220,457 1,347,702 1,137,119 Net Income per Share - Basic .20 .17 .18 .16 1999 March 31 June 30 September 30 December 31 Total Revenues $4,488,593 $4,616,134 $4,754,991 $4,947,367 Total Expenses 3,393,363 3,561,010 3,614,445 3,680,167 Net Income 1,083,153 1,071,653 1,119,211 1,282,119 Net Income per Share - Basic and Diluted .15 .15 .15 .18 (1) Decrease due primarily to a decrease in sales activity and security transactions and an increase in insurance costs and property taxes.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. Page 19 PART III ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Name, Age & Principal Occupation Director Shares Owned Percent Office Held During the Past Five Since Beneficially Of Years Stock Ernest V. Financial 1969 33,013 (1) 0.44% Bencivenga Consultant;(1976 to Age: 84 present); Treasurer Secretary/ and Director (1961 to Treasurer present)and Secretary and Director (1967 to present)of Monmouth Capital Corporation; Treasurer and Director (1968 to present) of Monmouth Real Estate Investment Corporation. Anna T. Chew Certified Public 1995 55,622(2) 0.74% Age: 43 Accountant; Controller Vice President (1991 to present) and and Chief Director (1993 to Financial present) of Monmouth Office and Real Estate Investment Director Corporation; Controller (1991 to present), Vice President (2001 to present) and Director (1994 to present ) of Monmouth Capital Corporation. Charles P. Investor; Director 1969 62,317 (3) 0.83% Kaempffer (1970 to present) of Age: 64 Monmouth Capital Director Corporation; Director (1974 to present) of Monmouth Real Estate Investment Corporation; Vice Chairman and Director (1996 to present) of Community Bank of New Jersey; Eugene W. Landy Attorney at Law; 1969 974,661 (4) 12.92% Age: 68 President and Chairman of Director (1961 to the Board and present) of Monmouth Director Capital Corporation; President and Director (1968 to present) of Monmouth Real Estate Investment Corporation Samuel A. Landy Attorney at Law; 1992 313,987 (5) 4.16% Age: 41 Director (1989 to President and present) of Monmouth Director Real Estate Investment Corporation; Director (1994 to present) of Monmouth Capital Corporation.

Page 20

Name, Age & Principal Occupation Director Shares Owned Percent Office Held During the Past Five Since Beneficially Of Years Stock James Mitchell Attorney at Law; 2001 170,126 (6) 2.25% Age: 61 General Partner, Director Mitchell Partners, L.P.; President, Mitchell Capital Mgmt., Inc. Richard H. Vice President (1984 1986 430,636(7) 5.71% Molke to present) of Remsco Age: 75 Associates, Inc., a Director construction firm. Eugene Investor; Director 1977 81,163 (8) 1.08% Rothenberg (2001 to present) of Age: 69 Monmouth Capital Director Corporation Robert G. Investor; Director 1969 131,468 (9) 1.74% Sampson (1963 to present) of Age: 76 Monmouth Capital Director Corporation; Director (1968 to present) of Monmouth Real Estate Investment Corporation; General Partner (1983 to present) of Sampco, Ltd., an investment group. TOTALS............ 2,252,993 29.87% 1) Includes 9,029 shares held by Mr. Bencivenga's wife and 6,999 shares held in the United Mobile Homes, Inc. 401(k) Plan. 2) Includes 51,201 shares held jointly with Ms. Chew's husband and 4,421 shares held in the United Mobile Homes, Inc. 401(k) Plan. 3) Includes (a) 60,317 shares held as Trustee for Defined Benefit Pension Plan for which Mr. Kaempffer has power to vote and (b) 2,000 shares held by Mr. Kaempffer's wife. 4) Includes (a) 74,857 shares held by Mr. Landy's wife, (b) 172,608 shares held by Landy Investments, Ltd. In which Mr. Landy has a beneficial interest, (c) 69,961 shares held in the Landy & Landy, Employee's Pension Plan, of which Mr. Landy is a Trustee with power to vote, and (d) 128,212 shares held in the Landy & Landy, Employees' Profit Sharing Plan, of which Mr. Landy is a Trustee with power to vote. Excludes 236,743 shares held by Mr. Landy's adult children in which he disclaims any beneficial interest. 5) Includes (a) 27,941 shares held jointly with Mr. Samuel A. Landy's wife, (b) 24,779 in a custodial account for his sons, (c) 5,916 shares in the Samuel Landy Limited Partnership and (d) 8,028 shares held in the United Mobile Homes, Inc. 401 (k) Plan. 6) Includes 135,158 shares held by Mitchell Partners in which Mr. Mitchell has a beneficial interest. 7) Includes (a) 45,005 shares owned by Mr. Molke's wife, (b) 166,518 shares in the Richard H. Molke Grantor Retained Annuity Trust dated December 21, 1992, and (c) 166,517 shares in the Louise G. Molke Grantor Retained Annuity Trust dated December 21, 1992. 8) Includes (a) 56,878 shares held by Rothenberg Investment, Ltd. In which Dr. Rothenberg has a beneficial interest. 9) Includes 48,492 shares held by Sampco, Ltd. In which he has a beneficial interest.

Page 21 ITEM 11 - EXECUTIVE COMPENSATION Summary Compensation Table. The following Summary Compensation Table shows compensation paid by the Company for services rendered during 2001, 2000 and 1999 to the Chairman of the Board, President and Vice President. There were no other executive officers whose aggregate cash compensation exceeded $100,000: Name and Annual Compensation Principal Year Salary Bonus All Other Options Position Eugene W. Landy 2001 $150,000 $ - $15,076 (1) - Chairman of 2000 150,000 - 53,876 (1) - the Board 1990 150,000 - 52,876 (1) - Samuel A. Landy 2001 $224,615 $25,704 $21,028 (2) 25,000 President 2000 $214,615 8,269 18,432 (2) 25,000 1999 $205,000 7,885 15,410 (2) 25,000 Anna T. Chew 2001 $145,898 $15,631 $17,646 (3) 10,000 Vice 2000 132,635 14,119 16,003 (3) 10,000 President 1999 120,577 13,654 13,650 (3) 10,000 (1) Represents base compensation of $75,000 in 1999, as well as Directors' fees, fringe benefits and legal fees. Also includes an accrual of $-0-, $40,000 and $40,000 for 2001, 2000 and 1999, respectively for pension and other benefits in accordance with Eugene W. Landy's employment contract. (2) Represents Directors' fees, fringe benefits and discretionary contributions by the Company to the Company's 401(k) Plan allocated to an account of the named executive officer. (3) Represents Directors' fees and discretionary contributions by the Company to the Company's 401(k) Plan allocated to an account of the named executive officer. Page 22 Stock Option Plan. The following table sets forth, for the executive officers named in the Summary Compensation Table, information regarding individual grants of stock options made during the year ended December 31, 2001:

Potential Realized Value at Assume Annual Granted Price Expiration Rates for Option Options to Per Terms Name Granted Employees Share Date 5% 10% Samuel A.Landy 25,000 40% $10.3125 01/02/06 $41,316 $119,651 Anna T. Chew 10,000 16% $10.60 10/04/09 $50,610 $121,220

The following table sets forth for the executive officers named in the Summary Compensation Table, information regarding stock options outstanding at December 31, 2001:

Number of Unexercised Value of Options at Year- Unexercised Options End At Year-End Shares Value Exercisable/ Exercisable/ Name Exercised Realized Unexercisable Unexercisable Eugene W. Landy -0- N/A 125,000/ -0- $226,000 $ -0- Samuel A. Landy -0- N/A 125,000/ 25,000 $191,624 $ 46,687 Anna T. Chew -0- N/A 38,000/ 10,000 $ 97,715 $ 15,800

Compensation of Directors. The Directors receive a fee of $1,000 for each Board meeting attended, and an additional fixed annual fee of $7,600, payable $1,900 quarterly. Effective April 1, 2001, the fixed fee was increased to $10,000. Directors appointed to house committees receive $150 for each meeting attended. Those specific committees are Compensation Committee, Audit Committee and Stock Option Committee. Employment Contracts. On December 14, 1993, the Company and Eugene W. Landy entered into an Employment Agreement under which Mr. Eugene Landy receives an annual base compensation of $150,000 plus bonuses and customary fringe benefits, including health insurance, participation in the Company's 401(k) Plan, stock options, five weeks vacation and use of an automobile. In lieu of annual increases in compensation, there will be additional bonuses voted by the Board of Directors. On severance of employment for any reason, Mr. Eugene Landy will receive severance pay of $450,000 payable $150,000 on severance and $150,000 on the first and second anniversaries of severance. If employment is terminated following a change in control of the Company, Mr. Eugene Landy will be entitled to severance pay only if actually severed either at Page 23 the time of merger or subsequently. In the event of disability, Mr. Eugene Landy's compensation shall continue for a period of three years, payable monthly. On retirement, Mr. Eugene Landy shall receive a pension of $50,000 a year for ten years, payable in monthly installments. In the event of death, Mr. Eugene Landy's designated beneficiary shall receive $450,000, $100,000 thirty days after death and the balance one year after death. The Employment Agreement terminated December 31, 1999 but was automatically renewed and extended for successive one-year periods. Effective January 1, 1999, the Company and Samuel A. Landy entered into a three-year Employment Agreement under which Mr. Samuel Landy receives an annual base salary of $205,000 for 1999, $215,000 for 2000 and $225,000 for 2001 plus bonuses and customary fringe benefits. Bonuses shall be at the discretion of the Board of Directors and shall be based on certain guidelines. Mr. Samuel Landy will also receive four weeks vacation, use of an automobile, and stock options for 25,000 shares in each year of the contract. On severance or disability, Mr. Samuel Landy is entitled to one year's pay. The Company also agrees to loan to Mr. Samuel Landy $100,000 at the Company's corporate borrowing rate with a 5-year maturity and a 15-year principal amortization. Additional amounts, secured by Company stock, may be borrowed at the same terms for the exercise of stock options. Effective January 1, 2000, the Company extended Anna T. Chew's Employment Agreement for an additional three years. Ms. Chew receives an annual base salary of $133,100 for 2000, $146,400 for 2001 and $161,000 for 2002 plus bonuses and customary fringe benefits. On severance for any reason, Ms. Chew is entitled to an additional one year's pay. In the event of disability, her salary shall continue for a period of two years. Report of Board of Directors. Overview and Philosophy The Company has a Compensation Committee consisting of two independent outside Directors. This Committee is responsible for making recommendations to the Board of Directors concerning executive compensation. The Compensation Committee takes into consideration three major factors in setting compensation. The first consideration is the overall performance of the Company. The Board believes that the financial interests of the executive officers should be aligned with the success of the Company and the financial interests of its shareholders. Increases in funds from operations, the enhancement of the Company's equity portfolio, and the success of the Dividend Reinvestment and Stock Purchase Plan all contribute to increases in stock prices thereby maximizing shareholders' return. The second consideration is the individual achievements made by each officer. The Company is a small real estate investment trust (REIT). The Board of Directors is aware of the contributions made by each officer and makes an evaluation of individual performance based on their own familiarity with the officer. Page 24 The final criteria in setting compensation is comparable wages in the industry. In this regard, the REIT industry maintains excellent statistics. Evaluation Mr. Eugene Landy is under an employment agreement with the Company. His base compensation under this contract is $150,000 per year. (The Summary Compensation Table for Mr. Eugene Landy shows a salary of $150,000 and $15,076 in director's fees, fringe benefits and legal fees). The Committee also reviewed the progress made by Mr. Samuel A. Landy, President. Funds from operations increased by approximately 5%. Mr. Samuel Landy is under an employment agreement with the Company. His base compensation under this contract is $225,000 for 2001. COMPARATIVE STOCK PERFORMANCE. The line graph compares the total return of the Company's common stock for the last five years to the NAREIT ALL REIT Total Return Index published by the National Association of Real Estate Investment Trust (NAREIT) and to the S&P 500 Index for the same period. The total return reflects stock price appreciation and dividend reinvestment for all three comparative indices. The information herein has been obtained from sources believed to be reliable, but neither its accuracy nor its completeness is guaranteed.

1996 1997 1998 1999 2000 2001 United Mobile Homes, Inc. 100 110 106 89 112 155 NAREIT All REIT 100 119 96 90 114 131 S & P 500 100 133 171 208 189 166

Page 25 ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT On March 14, 2002, no person owned of record, or was known by the Company to own beneficially more than five percent (5%) of the shares of the Company, except the following:

Name and Address Shares Owned Percent Title of Class Of Beneficial Owner Beneficially Of Class Common Stock Eugene W. Landy 20 Tuxedo Road Rumson, NJ 07760 974,661 12.92% Common Stock Richard H. Molke 8 Ivins Place Rumson, NJ 07760 430,636 5.71%

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Certain relationships and related party transactions are incorporated herein by reference to Part IV, Item 14(a)(1)(vi), Note 9 of the Notes to Consolidated Financial Statements - Related Party Transactions. Page 26 PART IV ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K The following Financial Statements are filed as part (a)(1) of this report. Page(s) (i) Independent Auditors' Report 29 Consolidated Balance Sheets as of December 31, 2001 30 (ii) and 2000 Consolidated Statements of Income for the years (iii) ended December 31, 2001, 2000, and 1999 31 Consolidated Statements of Shareholders' Equity for (iv) the years ended December 31, 2001, 2000 and 1999 32-33 Consolidated Statements of Cash Flows for the years (v) ended December 31, 2001, 2000 and 1999 34 (vi) Notes to Consolidated Financial Statements 35-46 (a) The following Financial Statement Schedule for the (2) years ended December 31, 2001, 2000 and 1999 is filed as part of this report (i) Schedule III - Real Estate and Accumulated 47 Depreciation All other schedules are omitted for the reason that they are not required, are not applicable, or the required information is set forth in the financial statements or notes thereto. Page 27 (a) (3) The Exhibits set forth in the following index of Exhibits are filed as part of this Report. Exhibit Description No. Articles of Incorporation and By-Laws: Articles of Incorporation and By-Laws, Certificate of Incorporation and Amendments thereto are incorporated by reference to the Company's Registration Statement No. 2-92896-NY, and Amendments thereto, filed with the SEC on August 22, (3) 1984. Material Contracts: (a) Stock Option Plan is incorporated by reference to the Company's Proxy Statement dated April 25, 1994 filed with the SEC April 27, 1994. (b) 401(k) Plan Document and Adoption Agreement effective April 1, 1992 is incorporated by reference to that filed with the Company's 1992 Form 10-K filed with the SEC on March 9, 1993. (c) Employment contract with Mr. Eugene W. Landy dated December 14, 1993 is incorporated by reference to that filed with the Company's 1993 Form 10-K filed with the SEC on March 28, 1994. (d) Employment contract with Mr. Ernest V. Bencivenga dated November 9, 1993 is incorporated by reference to that filed with the Company's 1993 Form 10-K filed with the SEC on March 28, 1994. (e) Employment contract with Mr. Samuel A. Landy effective January 1, 1997 is incorporated by reference to that filed with the Company's 1996 Form 10-K filed with the SEC on March 28, 1996. (f) Employment contract with Ms. Anna T. Chew effective January 1, 1998 is incorporated by reference to that filed with the Company's 1997 Form 10-K filed with the SEC on March 27, 1997. (21) Subsidiaries of the Registrant: The Company operates through nine wholly-owned multiple Subsidiaries carrying on the same line of business. The parent company of these subsidiaries is the Registrant. The line of business is the operation of manufactured home communities. (23) Consent of KPMG LLP (a)(3)(b) Reports of Form 8-K None Page 28 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders United Mobile Homes, Inc.: We have audited the consolidated financial statements of United Mobile Homes, Inc. as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of United Mobile Homes, Inc. as of December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Short Hills, New Jersey /s/ KPMG LLP March 22, 2002 Page 29 UNITED MOBILE HOMES, INC. CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2001 AND 2000

ASSETS 2001 2000 INVESTMENT PROPERTY AND EQUIPMENT Land $ 7,212,035 $ 6,779,335 Site and Land Improvements 54,640,298 50,707,021 Buildings and Improvements 2,745,194 2,705,636 Rental Homes and Accessories 8,432,068 8,088,015 __________ __________ Total Investment Property 73,029,595 68,280,007 Equipment and Vehicles 3,611,353 3,282,681 __________ __________ Total Investment Property and 76,640,948 71,562,688 Equipment Accumulated Depreciation (32,349,006) (29,862,276) __________ __________ Net Investment Property and Equipment 44,291,942 41,700,412 __________ __________ OTHER ASSETS Cash and Cash Equivalents 1,567,831 1,399,259 Securities Available for Sale 25,917,748 15,494,918 Inventory of Manufactured Homes 2,782,665 -0- Notes and Other Receivables 3,291,355 1,914,446 Unamortized Financing Costs 467,107 280,727 Prepaid Expenses 113,680 115,633 Land Development Costs 1,902,516 2,040,202 __________ ___________ Total Other Assets 36,042,902 21,245,185 __________ __________ TOTAL ASSETS 80,334,844 $62,945,597 ========== ========== - LIABILITIES AND SHAREHOLDERS' EQUITY - LIABILITIES: MORTGAGES PAYABLE $38,652,025 $32,055,839 ___________ ___________ OTHER LIABILITIES Accounts Payable 836,588 339,174 Loans Payable 10,692,683 5,639,470 Accrued Liabilities and Deposits 1,711,232 1,622,272 Tenant Security Deposits 477,782 449,416 __________ __________ Total Other Liabilities 13,718,285 8,050,332 __________ __________ Total Liabilities 52,370,310 40,106,171 __________ __________ SHAREHOLDERS' EQUITY: Common Stock - $.10 par value per share, 10,000,000 shares authorized, 7,888,632 and 7,711,141 Shares issued and 7,542,332 and 7,394,241 shares Outstanding as of December 31, 2001 and 2000, respectively 788,863 771,114 Additional Paid-In Capital 27,409,361 26,026,006 Accumulated Other Comprehensive Income (Loss) 3,541,001 (490,795) Accumulated Deficit (667,793) (667,793) Treasury Stock at Cost (346,300 and 316,900 shares at December 31, 2001 and 2000, respectively) (3,106,898) (2,799,106) __________ __________ Total Shareholders' Equity 27,964,534 22,839,426 __________ __________ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $80,334,844 $62,945,597 ========== ==========

See Accompanying Notes to Consolidated Financial Statements Page 30 UNITED MOBILE HOMES, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

2001 2000 1999 REVENUES: Rental and Related Income $ 19,291,611 $18,640,335 $17,752,823 Sales of Manufactured Homes 4,766,189 -0- -0- Interest and Dividend Income 2,188,430 1,747,254 1,000,789 Gain on Sale of Securities Available for Sale 530,324 257,142 53,473 Other Income 105,845 -0- -0- _________ _________ _________ Total Revenues 26,882,399 20,644,731 18,807,085 _________ _________ _________ EXPENSES: Community Operating Expenses 9,004,164 8,233,356 7,992,273 Cost of Sales of Manufactured Homes 3,930,666 -0- -0- Selling Expenses 754,934 -0- -0- General and Administrative 2,015,685 1,852,309 1,621,479 Interest Expense 2,825,894 2,624,801 2,105,546 Depreciation Expense 2,684,556 2,618,839 2,452,533 Amortization of Financing Costs 87,748 88,737 77,154 _________ _________ _________ Total Expenses 21,303,647 15,418,042 14,248,985 __________ __________ _________ Income Before Loss on Sales of Investment Property and Equipment 5,578,752 5,226,689 4,558,100 Loss on Sales of Investment Property and Equipment (28,264) (37,318) (1,964) _________ _________ _________ Net Income $ 5,550,488 $ 5,189,371 $ 4,556,136 =========== =========== =========== Net Income Per Share - Basic and Diluted $ .74 $ .71 $ .63 =========== ============ ============ Weighted Average Shares Outstanding: Basic 7,457,636 7,339,684 7,252,774 ========= ========= ========= Diluted 7,496,371 7,341,078 7,267,695 ========= ========= =========

See Accompanying Notes to Consolidated Financial Statements Page 31 UNITED MOBILE HOMES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

Additional Common Stock Issued Paid-In Number Amount Capital Balance December 31, 1998 7,246,580 $724,658 $23,427,783 Common Stock Issued with the DRIP* 187,616 18,762 1,613,027 Common Stock Issued Through the Exercise of Stock Options 49,000 4,900 394,225 Distributions -0- -0- (885,768) Net Income -0- -0- -0- Unrealized Net Holding Losses on Securities Available for Sale Net of Reclassification Adjustment -0- -0- -0- Purchase of Treasury Stock -0- -0- -0- _________ ________ _________ Balance December 31, 1999 7,483,196 748,320 24,549,267 Common Stock Issued with 227,945 22,794 1,843,309 the DRIP* Distributions -0- -0- (366,570) Net Income -0- -0- -0- Unrealized Net Holding Gains on Securities Available for Sale Net of Reclassification Adjustment -0- -0- -0- Purchase of Treasury Stock -0- -0- -0- _________ ________ _________ Balance December 31, 2000 7,711,141 771,114 26,026,006 Common Stock Issued with the DRIP* 163,491 16,349 1,669,682 Common Stock Issued Through the Exercise of Stock Options 14,000 1,400 143,725 Distributions -0- -0- (430,052) Net Income -0- -0- -0- Unrealized Net Holding Gains on Securities Available for Sale Net of Reclassification Adjustment -0- -0- -0- Purchase of Treasury Stock -0- -0- -0- _________ ________ _________ Balance December 31, 2001 7,888,632 $788,863 $27,409,361 ========= ========= ===========

*Dividend Reinvestment and Stock Purchase Plan See Accompanying Notes to Consolidated Financial Statements Page 32 UNITED MOBILE HOMES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY, CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

Accumulated Other Comprehensive Accumulated Treasury Comprehensive Income/(Loss) Deficit Stock Income Balance December 31, 1998 $ (271,835) $(667,793) -0- Common Stock Issued with the DRIP* -0- -0- -0- Common Stock Issued through the Exercise of Stock Options -0- -0- -0- Distributions -0- (4,556,136) -0- Net Income -0- 4,556,136 -0- $4,556,136 Unrealized Net Holding Losses on Securities Available for Sale Net of Reclassification Adjustment (1,390,343) -0- -0- (1,390,343) Purchase of Treasury Stock -0- -0- (1,576,309) ___________ ___________ __________ ___________ Balance December 31, 1999 (1,662,178) (667,793) (1,576,309) $3,165,793 ========== Common Stock Issued with the DRIP* -0- -0- -0- Distributions -0- (5,189,371) -0- Net Income -0- 5,189,371 -0- $5,189,371 Unrealized Net Holding Gains on Securities Available for Sale Net of Reclassification Adjustment 1,171,383 -0- -0- 1,171,383 Purchase of Treasury Stock -0- -0- (1,222,797) _________ _________ _________ _________ Balance December 31, 2000 (490,795) (667,793) (2,799,106) $6,360,754 ========== Common Stock Issued with the DRIP* -0- -0- -0- Common Stock Issued through the Exercise of Stock -0- -0- -0- Options Distributions -0- (5,550,488) -0- Net Income -0- 5,550,488 -0- $5,550,488 Unrealized Net Holding Gains on Securities Available for Sale Net of Reclassification Adjustment 4,031,796 -0- -0- 4,031,796 Purchase of Treasury Stock -0- -0- (307,792) _________ _________ _________ ________ Balance December 31, 2001 $3,541,001 $(667,793) $(3,106,898) $9,582,284 ========== ========== ============ ==========

*Dividend Reinvestment and Stock Purchase Plan. See Accompanying Notes to Consolidated Financial Statements Page 33

UNITED MOBILE HOMES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 2001 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $5,550,488 $5,189,371 $4,556,136 Depreciation 2,684,556 2,618,839 2,452,533 Amortization of Financing Costs 87,748 88,737 77,154 Gain on Sales of Securities Available for Sale Transactions (530,324) (257,142) (53,473) Loss on Sales of Investment Property & Equipment 28,264 37,318 1,964 Changes in Operating Assets and Liabilities - Inventory of Manufactured Homes (2,782,665) -0- -0- Notes and Other Receivables (1,376,909) (832,320) (347,402) Prepaid Expenses 1,953 5,888 46,994 Accounts Payable 497,414 233,959 (46,796) Accrued Liabilities and Deposits 88,960 128,375 (1,756) Tenant Security Deposits 28,366 (41,939) 85,271 _________ _________ _________ Net Cash Provided by Operating Activities 4,277,851 7,171,086 6,770,625 _________ _________ _________ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Manufactured Home Community (2,503,126) -0- -0- Purchase of Investment Property and Equipment (2,199,133) (1,382,130) (3,792,004) Proceeds from Sales of Investment Property and Equipment 352,494 250,923 344,173 Additions to Land Development Costs (816,899) (1,665,711) (2,206,010) Purchase of Securities Available for Sale (9,858,324) (4,282,988) (6,796,742) Proceeds from Sales of Securities Available for Sale 3,997,614 3,011,109 417,923 _________ __________ __________ Net Cash Used by Investing Activities (11,027,374) (4,068,797) (12,032,660) ___________ __________ ___________ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Mortgages and Loans 7,525,000 2,500,000 10,500,000 Net Proceeds from Short-Term Borrowings 5,053,213 965,085 1,305,873 Principal Payments of Mortgages and Loans (928,814) (863,314) (1,492,423) Financing Costs on Debt (274,128) (116,816) (171,874) Proceeds from Exercise of Stock Options 145,125 -0- 399,125 Dividends Paid (4,294,509) (3,689,838) (3,810,115) Purchase of Treasury Stock (307,792) (1,222,797) (1,576,309) _________ __________ __________ Net Cash Provided (Used) by Financing Activities 6,918,095 (2,427,680) 5,154,277 _________ __________ _________ NET INCREASE (DECREASE) IN CASH 168,572 674,609 (107,758) CASH & CASH EQUIVALENTS - BEGINNING 1,399,259 724,650 832,408 _________ _________ _________ CASH & CASH EQUIVALENTS - END $ 1,567,831 $ 1,399,259 $ 724,650 ========= ========= =========

See Accompanying Notes to Consolidated Financial Statements Page 34 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - ELECTION TO BE TAXED AS A REAL ESTATE INVESTMENT TRUST United Mobile Homes, Inc. (the Company) has elected to be taxed as a Real Estate Investment Trust (REIT) under Sections 856- 858 of the Internal Revenue Code. The Company will not be taxed on the portion of its income which is distributed to shareholders, provided it distributes at least 95% (90% effective for the year ended December 31, 2001) of its taxable income, has at least 75% of its assets in real estate investments and meets certain other requirements for qualification as a REIT. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF THE BUSINESS - The Company owns and operates twenty-five manufactured home communities containing 5,979 sites. The communities are located in New Jersey, New York, Ohio, Pennsylvania and Tennessee. These manufactured home communities are listed by trade names as follows: MANUFACTURED HOME COMMUNITY LOCATION Allentown Memphis, Tennessee Brookview Village Greenfield Center, New York Cedarcrest Vineland, New Jersey Cranberry Village Cranberry Township, Pennsylvania Cross Keys Village Duncansville, Pennsylvania D& R Village Clifton Park, New York Fairview Manor Millville, New Jersey Forest Park Village Cranberry Township, Pennsylvania Heather Highlands Inkerman, Pennsylvania Highland Estates Kutztown, Pennsylvania Kinnebrook Monticello, New York Lake Sherman Village Navarre, Ohio Laurel Woods Cresson, Pennsylvania Memphis Mobile City Memphis, Tennessee Oxford Village West Grove, Pennsylvania Pine Ridge Village Carlisle, Pennsylvania Pine Valley Estates Apollo, Pennsylvania Port Royal Village Belle Vernon, Pennsylvania River Valley Estates Marion, Ohio Sandy Valley Estates Magnolia, Ohio Southwind Village Jackson, New Jersey Spreading Oaks Village Athens, Ohio Waterfalls Village Hamburg, New York Woodlawn Village Eatontown, New Jersey Wood Valley Caledonia, Ohio Page 35 Effective April 1, 2001, the Company, through its wholly- owned taxable subsidiary, UMH Sales and Finance, Inc., (S&F), began to conduct manufactured home sales in its communities. This company was established to enhance the occupancy of the communities. BASIS OF PRESENTATION - The consolidated financial statements of the Company include all of its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. USE OF ESTIMATES - In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as contingent assets and liabilities as of the dates of the consolidated balance sheets and revenue and expenses for the years then ended. Actual results could differ significantly from these estimates and assumptions. INVESTMENT PROPERTY AND EQUIPMENT AND DEPRECIATION - Property and equipment are carried at cost. Depreciation for Sites and Building (15 to 27.5 years) is computed principally on the straight-line method over the estimated useful lives of the assets. Depreciation of Improvements to Sites and Buildings, Rental Homes and Equipment and Vehicles (3 to 27.5 years) is computed principally on the straight-line method. Land Development Costs are not depreciated until they are put in use, at which time they are capitalized as Sites or Site Improvements. Interest Expense pertaining to Land Development Costs are capitalized. Maintenance and Repairs are charged to income as incurred and improvements are capitalized. The costs and related accumulated depreciation of property sold or otherwise disposed of are removed from the accounts and any gain or loss is reflected in the current year's results of operations. If there is an event or change in circumstances that indicates that the basis of an investment property may not be recoverable, management assesses the possible impairment of value through evaluation of the estimated future cash flows of the property, on an undiscounted basis, as compared to the property's current carrying value. If a property is determined to be impaired, it will be recorded at fair value. UNAMORTIZED FINANCING COSTS - Legal fees and loan processing fees for mortgages are being amortized over the life of the related debt. CASH AND CASH EQUIVALENTS - Cash and cash equivalents include certificates of deposit and bank repurchase agreements with maturities of 90 days or less. SECURITIES AVAILABLE FOR SALE - The Company's securities are classified as available-for-sale and are carried at fair value. Gains or losses on the sale of securities are based on identifiable cost and are accounted for on a trade date basis. Unrealized holding gains and losses are excluded from earnings and reported as a separate component of Shareholders' Equity until realized. A decline in the market value of any security below cost that is deemed to be other than temporary results in a reduction in the carrying amount to fair value. Any impairment is charged to earnings and a new cost basis for the security established. Page 36 INVENTORY OF MANUFACTURED HOMES - Inventory of manufactured homes is valued at the lower of cost or market value and is determined by the specific identification method. All inventory is considered finished goods. REVENUE RECOGNITION - The Company derives its income primarily from the rental of manufactured home sites. The Company also owns approximately 470 rental units which are rented to residents. Rental and related income is recognized on the accrual basis. Sale of manufactured homes is recognized on the full accrual basis when certain criteria are met. These criteria include the following: (a) initial and continuing payment by the buyer must be adequate: (b) the receivable, if any, is not subject to future subordination; (c) the benefits and risks of ownership are substantially transferred to the buyer; and (d) the Company does not have a substantial continued involvement with the home after the sale. Alternatively, when the foregoing criteria are not met, the Company recognizes gains by the installment method. Interest income on loans receivable is not accrued when, in the opinion of management, the collection of such interest appears doubtful. NET INCOME PER SHARE - Basic net income per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period (7,457,636, 7,339,684 and 7,252,774 in 2001, 2000 and 1999, respectively). Diluted net income per share is calculated by dividing net income by the weighted-average number of common shares outstanding plus the weighted-average number of net shares that would be issued upon exercise of stock options pursuant to the treasury stock method (7,496,371, 7,341,078 and 7,267,695 in 2001, 2000 and 1999, respectively) (See Note 6). Options in the amount of 38,735, 1,394 and 14,921 for 2001, 2000, and 1999, respectively, are included in the diluted weighted average shares outstanding. STOCK OPTION PLANS - Stock option plans are accounted for under the intrinsic value based method as prescribed by Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees". As such, compensation expense would be recorded on the date of grant only if the current market price on the underlying stock exceeds the exercise price. Included in these Notes to Consolidated Financial Statements are the pro forma disclosures required by SFAS No. 123, "Accounting for Stock- Based Compensation," which assumes the fair value based method of accounting had been adopted. TREASURY STOCK - Treasury stock is accounted for under the cost method. OTHER COMPREHENSIVE INCOME - Comprehensive income consists of net income and net unrealized gains or losses on securities available for sale and is presented in the consolidated statements of shareholders' equity. RECLASSIFICATION - Certain amounts in the financial statements for the prior years have been reclassified to conform to the statement presentation for the current year. Page 37 NOTE 3 - INVESTMENT PROPERTY AND EQUIPMENT The following is a summary of accumulated depreciation by major classes of assets:

December 31, 2001 December 31, 2000 Site and Land Improvements $26,083,752 $24,241,316 Buildings and Improvements 1,511,066 1,418,939 Rental Homes and Accessories 2,182,822 1,880,685 Equipment and Vehicles 2,571,366 2,321,336 __________ __________ Total Accumulated $32,349,006 $29,862,276 Depreciation ========== ==========

NOTE 4 - SECURITIES AVAILABLE FOR SALE The following is a summary of securities available for sale at December 31, 2001 and 2000:

2001 2000 Market Market Cost Value Cost Value Equity Securities: Monmouth Real Estate Investment Corporation (548,501 and 378,369 shares at December 31, 2001 and 2000, respectively $3,134,889 $3,537,834 $2,165,069 $1,844,550 Monmouth Capital Corporation * (24,206 and 22,267 shares at December 31, 2001 and 2000, respectively) 62,076 65,839 56,986 55,666 Preferred Stock 12,623,026 15,219,657 6,653,648 6,946,426 Other Equity Securities 5,155,709 5,642,005 5,637,713 5,254,876 Debt Securities (maturing in 2003) 1,401,047 1,452,413 1,472,297 1,393,400 _________ _________ __________ __________ $22,376,747 $25,917,748 $15,985,713 $15,494,918 ========== ========== ========== ==========

* Related entity - See Note 9. Page 38 Gross unrealized gains on debt securities amounted to $51,366 and $3,375 as of December 31, 2001 and 2000, respectively. Gross unrealized losses on debt securities amounted to $-0- and $82,272 at December 31, 2001 and 2000, respectively. Gross unrealized gains on equity securities amounted to $3,578,486 and $734,652 as of December 31, 2001 and 2000, respectively. Gross unrealized losses on equity securities amounted to $88,851 and $1,146,550 as of December 31, 2001 and 2000, respectively. During the years ended December 31, 2001, 2000 and 1999, gross gains on sales of securities amounted to $737,417, $257,142 and $53,473, respectively. During the year ended December 31, 2001, gross losses on sales of securities amounted to $74,144. During the year ended December 31, 2001, the Company also realized a loss of $132,949 due to a writedown to fair value of securities available for sale which was considered other than temporarily impaired. Dividend income for the years ended December 31, 2001, 2000 and 1999 amounted to $1,910,909, $1,397,849 and $734,623, respectively. Interest income for the years ended December 31, 2001, 2000 and 1999 amounted to $277,521, $349,405 and $266,166, respectively. NOTE 5 - LOANS AND MORTGAGES PAYABLE LOANS PAYABLE During 2001 and 2000, the Company purchased securities on margin. The margin loan interest rate at December 31, 2001 and 2000 was 3.875% and 8%, respectively and is due on demand. At December 31, 2001 and 2000, the margin loan amounted to $8,411,421 and $5,619,980, respectively and is secured by investment securities with a market value of $25,917,748 and $15,494,918, respectively. The Company has a $2,500,000 agreement with Conseco Finance Servicing Corp. to finance inventory purchases. The interest rates ranged from prime for each advance to prime plus 2.75% after one year. Advances under this line of credit were secured by the manufactured homes for which the advances were made. As of December 31, 2001, the amount outstanding for inventory financing was $2,270,492. UNSECURED LINE OF CREDIT The Company has a $2,000,000 unsecured line of credit with Fleet Bank, all of which was available at December 31, 2001. The interest rate on this line of credit is prime. This line of credit expires on June 15, 2002. Page 39 MORTGAGES PAYABLE The following is a summary of mortgages payable at December 31, 2001 and 2000:

Interest Property Due Date Rate 2001 2000 Allentown 12-01-11 6.36% $5,767,117 $ -0- Cranberry Village 08-02-04 7.86% 2,370,693 2,427,667 D & R Village 05-01-03 7.5% 3,289,479 3,383,438 Fairview Manor 07-27-02 LIBOR +155 2,500,000 2,500,000 Forest Park Village 08-02-04 7.86% 3,793,109 3,884,268 Laurel Woods 10-10-06 6.38% 1,739,711 -0- Sandy Valley 03-01-04 7% 3,726,479 3,830,118 Water Falls Village 01-01-03 7.625% 2,852,354 2,935,721 Various (4properties) 12-01-05 7.5% 12,613,083 13,094,627 _________ __________ TOTAL MORTGAGES PAYABLE $38,652,025 $ 32,055,839 ========= =========

At December 31, 2001 and 2000, mortgages are collateralized by real property with a carrying value of $34,704,950 and $32,743,695, respectively, before accumulated depreciation and amortization. Interest costs amounting to $146,000, $180,600 and $179,000 were capitalized during 2001, 2000 and 1999, respectively, in connection with the Company's expansion program. RECENT FINANCING On July 27, 2000, the Company entered into a $4,000,000 mortgage commitment with First Union Bank, of which $2,500,000 was taken down. This mortgage is secured by Fairview Manor and bears interest at LIBOR plus 155 points. This mortgage matures on August 1, 2002 but may be converted to a fixed rate mortgage loan for an additional five years. On December 1, 2000, the Company extended the Fleet Bank mortgage on five properties for an additional five years. The interest rate remains fixed at 7.5% On September 24, 2001, the Company obtained a $1,750,000 mortgage with First Union Bank for the acquisition of Laurel Woods. This mortgage payable is at an effective interest rate of 6.38% and is due October 10, 2006. On November 6, 2001 the Company obtained a $5,775,000 Fannie Mae mortgage at an interest rate of 6.36% for a ten-year term with a twenty-five year amortization schedule. This loan is secured by Allentown Mobile Home Community in Memphis, Tennessee. Page 40 The aggregate principal payments of all mortgages payable are scheduled as follows:

2002 $ 3,624,502 2003 6,951,513 2004 10,088,781 2005 11,103,993 2006 1,674,108 Thereafter 5,209,128 __________ Total $38,652,025 ==========

NOTE 6 - EMPLOYEE STOCK OPTIONS The Company maintains Stock Option Plans for officers and key employees to purchase up to 750,000 shares of common stock. Options may be granted any time up to December 31, 2003. No option shall be available for exercise beyond ten years. All options are exercisable after one year from the date of grant. The option price shall not be below the fair market value at date of grant. Cancelled or expired options are added back to the "pool" of shares available under the plan. A summary of the status of the Company's stock option plans as of December 31, 2001, 2000 and 1999 and changes during the years then ended are as follows: 2001 2000 1999 Weighted- Weighted Weighted - - Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price Outstanding at beginning of year 433,500 $10.45 396,500 $10.59 384,500 $10.38 Granted 62,700 10.49 61,000 8.73 61,000 9.94 Exercised (14,000) 10.37 -0- -0- (49,000) 8.15 Expired (42,000) 10.68 (24,000) 8.38 -0- -0- ________ ________ _______ Outstanding at end of year 440,200 10.44 433,500 10.45 396,500 10.59 ======== ======= ======= Options exercisable at end of year 377,500 372,500 335,500 ======== ======== ======== Weighted- average fair value of options granted during the year 1.18 1.00 1.10 Page 41 The Company has elected to continue to follow APB Opinion No. 25 in accounting for its stock option plans and, accordingly, no compensation cost has been recognized. Had compensation cost been determined consistent with SFAS No. 123, the Company's net income and earnings per share would have been reduced to the pro forma amounts as follows: 2001 2000 1999 Net Income As Reported $5,550,488 $5,189,371 $4,556,136 Pro Forma 5,486,627 5,117,781 4,475,560 Net Income per Share - Basic As Reported .74 .71 .63 Pro Forma .74 .70 .62 - Diluted As Reported .74 .71 .63 Pro Forma .73 .70 .62 The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2001, 2000 and 1999: dividend yield of 8 percent for 2001, 2000 and 1999; expected volatility of 25 percent; risk-free interest rates of 4.29 percent, 6.50 percent and 6.25 percent in 2001, 2000 and 1999, respectively; and expected lives of five years. The following is a summary of stock options outstanding as of December 31, 2001:

Number of Option Expiration Date of Grant Number of Shares Price Date 01/05/95 2 75,000 8.25 01/05/05 01/03/97 1 25,000 13.125 01/03/02 03/17/97 1 25,000 13.375 03/17/02 06/25/97 6 26,500 11.50 06/25/02 12/15/97 1 25,000 13.0625 12/15/02 01/08/98 1 25,000 12.75 01/08/03 08/05/98 7 31,000 10.00 08/05/03 08/05/98 1 25,000 11.00 08/05/03 01/05/99 1 25,000 11.5625 01/05/04 09/28/99 7 34,000 8.8125 09/28/04 01/06/00 1 25,000 9.0625 01/06/05 07/17/00 8 36,000 8.50 07/17/05 01/02/01 1 25,000* 10.3125 01/02/06 10/04/01 10 37,700* 10.60 10/04/09 ________ 440,200 =======

* Unexercisable As of December 31, 2001, there were 214,800 shares available for grant under these plans. Page 42 NOTE 7 - TREASURY STOCK During the years ended December 31, 2001 and 2000, the Company purchased 29,400 and 146,400 shares, respectively, of its own stock for a total cost of $307,792 and $1,222,797, respectively. NOTE 8 - 401(K) PLAN Any full-time employees who are over 21 years old and have completed one year of service (as defined) are eligible for the Company's 401(k) Plan (Plan). Under this Plan, an employee may elect to defer his/her compensation (up to a maximum of 15%) and have it contributed to the Plan. Employer contributions to the Plan are at the discretion of the Company. During 2001, 2000 and 1999, the Company made matching contributions to the Plan of up to 50% of the first 6% of employee salary. This amounted to $48,243, $41,194 and $31,967 for 2001, 2000 and 1999, respectively. NOTE 9 - RELATED PARTY TRANSACTIONS AND OTHER MATTERS TRANSACTIONS WITH MONMOUTH REAL ESTATE INVESTMENT CORPORATION During 2001, 2000 and 1999, the Company purchased shares of Monmouth Real Estate Investment Corporation (MREIC) common stock primarily through its Dividend Reinvestment and Stock Purchase Plan (See Note 4). There are five Directors of the Company who are also Directors and shareholders of MREIC. TRANSACTIONS WITH MONMOUTH CAPITAL CORPORATION AND THE MOBILE HOME STORE, INC. During 2001, 2000 and 1999, the Company purchased shares of Monmouth Capital Corporation (MCC) common stock primarily through its Dividend Reinvestment and Stock Purchase Plan (See Note 4). Seven directors of the Company are also directors and shareholders of MCC. The Company received rental income from The Mobile Home Store, Inc. (MHS), a wholly-owned subsidiary of MCC. MHS sold and financed the sales of manufactured homes. MHS paid the Company market rent on sites where MHS had a home for sale. Total site rental income from MHS amounted to $33,370, $109,550 and $159,065, respectively for the years ended December 31, 2001, 2000 and 1999. Effective April 1, 1996, the Company and MHS entered into an agreement whereby MHS leases space from the Company to be used as sales lots, at market rates, at most of the Company's communities. Total rental income relating to these leases amounted to $38,370, $153,480 and $142,680 for the years ended December 31, 2001, 2000 and 1999, respectively. During 2001, 2000 and 1999, the Company had approximately $49,000, $52,000 and $62,000 respectively, of rental homes that were sold to MHS at book value. Page 43 During 2001, 2000 and 1999, the Company purchased from MHS at its cost, 3, 11 and 24 new homes, respectively totaling $47,953, $201,399 and $530,520, respectively to be used as rental homes. On March 30, 2001, the Company also purchased at carrying value all of the remaining inventory of MHS. This amounted to $2,261,624. The Company also assumed the inventory financing of $1,833,871. SALARY, DIRECTORS', MANAGEMENT AND LEGAL FEES During the years ended December 31, 2001, 2000 and 1999, salary, Directors', management and legal fees to Mr. Eugene W. Landy and the law firm of Landy & Landy amounted to $162,800, $161,600 and $160,600, respectively. OTHER MATTERS The Company has a three-year employment agreement and a five- year employment agreement with two of its executive officers. The agreements provide for base compensation, bonuses and fringe benefits, in addition to specified severance and retirement benefits. The Company is accruing these benefits over the terms of the agreements. Included in general and administrative expense for the years ended December 31, 2001, 2000 and 1999 were $-0-, $40,000 and $41,875, respectively, relating to these agreements. In August, 1999, the Company entered into a lease for its corporate offices. The lease is for a five-year term at market rates with monthly lease payments of $12,000. The lessor of the property is owned by certain officers and directors of the Company. The lease payments and the resultant lease term commenced on May 1, 2000. Approximately 50% of the monthly lease payment is reimbursed by other related entities utilizing the leased space (MCC and MREIC). NOTE 10 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN The Company has a Dividend Reinvestment and Stock Purchase Plan (DRIP). Under the terms of the DRIP, shareholders who participate may reinvest all or part of their dividends in additional shares of the Company at approximately 95% of the market price. Shareholders may also purchase additional shares at approximately 95% of their market price by making optional cash payments. Generally, dividend reinvestments and purchases of shares are made quarterly on March 15, June 15, September 15 and December 15. Effective June 24, 1998, the Company amended the Dividend Reinvestment and Stock Purchase Plan. Shareholders may no longer purchase additional shares by making optional cash payments. The dividend reinvestment feature of the Plan remains unchanged. Amounts received and shares issued in connection with the DRIP for the years ended December 31, 2001, 2000 and 1999 were as follows: 2001 2000 1999 Amounts Received/ Dividends Reinvested $1,686,031 $1,866,103 $1,631,789 Number of Share Issued 163,491 227,945 187,616 Page 44 NOTE 11 - DISTRIBUTIONS The following dividends were paid to shareholders during the three years ended December 31, 2001, 2000 and 1999: 2001 2000 1999 Quarter Ended Amount Per Amount Per Amount Per Share Share Share March 31 $1,442,387 $.1950 $1,371,130 $.1875 $1,358,734 $.1875 June 30 1,466,787 .1975 1,376,095 .1875 1,352,118 .1875 September 30 1,494,309 .2000 1,396,844 .1900 1,359,730 .1875 December 31 1,577,057 .2100 1,411,872 .1925 1,371,322 .1875 _________ ______ _________ _____ _________ ______ __ $5,980,540 $.8025 $5,555,941 $.7575 $5,441,904 $ .75 ========= ===== ======== ===== ======== ====== Total distributions to shareholders for 2001 amounted to $5,980,540, or $.8025 per share, all of which was taxed as ordinary income. This amount does not include the dividend resulting from the discount on shares purchased through the Company's Dividend Reinvestment and Stock Purchase Plan. On January 16, 2002, the Company declared a dividend of $.2125 per share to be paid on March 15, 2002 to shareholders of record February 15, 2002. NOTE 12 - FEDERAL INCOME TAXES The Company elected to be taxed as a REIT. As the Company has distributed all of its income currently, no provision has been made for Federal income or excise taxes for the years ended December 31, 2001, 2000 and 1999. NOTE 13 - LEGAL MATTERS There are no lawsuits pending against the Company that management believes will have a material effect on the financial condition or results of operations of the Company. In the normal course of business, the Company is a Defendant in various legal cases, all of which are being defended by the Company's insurance carrier. NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS The Company is required to disclose certain information about fair values of financial instruments, as defined in SFAS No. 107, "Disclosures About Fair Value of Financial Instruments". Page 45 Limitations Estimates of fair value are made at a specific point in time, based upon, where available, relevant market prices and information about the financial instrument. Such estimates do not include any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. For a portion of the Company's financial instruments, no quoted market value exists. Therefore, estimates of fair value are necessarily based on a number of significant assumptions (many of which involve events outside the control of management). Such assumptions include assessments of current economic conditions, perceived risks associated with these financial instruments and their counterparties, future expected loss experience and other factors. Given the uncertainties surrounding these assumptions, the reported fair values represent estimates only and, therefore, cannot be compared to the historical accounting model. Use of different assumptions or methodologies is likely to result in significantly different fair value estimates. The fair value of cash and cash equivalents and notes receivables approximates their current carrying amounts since all such items are short-term in nature. The fair value of securities available for sale is based upon quoted market values. The fair value of mortgages payable in 1999 approximated their carrying amounts since such amounts payable were at approximately a weighted-average current market rate of interest. For 2001, the fair and carrying values of mortgages payable amounted to $38,719,558 and $38,652,025, respectively. The fair value of mortgages payable is based upon discounted cash flows at current market rates for instruments with similar remaining terms. NOTE 15 - SUPPLEMENTAL CASH FLOW AND COMPREHENSIVE INCOME INFORMATION Cash paid during the years ended December 31, 2001, 2000 and 1999 for interest was $2,971,894, $2,805,401 and $2,120,268, respectively. During the years ended December 31, 2001, 2000 and 1999, land development costs of $954,585, $1,063,099 and $2,284,546, respectively were transferred to investment property and equipment and placed in service. During the years ended December 31, 2001, 2000 and 1999, the Company had dividend reinvestments of $1,686,031, $1,866,103 and $1,631,789, respectively which required no cash transfers. The following are the reclassification adjustments related to securities available for sale included in Other Comprehensive Income: 2001 2000 1999 Unrealized holding gains (losses)arising during the year $4,562,120 $ 1,428,525 $(1,336,870) Less: reclassification adjustment for gains realized in income (530,324) (257,142) (53,473) _________ __________ __________ Net unrealized gains (losses) $4,031,796 $ 1,171,383 $(1,390,343) ======== ========= ========= Page 46 UNITED MOBILE HOMES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2001

Column A Column B Column C Column D Initial Cost Site, Land & Capitalization Building Subsequent to Description Encumbrances Land Improvements Acquisition Memphis, TN $ 5,767,117 $ 50,000 $ 2,569,101 $1,316,117 Greenfield Center, NY -0- 37,500 232,547 1,964,894 Vineland, NJ (3) 320,000 1,866,323 730,248 Duncansville, PA -0- 60,774 378,093 412,929 Cranberry Township, PA 2,370,693 181,930 1,922,931 248,955 Clifton Park, NY 3,289,479 391,724 704,021 982,645 Apollo, PA -0- 670,000 1,336,600 737,491 Cranberry 3,793,109 75,000 977,225 1,085,080 Township, PA Millville, NJ 2,500,000 216,000 1,166,517 4,172,482 Kutztown, PA -0- 145,000 1,695,041 3,626,923 Inkerman, PA -0- 572,500 2,151,569 2,258,579 Monticello, NY -0- 235,600 1,402,572 1,748,724 Navarre, OH -0- 290,000 1,457,673 695,172 Cresson, PA 1,739,711 432,700 2,070,426 38,091 Memphis, TN -0- 78,435 810,477 1,479,120 West Grove, PA (3) 175,000 990,515 1,216,307 Carlisle, PA -0- 37,540 198,321 904,335 Belle Vernon, PA -0- 150,000 2,491,796 2,631,293 Marion, OH -0- 236,000 785,293 2,183,966 Athens, OH -0- 67,000 1,326,800 215,272 Magnolia, OH 3,726,479 270,000 1,941,430 1,632,316 Jackson, NJ (3) 100,095 602,820 1,293,853 Hamburg, NY 2,852,354 424,000 3,812,000 -0- Eatontown, NJ (3) 157,421 280,749 165,315 Caledonia, OH -0- 260,000 1,753,206 402,052 _________ _________ _________ _________ $26,038,942 $5,834,219 $34,924,046 $32,142,159 ========= ========= ========= Various 12,613,083 (3) _________ $38,652,025 =========

Page 47a UNITED MOBILE HOMES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2001

Column A Column E (1) (2) Column F (1) Gross Amount at Which Carried at 12/31/01 Site, Land & Building Accumulated Description Land Improvements Total Depreciation Memphis, TN $250,000 $3,885,218 $4,135,218 $ 2,543,660 Greenfield Center, NY 122,865 2,112,076 2,234,941 1,028,366 Vineland, NJ 408,206 2,508,365 2,916,571 1,730,405 Duncansville,PA 60,774 791,022 851,796 566,020 Cranberry Township, PA 181,930 2,171,886 2,353,816 1,598,422 Clifton Park, NY 391,724 1,686,666 2,078,390 969,510 Apollo, PA 670,000 2,074,091 2,744,091 477,997 Cranberry Township, PA 75,000 2,062,305 2,137,305 1,631,036 Millville, NJ 631,137 4,923,862 5,554,999 1,503,038 Kutztown, PA 404,239 5,062,725 5,466,964 1,352,277 Inkerman, PA 572,500 4,410,148 4,982,648 1,229,340 Monticello, NY 318,472 3,068,424 3,386,896 1,227,481 Navarre, OH 290,000 2,152,845 2,442,845 1,075,603 Cresson, PA 432,700 2,108,517 2,541,217 19,168 Memphis, TN 78,435 2,289,597 2,368,032 1,212,468 West Grove, PA 536,064 1,845,758 2,381,822 1,433,801 Carlisle, PA 145,473 994,723 1,140,196 686,283 Belle Vernon, PA 150,000 5,123,089 5,273,089 3,163,905 Marion, OH 236,000 2,969,259 3,205,259 1,077,503 Athens, OH 67,000 1,542,072 1,609,072 293,960 Magnolia, OH 270,000 3,573,746 3,843,746 2,088,707 Jackson, NJ 100,095 1,896,673 1,996,768 1,478,755 Hamburg, NY 424,000 3,927,023 4,351,023 577,209 Eatontown, NJ 135,421 468,064 603,485 364,787 Caledonia, OH 260,000 2,155,258 2,415,258 433,791 _________ _________ _________ __________ $7,212,035 $65,803,412 $73,015,447 $29,763,492 ========== =========== =========== ===========

Page 47b UNITED MOBILE HOMES, INC. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2001

Column A Column G Column H Column I Date of Date Depreciable Description Construction Acquired Life Memphis, TN Prior to 1980 1986 3 to 27.5 Greenfield Center, NY Prior to 1970 1977 3 to 27.5 Vineland, NJ 1973 1986 3 to 27.5 Duncansville, PA 1961 1979 3 to 27.5 Cranberry Township, PA 1974 1986 5 to 27.5 Clifton Park, NY 1972 1978 3 to 27.5 Apollo, PA Prior to 1980 1995 5 to 27.5 Cranberry Township, PA Prior to 1980 1982 3 to 27.5 Millville, NJ Prior to 1980 1985 3 to 27.5 Kutztown, PA 1971 1979 5 to 27.5 Inkerman, PA 1970 1992 5 to 27.5 Monticello, NY 1972 1988 5 to 27.5 Navarre, OH Prior to 1980 1987 5 to 27.5 Cresson, PA Prior to 1980 2001 27.5 Memphis, TN 1955 1985 3 to 27.5 West Grove, PA 1971 1974 5 to 27.5 Carlisle, PA 1961 1969 3 to 27.5 Belle Vernon, PA 1973 1983 3 to 27.5 Marion, OH 1950 1986 3 to 27.5 Athens, OH Prior to 1980 1996 5 to 27.5 Magnolia, OH Prior to 1980 1985 5 to 27.5 Jackson, NJ 1969 1969 3 to 27.5 Hamburg, NY Prior to 1980 1997 27.5 Eatontown, NJ 1964 1978 3 to 27.5 Caledonia, OH Prior to 1980 1996 5 to 27.5

Page 47c

/----------FIXED ASSETS-----------/ (1) Reconciliation: 12/31/01 12/31/00 12/31/99 Balance - Beginning $68,265,859 $66,608,020 $61,329,910 of Year _________ __________ __________ Additions: Acquisitions 2,503,126 -0- -0- Improvements 2,710,384 2,017,051 5,739,997 Depreciation -0- -0- -0- _________ __________ __________ Total Additions 5,213,510 2,017,051 5,739,997 _________ __________ __________ Deletions 463,922 359,212 461,887 Balance - End of _________ __________ __________ Year $73,015,447 $68,265,859 $66,608,020 ========= ========= ==========

/-----ACCUMULATED DEPRECIATION-----/ Reconciliation: 12/31/01 12/31/00 12/31/99 Balance - Beginning of Year $27,526,792 $25,357,748 $23,335,294 _________ __________ __________ Additions: Acquisitions -0- -0- -0- Improvements -0- -0- -0- Depreciation 2,360,623 2,260,130 2,128,474 _________ _________ _________ Total Additions 2,360,623 2,260,130 2,128,474 _________ _________ _________ Deletions 123,923 91,086 106,020 _________ _________ __________ Balance - End of Year $ 29,763,492 $ 27,526,792 $ 25,357,748 ========= ========= ==========

(2) The aggregate cost for Federal tax purposes approximates historical cost. (3) Represents one mortgage note payable secured by five properties. Page 47d INDEPENDENT ACCOUNTANTS' CONSENT The Board of Directors United Mobile Homes, Inc. We consent to incorporation by reference in the Registration Statement (No. 333-13053) on Form S-8 of our report dated March 22, 2002, relating to the consolidated balance sheets of United Mobile Homes, Inc., as of December 31, 2001 and 2000 and the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2001, and the related schedule, which report appears in the December 31, 2001 annual report on Form 10-K of United Mobile Homes, Inc. /s/ KPMG LLP Short Hills, New Jersey March 22, 2002 Page 48 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. UNITED MOBILE HOMES, INC. BY: /s/Eugene W. Landy EUGENE W. LANDY Chairman of the Board Dated: March 15, 2002 Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been duly signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Title Date /s/Eugene W. Landy Chairman of the March 15, 2002 EUGENE W. LANDY Board and Director /s/Samuel A. Landy President and March 15, 2002 SAMUEL A. LANDY Director /s/Anna T. Chew Vice President and March 15, 2002 ANNA T. CHEW Chief Financial Officer and Director /s/Ernest V. Secretary/Treasurer March 15, 2002 Bencivenga and ERNEST V. BENCIVENGA Director /s/Charles P. Director March 15, 2002 Kaempffer CHARLES P. KAEMPFFER /s/James Mitchell Director March 15, 2002 JAMES MITCHELL /s/Richard H. Molke Director March 15, 2002 RICHARD H. MOLKE /s/Eugene Rothenberg Director March 15, 2002 EUGENE ROTHENBERG /s/Robert G. Sampson Director March 15, 2002 ROBERT G. SAMPSON Page 49