FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ______________________to________________________
For the Quarter ended Commission File No.
September 30, 1998 0-24282
MONMOUTH CAPITAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
New Jersey 21-0740878
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 Wyckoff Road, Eatontown, New Jersey 07724
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (732) 542-4927
(Former name, former address and former fiscal year, if
changed since last report)
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 and 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
The number of shares or other units outstanding of each of
the issuer's classes of securities as of October 15, 1998
was 1,493,291 shares.
<PAGE>
MONMOUTH CAPITAL CORPORATION
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
CONTENTS
PART I - FINANCIAL INFORMATION
PAGE NO.
Item 1 - Financial Statements (Unaudited):
Consolidated Balance Sheets 3-4
Consolidated Statements of Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
Item 3 - Quantitative and Qualitative Disclosure
About Market Risk
There have been no material changes to information
required regarding quantitative and qualitative
disclosures about market risk from the end of the
preceding year to the date of this Form 10-Q.
PART II - OTHER INFORMATION 11
SIGNATURES 12
- 2-
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<TABLE>
<CAPTION>
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1998 AND MARCH 31, 1998
9/30/98 3/31/98
<S> <C> <C>
Current Assets:
Cash $ 25,462 $ 547,020
Accounts Receivable 74,888 86,998
Interest Receivable 8,304 3,342
Securities Available for Sale at Fair
Value 389,250 412,919
Inventory 2,902,733 2,556,851
Prepaid Expenses and Other Current Assets 82,174 81,714
Current Portion of Loans Receivable 79,783 80,417
_________ _________
Total Current Assets 3,562,594 3,769,261
_________ _________
Long-Term Assets:
Real Estate Investments:
Land 183,065 178,170
Building and Improvements net of
accumulated depreciation of $124,229
and $110,987, respectively 1,017,289 1,022,020
_________ _________
Total Real Estate Investments 1,200,354 1,200,190
Loans Receivable (less allowance for
losses of $65,000 at
September 30, 1998 and March 31, 1998) 2,657,247 1,886,235
_________ _________
Total Long-Term Assets 3,857,601 3,086,425
_________ _________
TOTAL ASSETS $7,420,195 $6,855,686
========= =========
-UNAUDITED-
See Notes to the Consolidated Financial Statements
-3-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS (CONT'D.)
AS OF SEPTEMBER 30, 1998 AND MARCH 31, 1998
9/30/98 3/31/98
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts Payable and Accrued Expenses $ 156,522 $ 241,609
Loans Payable -0- 35,671
Inventory Financing 1,694,443 985,233
_________ _________
Total Current Liabilities 1,850,965 1,262,513
Other Liabilities 74,852 74,852
_________ _________
Total Liabilities 1,925,817 1,337,365
_________ _________
Shareholders' Equity:
Common Stock (par value $1.00 per
share; authorized 10,000,000 shares;
issued and outstanding 1,489,688 and
1,477,839 shares at September 30, 1998
and March 31, 1998, respectively 1,489,688 1,477,839
Additional Paid-in Capital 3,246,259 3,225,605
Unrealized Investment Gain 2,933 218
Retained Earnings 755,498 814,659
_________ _________
Total Shareholders' Equity 5,494,378 5,518,321
_________ _________
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $7,420,195 $6,855,686
========= =========
-UNAUDITED-
See Notes to the Consolidated Financial Statements
-4-
</TABLE>
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<TABLE>
<CAPTION>
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THREE AND SIX MONTHS ENDED SEPTEMBER 30,
Three Months Six Months
1998 1997 1998 1997
<S> <C> <C> <C> <C>
INCOME:
Sales of Manufactured Homes $1,606,318 $1,160,936 $2,897,466 $2,035,332
Interest Income 89,485 59,420 159,961 130,040
Rental Income 33,499 47,362 65,203 93,872
Other Income 19,066 23,032 32,726 34,159
_________ _________ _________ _________
Total Income 1,748,368 1,290,750 3,155,356 2,293,403
_________ _________ _________ _________
EXPENSES:
Cost of Manufactured
Homes Sales 1,274,853 886,940 2,329,552 1,578,084
Selling Expense 158,183 107,256 258,470 162,775
Salaries & Employee Benefits 95,579 60,195 150,511 117,016
Professional Fees 38,623 49,712 72,169 83,065
Interest Expense 31,780 20,481 65,782 42,423
Other Expenses 179,528 148,982 338,033 275,857
_________ _________ _________ _________
Total Expens 1,778,546 1,273,566 3,214,517 2,259,220
_________ _________ _________ _________
Income (Loss) Before
Income Taxes (30,178) 17,184 (59,161) 34,183
Income Taxes -0- 6,700 -0- 13,700
_________ _________ _________ _________
NET INCOME (LOSS) $ (30,178) $ 10,484 $ (59,161) $ 20,483
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE
BASIC AND DILUTED $ (0.02) $ 0.01 $ (.04) $ 0.01
========= ========= ========= =========
WEIGHTED AVERAGE
SHARES OUTSTANDING
BASIC AND DILUTED 1,486,469 1,463,225 1,487,902 1,444,660
========= ========= ========= =========
-UNAUDITED-
See Notes to Consolidated Financial Statements
-5-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (59,161) $ 20,483
Depreciation and Amortization 13,242 13,242
Changes In Operating Assets and
Liabilities:
Accounts Receivable 12,110 (51,989)
Interest Receivable (4,962) 19,871
Inventory (345,882) (293,671)
Prepaid Expenses and Other
Current Assets (460) 94,911
Accounts Payable and Accrued Expenses (85,087) (71,750)
Other Liabilities -0- 9,165
_________ _________
Net Cash Used by Operating Activities (470,200) (259,738)
_________ _________
CASH FLOWS FROM INVESTING ACTIVITIES
New Loans Receivable (948,369) (577,015)
Collections and Other Decreases in
Loans Receivable 177,991 569,604
Sales and Other Decreases in
Securities Available for Sale 26,384 16,703
Additions to Real Estate Investments (13,406) (102,523)
_________ _________
Net Cash Used by Investing Activities (757,400) (93,231)
_________ _________
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Inventory Financing 709,210 239,450
Principal Payments on Loans (35,671) -0-
Proceeds from the Issuance of Class A
Common Stock 32,503 187,739
_________ _________
Net Cash Provided by Financing Activities 706,042 427,189
_________ _________
Net Increase (Decrease) in Cash (521,558) 74,220
Cash at Beginning of Period 547,020 228,928
_________ _________
Cash at End of Period $ 25,462 $ 303,148
========= =========
</TABLE>
-UNAUDITED-
See Notes to the Consolidated Financial Statements
-6-
<PAGE>
MONMOUTH CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
NOTE 1 - ACCOUNTING POLICY
The interim consolidated financial statements furnished
herein reflect all adjustments which were, in the opinion of
management, necessary to present fairly the financial
position, results of operations, and cash flows at
September 30, 1998 and for all periods presented. All
adjustments made in the interim period were of a normal
recurring nature. Certain footnote disclosures which
would substantially duplicate the disclosures contained
in the audited financial statements and notes thereto
included in the annual report of Monmouth Capital
Corporation (the Company) for the year ended March 31, 1998
have been omitted.
NOTE 2 - LOANS RECEIVABLE
In conjunction with the sale of manufactured homes, loans
totaling $948,369 were made for the six months ended
September 30, 1998. Loans are primarily at 10%-15% for
fifteen years and secured by the homes.
Collections and other decreases of loans receivable totalled
$177,991 for the six months ended September 30, 1998.
NOTE 3 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
For the six months ended September 30, 1998, the Company
received $32,503 from the Dividend Reinvestment and Stock
Purchase Plan (DRIP). There were 11,849 new shares issued,
resulting in 1,489,688 shares outstanding.
NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and taxes for the six months ended
September 30, 1998 and 1997 were as follows:
1998 1997
Interest $ 72,169 $ 83,065
Taxes 14,000 16,000
-7-
<PAGE>
MONMOUTH CAPITAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
Net cash used by operating activities for the six months
ended September 30, 1998 amounted to $470,200 as compared to
$259,738 for the six months ended September 30, 1997. This
increase in net cash used by operating activities is
primarily due to a decrease in accounts payable and accrued
expenses and to an increase in manufactured home inventory of
The Mobile Home Store, Inc. (MHS), the Company's wholly-owned
subsidiary. Inventory increased by $345,882 for the six
months ended September 30, 1998 as compared to an increase of
$293,671 for the six months ended September 30, 1997 as a
result of increased purchases of manufactured homes for sale
to be used as models for new sales centers in Ohio and New
York.
Loans Receivable increased by $770,378 during the six months
ended September 30, 1998. This was the result of new loans
made of $948,369 offset by $177,991 in collections.
Inventory financing increased by $709,210 during the six
months ended September 30, 1998. This was a result of the
new $2,500,000 financing agreement which allows the Company
to finance all inventory purchases. In the past, only
inventory purchased at certain locations was financed.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Income is comprised primarily of sales of manufactured homes,
interest income and rental income. Sales of manufactured
homes amounted to $1,606,318 and $2,897,466 for the three and
six months ended September 30, 1998 as compared to $1,160,936
and $2,035,332 for the three and six months ended September
30, 1997. MHS has been experiencing increased sales since
its inception in fiscal 1994.
Rental income, including tenant reimbursements, amounted to
$33,499 and $65,203 for the three and six months ended
September 30, 1998 as compared to $47,362 and $93,872 for the
three and six months ended September 30, 1997. Rental
income is attributable to the Company's purchase of a net-
leased industrial building on March 31, 1994. The decrease
was the result of a decrease in reimburseable expenses.
-8-
<PAGE>
MONMOUTH CAPITAL CORPORATION
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (CONT'D)
Interest income and other income remained relatively stable
for the three and six months ended September 30, 1998 as
compared to the three and six months ended September 30,
1997.
The increase in Cost of manufactured homes sales and Selling
expense is directly attributable to the increase in sales of
manufactured homes made by MHS. The Company is investing in
new sales centers and increasing market share. Interest
expense increased to $31,780 and $65,782 for the three and
six months ended September 30, 1998 as compared to $20,481
and $42,423 for the three and six months ended September 30,
1997. The increase in interest expense is due to an increase
in inventory financing.
Salaries and employee benefits increased from $95,579 and
$150,511 for the three and six months ended September 30,
1998 as compared to $60,195 and $117,016 for the three and
six months ended September 30, 1997. This was due to an
increase in personnel.
Other expenses increased to $179,528 and $338,033 for the
three and six months ended September 30, 1998 as compared to
$148,982 and $275,857 for the three and six months ended
September 30, 1997 primarily due to the expansion of the
operations of MHS.
LIQUIDITY AND CAPITAL RESOURCES
The Company is currently engaged in real estate activities,
including the sale and financing of manufactured homes.
The Company has a $2,500,000 line of credit to finance its
inventory purchases. As of September 30, 1998, $1,694,443 of
the line was utilized.
The Company's ability to generate adequate cash to meet its
needs is dependent primarily on its real estate investment,
leveraging of its real estate investment, the success of the
sale and financing of manufactured homes, collections
receivable, availability of bank borrowings, the Dividend
Reinvestment and Stock Purchase Plan and access to the
capital markets.
YEAR 2000
The Company is currently in the process of implementing its
Year 2000 compliance plan. The Company has assessed all
hardware and software for Year 2000 readiness.
-9-
<PAGE>
MONMOUTH CAPITAL CORPORATION
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (CONT'D)
The Company has developed and is currently implementing
renovation plans, including hardware replacement and software
upgrades, to ensure all hardware and software is Year 2000
compliant. The Company has no significant suppliers and
vendors. Renovation and testing are scheduled to be
completed during the first half of 1999.
The Company has developed contingency plans for each of its
critical systems which includes moving many of the Company's
operations to a manual system. There can be no assurances
given that the Year 2000 compliance plan will be completed
successfully by the Year 2000, in which event the Company
could incur additional costs to implement its contingency
plans. Management does not anticipate that such costs would
be significant to the Company. The total costs associated
with the Company's Year 2000 plan are anticipated to be
immaterial.
Successful and timely completion of the Year 2000 plan is
based on management's best estimates derived from various
assumptions of future events, which are inherently uncertain,
including the effectiveness of remediation and validation
plans, and all vendors and suppliers readiness.
-10-
<PAGE>
MONMOUTH CAPITAL CORPORATION
PART II - OTHER INFORMATION
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
Item 1 - Legal Proceedings - None
Item 2 - Changes in Securities - None
Item 3 - Defaults Upon Senior Securities - None
Item 4 - Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders was held on
September 24, 1998 to elect a Board of Directors
for the ensuing year and to approve the selection
of independent auditors. Proxies for the meeting
were solicited pursuant to Regulation 14 under
the Securities and Exchange Act of 1934.
Item 5 - Other Information - None
Item 6 - Exhibits and Reports on Form 8-K - None
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
MONMOUTH CAPITAL CORPORATION
Date: November 13, 1998 By /s/ Eugene W. Landy
EUGENE W. LANDY
President
Date: November 13, 1998 By /s/ Anna T. Chew
ANNA T. CHEW
Controller
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MONMOUTH CAPITAL CORPORATION AS OF AND FOR THE
PERIOD ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<CASH> 25,462
<SECURITIES> 389,250
<RECEIVABLES> 2,885,222
<ALLOWANCES> 65,000
<INVENTORY> 2,902,733
<CURRENT-ASSETS> 3,562,594
<PP&E> 1,324,583
<DEPRECIATION> 124,229
<TOTAL-ASSETS> 7,420,195
<CURRENT-LIABILITIES> 1,850,965
<BONDS> 0
0
0
<COMMON> 1,489,688
<OTHER-SE> 4,004,690
<TOTAL-LIABILITY-AND-EQUITY> 7,420,195
<SALES> 2,897,466
<TOTAL-REVENUES> 3,155,356
<CGS> 2,329,552
<TOTAL-COSTS> 481,150
<OTHER-EXPENSES> 338,033
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,782
<INCOME-PRETAX> (59,161)
<INCOME-TAX> 0
<INCOME-CONTINUING> (59,161)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (59,161)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
