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 December 31, 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.
December 31, 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 February 10, 1999
was 1,513,891 shares.
<PAGE>
MONMOUTH CAPITAL CORPORATION
FOR THE NINE MONTHS ENDED DECEMBER 31, 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 8-10
Financial Condition and Results of Operations
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-
<PAGE>
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND MARCH 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
12/31/98 3/31/98
ASSETS
Current Assets:
Cash $ 195,086 $ 547,020
Accounts Receivable 119,083 86,998
Interest Receivable 10,461 3,342
Securities Available for Sale at Fair
Value 365,203 412,919
Inventory 3,133,688 2,556,851
Prepaid Expenses and Other Current Assets 53,152 81,714
Current Portion of Loans Receivable 116,485 80,417
_________ _________
Total Current Assets 3,993,158 3,769,261
_________ _________
Long-Term Assets:
Real Estate Investments:
Land 183,065 178,170
Building, Improvements and Equipment net
of accumulated depreciation of $142,850
and $110,987, respectively 1,000,179 1,022,020
_________ _________
Total Real Estate Investments 1,183,244 1,200,190
Loans Receivable (less allowance for
losses of $65,000 at December 31, 1998
and March 31, 1998) 2,611,538 1,886,235
_________ _________
Total Long-Term Assets 3,794,782 3,086,425
_________ _________
TOTAL ASSETS $7,787,940 $6,855,686
========= =========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
-3-
<PAGE>
[CAPTION]
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS (CONT'D)
AS OF DECEMBER 31, 1998 AND MARCH 31, 1998
<TABLE>
<S> <C> <C>
12/31/98 3/31/98
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Expenses $ 183,275 $ 241,609
Loans Payable -0- 35,671
Inventory Financing 2,026,734 985,233
--------- ---------
Total Current Liabilities 2,210,009 1,262,513
Other Liabilities 66,527 74,852
--------- ---------
Total Liabilities 2,276,536 1,337,365
--------- ---------
Shareholders' Equity:
Common Stock (par value $1.00 per share;
authorized 10,000,000 shares;
issued and outstanding 1,513,891 and
1,477,839 shares at December 31, 1998
and March 31, 1998, respectively 1,513,891 1,477,839
Additional Paid-In Capital 3,304,657 3,225,605
Unrealized Investment Gain (Loss) (1,015) 218
Retained Earnings 693,871 814,659
--------- ---------
Total Shareholders' Equity 5,511,404 5,518,321
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 7,787,940 $ 6,855,686
========= =========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
-4-
<PAGE>
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Nine Months
1998 1997 1998 1997
INCOME
Sales of Manufactured Homes $1,503,174 $1,039,541 $4,400,640 $3,074,873
Interest Income 92,003 68,471 251,964 198,511
Rental Income 49,745 47,149 114,948 141,021
Other Income 49,121 13,478 81,847 47,637
--------- --------- --------- ---------
Total Income 1,694,043 1,168,639 4,849,399 3,462,042
--------- --------- --------- ---------
EXPENSES
Cost of Manufactured
Home Sales 1,245,662 771,921 3,575,214 2,350,005
Selling Expense 28,456 22,187 94,238 64,610
Salaries and Employee Benefits 114,454 110,056 372,924 331,933
Professional Fees 92,680 78,442 243,191 195,458
Interest Expense 48,935 51,403 121,104 134,468
Other Expenses 150,818 140,713 488,851 357,468
-------- --------- --------- ---------
Total Expenses 1,681,005 1,174,722 4,895,522 3,433,942
--------- --------- --------- ---------
Income (Loss) Before
Income Taxes 13,038 (6,083) (46,123) 28,100
Income Taxes -0- (2,500) -0- 11,200
--------- --------- --------- ---------
NET INCOME (LOSS) $ 13,038 $ (3,583) $ (46,123) $ 16,900
========= ======== ======== ========
NET INCOME (LOSS) PER SHARE
BASIC AND DILUTED $ 0.02 $ -0- $ (0.03) $ 0.01
========= ======== ======== ========
WEIGHTED AVERAGE
SHARES OUTSTANDING
BASIC AND DILUTED 1,497,571 1,472,174 1,491,578 1,453,103
========= ========= ========= =========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
-5-
<PAGE>
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ (46,123) $ 16,900
Depreciation and Amortization 31,863 24,518
Changes In Operating Assets and
Liabilities:
Accounts Receivable (32,085) (15,792)
Interest Receivable (7,119) 31,864
Inventory (576,837) (515,447)
Prepaid Expenses and Other Current Assets 28,562 86,816
Accounts Payable and Accrued Expenses (58,334) (34,025)
Other Liabilities (8,325) 13,669
------- -------
Net Cash Used by Operating Activities (668,398) (391,497)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
New Loans Receivable (1,201,809) (678,886)
Collections and Other Decreases in Loans
Receivable 440,438 800,921
Sales and Other Decreases in Securities
Available for Sale 46,483 27,782
Additions to Real Estate Investments (14,917) (108,015)
------- -------
Net Cash Provided (Used) by Financing
Activities (729,805) 41,802
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase (Decrease) in Inventory
Financing 1,041,501 189,939
Net Increase (Decrease) in Loans Payable (35,671) -0-
Proceeds from the Issuance
of Class A Common Stock 94,013 187,728
Dividends Paid (53,574) (52,726)
--------- -------
Net Cash Provided by Financing Activities 1,046,269 324,941
--------- -------
Net Increase (Decrease) in Cash (351,934) (24,754)
Cash at Beginning of the Period 547,020 228,928
--------- -------
Cash at End of Period $ 195,086 $ 204,174
========= =========
</TABLE>
-UNAUDITED-
See Notes to Consolidated Financial Statements
-6-
<PAGE>
MONMOUTH CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 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 December
31, 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 $1,201,809 were made for the nine months ended
December 31, 1998. Loans are primarily at 10%-15% for
fifteen years and secured by the homes.
Collections and other decreases of loans receivable totalled
$440,438 for the nine months ended December 31, 1998.
NOTE 3 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
For the nine months ended December 31, 1998, the Company
received $115,104 from the Dividend Reinvestment and Stock
Purchase Plan (DRIP). There were 36,052 new shares issued,
resulting in 1,513,891 shares outstanding.
NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and taxes for the nine months ended
December 31, 1998 and 1997 were as follows:
1998 1997
Interest $ 95,139 $ 134,468
Taxes 16,500 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 nine months
ended December 31, 1998 amounted to $668,398 as compared to
$391,497 for the nine months ended December 31, 1997. This
increase in net cash used by operating activities is
primarily due to an increase in manufactured home inventory
of The Mobile Home Store, Inc. (MHS), the Company's wholly-
owned subsidiary. Inventory increased by $576,837 for the
nine months ended December 31, 1998 as compared to an
increase of $515,447 for the nine months ended December 31,
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 $761,371 during the nine months
ended December 31, 1998. This was the result of new loans
made of $1,201,809 offset by $440,438 in collections.
Inventory financing increased by $1,041,501 during the nine
months ended December 31, 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 $1,503,174 and $4,400,640 for the three and
nine months ended December 31, 1998 as compared to $1,039,541
and $3,074,873 for the three and nine months ended December
31, 1997. MHS has been experiencing increased sales since
its inception in fiscal 1994.
Interest income amounted to $92,003 and $251,964 for the
three and nine months ended December 31, 1998 as compared to
$68,471 and $198,511 for the three and nine months ended
December 31, 1997. This increase was the result of an
increase in loans receivable.
Rental income, including tenant reimbursements, amounted to
$49,745 and $114,948 for the three and nine months ended
December 31, 1998 as compared to $47,149 and $141,021 for the
three and nine months ended December 31, 1997. Rental income
is attributable to the Company's purchase of a net-leased
industrial building on March 31, 1994. The decrease during
the nine months ended December 31, 1998 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)
Other income amounted to $49,121 and $81,847 for the three
and nine months ended December 31, 1998 as compared to
$13,478 and $47,637 for the three and nine months ended
December 31, 1997. This increase was due to income received
for retail loan volume.
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 remained relatively stable for the three and nine
months ended December 31, 1998 as compared to the three and
nine months ended December 31, 1997.
Salaries and employee benefits amounted to $114,454 and
$372,924 for the three and nine months ended December 31,
1998 as compared to $110,056 and $331,933 for the three and
nine months ended December 31, 1997. The increase during the
nine months ended December 31, 1998 was due to an increase in
personnel.
Other expenses amounted to $150,818 and $488,851 for the
three and nine months ended December 31, 1998 as compared to
$140,713 and $357,468 for the three and nine months ended
December 31, 1997. The increase during the nine months ended
December 31, 1998 was 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 December 31, 1998, $2,026,734 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.
-9-
<PAGE>
MONMOUTH CAPITAL CORPORATION
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS (CONT'D)
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.
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 DECEMBER 31, 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 - None
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: February 11, 1998 By: /s/Eugene W. Landy
EUGENE W. LANDY
President
Date: February 11, 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 DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> DEC-31-1998
<CASH> 195,086
<SECURITIES> 365,203
<RECEIVABLES> 2,922,567
<ALLOWANCES> 65,000
<INVENTORY> 3,133,688
<CURRENT-ASSETS> 3,993,158
<PP&E> 1,326,094
<DEPRECIATION> 142,850
<TOTAL-ASSETS> 7,787,940
<CURRENT-LIABILITIES> 2,210,009
<BONDS> 0
0
0
<COMMON> 1,513,891
<OTHER-SE> 3,997,513
<TOTAL-LIABILITY-AND-EQUITY> 7,787,940
<SALES> 4,400,640
<TOTAL-REVENUES> 4,849,399
<CGS> 3,575,214
<TOTAL-COSTS> 710,353
<OTHER-EXPENSES> 488,851
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121,104
<INCOME-PRETAX> (46,123)
<INCOME-TAX> 0
<INCOME-CONTINUING> (46,123)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46,123)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
