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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (C) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 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 0-24282
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.)
Juniper Business Plaza, 3499 Route 9 North, Freehold, NJ 07728
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (732) 577-9993
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $1.00 par value
Indicate by check mark whether the registrant (1) has filed all
reports required 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. ____
The aggregate market value of voting stock held by non-affiliates
of the Registrant was $3,577,074 (based on 1,237,742 shares of
common stock at $2.89 per share, the closing price on June 14,
2001).
The number of shares outstanding of issuer's common stock as of
June 14, 2001 was 1,573,790 shares.
-1-
PART I
ITEM 1. BUSINESS
General Development of Business
Monmouth Capital Corporation (the Company) is a corporation
organized in the State of New Jersey. The Company commenced
operations in 1961.
Prior to fiscal 1994, the Company operated as a small
business investment company under the Small Business Investment
Company Act of 1958 and as an investment company under the
Investment Company Act of 1940. As such, the Company was able to
distribute its income prior to income taxes as dividends to
shareholders. The Company was allowed a deduction from taxable
income for these distributions.
With shareholder approval, the Company surrendered its
license to operate as a small business investment company and
deregistered as an investment company. On January 15, 1993, the
Small Business Administration approved the surrender of the
Company's license. On July 20, 1993, the Securities and Exchange
Commission entered an Order that the Company had ceased to be an
investment company. Since the Company is no longer an investment
company, earnings are now fully taxable.
Certain members of the Company's Board of Directors manage
two real estate investment trusts. In 1995, the Company success
fully completed a Rights Offering to its shareholders. The
Company raised approximately $1,600,000 after expenses bringing
total equity to approximately $4,500,000.
Narrative Description of the Business
During fiscal 1994, the Company formed a wholly-owned
subsidiary, The Mobile Home Store, Inc., to finance and sell
manufactured homes. This sales operation was conducted at
manufactured home communities owned by United Mobile Homes, Inc.
(United), a related real estate investment trust (REIT). On
March 30, 2001, the Company sold all of its existing inventory to
United at the Company's carrying value. The Company exited the
manufactured home sales business since it proved to be
unprofitable.
On March 31, 1994, the Company purchased a net leased
industrial building in Bethlehem, Pennsylvania. During fiscal
2000, this building was sold at a gain of $245,419. As an
interim measure, the Company is investing in securities of REITs.
Based on current market conditions, management believes that the
prices of those REIT shares are at a discount from the value of
the underlying properties. The Company has also invested in
mortgage backed securities issued by the Federal National
Mortgage Association. The Company has purchased these securities
on margin since the interest and dividend yields exceed the cost
of funds. Such securities are subject to risk arising from
adverse changes in market rates and prices, primarily interest
rate risk relating to debt securities and equity price risk
relating to equity securities.
-2-
The Company is considering operating as a hybrid REIT
investing in (a) real estate equities; (b) mortgages; (c)
mortgage backed securities; and (d) other REIT securities. The
Company intends to change its fiscal year and may take other
steps to qualify as a REIT and not be classified as an investment
company. The Company's capital is limited, and there is no
assurance the Company can or will operate as a hybrid REIT. The
Company will consider alternative plans or proposals.
Management
The management of the Company currently operates Monmouth
Real Estate Investment Corporation (MREIC) and United, two REITs.
MREIC is now specializing in net leased industrial properties to
rated tenants on medium term leases. United specializes in
investments in manufactured home communities. It is intended
that the Company will invest in real estate ventures that do not
qualify under the investment objectives of MREIC and United. To
the extent that there may be conflicts of interest as to
prospective investments, the Company may be deprived of
investment opportunities.
Environmental, Regulatory and Energy Problems
The Company must comply with certain Federal Environmental
Protection Agency Regulations as well as state and local
governmental regulations.
In conjunction with the sale of the Bethlehem building, a
Phase I environmental assessment was performed. This assessment
consisted of searches of Federal and State databases to determine
potential sources of contamination, investigation of the site
history, and visual inspection. The assessment concluded that
there was no evidence to suggest that the site has ever
experienced a significant spill or environmental incident.
Management is not aware of any material environmental problems
affecting the Company.
Number of Employees
At March 31, 2001, the Company had six full-time employees.
A Board of Directors consisting of seven directors is responsible
for the general policies of the Company.
ITEM 2. PROPERTIES
The Company had one property, located in Bethlehem,
Pennsylvania. This property was sold in fiscal 2000.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
-3-
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Prior to October 19, 1995, the shares of the Company were
traded on the over-the-counter market. As of October 19, 1995,
the Company's shares are traded on the National Association of
Securities Dealers Automatic Quotations (NASDAQ). Small
Capitalization market under the symbol "MONM". The per share
range of high and low market during each quarter of the last
three fiscal years were as follows:
2001-2000 2000-1999 1999-1998
Market Price Market Price Market Price
Low High Low High Low High
First 2-7/16 3 2-3/4 2-3/8 3-1/2 2-3/4
Second 2-3/8 2-3/4 2-3/4 2-1/8 3-3/8 2-3/4
Third 2-7/16 2-7/8 2-5/8 2-1/4 4 2-1/2
Fourth 2-7/16 3-1/2 2-5/8 2-5/16 3-7/8 2-1/2
The over-the-counter market quotations reflect the inter-
dealer prices, without retail mark-up, mark-down or commission,
and may not necessarily represent actual transactions.
As of March 31, 2001, there were approximately 407 holders
of the Company's common stock based on the number of record
owners.
For the years ended March 31, 2001, 2000 and 1999, total
dividends paid by the Company amounted to $76,123 or $.05 per
share, $75,710 or $.05 per share and $74,666 or $.05 per share,
respectively.
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.
-4-
ITEM 6 SELECTED FINANCIAL DATA
FOR THE YEARS ENDED MARCH 31,
2001 2000 1999 1998 1997
Income Statement Data:
Total Income $5,831,320 $5,453,916 $5,965,265 $4,288,031 $2,788,741
Total Expenses 5,906,020 5,685,135 6,178,666 4,242,531 2,769,531
Gain on Sale of
Real Estate
Investments -0- 245,419 -0- -0- -0-
Income Taxes -0- -0- -0- 34,239 6,700
Net Income (Loss) (74,700) 14,200 (213,401) 11,261 12,510
Net Income (Loss)
Per Share (0.05) 0.01 (0.14) 0.01 0.01
==========================================================================
Balance Sheet Data:
Total Assets $15,494,536 $9,068,788 $7,760,765 $6,855,686 $5,994,684
Shareholders'
Equity 6,463,842 5,273,879 5,348,223 5,518,321 5,342,174
==========================================================================
Cash Dividends
Per Share $0.05 $0.05 $0.05 $0.05 $0.05
Average Number of
Shares
Outstanding 1,534,759 1,516,528 1,496,727 1,458,811 1,217,129
-5-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Liquidity and Capital Resources
Net cash provided by operating activities for the years
ended March 31, 2001 and 2000 amounted to $178,452 and $553,657,
respectively as compared to net cash used by operating activities
of $870,704 for the year ended March 31, 1999. The decrease in
fiscal 2001 in net cash provided by operating activities was due
primarily to the decrease in accounts payable and accrued
expenses. The increase in fiscal 2000 in net cash provided by
operating activities was due primarily to a decrease in inventory
and an increase in accounts payable for the year.
Securities available for sale increased by $9,203,391
primarily as a result of new purchases. These funds were made
available by the sale of inventory, building, equipment and
rental homes. As an interim measure, the Company is investing in
securities of REITs. Based on current market conditions,
management believes that the prices of those REIT shares are at a
discount from the value of the underlying properties. The
Company has also invested in mortgage backed securities issued by
the Federal National Mortgage Association.
Inventory decreased by $2,750,941. On March 30, 2001, the
Company exited the manufactured home sales business. The
remaining inventory of $2,261,624 was sold to United at carrying
value.
Buildings, improvements and equipment decreased by $346,923
during fiscal 2001. This was due primarily to the sale of
equipment and rental homes to United at carrying value.
Loans receivable increased by $543,904 during fiscal 2001.
This increase was the result of new loans of $1,291,195 offset by
principal repayments and other decreases of $793,403.
Loans payable increased by $7,484,872 during fiscal 2001.
This represents the margin loans on securities available for
sale. The Company purchased these securities on margin since the
interest and dividend yields exceed the cost of funds.
Inventory financing decreased by $1,875,811 during fiscal
2001 as a direct result of the Company exiting the manufactured
home sales business. This loan was assumed by United.
-6-
Results of Operations
Fiscal 2001 vs. 2000
Income is comprised primarily of sales of manufactured homes
by The Mobile Home Store, Inc. (MHS), the Company's wholly owned
subsidiary, interest income and rental income. Sales of
manufactured homes remained relatively stable during fiscal 2001.
Interest and dividend income increased by $487,069 during
fiscal 2001 primarily due to the purchases of securities
available for sale.
Rental income decreased by $173,937 in fiscal 2001,
primarily due to the sale of the Bethlehem, Pennsylvania net-
leased industrial building.
Other income increased from $121,012 in fiscal 2000 to
$154,239 in fiscal 2001 due primarily to an increase in the gain
on sales of securities available for sale. Gain on sales of
securities available for sale increase from $16,841 in fiscal
2000 to $31,598 in fiscal 2001.
Cost of manufactured home sales increased from $3,974,912 in
fiscal 2000 to $4,192,175 in fiscal 2001. Selling expense
decreased from $474,134 in fiscal 2000 to $425,620 in fiscal
2001. These changes are directly attributable to the change in
sales of manufactured homes.
Salaries and employee benefits decreased from $315,290 in
fiscal 2000 to $254,518 in fiscal 2001. This was due primarily
to fewer employees as a result of the exiting of the manufactured
home sales business.
Professional fees remained relatively stable during fiscal
2001.
Interest expense increased from $152,509 in fiscal 2000 to
$364,690 in fiscal 2001. This increase was due to the purchase
of securities for sale on margin.
Other expenses decreased from $641,991 in fiscal 2000 to
$539,427 in fiscal 2001 due primarily to MHS exiting the
manufactured home sales business.
The gain on sale of real estate investment of $245,419 in
fiscal 2000 was due to the sale of the Bethlehem, Pennsylvania
net-leased industrial building on March 1, 2000.
-7-
Results of Operations
Fiscal 2000 vs. 1999
Sales of manufactured homes decreased from $5,396,530 in
fiscal 1999 to $4,759,648 in fiscal 2000. This was primarily due
to the closing of certain unprofitable sales locations.
Interest and dividend income increased by $57,412 during
fiscal 2000 primarily due to the purchases of securities
available for sale.
Rental income, primarily related to the Bethlehem,
Pennsylvania net-leased industrial building, increased by $29,613
during fiscal 2000. This was primarily a result of an increase
in reimbursable expenses.
Other income increased from $82,503 in fiscal 1999 to
$121,012 in fiscal 2000 due primarily to increased income
received for retail loan volume. Other income in fiscal 2000
also included a gain on sale of securities available for sale of
$16,841.
Cost of manufactured home sales decreased from $4,442,148 in
fiscal 1999 to $3,974,912 in fiscal 2000. Selling expense
decreased from $490,771 in fiscal 1999 to $474,134 in fiscal
2000. These changes are directly attributable to the change in
sales of manufactured homes.
Salaries and employee benefits and professional fees
remained relatively stable during fiscal 2000.
Interest expense increased from $130,706 in fiscal 1999 to
$152,509 in fiscal 2000. This increase was due to the purchase
of securities for sale on margin.
Other expenses remained relatively stable during fiscal
2000.
The gain on sale of Real Estate Investment of $245,419 in
fiscal 2000 was due to the sale of the Bethlehem, Pennsylvania
net-leased industrial building on March 1, 2000.
-8-
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, including interest
rates; (ii) increased competition in the geographic areas in
which the Company operates; and (iii) changes in government laws.
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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
See Item 1. Business
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 and
filed as a part of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
-9-
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND AFFILIATED ENTITY OF
THE REGISTRANT
Several of the Directors and Officers of the Company also
serve as directors of Monmouth Real Estate Investment Corporation
(MREIC) and United Mobile Homes, Inc. (United), both publicly-
owned real estate investment trusts.
Director since/
Principal Occupation Shares Owned
Name, Age and Title Past Five Years % of Total
Ernest V. Treasurer and Director 1961
Bencivenga of MREIC; Owns 6,533 shs
(83) Secretary/Treasurer and .41 % (1)
Director of United.
Anna T. Chew Certified Public 1994
(43) Accountant; Vice Owns 8,654 shs
Vice President President, Chief .55 % (2)
and Director Financial Officer and
Director of United;
Controller and Director
of MREIC.
Charles P. Self-employed investor; 1970
Kaempffer Director of MREIC, Owns 15,331 shs
(64) United and Community .97 % (3)
Director Bank of New Jersey.
Eugene W. Landy Attorney; President of 1961
(67) MREIC; Chairman of the Owns 227,384
President Board of United. shs
and Director 14.45 % (4)
Samuel A. Landy Attorney; President and 1994
(40) Director of United; Owns 60,560 shs
Director Director of MREIC. 3.85 % (5)
Eugene Rothenberg Obstetrician and 2001
(68) Gynecologist; Owns 600 shs
Director Investor .04 %
-10-
Director since/
Principal Occupation Shares Owned
Name, Age and Title Past Five Years % of Total
Robert G. Sampson Self-employed investor; 1963
(75) Director of MREIC and United; Owns 16,986 shs
Director General Partner for Sampco, 1.08 %
Ltd.
(1) Includes 5,162 shares held by Mr. Bencivenga's wife.
(2) Held jointly with Ms. Chew's husband.
(3) Includes (a) 726 shares in joint name with Mrs. Kaempffer;
(b) 270 shares held by Mr. Kaempffer's wife; and (c) 7,000 shares
in joint name with Mrs. Kaempffer held as Trustees for Defined
Benefit Pension Plan.
(4) Includes (a) 7,321 shares held by Mr. Landy's wife; (b)
32,836 shares held in the Landy & Landy Employees' Pension Plan,
of which Mr. Landy is a Trustee with power to vote; (c) 69,053
shares held in the Landy & Landy Employees' Profit Sharing Plan,
of which Mr. Landy is Trustee with power to vote; and (d) 14,545
shares held by Landy Investments, Ltd. of which Mr. Landy has
power to vote.
(5) Includes (a) 12,297 shares held by Mr. Landy's wife; (b)
13,411 shares in custodial accounts for Mr. Landy's children
under the Uniform Gift to Minor's Act in which he disclaims any
beneficial interest, but has power to vote; and (c) 24,132 shares
in the Samuel Landy Family Limited Partnership.
-11-
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table shows compensation
paid by the Company to its chief executive officer for services
rendered during the fiscal years ended March 31, 2001, 2000 and
1999. Because no executive officers received total annual salary
and bonus exceeding $100,000, only the compensation paid to the
chief executive officer is to be disclosed under the Securities
and Exchange Commission disclosure requirements.
Name and Principal Annual Compensation
Position Year Salary Bonus Other (1)
2001 $50,000 None $3,200
Eugene W. Landy 2000 $50,000 None $3,200
Chief Executive Officer 1999 $37,500 None $15,700
(1) Represents base compensation and directors' fees.
Report of the Compensation Committee
Overview and Philosophy
The Company has a Compensation Committee consisting of three
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 Committee 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.
The second consideration is the individual achievements made
by each officer. The Company is relatively small. The Committee
is aware of the contributions made by each officer and makes an
evaluation of individual performance based on their own
familiarity with the officer.
The final criteria in setting compensation is comparable
wages in the industry.
-12-
Evaluation
The Committee reviewed the progress made by Eugene W. Landy,
Chief Executive Officer, in locating alternative business and
investment opportunities. The Committee decided to continue Mr.
Landy's annual compensation of $50,000.
Other Information
Except for specific agreements, the Company has no
retirement plan in effect for officers, directors or employees
and, at present, has no intention of instituting such a plan.
Comparative Performance
The following line graph compares the total return of the
Company's Common Stock for the last five fiscal years to the
NASDAQ Total Return Index and the NASDAQ Financial Stocks Total
Return Index. 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.
Monmouth Capital NASDAQ NASDAQ
Year Corporation Total Financial
1996 100 100 100
1997 95 111 129
1998 78 168 200
1999 80 228 180
2000 76 423 171
2001 90 169 172
-13-
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of March 31, 2001, no person owned of record or was known
by the Company to beneficially own more than 5% of the shares,
except as follows:
Name and Address Shares Owned Percent
of Beneficial Owner Beneficially of Class
Eugene W. Landy
20 Tuxedo Road
Rumson, NJ 07760 227,384 14.45 %
Group consisting of
Walter Carucci, Carucci
Family Partners, and
Carr Securities Corp.
1 Penn Plaza
New York, NY 10114 129,010 8.20 %
Group consisting of
Paul H. O'Leary, Raffles
Associates, L.P. and
Channel Partnership II
1 Penn Plaza, Suite 4720
New York, NY 10119 86,788 5.51 %
James E. Mitchell &
Mitchell Partners
611 Anton Blvd.
Costa Mesa, CA 92626 78,681 5.00 %
The Company believes that during fiscal 2001, all persons
required to report ownership and changes in ownership of common
stock pursuant to Section 16(a) of the Securities Exchange Act of
1934 have complied.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED 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-Payments
to Affiliated Persons and Related Party Transactions.
-14-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS
ON FORM 8-K
(a) (1) The following Financial Statements are filed as part of
this report:
Page
(i) Auditors' Report 16
(ii) Consolidated Balance Sheets as of March 31, 17-18
2001 and 2000
(iii) Consolidated Statements of Income for the
years ended March 31, 2001, 2000 and 1999 19
(iv) Consolidated Statements of Shareholders'
Equity for the years ended March 31, 2001, 20
2000 and 1999
(v) Consolidated Statements of Cash Flows for
the years ended March 31, 2001, 2000 and 21
1999
(vi) Notes to Consolidated Financial Statements 22-32
(a) (2) Financial Statement 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.
(a) (3) The Exhibits set forth in the following index of
Exhibits are filed as a part of this Report.
Exhibit No. Description
(3) Articles of Incorporation and By-Laws - Reference is hereby
made to that filed with the Securities and Exchange Commission
with the Company's Form 10-K/A No. 2 for the year ended March 31,
1994.
(21) Subsidiaries of the Registrant - During fiscal 1994, the
Registrant formed a wholly-owned subsidiary, The Mobile Home
Store, Inc. to finance and sell manufactured homes. This
subsidiary was incorporated in the State of New Jersey.
(a)(3)(b) Reports on Form 8-K
None
-15-
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Monmouth Capital Corporation
Freehold, New Jersey
We have audited the accompanying consolidated balance sheets
of Monmouth Capital Corporation as of March 31, 2001 and 2000,
and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period
ended March 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. 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 Monmouth Capital Corporation at March 31,
2001 and 2000, and the consolidated results of their operations
and their cash flows for each of the three years in the period
ended March 31, 2001 in conformity with generally accepted
accounting principles.
/s/ Cowan, Gunteski & Co.
June 26, 2001
Toms River, New Jersey
-16-
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31,
2001 2000
ASSETS
Current Assets:
Cash and Cash Equivalents $ 92,450 $ 207,943
Accounts Receivable 47,705 130,598
Securities Available for Sale, at Fair Value:
Federal National Mortgage Association 5,967,189 -0-
Government National Mortgage Association 250,125 271,410
Other Securities Available for Sale 6,059,984 2,802,497
Inventory -0- 2,750,941
Prepaid Expenses and Other Current Assets 17,310 42,607
Current Portion of Loans Receivable 144,214 104,246
__________ __________
Total Current Assets 12,578,977 6,310,242
__________ __________
Long-Term Assets:
Real Estate Investments:
Land 11,065 11,065
Building, Improvements and
Equipment, net of accumulated
depreciation of -0- and $99,268,
respectively -0- 346,923
__________ __________
Total Real Estate Investments 11,065 357,988
Loans Receivable 2,904,494 2,400,558
__________ __________
Total Long-Term Assets 2,915,559 2,758,546
__________ __________
TOTAL ASSETS $ 15,494,536 $ 9,068,788
========== ==========
See Accompanying Independent Auditors' Report and
Notes to Consolidated Financial Statements
-17-
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS (CONT.)
AS OF MARCH 31,
2001 2000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued
Expenses $ 129,615 $ 460,012
Loans Payable 8,873,565 1,388,693
Inventory Financing -0- 1,875,811
__________ __________
Total Current Liabilities 9,003,180 3,724,516
Other Liabilities 27,514 70,393
__________ __________
Total Liabilities 9,030,694 3,794,909
__________ __________
Shareholders' Equity:
Common Stock (par value $1.00 per
share; authorized 10,000,000 shares;
issued and outstanding 1,573,790 and
1,522,280 shares, respectively in
2001 and 2000 1,573,790 1,522,280
Additional Paid-In Capital 3,409,497 3,319,346
Accumulated Other Comprehensive
Income (Loss) 1,166,296 (32,829)
Retained Earnings 314,259 465,082
__________ __________
Total Shareholders' Equity 6,463,842 5,273,879
__________ __________
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 15,494,536 $ 9,068,788
========== ==========
See Accompanying Independent Auditors' Report and
Notes to Consolidated Financial Statements
-18-
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED MARCH 31,
2001 2000 1999
Income:
Sales of Manufactured Homes $4,790,693 $4,759,648 $5,396,530
Interest and Dividend Income 875,778 388,709 331,298
Rental Income 10,610 184,547 154,934
Other Income 154,239 121,012 82,503
__________ _________ __________
Total Income 5,831,320 5,453,916 5,965,265
__________ _________ __________
Expenses:
Cost of Sales of
Manufactured Homes 4,192,175 3,974,912 4,442,148
Selling Expense 425,620 474,134 490,771
Salaries and Employee Benefits 254,518 315,290 318,291
Professional Fees 129,590 126,299 146,845
Interest Expense 364,690 152,509 130,706
Other Expenses 539,427 641,991 649,905
__________ _________ __________
Total Expenses 5,906,020 5,685,135 6,178,666
__________ _________ __________
Loss Before Gain on Sale of Real
Estate Investment (74,700) (231,219) (213,401)
Gain on Sale of Real Estate Investment -0- 245,419 -0-
__________ _________ __________
NET INCOME (LOSS) $ (74,700) $ 14,200 $ (213,401)
========== ========= ==========
NET INCOME (LOSS) PER
SHARE-BASIC AND DILUTED $ (0.05) $ 0.01 $ (0.14)
========== ========= ==========
WEIGHTED AVERAGE
SHARES OUTSTANDING 1,534,759 1,516,528 1,496,727
========== ========= ==========
See Accompanying Independent Auditors' Report and
Notes to Consolidated Financial Statements
-19-
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Additional
Common Stock Paid-In
Number Amount Capital
Balance March 31, 1998 1,477,839 $ 1,477,839 $ 3,225,605
Common Stock Issued with
the DRIP* 36,052 36,052 79,052
Net Loss -0- -0- -0-
Distributions -0- -0- -0-
Unrealized Net Holding
Gains on Securities
Available for Sale -0- -0- -0-
__________ __________ __________
Balance March 31, 1999 1,513,891 1,513,891 3,304,657
Common Stock Issued with
the DRIP* 8,389 8,389 14,689
Net Income -0- -0- -0-
Distributions -0- -0- -0-
Unrealized Net Holding
Losses on Securities
Available for Sale -0- -0- -0-
__________ __________ __________
Balance March 31, 2000 1,522,280 1,522,280 3,319,346
Common Stock Issued
with the DRIP* 51,510 51,510 90,151
Net Loss -0- -0- -0-
Distributions -0- -0- -0-
Unrealized Net Holding
Losses on Securities
Available for Sale -0- -0- -0-
__________ __________ __________
Balance March 31, 2001 1,573,790 $ 1,573,790 $ 3,409,497
========== ========== ==========
*Dividend Reinvestment and Stock Purchase Plan
Accumulated
Other Com-
prehensive Retained Comprehensive
Income Earnings Income
Balance March 31, 1998 $ 218 $ 814,659
Common Stock Issued with
the DRIP* -0- -0-
Net Loss -0- (213,401) $ (213,401)
Distributions -0- (74,666)
Unrealized Net Holding
Gains on Securities
Available for Sale 2,865 -0- 2,865
__________ __________ __________
Balance March 31, 1999 3,083 526,592 $ (210,536)
==========
Common Stock Issued with
the DRIP* -0- -0-
Net Income -0- 14,200 $ 14,200
Distributions -0- (75,710)
Unrealized Net Holding
Losses on Securities
Available for Sale (35,912) -0- (35,912)
__________ __________ __________
Balance March 31, 2000 (32,829) 465,082 $ (21,712)
==========
Common Stock Issued
with the DRIP* -0- -0-
Net Loss -0- (74,700) $ (74,700)
Distributions -0- (76,123)
Unrealized Net Holding
Losses on Securities
Available for Sale 1,199,125 -0- 1,199,125
__________ __________ __________
Balance March 31, 2001 $ 1,166,296 $ 314,259 $ 1,124,425
========== ========== ==========
*Dividend Reinvestment and Stock Purchase Plan
See Accompanying Independent Auditors' Report and
Notes to Consolidated Financial Statements
-20-
MONMOUTH CAPITAL CORPORATION CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31,
2001 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (74,700) $ 14,200 $ (213,401)
Adjustments to reconcile net
income to net cash used
by operating activities:
Depreciation and Amortization 60,519 79,908 45,803
Gain on Sale of Securities (31,598) (16,841) -0-
Available for Sale
Gain on Sale of Real Estate -0- (245,419) -0-
Investments
Changes In Operating Assets
and Liabilities:
Accounts Receivable 82,893 15,472 (55,730)
Inventory 489,317 391,761 (585,851)
Prepaid Expenses and 25,297 3,370 35,737
Other Current Assets
Accounts Payable and
Accrued Expenses (330,397) 320,056 (101,653)
Other Liabilities (42,879) (8,850) 4,391
__________ __________ __________
Net Cash Provided (Used) by
Operating Activities 178,452 553,657 (870,704)
__________ __________ __________
CASH FLOWS FROM INVESTING ACTIVITIES
Loans Made (1,291,195) (609,962) (1,390,025)
Collections and Other
Decreases in Loans
Receivable 747,291 793,403 558,201
Purchase of Securities (8,198,342) (2,852,770) -0-
Available for Sale
Proceeds from Sales and Other
Decreases in Securities
Available for Sale 225,674 116,581 58,995
Additions to Real Estate (103,430) (171,437) (13,765)
Investments
Proceeds from Sale of Real 389,834 1,257,343 -0-
Estate Investments
Disposition of Inventory 2,261,624 -0- -0-
__________ __________ __________
Net Cash Used by Investing
Activities (5,968,544) (1,466,842) (786,594)
__________ __________ __________
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Loans Payable
and Inventory Financing 5,609,061 1,071,161 1,172,439
Dividends Paid (54,973) (54,142) (53,575)
Proceeds from the Issuance of
Class A Common Stock 120,511 1,510 94,013
__________ __________ __________
Net Cash Provided by Financing
Activities 5,674,599 1,018,529 1,212,877
__________ __________ __________
Net Increase (Decrease) in Cash
and Cash Equivalents (115,493) 105,344 (444,421)
Cash and Cash Equivalents at
Beginning of Year 207,943 102,599 547,020
__________ __________ __________
Cash and Cash Equivalents at End
of Year $ 92,450 $ 207,943 $ 102,599
========== ========== ==========
See Accompanying Independent Auditors' Report and
Notes to Consolidated Financial Statements
-21-
MONMOUTH CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of the Business
Monmouth Capital Corporation (the Company) is a corporation
organized in New Jersey which commenced operations in 1961.
Prior to fiscal 1994, the Company was an investment company under
the Investment Company Act of 1940 and a small business
investment company licensed under the Small Business Investment
Company Act of 1958.
During fiscal 1994, the Company formed a wholly-owned
subsidiary, The Mobile Home Store, Inc., to finance and sell
manufactured homes. This sales operation was conducted at
manufactured home communities owned by United Mobile Homes, Inc.
(United), a related real estate investment trust (REIT). On
March 30, 2001, the Company sold all of its existing inventory to
United at the Company's carrying value. The Company exited the
manufactured home sales business since it proved to be
unprofitable.
On March 31, 1994, the Company purchased a net leased
industrial building in Bethlehem, Pennsylvania. During fiscal
2000, this building was sold at a gain of $245,419. As an
interim measure, the Company is investing in securities of REITs.
Based on current market conditions, management believes that the
prices of those REIT shares are at a discount from the value of
the underlying properties. The Company has also invested in
mortgage backed securities issued by the Federal National
Mortgage Association. The Company has purchased these securities
on margin since the interest and dividend yields exceed the cost
of funds. Such securities are subject to risk arising from
adverse changes in market rates and prices, primarily interest
rate risk relating to debt securities and equity price risk
relating to equity securities.
Revenue Recognition
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. Rental income is recognized on the straight-line basis
over the term of the lease.
-22-
Use of Estimates
The preparation of the financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Building, Improvements and Equipment
Building, Improvements and Equipment are stated at the lower
of depreciated cost or net realizable value. Depreciation is
computed based on the straight-line method over the estimated
useful life of the assets (5 to 27.5 years). 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. A property's carrying value would be adjusted,
if necessary, to reflect an impairment in the value of the
property.
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 is established.
Inventories
Inventories, consisting of manufactured homes for sale, were
valued at the lower of cost or market value and were determined
by the specific identification method. All inventories were
considered finished goods.
Income Taxes
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes". Income taxes are accounted for by
the asset/liability method.
-23-
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 (1,534,759, 1,516,528 and
1,496,727, 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
(See Note 6). There were no dilutive stock options as of March
31, 2001, 2000 and 1999.
Stock Option Plan
The Company's stock option plan is 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 has been adopted.
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.
NOTE 2 - INVESTMENT IN SUBSIDIARY
The Company formed a wholly-owned subsidiary, The Mobile
Home Store, Inc. (MHS), to finance and sell manufactured homes.
MHS was incorporated in the State of New Jersey on July 28, 1993.
The consolidated financial statements of the Company include the
accounts of MHS. All intercompany transactions and balances have
been eliminated in consolidation.
-24-
NOTE 3 - LOANS RECEIVABLE
The following is a summary of the loans held by the Company
at March 31, 2001 and 2000:
Balance
Rate Date 3/31/01 3/31/00
Financed Manufactured Homes 10%-15% various $3,021,188 $2,476,510
Other various various 27,520 28,294
__________ __________
Total Loans Receivable 3,048,708 2,504,804
Current Portion 144,214 104,246
__________ __________
Long-Term Portion $2,904,494 $2,400,558
========== ==========
During 1994, MHS began selling manufactured home units and
financing these sales. At March 31, 2001 and 2000, financed
manufactured homes consist of 138 and 116 loans, respectively.
These loans range from approximately $400 to approximately
$56,000. Loans receivable for financed manufactured homes are
secured by the property financed. Generally, the terms of the
loans do not exceed 20 years. No allowance for uncollectable
accounts has been recorded. Management believes that the fair
market value of a unit under repossession exceeds the loan
balance due.
-25-
NOTE 4 - SECURITIES AVAILABLE FOR SALE
The following is a summary of investments in debt and equity
securities at March 31, 2001 and 2000 :
2001 2000
____________________________ __________________
Fair Fair
Description Shares Cost Value Cost Value
Equity Securities-
Preferred Stock:
Associated Estates
Realty Corp
9.75% Class A 19,500 $ 310,459 $ 413,400 $ 254,204 $ 293,298
Camden Property
Trust $2.25 Series A 1,000 22,000 25,850 22,000 22,188
Crescent Real Estate
Equities Co
6.75% 2,000 27,266 34,200 27,266 28,250
Crown American Realty
Trust 11% 20,200 731,032 896,791 306,430 304,425
Equity Inns Inc 9.5%
Series A 12,400 201,783 250,852 183,921 182,213
Equity Office
Properties Trust
8.98% Series A 1,000 21,995 25,230 21,995 22,563
Felcor Lodging Trust
Inc 1.95% 4,000 66,520 78,800 66,520 63,252
Felcor Lodging Trust
Inc. 9% Series B 16,000 281,072 358,400 147,794 148,500
First Industrial
Realty Trust 9.5%
Series A 2,000 44,925 50,040 44,925 45,500
First Industrial
Realty Trust 8.75%
Series B -0- -0- -0- 20,245 20,000
G&L Realty Corp
10.25% Series A 1,000 15,683 17,000 15,683 15,063
Glenborough Realty
Trust 7.75%
Series A 6,000 87,823 116,100 87,823 90,000
Glimcher Realty Trust
9.25% Series B 4,000 62,418 78,800 28,803 29,500
Healthcare Property
Investors
7.875% Series A 8,000 133,417 176,000 15,558 14,313
Healthcare Property
Investors 8.7%
Series B 3,000 50,860 70,800 31,240 33,000
Highwoods Properties
Inc 8% Series D 1,000 17,170 21,980 17,170 17,750
Hospitality
Properties Trust
9.5% Series A 6,400 127,413 157,504 61,578 63,402
Innkeepers USA Trust
8.625% Series A 8,000 145,273 156,400 -0- -0-
Istar Financial Inc.
9 3/8 Series B 17,000 267,504 369,750 267,504 263,500
Istar Financial Inc.
9.2% Series C 1,000 15,245 21,750 15,245 15,250
Istar Financial Inc.
8% Series D 2,000 32,115 37,800 -0- -0-
JDN Realty Corp 9-
3/8% Series A 13,600 244,989 290,632 35,665 34,376
Kramont Realty Trust
9.5% Series D 22,700 382,548 463,080 177,930 176,000
Mid America Apartment
Communities Inc.
9.5% Series A 1,200 24,525 27,180 -0- -0-
Mid America Apartment
Communities
Inc 8.825% Series B 12,500 219,501 267,500 115,341 120,750
New Plan Excel Realty
Trust 8.5% Series A 1,000 20,558 24,250 20,558 19,250
New Plan Excel Realty
Trust 8.625%
Series B 2,000 38,990 46,400 -0- -0-
Prime Group Realty
Trust 9% Series B 3,000 48,040 55,500 48,040 46,689
Prime Retail Inc.
Series B 1,000 5,185 4,240 -0- -0-
-26-
2001 2000
____________________________ __________________
Description Shares Cost Fair Value Cost Fair Value
Sovran Self
Storage Inc
9.85% Series B 1,000 19,245 24,800 19,245 20,125
Thornburg
Mortgage Asset
Corp 9.68% 1,700 33,423 40,460 19,514 19,375
Series A
United Dominion
Realty Trust
9.25% Series A 4,000 75,497 98,400 75,497 78,000
United Dominion
Realty Trust
8.6% Series B 2,000 35,646 49,640 16,620 18,125
Vornado Realty
Trust 8.5%
Series C 1,000 19,683 24,500 19,683 19,625
__________ __________ __________ __________
Total Equity
Securities-
Preferred Stock 3,829,803 4,774,029 2,183,997 2,224,282
__________ __________ __________ __________
Equity
Securities-
Common Stock:
Annaly Mortgage
Management Inc. 7,500 66,115 84,450 -0- -0-
HRPT Properties
Trust 4,000 28,150 33,120 -0- -0-
LaSalle Hotel
Properties 1,000 12,308 16,190 12,308 12,500
New Plan Excel
Realty Trust
Inc 5,000 70,188 80,000 70,188 68,750
Pennsylvania
Real Estate
Investment
Trust 5,000 82,300 105,000 82,300 81,250
Sizeler
Properties 92,600 706,057 816,732 406,637 345,525
Investors Inc
Tork Time
Control Inc 1,500 10,125 14,063 10,125 19,875
United Dominion
Realty Trust -0- -0- -0- 49,875 50,315
United Mobile
Homes, Inc.(a
related entity) 11,000 84,826 136,400 -0- -0-
__________ __________ __________ __________
Total Equity
Securities-
Common Stock 1,060,069 1,285,955 631,433 578,215
__________ __________ __________ __________
Total Equity
Securities 4,889,872 6,059,984 2,815,430 2,802,497
__________ __________ __________ __________
Debt Securities:
Federal National
Mortgage
Association
6.09% 7/1/39 4,968,079 4,968,079 -0- -0-
Federal National
Mortgage
Association
6.86% 11/1/30 999,110 999,110 -0- -0-
Government
National
Mortgage
Association
6.5% 2/20/14 253,941 250,125 291,306 271,410
__________ __________ __________ __________
Total Debt
Securities 6,221,130 6,217,314 291,306 271,410
__________ __________ __________ __________
Total Securities
Available for $11,111,002 $12,277,298 $3,106,736 $3,073,907
Sale ========== ========== ========= =========
Gross unrealized losses on debt securities amounted to
$3,816 and $19,896 as of March 31, 2001 and 2000, respectively.
Gross unrealized gains on equity securities amounted to
$1,171,057 and $69,837 as of March 31, 2001 and 2000,
respectively. Gross unrealized losses on equity securities
amounted to $945 and $82,770 as of March 31, 2001 and 2000,
respectively.
-27-
NOTE 5 - LOANS PAYABLE AND INVENTORY FINANCING
During fiscal 2000 and 2001, the Company purchased
securities on margin. At March 31, 2001, the margin loans
amounted to $8,873,565 at interest rates ranging from 5.05% to
6.75% and secured by investment securities with a market value of
$12,277,298. These margin loans are due on demand.
The Company had a $2,500,000 agreement with Conseco Finance
Servicing Corp. (formerly Greentree Financial Servicing
Corporation) 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. Effective
March 30, 2001, the Company exited the manufactured home sales
business. The existing inventory was sold to United. The terms
of the sale included assignment of the inventory financing.
NOTE 6 - EMPLOYEE STOCK OPTION PLAN
On July 14, 1994, the shareholders approved and ratified the
Company's 1994 Stock Option Plan authorizing the grant to
officers and key employees of options to purchase up to 300,000
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. Canceled or expired options
are added back to the "pool" of shares available under the plan.
The Company elected to continue following 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 (Loss) As Reported $(74,700) $14,200 $(213,401)
Pro forma (91,281) (498) (222,393)
Net Income (Loss) As Reported (.05) .01 (.14)
Per Share Pro forma (.06) -0- (.15)
-28-
The fair value of each option grant is estimated on the date
of the 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 .3 percent; expected
volatility of 25 percent; risk-free interest rates of 6.5
percent; and expected lives of five years.
A summary of the status of the Company's stock option plans
as of March 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 70,000 2.93 115,000 $2.96 20,000 $3.00
Issued 20,000 2.62 -0- -0- 95,000 2.95
Expired/
Cancelled -0- -0- (45,000) 3.00 -0- -0-
______ _______ ______
Outstanding
at end of
year 90,000 2.86 70,000 2.93 115,000 2.96
====== ======= =======
Weighted-average
fair value of
options granted
during the year .94 -0- 1.05
===== ===== =====
The following is a summary of stock options outstanding as
of March 31, 2001:
Date of Number of Number of Option Expiration
Grant Employees Shares Price Date
4/8/98 2 20,000 2.75 4/8/2003
9/28/98 1 50,000 3.00 9/28/2003
10/4/00 2 20,000 2.625 10/4/2005
______
90,000
=====
As of March 31, 2001, there were 210,000 shares available
for grant under the Plan.
-29-
NOTE 7 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Effective August 28, 1995, the Company implemented 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 its market price by making optional cash
payments. For the years ended March 31, 2001 and 2000, the
Company received $141,661 and $23,078 from the DRIP,
respectively. There were 51,510 and 8,389 new shares issued,
respectively.
On December 15, 2000, the Company paid $76,123 as a dividend
of $.05 per share to shareholders of record November 15, 2000.
NOTE 8 - INCOME TAXES
For the year ended March 31, 2001, the Company had a net
operating loss carryforward of approximately $140,000 to offset
future taxable income.
There were no deferred tax assets or liabilities recognized
as of March 31, 2001, 2000 and 1999.
NOTE 9 - PAYMENTS TO AFFILIATED PERSONS AND RELATED PARTY
TRANSACTIONS
Payments to Affiliated Persons
Total payments to all officers, directors and affiliated
persons during the fiscal years ended March 31, 2001, 2000 and
1999 amounted to $98,000, $98,800 and $104,850 respectively.
Eugene W. Landy, President of the Company, received $53,200 in
salary, management and director fees during each of the years
ended March 31, 2001, 2000 and 1999, respectively.
-30-
Transactions with United Mobile Homes, Inc.
MHS had rental expenses to United. United owns and operates
manufactured home communities. Seven Directors of the Company
are also Directors and shareholders of United. MHS paid United
market rent on sites where MHS had a home for sale. Total site
rental expense to United amounted to $82,087, $161,377 and
$148,249, respectively, for the years ended March 31, 2001, 2000
and 1999. MHS also leases space from United to be used as sales
lots, at market rates, at most of United's communities. Total
rental expense relating to these sales lots amounted to $153,480,
$145,670 and $139,200 for the years ended March 31, 2001, 2000
and 1999, respectively.
During the years ended March 31, 2001, 2000 and 1999, MHS
acquired certain inventory from United. These purchases amounted
to $124,890, $64,984 and $155,400, representing 3%, 2% and 3%,
respectively, of total purchases made by MHS during fiscal 2001,
2000 and 1999. This inventory was available through United, but
could have been acquired from a third-party at approximately the
same cost.
During fiscal 2001, 2000 and 1999, MHS sold to United 10, 21
and 15 homes, respectively, for a total sales price of $161,487,
$437,137 and $370,908 respectively, at MHS's cost. These sales
represented 3%, 9% and 7%, respectively, of total sales made by
MHS. These manufactured homes were available through MHS, but
could have been acquired by United from a third party at
approximately the same price.
In addition to the above sales, on March 30, 2001, United
purchased at carrying value all of the remaining inventory of
MHS. This amounted to $2,261,624. United also assumed the
inventory financing of $ 1,833,871.
NOTE 10 - GROUP CONCENTRATIONS OF CREDIT RISK
The Company's loan portfolio is diversified. Generally,
loans are collateralized by the manufactured homes. At March 31,
2001 and 2000, all loans were secured.
NOTE 11 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company is required to disclose certain information
about fair values of financial instruments, as defined in
Statement of Financial Accounting Standards No. 107, "Disclosures
About Fair Value of Financial Instruments".
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
-31-
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 loans
receivable 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 (See Note
4). The fair value of loans payable approximates their current
carrying amounts since such amounts payable are at a current
market rate of interest.
NOTE 12 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the years ended March 31, 2001, 2000 and
1999 for interest and taxes are as follows:
2001 2000 1999
Interest $364,690 $ 152,509 $130,706
Taxes $13,071 $ 5,643 $ 17,800
During the years ended March 31, 2001, 2000 and 1999 the
Company had dividend reinvestments of $21,150, $21,568 and
$21,091, respectively, which required no cash transfers.
During the year ended March 31, 2000, the Company wrote off
$65,000 of a non-performing loan against the Allowance for Losses
and transferred the remaining balance of $110,231 to Building,
Improvements and Equipment.
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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.
MONMOUTH CAPITAL CORPORATION
BY: /s/ Eugene W. Landy
EUGENE W. LANDY
President
Dated: June 21, 2001
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
EUGENE W. LANDY President and
Director June 21, 2001
/s/ Ernest V. Bencivenga Secretary/Treasurer
ERNEST V. BENCIVENGA and Director June 21, 2001
/s/ Anna T. Chew Controller and
ANNA T. CHEW Director June 21, 2001
/s/ Charles P. Kaempffer
CHARLES P. KAEMPFFER Director June 21, 2001
/s/ Samuel A. Landy
SAMUEL A. LANDY Director June 21, 2001
/s/ Robert G. Sampson
ROBERT G. SAMPSON Director June 21, 2001
/s/ Eugene Rothenberg
EUGENE ROTHENBERG Director June 21, 2001
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