-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E9cyXhR1GNil0BTVJnnCXF48jj9JEvj5D5b4/0Tf3NUurt8WR/oqSm8Ry4GZf0Dd N38U80EShuG0yFejTZnVxg== 0000067625-02-000004.txt : 20020414 0000067625-02-000004.hdr.sgml : 20020414 ACCESSION NUMBER: 0000067625-02-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONMOUTH REAL ESTATE INVESTMENT CORP CENTRAL INDEX KEY: 0000067625 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 221897375 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04258 FILM NUMBER: 02547368 BUSINESS ADDRESS: STREET 1: 3499 ROUTE 9 N, SUITE 3-C STREET 2: JUNIPER BUSINESS PLAZA CITY: FREEHOLD STATE: NJ ZIP: 07728 BUSINESS PHONE: 7325779996 MAIL ADDRESS: STREET 1: 3499 ROUTE 9 N, SUITE 3-C STREET 2: JUNIPER BUSINESS PLAZA CITY: FREEHOLD STATE: NJ ZIP: 07728 FORMER COMPANY: FORMER CONFORMED NAME: MONMOUTH REAL ESTATE INVESTMENT TRUST DATE OF NAME CHANGE: 19900403 10-Q 1 mreicq.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ( 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, 2001 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 December 31, 2001 No 2-29442 MONMOUTH REAL ESTATE INVESTMENT CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 22-1897375 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3499 Route 9 North, Suite 3-C, Freehold, NJ 07728 (Address of Principal Executive Office) (Zip Code) Registrant's telephone number, including area code: (732) 577-9997 - ------------------------------------------------------------------- (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 8, 2002 was 10,798,053. MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARY FOR THE QUARTER ENDED DECEMBER 31, 2001 C O N T E N T S Page No. Part I - Financial Information Item 1 - Financial Statements (Unaudited): Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6-8 Item 2 - Management's Discussion and Analysis Of Financial Condition and Results of Operation 9-10 Item 3 - Quantitative and Qualitative Disclosures 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 Page 2
MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2001 AND SEPTEMBER 30, 2001 12/31/01 9/30/01 ASSETS Real Estate Investments: Land $19,135,814 $18,295,814 Buildings, Improvements and Equipment, Net of Accumulated Depreciation of $11,964,900 and $11,268,700, respectively 100,909,084 84,426,270 Total Real Estate Investments 120,044,898 102,722,084 Cash and Cash Equivalents 276,440 147,579 Securities Available for Sale at Fair Value 12,057,661 12,948,359 Interest and Other Receivables 871,992 847,130 Prepaid Expenses 60,805 53,257 Lease Costs, Net of Accumulated Amortization 103,222 109,448 Investment in Hollister '97, L.L.C. 900,399 900,399 Other Assets 1,348,483 1,705,214 ____________ ____________ TOTAL ASSETS $135,663,900 $119,433,470 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage Notes Payable $73,031,047 $60,424,754 Loans Payable 9,184,422 8,204,961 Other Liabilities 839,378 874,216 ____________ ____________ Total Liabilities 83,054,847 69,503,931 ____________ ____________ Shareholders' Equity: Common Stock-Class A-$.01 Par Value, 16,000,000 Shares Authorized, 10,670,295 and 10,264,728Shares Issued and Outstanding, respectively 106,703 102,647 Common Stock-Class B-$.01 Par Value, 100,000 Shares Authorized, No Shares Issued or Outstanding -0- -0- Additional Paid-In Capital 50,507,819 48,284,847 Accumulated Other Comprehensive Income 1,994,531 1,542,045 Undistributed Income -0- -0- ____________ ____________ Total Shareholders' Equity 52,609,053 49,929,539 ____________ ___________ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $135,663,900 $119,433,470 ============ ============ Unaudited See Accompanying Notes to Financial Statements Page 3
MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000 2001 2000 INCOME: Rental and Occupancy Charges 3,306,743 2,195,442 Interest and Dividend Income 292,500 499,162 Gain on Securities Available for Sale Transactions, net 169,048 90,398 ___________ ___________ TOTAL INCOME 3,768,291 2,785,002 ___________ ___________ EXPENSES: Interest Expense 1,426,291 894,523 Real Estate Taxes 43,226 27,770 Operating Expenses 181,985 154,755 Office and General Expense 218,244 120,230 Depreciation 696,200 449,964 ___________ ___________ TOTAL EXPENSES 2,565,946 1,647,242 ___________ ___________ NET INCOME 1,202,345 1,137,760 =========== =========== NET INCOME - PER SHARE Basic $ .12 $ .13 =========== =========== Diluted $ .11 $ .13 =========== =========== WEIGHTED AVERAGE SHARES OUTSTANDING Basic 10,440,726 8,884,543 =========== =========== Diluted 10,466,187 8,884,543 =========== =========== Unaudited See Accompanying Notes to Financial Statements
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MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $1,202,345 $1,137,760 Noncash Items Included in Net Income: Depreciation 696,200 449,964 Amortization 37,588 29,408 Gain on Sales of Securities Available for Sale (169,048) (90,398) Changes In: Interest and Other Receivables (24,862) 38,110 Prepaid Expenses (7,548) (65,793) Other Assets and Lease Costs 496,409 (454,370) Other Liabilities (34,838) 17,043 ___________ ___________ NET CASH PROVIDED BY OPERATING ACTIVITIES 2,196,246 1,061,724 ___________ ___________ CASH FLOWS FROM INVESTING ACTIVITIES Additions to Land, Buildings, Improvements and Equipment (18,019,014) (7,576,853) Purchase of Securities Available for Sale -0- (111,200) Proceeds from Sale of Securities Available for Sale 1,512,232 641,844 ___________ ___________ NET CASH USED BY INVESTING ACTIVITIES (16,506,782) (7,046,209) ___________ ___________ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Loans 5,586,598 3,376,463 Principal Payments on Loans (4,607,137) (3,814,998) Proceeds from Mortgages 13,550,000 5,650,000 Principal Payments on Mortgages (943,707) (582,620) Financing Costs on Debt (171,040) (99,786) Proceeds from Issuance of Class A 2,071,630 1,905,011 Common Stock Dividends Paid (1,046,947) (836,383) ___________ ___________ NET CASH PROVIDED BY FINANCING ACTIVITIES 14,439,397 5,597,687 ___________ ___________ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 128,861 (386,798) CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 147,579 514,090 ___________ ___________ END OF PERIOD $ 276,440 $ 127,292 =========== =========== Unaudited See Accompanying Notes to Financial Statements
Page 5 MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - ACCOUNTING POLICY The interim 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, 2001 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 Real Estate Investment Corporation (the Company) for the year ended September 30, 2001 have been omitted. Certain reclassifications have been made to the financial statements for the prior period to conform to the current period presentation. NOTE 2 - 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. 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. Options in the amount of 25,461 and -0- for the three months ended December 31, 2001 and 2000, respectively are included in the diluted weighted average shares outstanding. NOTE 3 - COMPREHENSIVE INCOME Total comprehensive income, including unrealized gains (loss) on securities available for sale, for the three months ended December 31, 2001 and 2000 amounted to $1,654,831 and $758,504, respectively. NOTE 4 - REAL ESTATE INVESTMENTS On October 12, 2001, the Company purchased a 184,800 square foot warehouse facility in Granite City, Illinois. This warehouse facility is 100% net-leased to Anheuser-Busch, Inc. The purchase price was approximately $12,400,000. The Company paid approximately $100,000 in cash, borrowed approximately $1,000,000 against its security portfolio with Prudential Securities, used approximately $1,800,000 of its credit line with Fleet Bank and obtained a mortgage of approximately $9,500,000. This mortgage payable is at an interest rate of 7.11% and is due November 1, 2016. Page 6 On November 2, 2001, the Company purchased a 160,000 square foot warehouse facility in Monroe, North Carolina. This warehouse facility is 100% net-leased to Hughes Supply Inc. The purchase price was approximately $5,500,000. The Company paid approximately $100,000 in cash, used approximately $1,300,000 of its credit line with Fleet Bank and obtained a mortgage of approximately $4,100,000. This mortgage payable is at an interest rate of 7.11% and is due December 1, 2016. NOTE 5 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN On December 17, 2001, the Company paid $1,519,885 as a dividend of $.145 per share to shareholders of record November 15, 2001. For the three months ended December 31, 2001, the Company received $2,544,568 from the Dividend Reinvestment and Stock Purchase Plan (DRIP). There were 405,567 shares issued, resulting in 10,670,295 shares outstanding. NOTE 6 - EMPLOYEE STOCK OPTIONS During the three months ended December 31, 2001, the following stock option was granted: Number Expiration Date of Number of of Option Date Grant Employees Shares Price 10/04/01 1 65,000 $6.765 10/04/06 As of December 31, 2001, there were options outstanding to purchase 450,000 shares and 300,000 shares available for grant under the Company's Stock Option Plan. NOTE 7 - SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the three months ended December 31, 2001 and 2000 for interest was $1,426,291 and $894,523, respectively. During the three months ended December 31, 2001 and 2000, the Company had dividend reinvestments of $472,938 and $454,596, respectively, which required no cash transfers. NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS In August, 2001, FASB issued Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations," which addresses financial accounting and reporting for obligations associated with the retirement of tangible long- lived assets and the associated asset retirement costs. SFAS No. 143 requires an enterprise to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets. The Company is required to adopt the provisions of SFAS No. 143 for fiscal years beginning after June 15, 2002. The Company does not anticipate that SFAS No. 143 will significantly impact the Company's consolidated financial statements. Page 7 On October 3, 2001, FASB issued SFAS No. 144. "Accounting for the Impairment or Disposal of Long-Lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. While SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed Of", it retains many of the fundamental provisions of the Statement. The Statement is effective for fiscal years beginning after December 15, 2001. The Company does not anticipate that the initial adoption of SFAS No. 144 will have a significant impact on the Company's financial statements. NOTE 9 - SUBSEQUENT EVENTS On January 31, 2002, the Company purchased a 106,507 square foot warehouse facility in Winston-Salem, North Carolina. This warehouse facility is 100% net-leased to Fed Ex Ground Package System, a subsidiary of Federal Express Corporation. The purchase price was approximately $6,700,000. The Company paid approximately $200,000 in cash, used approximately $1,700,000 of its credit line with Fleet Bank and obtained a mortgage of approximately $4,800,000. This mortgage payable is at an interest rate of 7.1% and is due February 1, 2012. Page 8 MONMOUTH REAL ESTATE INVESTMENT CORPORATION AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MATERIAL CHANGES IN FINANCIAL CONDITION The Company generated net cash provided by operating activities of $2,196,246 for the current three months as compared to $1,061,724 for the prior period. The Company raised $2,544,568 from the issuance of shares of common stock through its Dividend Reinvestment and Stock Purchase Plan (DRIP). Dividends paid for the three months ended December 31, 2001 amounted to $1,519,885. The Company purchased two warehouse facilities for a total purchase price, including closing costs, of approximately $18,000,000. Securities available for sale decreased by $890,698 primarily as a result of sales of $1,343,184 partially offset by an increase in the unrealized gain of $452,486. Other assets decreased by $356,731 primarily as a result of deposits used for the purchase of two additional warehouse facilities. Mortgage notes payable increased by $12,606,293 during the three months ended December 31, 2001. This increase was primarily due to additional mortgages of $13,550,000 on the new acquisitions partially offset by principal repayments of $943,707. Loans payable increased by $979,461 during the three months ended December 31, 2001. This increase was the result of additional take- downs in the amount of $5,586,598 of the Company's revolving credit line and margin loan partially offset by repayments of $4,607,137. MATERIAL CHANGES IN RESULTS OF OPERATIONS Rental and occupancy charges increased for the three months ended December 31, 2001 to $3,306,743 as compared to $2,195,442 for the three months ended December 31, 2000. This was a result of the new acquisitions made in fiscal 2001 and 2002. Interest and dividend income decreased by $206,662 for the three months ended December 31, 2001 as compared to the three months ended December 31, 2000. This was due primarily to the sales of securities available for sale during the current three months. Gain on Securities Available for Sale transactions amounted to $169,048 and $90,398 for the three months ended December 31, 2001 and 2000, respectively. Page 9 Interest expense increased by $531,768 for the three months ended December 31, 2001 as compared to the three months ended December 31, 2000. This was primarily the result of additional borrowings for the new acquisitions made in fiscal 2001 and 2002. Real estate taxes increased by $15,456 for the three months ended December 31, 2001 as compared to the three months ended December 31, 2000. This was due primarily to the new acquisitions made in fiscal 2001 and 2002. Operating expenses increased by $27,230 for the three months ended December 31, 2001 as compared to the three months ended December 31, 2000. This was due primarily to the new acquisitions made in fiscal 2001 and 2002. Office and General expenses increased by $98,014 for the three months ended December 31, 2001 as compared to the three months ended December 31, 2000. This was primarily due to increased occupancy charges and personnel costs. The Company has been expanding its operations. Depreciation expense increased by $246,236 for the three months ended December 31, 2001 as compared to the three months ended December 31, 2000. This was due to the real estate acquisitions in fiscal 2001 and 2002. Funds from operations (FFO), defined as net income, excluding gains (or losses) from sales of depreciable assets, plus depreciation amounted to $1,898,545 and $1,587,724 for the three months ended December 31, 2001 and 2000, respectively. FFO does not replace net income (determined in accordance with generally accepted accounting principles) as a measure of performance or net cash flows as a measure of liquidity. FFO should be considered as a supplemental measure of operating performance used by real estate investment trusts. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities amounted to $2,196,246 and $1,061,724 during the three months ended December 31, 2001 and 2000, respectively. The Company owns twenty-nine properties of which twenty-three carried mortgage loans totaling $73,031,047 at December 31, 2001. The Company has been raising capital through its DRIP and investing in net leased industrial properties. The Company believes that funds generated from operations, the DRIP, together with the ability to finance and refinance its properties will provide sufficient funds to adequately meet its obligations over the next several years. The Company seeks to invest in well-located, modern buildings leased to credit worthy tenants on long-term leases. In management's opinion, newly built facilities leased to The Federal Express Corporation (FDX) and its subsidiaries meet this criteria. The Company is considering an additional FDX subsidiary leased property. This will result in an increased concentration of FDX and FDX subsidiary leased properties. This is a risk factor that shareholders should consider. FDX is a publicly-owned corporation and information on its financial business operations is readily available to the Company's shareholders. Because of the contingent nature of contracts to purchase real property, the Company announces acquisitions only on closing. Page 10 PART II: OTHER INFORMATION MONMOUTH REAL ESTATE INVESTMENT CORPORATION 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 (a) EXHIBITS - None (b) REPORTS ON FORM 8-K - Form 8-K dated October 12, 2001 was filed to report the purchase of a warehouse facility in Granite City, Illinois. Page 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MONMOUTH REAL ESTATE INVESTMENT CORPORATION Date: February 13, 2002 By: /s/ Eugene W. Landy Eugene W. Landy President Date: February 13, 2002 By: /s/ Anna T. Chew Anna T. Chew Controller Page 12 -----END PRIVACY-ENHANCED MESSAGE-----