UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended JanuaryOctober 31, 2021
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ___________
Commission File Number: 1-4702
AMREP Corporation
(Exact Name of Registrant as Specified in its Charter)
Oklahoma | 59-0936128 | |
State or Other Jurisdiction of Incorporation or Organization | I.R.S. Employer Identification No. | |
| ||
850 West Chester Pike, Suite 205, Havertown, PA | 19083 | |
Address of Principal Executive Offices | Zip Code |
(610) 487-0905 |
Registrant’s Telephone Number, Including Area Code |
(610) 487-0905
|
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report |
Registrant’s Telephone Number, Including Area Code
Not Applicable
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Securities registered pursuant to Section 12(b) of the Act:
| | | | |
Title of each class | Trading Symbol(s) | | Name of each exchange on which registered | |
Common Stock $0.10 par value | | AXR | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) 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 mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x☒ No ¨
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | Accelerated filer |
Non-accelerated filer | Smaller reporting company |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x
⌧
Number of Shares of Common Stock, par value $.10 per share, outstanding at March 5,December 3, 2021 – 7,323,370.7,336,370.
AMREP CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1.1. Financial Statements
AMREP CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEE
Consolidated Balance SheetsTS
(Amounts in thousands, except share and per share amounts)
January 31, 2021 | April 30, 2020 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 15,406 | $ | 17,502 | ||||
Real estate inventory | 55,607 | 53,449 | ||||||
Investment assets, net | 18,818 | 18,644 | ||||||
Other assets | 1,225 | 934 | ||||||
Taxes receivable, net | 57 | 57 | ||||||
Deferred income taxes, net | 4,779 | 6,080 | ||||||
TOTAL ASSETS | $ | 95,892 | $ | 96,666 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
LIABILITIES: | ||||||||
Accounts payable and accrued expenses | $ | 4,076 | $ | 3,125 | ||||
Notes payable, net | 5,200 | 3,890 | ||||||
Accrued pension costs | 3,209 | 5,014 | ||||||
TOTAL LIABILITIES | 12,485 | 12,029 | ||||||
SHAREHOLDERS’ EQUITY: | ||||||||
Common stock, $.10 par value; shares authorized – 20,000,000; shares issued – 7,323,370 at January 31, 2021 and 8,358,154 at April 30, 2020 | 730 | 836 | ||||||
Capital contributed in excess of par value | 45,072 | 51,334 | ||||||
Retained earnings | 43,802 | 43,149 | ||||||
Accumulated other comprehensive loss, net | (6,197 | ) | (6,467 | ) | ||||
Treasury stock, at cost – 225,250 shares at April 30, 2020 | - | (4,215 | ) | |||||
TOTAL SHAREHOLDERS’ EQUITY | 83,407 | 84,637 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 95,892 | $ | 96,666 |
| | | | | | |
| | October 31, | | April 30, | ||
| | 2021 | | 2021 | ||
|
| (Unaudited) |
| | ||
ASSETS |
| |
|
| |
|
Cash and cash equivalents | | $ | 30,327 | | $ | 24,801 |
Real estate inventory | |
| 61,772 | |
| 55,589 |
Investment assets, net | |
| 9,775 | |
| 13,582 |
Other assets | |
| 1,870 | |
| 645 |
Deferred income taxes, net | |
| 1,165 | |
| 2,749 |
TOTAL ASSETS | | $ | 104,909 | | $ | 97,366 |
| | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
|
| |
|
|
Liabilities: | |
|
| |
|
|
Accounts payable and accrued expenses | | $ | 4,758 | | $ | 4,458 |
Notes payable, net | |
| 5,952 | |
| 3,448 |
Taxes payable, net | |
| 29 | |
| 95 |
Accrued pension costs | |
| 35 | |
| 476 |
TOTAL LIABILITIES | |
| 10,774 | |
| 8,477 |
| | | | | | |
Shareholders’ Equity: | |
|
| |
|
|
Common stock, $.10 par value; shares authorized – 20,000,000; shares issued – 7,336,370 at October 31, 2021 and 7,323,370 at April 30, 2021 | |
| 731 | | | 730 |
Capital contributed in excess of par value | |
| 45,221 | |
| 45,072 |
Retained earnings | |
| 52,673 | |
| 47,710 |
Accumulated other comprehensive loss, net | |
| (4,490) | |
| (4,623) |
TOTAL SHAREHOLDERS’ EQUITY | |
| 94,135 | |
| 88,889 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 104,909 | | $ | 97,366 |
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
2
AMREP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Consolidated Statements of Comprehensive Income (Unaudited) (UNAUDITED)
Three and NineSix Months Ended Januaryended October 31, 2021 and 2020
(Amounts in thousands)thousands, except per share amounts)
Three Months ended January 31, | ||||||||
2021 | 2020 | |||||||
Net income | $ | 2,093 | $ | 338 | ||||
Other comprehensive income, net of tax: | ||||||||
Decrease in pension liability, net of tax ($42 in 2021 and $24 in 2020) | 90 | 77 | ||||||
Other comprehensive income | 90 | 77 | ||||||
Total comprehensive income | $ | 2,183 | $ | 415 |
Nine months ended January 31, | ||||||||
2021 | 2020 | |||||||
Net income (loss) | $ | 3,484 | $ | (2,027 | ) | |||
Other comprehensive income, net of tax: | ||||||||
Pension settlement, net of tax ($880 in 2020) | - | 2,049 | ||||||
Decrease in pension liability, net of tax ($126 in 2021 and $134 in 2020) | 270 | 329 | ||||||
Other comprehensive income | 270 | 2,378 | ||||||
Total comprehensive income | $ | 3,754 | $ | 351 |
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
AMREP CORPORATION AND SUBSIDIARIES
| | | | | | | | | | | | |
| | Three Months ended | | Six Months ended | ||||||||
| | October 31, | | October 31, | ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
REVENUES: |
| |
|
| |
|
| |
|
| |
|
Land sale revenues | | $ | 8,466 | | $ | 8,526 | | $ | 15,656 | | $ | 12,013 |
Home sale revenues | | | 819 | | | 202 | | | 3,230 | | | 202 |
Building sales and other revenues | |
| 6,951 | |
| 528 | |
| 7,857 | |
| 1,247 |
Total revenues | |
| 16,236 | |
| 9,256 | |
| 26,743 | |
| 13,462 |
| | | | | | | | | | | | |
COSTS AND EXPENSES: | |
|
| |
| | |
|
| |
| |
Land sale cost of revenues | |
| 6,154 | |
| 6,430 | |
| 11,765 | |
| 9,109 |
Home sale cost of revenues | | | 629 | | | 174 | | | 2,543 | | | 174 |
Building sales and other cost of revenues | |
| 3,837 | |
| 0 | |
| 3,837 | |
| — |
General and administrative expenses | |
| 1,257 | |
| 1,523 | |
| 2,443 | |
| 2,967 |
Total costs and expenses | |
| 11,877 | |
| 8,127 | |
| 20,588 | |
| 12,250 |
Operating income | | | 4,359 | | | 1,129 | | | 6,155 | | | 1,212 |
| | | | | | | | | | | | |
Interest income (expense), net | |
| 2 | |
| (12) | |
| 1 | |
| (6) |
Other income | |
| 30 | |
| 0 | |
| 260 | |
| 650 |
Income before income taxes | | | 4,391 | | | 1,117 | | | 6,416 | | | 1,856 |
| | | | | | | | | | | | |
Provision for income taxes | | | 1,065 | | | 319 | | | 1,453 | | | 465 |
Net income | | $ | 3,326 | | $ | 798 | | $ | 4,963 | | $ | 1,391 |
| | | | | | | | | | | | |
Basic earnings per share | | $ | 0.45 | | $ | 0.10 | | $ | 0.67 | | $ | 0.17 |
Diluted earnings per share | | $ | 0.45 | | $ | 0.10 | | $ | 0.67 | | $ | 0.17 |
Weighted average number of common shares outstanding – basic | |
| 7,361 | |
| 8,122 | |
| 7,354 | |
| 8,136 |
Weighted average number of common shares outstanding – diluted | |
| 7,383 | |
| 8,152 | |
| 7,378 | |
| 8,168 |
Consolidated Statements of Shareholders’ Equity (Unaudited)
Three Months Ended January 31, 2021 and 2020
(Amounts in thousands)
Common Stock | Capital Contributed in Excess of | Retained | Accumulated Other Comprehensive | Treasury Stock, at | ||||||||||||||||||||||||
Shares | Amount | Par Value | Earnings | Loss | Cost | Total | ||||||||||||||||||||||
Balance, November 1, 2020 | 7,692 | $ | 768 | $ | 47,216 | $ | 44,540 | $ | (6,287 | ) | $ | (4,215 | ) | $ | 82,022 | |||||||||||||
Issuance of deferred common share units | - | - | 90 | - | - | - | 90 | |||||||||||||||||||||
Repurchase of common stock | (144 | ) | (14 | ) | (874 | ) | - | - | - | (888 | ) | |||||||||||||||||
Retirement of treasury stock | (225 | ) | (24 | ) | (1,360 | ) | (2,831 | ) | - | 4,215 | - | |||||||||||||||||
Net income | - | - | - | 2,093 | - | - | 2,093 | |||||||||||||||||||||
Other comprehensive income | - | - | - | - | 90 | - | 90 | |||||||||||||||||||||
Balance, January 31, 2021 | 7,323 | $ | 730 | $ | 45,072 | $ | 43,802 | $ | (6,197 | ) | - | $ | 83,407 | |||||||||||||||
Balance, November 1, 2019 | 8,362 | $ | 836 | $ | 51,261 | $ | 46,687 | $ | (4,730 | ) | $ | (4,215 | ) | $ | 89,839 | |||||||||||||
Issuance of deferred common share units | - | - | 100 | - | - | - | 100 | |||||||||||||||||||||
Net income | - | - | - | 338 | - | - | 338 | |||||||||||||||||||||
Other comprehensive income | - | - | - | - | 77 | - | 77 | |||||||||||||||||||||
Balance, January 31, 2020 | 8,362 | $ | 836 | $ | 51,361 | $ | 47,025 | $ | (4,653 | ) | $ | (4,215 | ) | $ | 90,354 |
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
3
AMREP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Consolidated Statements of Shareholders’ Equity (Unaudited)
NineThree and Six Months Ended Januaryended October 31, 2021 and 2020
(Amounts in thousands)
Common Stock | Capital Contributed in Excess of | Retained | Accumulated Other Comprehensive | Treasury Stock, at | ||||||||||||||||||||||||
Shares | Amount | Par Value | Earnings | Loss | Cost | Total | ||||||||||||||||||||||
Balance, May 1, 2020 | 8,358 | $ | 836 | $ | 51,334 | $ | 43,149 | $ | (6,467 | ) | $ | (4,215 | ) | $ | 84,637 | |||||||||||||
Issuance of restricted common stock | 9 | 1 | 41 | - | - | - | 42 | |||||||||||||||||||||
Issuance of deferred common share units | - | - | 90 | - | - | - | 90 | |||||||||||||||||||||
Issuance of common stock settled from deferred common share units | 12 | - | - | - | - | - | - | |||||||||||||||||||||
Repurchase of common stock | (831 | ) | (83 | ) | (5,033 | ) | - | - | - | (5,116 | ) | |||||||||||||||||
Retirement of treasury stock | (225 | ) | (24 | ) | (1,360 | ) | (2,831 | ) | - | 4,215 | - | |||||||||||||||||
Net income | - | - | - | 3,484 | - | - | 3,484 | |||||||||||||||||||||
Other comprehensive income | - | - | - | - | 270 | - | 270 | |||||||||||||||||||||
Balance, January 31, 2021 | 7,323 | $ | 730 | $ | 45,072 | $ | 43,802 | $ | (6,197 | ) | - | $ | 83,407 | |||||||||||||||
Balance, May 1, 2019 | 8,353 | $ | 835 | $ | 51,205 | $ | 49,052 | $ | (7,031 | ) | $ | (4,215 | ) | $ | 89,846 | |||||||||||||
Issuance of restricted common stock | 9 | 1 | 56 | - | - | - | 57 | |||||||||||||||||||||
Issuance of deferred common share units | - | - | 100 | - | - | - | 100 | |||||||||||||||||||||
Net loss | - | - | - | (2,027 | ) | - | - | (2,027 | ) | |||||||||||||||||||
Other comprehensive income | - | - | - | - | 2,378 | - | 2,378 | |||||||||||||||||||||
Balance, January 31, 2020 | 8,362 | $ | 836 | $ | 51,361 | $ | 47,025 | $ | (4,653 | ) | $ | (4,215 | ) | $ | 90,354 |
| | | | | | | | | | | | |
| | Three Months ended | | Six Months ended | ||||||||
| | October 31, | | October 31, | ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Net income | | $ | 3,326 | | $ | 798 | | $ | 4,963 | | $ | 1,391 |
Other comprehensive income, net of tax: | |
|
| |
|
| |
|
| |
|
|
Decrease in pension liability | |
| 98 | |
| 132 | |
| 195 | |
| 264 |
Income tax effect | | | (31) | | | (42) | | | (62) | | | (84) |
Decrease in pension liability, net of tax | | | 67 | | | 90 | | | 133 | | | 180 |
Other comprehensive income | |
| 67 | |
| 90 | |
| 133 | |
| 180 |
Total comprehensive income | | $ | 3,393 | | $ | 888 | | $ | 5,096 | | $ | 1,571 |
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
4
2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 3,484 | $ | (2,027 | ) | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 424 | 381 | ||||||
Amortization of debt issuance costs | 30 | 56 | ||||||
Non-cash credits and charges: | ||||||||
Interest earned on deferred purchase price | - | (196 | ) | |||||
Stock-based compensation | 132 | 107 | ||||||
Deferred income tax provision (benefit) | 1,301 | (336 | ) | |||||
Net periodic pension cost | 298 | 189 | ||||||
Gain on debt forgiveness | (300 | ) | - | |||||
Pension settlement | - | 2,929 | ||||||
Deferred Rent | - | 154 | ||||||
Changes in assets and liabilities: | ||||||||
Real estate inventory and investment assets | (2,750 | ) | 2,907 | |||||
Other assets | (297 | ) | (399 | ) | ||||
Accounts payable and accrued expenses | 951 | 487 | ||||||
Accrued pension costs | (1,847 | ) | (3,600 | ) | ||||
Total adjustments | (2,058 | ) | 2,679 | |||||
Net cash provided by operating activities | 1,426 | 652 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Capital expenditures | (3 | ) | (18 | ) | ||||
Net cash used in investing activities | (3 | ) | (18 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from debt financing | 5,466 | 986 | ||||||
Principal debt payments | (3,782 | ) | (1,385 | ) | ||||
Payments for debt issuance costs | (87 | ) | - | |||||
Repurchase of common stock | (5,116 | ) | - | |||||
Net cash used in financing activities | (3,519 | ) | (399 | ) | ||||
(Decrease) increase in cash, cash equivalents and restricted cash | (2,096 | ) | 235 | |||||
Cash, cash equivalents and restricted cash, beginning of period | 17,502 | 14,236 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 15,406 | $ | 14,471 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
Interest paid | $ | 52 | $ | - | ||||
Right-of-use assets obtained in exchange for operating lease liabilities | $ | - | $ | 198 |
Three and Six Months ended October 31, 2021 and 2020
(Amounts in thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | Capital | | | | | Accumulated | | Treasury | | | | |||
| | | | | | | Contributed | | | | | Other | | Stock, | | | | |||
| | Common Stock | | in Excess of | | Retained | | Comprehensive | | at | | | | |||||||
|
| Shares |
| Amount |
| Par Value |
| Earnings |
| Loss |
| Cost |
| Total | ||||||
Balance, August 1, 2021 |
| 7,336 | | $ | 731 | | $ | 45,221 | | $ | 49,347 | | $ | (4,557) | | $ | 0 | | $ | 90,742 |
Net income | | — | | | 0 | | | 0 | | | 3,326 | | | 0 | | | 0 | | | 3,326 |
Other comprehensive income |
| — | | | 0 | |
| 0 | |
| 0 | |
| 67 | |
| 0 | |
| 67 |
Balance, October 31, 2021 |
| 7,336 | | $ | 731 | | $ | 45,221 | | $ | 52,673 | | $ | (4,490) | | $ | 0 | | $ | 94,135 |
| | | | | | | | | | | | | | | | | | | | |
Balance, August 1, 2020 | | 8,367 | | $ | 837 | | $ | 51,375 | | $ | 43,742 | | $ | (6,377) | | $ | (4,215) | | $ | 85,362 |
Issuance of common stock settled from deferred common share units | | 12 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 |
Repurchase of common stock | | (687) | | | (69) | | | (4,159) | | | 0 | | | 0 | | | 0 | | | (4,228) |
Net income | | — | | | 0 | | | 0 | | | 798 | | | 0 | | | 0 | | | 798 |
Other comprehensive income | | — | | | 0 | | | 0 | | | 0 | | | 90 | | | 0 | | | 90 |
Balance, October 31, 2020 |
| 7,692 | | $ | 768 | | $ | 47,216 | | $ | 44,540 | | $ | (6,287) | | $ | (4,215) | | $ | 82,022 |
| | | | | | | | | | | | | | | | | | | | |
Balance, May 1, 2021 |
| 7,323 | | $ | 730 | | $ | 45,072 | | $ | 47,710 | | $ | (4,623) | | $ | 0 | | $ | 88,889 |
Issuance of restricted common stock | | 13 | | | 1 | |
| 149 | |
| 0 | |
| 0 | |
| 0 | |
| 150 |
Net income | | — | | | 0 | | | 0 | | | 4,963 | | | 0 | | | 0 | | | 4,963 |
Other comprehensive income |
| — | |
| 0 | |
| 0 | |
| 0 | |
| 133 | |
| 0 | |
| 133 |
Balance, October 31, 2021 |
| 7,336 | | $ | 731 | | $ | 45,221 | | $ | 52,673 | | $ | (4,490) | | $ | 0 | | $ | 94,135 |
| | | | | | | | | | | | | | | | | | | | |
Balance, May 1, 2020 | | 8,358 | | $ | 836 | | $ | 51,334 | | $ | 43,149 | | $ | (6,467) | | $ | (4,215) | | $ | 84,637 |
Issuance of restricted common stock | | 9 | | | 1 | | | 41 | | | 0 | | | 0 | | | 0 | | | 42 |
Issuance of common stock settled from deferred common share units | | 12 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 |
Repurchase of common stock | | (687) | | | (69) | | | (4,159) | | | 0 | | | 0 | | | 0 | | | (4,228) |
Net income | | — | | | 0 | | | 0 | | | 1,391 | | | 0 | | | 0 | | | 1,391 |
Other comprehensive income | | — | | | 0 | | | 0 | | | 0 | | | 180 | | | 0 | | | 180 |
Balance, October 31, 2020 |
| 7,692 | | $ | 768 | | $ | 47,216 | | $ | 44,540 | | $ | (6,287) | | $ | (4,215) | | $ | 82,022 |
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
5
AMREP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months ended October 31, 2021 and 2020
(Amounts in thousands)
| | | | | | |
| | Six Months ended October 31, | ||||
|
| 2021 |
| 2020 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
| |
|
| |
|
Net income | | $ | 4,963 | | $ | 1,391 |
Adjustments to reconcile net income to net cash provided by operating activities: | |
|
| |
|
|
Depreciation | |
| 204 | |
| 270 |
Amortization of debt issuance costs | |
| 34 | |
| 30 |
Non-cash credits and charges: | |
|
| |
|
|
Stock-based compensation | |
| 47 | |
| 42 |
Deferred income tax provision | |
| 1,522 | |
| 548 |
Net periodic pension cost | |
| (246) | |
| 208 |
Gain on debt forgiveness | | | (45) | | | — |
Changes in assets and liabilities: | |
|
| |
|
|
Real estate inventory and investment assets | |
| (2,580) | |
| (1,065) |
Other assets | |
| (1,203) | |
| (614) |
Accounts payable and accrued expenses | |
| 300 | |
| 1,575 |
Accrued pension costs | | | — | | | (1,847) |
Taxes payable | |
| (66) | |
| — |
Net cash provided by (used in) operating activities | |
| 2,930 | |
| 538 |
| | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | |
| |
Proceeds from corporate-owned life insurance policy | |
| 92 | |
| — |
Capital expenditures | |
| (11) | |
| (3) |
Net cash provided by (used in) investing activities | |
| 81 | |
| (3) |
| | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | |
| |
Proceeds from debt financing | |
| 6,857 | |
| 5,415 |
Principal debt payments | |
| (4,292) | |
| (3,475) |
Payments for debt issuance costs | |
| (50) | |
| (57) |
Repurchase of common stock | | | — | | | (4,228) |
Net cash provided by (used in) financing activities | |
| 2,515 | |
| (2,345) |
| | | | | | |
Increase (decrease) in cash and cash equivalents | |
| 5,526 | |
| (1,810) |
Cash and cash equivalents, beginning of period | |
| 24,801 | |
| 17,502 |
Cash and cash equivalents, end of period | | $ | 30,327 | | $ | 15,692 |
| | | | | | |
SUPPLEMENTAL CASH FLOW INFORMATION: | |
|
| |
|
|
Income taxes refunded, net | | $ | 3 | | $ | — |
Interest paid, net of amount capitalized | | $ | — | | $ | 52 |
Right-of-use assets obtained in exchange for operating lease liabilities | | $ | 42 | | $ | — |
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
6
AMREP CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Three and NineSix Months Ended JanuaryOctober 31, 2021 and 2020
(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL REPORTING POLICIES
The accompanying unaudited consolidated financial statements have been prepared by AMREP Corporation (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information, and do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The Company, through its subsidiaries, is primarily engaged in two business segments: land development and homebuilding. The Company has no foreign sales.sales or activities outside the United States. All references to the Company in this quarterly report on Form 10-Q include the Registrant and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
In the opinion of management, these unaudited consolidated financial statements include all adjustments, which are of a normal recurring nature, considered necessary to reflect a fair presentation of the results for the interim periods presented. The results of operations for such interim periods are not necessarily indicative of what may occur in future periods. Unless the context otherwise indicates, all references to 20212022 and 20202021 are to the fiscal years ending April 30, 20212022 and 2020.2021.
The unaudited consolidated financial statements herein should be read in conjunction with the Company’s annual report on Form 10-K for the year ended April 30, 2020,2021, which was filed with the SEC on July 27, 20202021 (the “2020“2021 Form 10-K”). Certain 20202021 balances in these financial statements have been reclassified to conform to the current year presentation with no effect on net income (loss) or shareholders’ equity.
Summary of Significant Accounting Policies
The significant accounting policies used in preparing these consolidated financial statements are consistent with the accounting policies described in the 20202021 Form 10-K, except for those adopted as described below.
Revenue Recognition
New Accounting Pronouncements
In August 2018,December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13,2019-12, Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements to improve the effectiveness of disclosures in the notes to financial statements. ASU 2018-13 was effective for the Company on May 1, 2020. The adoption of ASU 2018-13 by the Company did not have a material effect on its consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 removes disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant for companies with defined benefit retirement plans. ASU 2018-14 was effective for the Company on May 1, 2020. The adoption of ASU 2018-14 by the Company did not have a material effect on its consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes, which removes certain exceptions for companies related to tax allocations and simplifies when companies recognize deferred tax liabilities in an interim period. ASU 2019-12 will bewas effective for the Company’s fiscal year beginning May 1, 2021. The adoption of ASU 2019-12 by the Company is currently evaluating the impact that this ASU willdid not have any effect on the Company’sits consolidated financial statements.
There are no other new accounting standards or updates to be adopted that the Company currently believes might have a significant impact on its consolidated financial statements.
(2) RESTRICTED CASH
The following provides a reconciliation of the Company’s cash, cash equivalents and restricted cash as reported in the consolidated statement of cash flows for the nine months ended January 31, 2020:
January 31, | April 30, | |||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Cash and cash equivalents | $ | 14,166 | $ | 13,267 | ||||
Restricted cash | 305 | 969 | ||||||
Total cash, cash equivalents and restricted cash | $ | 14,471 | $ | 14,236 |
There was no restricted cash at January 31, 2021 and April 30, 2020.
(3) REAL ESTATE INVENTORY
Real estate inventory consists of:of (in thousands):
| | | | | | |
| | October 31, | | April 30, | ||
|
| 2021 |
| 2021 | ||
Land held for development or sale in New Mexico | | $ | 54,148 | | $ | 49,918 |
Land held for development or sale in Colorado | |
| 4,009 | |
| 3,975 |
Homebuilding finished inventory | | | 214 | | | 417 |
Homebuilding construction in process | | | 3,401 | | | 1,279 |
| | $ | 61,772 | | $ | 55,589 |
January 31, | April 30, | |||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Land held for development or sale | $ | 54,351 | $ | 53,405 | ||||
Homebuilding construction in process and completed inventory | 1,256 | 44 | ||||||
$ | 55,607 | $ | 53,449 |
7
Land held for development or sale represents property located in areas that are planned to be developed or sold in the near term. AsTable of January 31, 2021 and April 30, 2020, the Company held approximately 6,000 acres of land in New Mexico classified as land held for development. Homebuilding construction in process and completed inventory related to residential homes inventory and construction costs for residential homes being built and offered for sale by the homebuilding business segment.Contents
(4) (3)INVESTMENT ASSETS, NET
Investment assets, net consist of:of (in thousands):
January 31, | April 30, | |||||||||||||
2021 | 2020 | |||||||||||||
(in thousands) | ||||||||||||||
| | | | | | | ||||||||
|
| October 31, |
| April 30, | ||||||||||
| | 2021 | | 2021 | ||||||||||
Land held for long-term investment | $ | 9,775 | $ | 9,751 | | $ | 9,775 | | $ | 9,775 | ||||
Construction in process | - | 2,320 | ||||||||||||
Buildings | 15,993 | 13,096 | | | — | | | 10,003 | ||||||
Less accumulated depreciation | (6,950 | ) | (6,523 | ) | |
| — | |
| (6,196) | ||||
Buildings, net | 9,043 | 6,573 | |
| — | |
| 3,807 | ||||||
$ | 18,818 | $ | 18,644 | |||||||||||
| | $ | 9,775 | | $ | 13,582 |
Land held for long-term investment represents property located in areas that are not planned to be developed in the near term and thus has not been offered for sale. As of January 31, 2021 and April 30, 2020, the Company held approximately 12,000 acres of land in New Mexico classified as land held for long-term investment.
Buildings are2021, buildings were comprised of 204,000a 143,000 square feet offoot warehouse and office buildingsfacility located in Palm Coast, Florida and a 14,000Florida. In October 2021, the Company sold this 143,000 square foot retail building in the Las Fuentes at Panorama Village subdivision in Rio Rancho, New Mexico.warehouse and office facility. Depreciation associated with the buildings was $415,000$98,000 and $366,000 for the nine months ended January 31, 2021 and January 31, 2020 and $152,000 and $87,000$140,000 for the three months ended JanuaryOctober 31, 2021 and JanuaryOctober 31, 2020. Construction in process related to2020 and $201,000 and $262,000 for the construction costs of such 14,000 square foot retail building, which was completed during the ninesix months ended JanuaryOctober 31, 2021.2021 and October 31, 2020.
(5) (4) OTHER ASSETS
Other assets consist of:of (in thousands):
January 31, | April 30, | |||||||||||||
2021 | 2020 | |||||||||||||
(in thousands) | ||||||||||||||
| | | | | | | ||||||||
|
| October 31, |
| April 30, | ||||||||||
| | 2021 | | 2021 | ||||||||||
Prepaid expenses | $ | 874 | $ | 464 | | $ | 324 | | $ | 324 | ||||
Receivables | 44 | 156 | | | 58 | | | 37 | ||||||
Right-of-use assets associated with leases of office facilities | 109 | 109 | |
| 129 | |
| 84 | ||||||
Other assets | 170 | 170 | | | 80 | | | 172 | ||||||
Property and equipment | 219 | 217 | | | 1,476 | | | 222 | ||||||
Less accumulated depreciation | (191 | ) | (182 | ) | | | (197) | | | (194) | ||||
Property and equipment, net | 28 | 35 | | | 1,279 | | | 28 | ||||||
$ | 1,225 | $ | 934 | |||||||||||
| | $ | 1,870 | | $ | 645 |
Prepaid expenses as of January 31, 2021 primarily consist of prepaid insurance, stock compensation, prepayments for office rent, brokers commission related to a building lease and security deposits for the buildings in Palm Coast, Florida. Prepaid expenses as of JanuaryOctober 31, 2021 primarily consisted of stock compensation, insurance and utility deposits. Amortized lease cost for right-of-use assets associated with the leases of office facilities was $24,000 and $26,000 for the three months ended October 31, 2021 and October 31, 2020 primarily consist of prepaid insurance, stock compensation and in-process prepayments of amounts due under$36,000 and $63,000 for the six months ended October 31, 2021 and October 31, 2020. In August 2021, the Company acquired a public improvement district.
7,000 square foot office building in Rio Rancho, New Mexico from which its real estate business now operates. Depreciation expense associated with property and equipment was $9,000 and $13,000$2,000 for the nine months ended January 31, 2021 and January 31, 2020 and $2,000 and $4,000 foreach of the three months ended JanuaryOctober 31, 2021 and JanuaryOctober 31, 2020 and $3,000 and $8,000 for the six months ended October 31, 2021 and October 31, 2020.
(6) (5) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of:of (in thousands):
January 31, | April 30, | |||||||||||||
2021 | 2020 | |||||||||||||
(in thousands) | ||||||||||||||
| | | | | | | ||||||||
|
| October 31, |
| April 30, | ||||||||||
| | 2021 | | 2021 | ||||||||||
Real estate operations | | | | | | | ||||||||
Accrued expenses | $ | 930 | $ | 518 | | $ | 866 | | $ | 658 | ||||
Trade payables | 649 | 1,146 | |
| 2,117 | |
| 1,377 | ||||||
Real estate customer deposits | 1,795 | 1,117 | | | 1,378 | | | 1,769 | ||||||
Other | 76 | - | ||||||||||||
3,450 | 2,781 | |||||||||||||
| | | 4,361 | | | 3,804 | ||||||||
Corporate operations | 626 | 344 | | | 397 | | | 654 | ||||||
$ | 4,076 | $ | 3,125 | |||||||||||
| | $ | 4,758 | | $ | 4,458 |
8
(7) (6) NOTES PAYABLE
Notes payable, net consist of:of (in thousands):
January 31, | April 30, | |||||||||||||
2021 | 2020 | |||||||||||||
(in thousands) | ||||||||||||||
| | | | | | | ||||||||
|
| October 31, |
| April 30, | ||||||||||
| | 2021 | | 2021 | ||||||||||
Real estate notes payable | $ | 5,261 | $ | 3,894 | | $ | 6,002 | | $ | 3,482 | ||||
Unamortized debt issuance costs | (61 | ) | (4 | ) | |
| (50) | |
| (34) | ||||
$ | 5,200 | $ | 3,890 | |||||||||||
| | $ | 5,952 | | $ | 3,448 |
Refer to Notes 8The following tables present information on the Company’s notes payable in effect during the six months ended October 31, 2021 (dollars in thousands):
| | | | | | | | | | | | | | | |
|
| Principal Amount |
| | |
| | |
| | |
| | | |
| | Available for | | Outstanding | | | | | |||||||
| | Borrowing | | Principal Amount | | Principal Repayments | |||||||||
| | October 31, | | October 31, | | April 30, | | Three Months ended | | Six Months ended | |||||
Loan Identifier | | 2021 | | 2021 | | 2021 | | October 31, 2021 | | October 31, 2021 | |||||
Revolving Line of Credit |
| $ | 3,750 |
| $ | 0 |
| $ | 0 | | $ | 0 | | $ | 0 |
Lomas Encantadas U2B P3 | | | 632 | | | 0 | | | 410 | | | 0 | | | 1,770 |
Hawk Site U37 | |
| 0 | |
| 0 | |
| 0 | |
| 0 | |
| 0 |
Hawk Site U23 U40 | |
| 1,678 | |
| 0 | |
| 30 | |
| 30 | |
| 30 |
Lavender Fields – acquisition | |
| 0 | |
| 0 | |
| 1,749 | |
| 0 | |
| 1,703 |
Lavender Fields – development | |
| 2,194 | |
| 504 | |
| 1,293 | |
| 395 | |
| 789 |
La Mirada | |
| 1,877 | |
| 5,498 | |
| 0 | |
| 0 | |
| 0 |
| |
| | | $ | 6,002 | | $ | 3,482 | |
| | |
| |
| | | | | | | | | | | |
|
| |
| Mortgaged Property |
| |
| | |||
| | Interest Rate | | Book Value | | Capitalized Interest and Fees | |||||
| | October 31, | | October 31, | | Three Months ended | | Six Months ended | |||
Loan Identifier | | 2021 | | 2021 | | October 31, 2021 | | October 31, 2021 | |||
Revolving Line of Credit |
| 3.75 | % | $ | 1,693 | | $ | 0 | | $ | 0 |
Lomas Encantadas U2B P3 |
| 3.75 | % |
| 877 | |
| 0 | |
| 0 |
Hawk Site U23 U40 |
| 3.75 | % |
| 1,359 | |
| 0 | |
| 0 |
Lavender Fields – development |
| 3.75 | % |
| 5,261 | |
| 6 | |
| 17 |
La Mirada |
| 3.75 | % |
| 8,041 | |
| 40 | |
| 61 |
As of October 31, 2021, the Company and 17 to the consolidated financial statements contained in the 2020 Form 10-K for additional detail about each of the following outstanding financing facilities thatits subsidiaries were entered into prior to May 1, 2020.
LEDC and ASW made certain representations and warranties in connection with this loan and are required to comply with various covenants, reporting requirements and other customary requirements for similar loans. The loan documentation contains customary events of default for similar financing transactions, including LEDC’s failure to make principal, interest or other payments when due; the failure of LEDC or ASW to observe or perform their respective covenants under the loan documentation; the representations and warranties of LEDC or ASW being false; the insolvency or bankruptcy of LEDC or ASW; and the failure of ASW to maintain a net worth of at least $32 million. Upon the occurrence and during the continuance of an event of default, BOKF may declare the outstanding principal amount and all other obligations under the loan immediately due and payable. LEDC incurred customary costs and expenses and paid certain fees to BOKF in connection with the loan. The Company capitalized no interest or fees related to this loan during the three months ended January 31, 2021 and interest and fees of $27,000 during the nine months ended January 31, 2021. The total book value of the property mortgaged pursuant to this loan was $761,000 as of January 31, 2021. At January 31, 2021, LEDC was in compliance with the financial covenants contained in the loan documentation.
MHWDC and ASW made certain representations and warranties in connection with this loan and are required to comply with various covenants, reporting requirements and other customary requirements for similar loans. The loan documentation contains customary events of default for similar financing transactions, including: MHWDC’s failure to make principal, interest or other payments when due; the failure of MHWDC or ASW to observe or perform their respective covenants under the loan documentation; the representations and warranties of MHWDC or ASW being false; the insolvency or bankruptcy of MHWDC or ASW; and the failure of ASW to maintain a net worth of at least $32 million. Upon the occurrence and during the continuance of an event of default, BOKF may declare thethen outstanding principal amount and all other obligations under the loan immediately due andnotes payable. MHWDC incurred customary costs and expenses and paid certain fees to BOKF in connection with the loan. The Company capitalized no interest or fees related to this loan during the three and nine months ended January 31, 2021. The total book value of the property mortgaged pursuant to this loan was $1,298,000 as of January 31, 2021. At January 31, 2021, MHWDC was in compliance with the financial covenants contained in the loan documentation.
Refer to Note 8Notes 6 and 19 to the consolidated financial statements contained in the 20202021 Form 10-K for additional detail about each of the above notes payable.
The note payable identified as “Hawk Site U37” was terminated in October 2021. The outstanding principal amount of the note payable identified as “Lavender Fields – acquisition” was prepaid in full without penalty in June 2021 following expired or terminated financing facilities:
The following table summarizes the notes payable scheduled principal repayments subsequent to JanuaryOctober 31, 2021 with respect to the outstanding financing facilities as of January 31, 2021:(in thousands):
| | | | ||||
Fiscal Year | Scheduled Payments (in thousands) |
| Scheduled Payments | ||||
2021 | $ | 936 | |||||
2022 | 1,866 | | $ | 0 | |||
2023 | 101 | |
| 504 | |||
2024 | 72 | |
| 5,498 | |||
2025 | 75 | ||||||
Thereafter | 2,211 | ||||||
Total | $ | 5,261 | | $ | 6,002 |
14
9
(8) (7) REVENUES
Land sale revenues. Land sale revenues consist of:
Three Months Ended January 31, | Nine months Ended January 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Land sale revenues - New Mexico | $ | 5,957 | $ | 3,812 | $ | 17,970 | $ | 11,626 | ||||||||
Land sale revenues - corporate | - | 665 | - | 665 | ||||||||||||
$ | 5,957 | $ | 4,477 | $ | 17,970 | $ | 12,291 |
Substantially all of the land sale revenues in New Mexico were received from four3 customers for the ninethree and six months ended JanuaryOctober 31, 2021 and January 31, 2020 and also4 customers for the three and six months ended JanuaryOctober 31, 2020. There were 0 outstanding receivables from these customers as of October 31, 2021 and Januaryor October 31, 2020. Corporate land sale
Building sales and other revenues resulted from the sale. Building sales and other revenues consist of two undeveloped properties(in thousands):
| | | | | | | | | | | | |
|
| Three Months ended October 31, |
| Six Months ended October 31, | ||||||||
| | 2021 | | 2020 | | 2021 | | 2020 | ||||
Sale of building | | $ | 6,750 | | $ | — | | $ | 6,750 | | $ | — |
Oil and gas royalties | | | 40 | | | 25 | | | 175 | | | 36 |
Public improvement district reimbursements | |
| 15 | |
| 69 | |
| 239 | |
| 244 |
Private infrastructure reimbursement covenants | |
| 31 | |
| 245 | |
| 83 | |
| 378 |
Miscellaneous other revenues | |
| 115 | |
| 189 | |
| 610 | |
| 589 |
| | $ | 6,951 | | $ | 528 | | $ | 7,857 | | $ | 1,247 |
The Company owned a 143,000 square foot warehouse and office facility located in Palm Coast, Florida during the three and ninesix months ended JanuaryOctober 31, 2020.
Home sale revenues. Home sale revenues are from homes constructed2021, which was leased to a third party through August 2020 and sold bya portion of which was leased to the Company in the Albuquerque metropolitan area. Home sale revenues were received from six and seven customerssame third party after August 2020. Sale of building during the three months and ninesix months ended JanuaryOctober 31, 2021.
Rental revenues. Rental revenues consist2021 consisted of rent received from tenants at the Company’ssale of this 143,000 square foot warehouse and office buildingsfacility in Palm Coast, Florida and at a retail building in the Las Fuentes at Panorama Village subdivision in Rio Rancho, New Mexico.
Other revenues. Other revenues consist of:
Three Months Ended January 31, | Nine months Ended January 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Oil & gas royalties | $ | 46 | $ | 499 | $ | 82 | $ | 499 | ||||||||
Private infrastructure reimbursement covenants | 84 | - | 462 | 231 | ||||||||||||
Public improvement district reimbursements | 110 | 26 | 354 | 26 | ||||||||||||
Miscellaneous other revenues | 320 | 171 | 407 | 171 | ||||||||||||
$ | 560 | $ | 696 | $ | 1,305 | $ | 927 |
October 2021.
Refer to Note 97 to the consolidated financial statements contained in the 20202021 Form 10-K for additional detail about each category of building sales and other revenues.
The Company owns certain minerals and mineral rights in and under approximately 55,000 surface acres of land in Sandoval County, New Mexico. The lease to a third party with respect to such mineral rights expired in September 2020 and no drilling had commenced with respect to such mineral rights. The Company did not record any revenue in the nine months ended 2021 related to this lease.
Miscellaneous other revenues for the three and ninesix months ended JanuaryOctober 31, 2021 primarily consistconsisted of rent received from a tenant at a building in Palm Coast, Florida and tenants at a shopping center in Albuquerque,New Mexico, payments for impact fee credits, a non-refundable option payment and sale of equipment. Miscellaneous other revenue for the three and six months ended October 31, 2020 primarily consisted of rent received from a tenant at a building in Palm Coast, Florida, payments for impact fee credits and for installationa land condemnation.
Major customers:
● | There were 3 customers with revenues in excess of 10% of the Company’s revenues during the three months ended October 31, 2021. The revenues for each such customer during the three months ended October 31, 2021 were as follows: $3,700,000, $2,400,000 and $1,700,000, with each of these revenues reported in the Company’s land development business segment. |
● | There were 3 customers with revenues in excess of 10% of the Company’s revenues during the six months ended October 31, 2021. The revenues for each such customer during the six months ended October 31, 2021 were as follows: $6,700,000, $3,700,000 and $3,400,000, with each of these revenues reported in the Company’s land development business segment. |
● | There were 4 customers with revenues in excess of 10% of the Company’s revenues during the three months ended October 31, 2020. The revenues for each such customer during the three months ended October 31, 2020 were as follows: $2,900,000, $2,600,000, $1,600,000 and $1,450,000, with each of these revenues reported in the Company’s land development business segment. |
● | There were 4 customers with revenues in excess of 10% of the Company’s revenues during the six months ended October 31, 2020. The revenues for each such customer during the six months ended October 31, 2020 were as follows: $4,800,000, $2,600,000, $2,400,000 and $2,000,000, with each of these revenues reported in the Company’s land development business segment. |
(8) COST OF REVENUES
Building sales and other cost of telecommunications equipment in subdivisions. Miscellaneous other revenues forduring the three and ninesix months ended JanuaryOctober 31, 2020 primarily2021 consist of forfeited depositsthe sale of a 143,000 square foot warehouse and non-refundable option payments.office facility located in Palm Coast, Florida.
10
(9) LAND SALE COST OF REVENUES
Land sale cost of revenues consist of:
Three Months Ended January 31, | Nine months Ended January 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Land sale cost of revenues - New Mexico | $ | 2,916 | $ | 3,076 | $ | 12,028 | $ | 9,502 | ||||||||
Land sale cost of revenues - corporate | - | 477 | - | 477 | ||||||||||||
$ | 2,916 | $ | 3,553 | $ | 12,028 | $ | 9,979 |
(10) GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expensesconsist of(in thousands):
Three Months Ended January 31, | Nine months Ended January 31, | |||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||
| | | | | | | | | | | | | ||||||||||||||||
|
| Three Months ended October 31, |
| Six Months ended October 31, | ||||||||||||||||||||||||
| | 2021 | | 2020 | | 2021 | | 2020 | ||||||||||||||||||||
Land development | $ | 829 | $ | 564 | $ | 1,826 | $ | 1,826 | | $ | 677 | | $ | 665 | | $ | 1,261 | | $ | 1,271 | ||||||||
Homebuilding | 137 | - | 368 | 12 | |
| 212 | |
| 118 | |
| 399 | |
| 231 | ||||||||||||
Corporate | 376 | 494 | 2,112 | 4,907 | |
| 368 | |
| 740 | |
| 783 | |
| 1,465 | ||||||||||||
$ | 1,342 | $ | 1,058 | $ | 4,306 | $ | 6,745 | |||||||||||||||||||||
| | $ | 1,257 | | $ | 1,523 | | $ | 2,443 | | $ | 2,967 |
Corporate general and administrative expenses included a non-cash pre-tax pension settlement charge of $2,929,000 in the nine months ended January 31, 2020, due to the Company’s defined benefit pension plan paying an aggregate of $7,280,000 in lump sum payouts of pension benefits to former employees. No such settlement expense was incurred in 2021.
(11) (10) BENEFIT PLANS
Pension Plan
plan
Refer to Note 11 to the consolidated financial statements contained in the 20202021 Form 10-K for detail regarding the Company’s defined benefit pension plan. The Company recognizes the known changes in the funded status of the pension plan in the period in which the changes occur through other comprehensive income, net of the related deferred income tax effect. The Company recognizedrecorded, net of tax, other comprehensive income of $270,000$67,000 and $2,378,000 for the nine months ended January 31, 2021 and January 31, 2020 and $90,000 and $77,000 for$90,000 during the three months ended JanuaryOctober 31, 2021 and JanuaryOctober 31, 2020 relatedand $133,000 and $180,000 during the six months ended October 31, 2021 and October 31, 2020 to a decrease inaccount for the Company’snet effect of changes to the unfunded portion of pension liability, net of tax.liability. The Company funds the pension plan in compliance with IRS funding requirements. The Company did not make any contributions to the pension plan during the three and six months ended October 31, 2021. The Company made voluntary contributions to the pension plan of $1,847,000 during the ninethree and six months ended January 31, 2021 and $3,600,000 during the nine months ended JanuaryOctober 31, 2020.
Equity Compensation Plan
compensation plan
Refer to Note 11 to the consolidated financial statements contained in the 20202021 Form 10-K for detail regarding the AMREP Corporation 2016 Equity Compensation Plan (the “Equity Plan”). The Company issued 9,000 shares of restricted common stock under the Equity Plan during eachsummary of the ninerestricted share award activity during the six months ended JanuaryOctober 31, 2021 and January 31, 2020. Duringpresented below represents the nine months ended January 31, 2021 and January 31, 2020, 12,834maximum number of shares and 14,833 shares of restricted common stock previously issued under the Equity Plan vested. As of January 31, 2021 and January 31, 2020, 29,000 shares and 36,834 shares of restricted common stock previously issued under the Equity Plan had not vested. that could become vested after these dates:
| | |
| | |
| | Number of |
Restricted share awards | | Shares |
Non-vested as of April 30, 2021 | 29,000 | |
Granted during the six months ended October 31, 2021 | 13,000 | |
Vested during the six months ended October 31, 2021 | (20,500) | |
Forfeited during the six months ended October 31, 2021 | 0 | |
Non-vested as of October 31, 2021 | 21,500 |
The Company recognized non-cash compensation expense related to the vesting of restricted shares of common stock net of forfeitures of $27,000$31,000 and $83,000 for the nine months ended January 31, 2021 and January 31, 2020 and $20,000 and $29,000 for$25,000 during the three months ended JanuaryOctober 31, 2021 and JanuaryOctober 31, 2020 and $47,000 and $54,000 during the six months ended October 31, 2021 and October 31, 2020. As of JanuaryOctober 31, 2021 and JanuaryOctober 31, 2020, there was $53,000$137,000 and $105,000$73,000 of unrecognized compensation expense related to restricted shares of common stock previously issued under the Equity Plan which had not vested as of those dates, which is expected to be recognized over the remaining vesting term not to exceed three years.
In connection with the resignation of a director in September 2020, the Company (i) issued 12,411 shares of common stock in October 2020 pursuant to an equivalent number of deferred common share units previously issued to such director and (ii) paid $20,000 in September 2020 to such director in lieu of issuance of deferred common share units earned for calendar year 2020. The Company recognized
Director compensation non-cash expense, related towhich is recognized for the expected annual grant of deferred common share units expected to be issued to non-employee members of the Company’s Board of Directors of $57,500ratably over the director’s service in office during the calendar year, was $22,000 and $60,000 for$21,000 during the ninethree months ended JanuaryOctober 31, 2021 and JanuaryOctober 31, 2020 and $15,000$45,000 and $20,000$35,000 during the six months ended October 31, 2021 and October 31, 2020. As of October 31, 2021, there was $75,000 of accrued compensation expense
11
related to the deferred stock units expected to be issued in December 2021. As of October 31, 2020, there was $82,000 of accrued compensation expense related to the deferred stock units issued in December 2020.
(11) OTHER INCOME
Other income for the three months ended JanuaryOctober 31, 2021 and January 31, 2020.
(12) INTEREST (EXPENSE) INCOME, NET
Interest (expense) income, net consists of:
Three Months Ended January 31, | Nine months Ended January 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Interest income on savings | $ | 2 | $ | 26 | $ | 10 | $ | 127 | ||||||||
Interest income on notes | - | - | 1 | - | ||||||||||||
Interest on deferred purchase price | - | 32 | - | 196 | ||||||||||||
Interest expense | (23 | ) | - | (38 | ) | - | ||||||||||
$ | (21 | ) | $ | 58 | $ | (27 | ) | $ | 323 |
Refer to Note 2 to the consolidated financial statements contained in the 2020 Form 10-Kconsisted of $30,000 received for detail regarding the deferred purchase price with respect to a former business segmentlife insurance policy for a retired executive of the Company.
(13) OTHER INCOME
Other income consists of:
Three Months Ended January 31, | Nine months Ended January 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Settlement payment | $ | - | $ | - | $ | 650 | $ | - | ||||||||
Forgiveness of debt | 300 | - | 300 | - | ||||||||||||
$ | 300 | $ | - | $ | 950 | $ | - |
Settlement Payment. Other income for the ninesix months ended JanuaryOctober 31, 2021 includedconsisted of $185,000 received in connection with a bankruptcy of a warranty provider, $45,000 of debt forgiveness with respect to the note payable identified as “Lavender Fields – acquisition” in Note 6 above and $30,000 received for a life insurance policy for a retired executive of the Company. Other income for the six months ended October 31, 2020 consisted of a settlement payment of $650,000 from a former business segment of the Company. Refer(refer to Note 23 to the consolidated financial statements contained in the 20202021 Form 10-K for detail regarding the former business segment of the Company. During the nine months ended January 31, 2021, affiliates of the Company and affiliates of this former business segment entered into a settlement agreement pursuant to which, among other things, the Company received $650,000 as a settlement payment and $350,000 for rent with respect to properties in Palm Coast, Florida for the period May 2020 through August 2020.agreement).
Forgiveness of Debt. Other income for the three and nine months ended January 31, 2021 included income from forgiveness of debt with respect to the loan received by the Company pursuant to the Paycheck Protection Program administered by the U.S. Small Business Administration. Refer to Note 7 of the notes to these consolidated financial statements for detail regarding this debt forgiveness.
(12) (14) STOCK REPURCHASES
In August 2020, the Company repurchased 11,847 shares of common stock of the Company at a price of $4.48 per share in a privately negotiated transaction. As of the date of the repurchase, the repurchased shares were retired and returned to the status of authorized but unissued shares of common stock.
In September 2020, the Board of Directors of the Company authorized the Company to purchase up to 1,000,000 shares of common stock of the Company from time to time pursuant to a share repurchase program, subject to the total expenditure for the purchase of shares under the share repurchase program not exceeding $5,000,000, exclusive of any fees, commissions and other expenses related to such repurchases. Under the share repurchase program, the Company was authorized to repurchase its common stock from time to time, in amounts, at prices, and at such times as the Company deemed appropriate, subject to market conditions, legal requirements and other considerations. The Company’s repurchases could be executed using open market purchases, unsolicited or solicited privately negotiated transactions or other transactions, and could be effected pursuant to trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The share repurchase program did not obligate the Company to repurchase any specific number of shares and could be suspended, modified or terminated at any time without prior notice. The share repurchase program did not contain a time limitation during which repurchases were permitted to occur. In October 2020, the Company repurchased 675,616 shares of common stock of the Company at a price of $6.18 per share in a privately negotiated transaction pursuant to the share repurchase program. As of the date of the repurchase, the repurchased shares were retired and returned to the status of authorized but unissued shares of common stock.
In November 2020, the Company repurchased 143,482 shares of common stock of the Company at a price of $6.18 per share in a privately negotiated transaction. As of the date of the repurchase, the repurchased shares were retired and returned to the status of authorized but unissued shares of common stock. The share repurchase was not completed pursuant to the Company’s share repurchase program.
In November 2020, the Company’s share repurchase program was terminated.
12
(15) TREASURY STOCK(13)
During the three months ended January 31, 2021, 225,250 shares of common stock of the Company held as treasury stock were retired and returned to the status of authorized but unissued shares of common stock.
(16) INFORMATION ABOUT THE COMPANY’S OPERATIONS IN DIFFERENT INDUSTRY SEGMENTS
The following tables set forth summarized data relative to the industry segments in which the Company operated for the periods indicated (in thousands):
Land Development | Homebuilding | Corporate | Consolidated | |||||||||||||
Three months ended January 31, 2021 (a): | ||||||||||||||||
Revenues | $ | 6,531 | $ | 1,262 | $ | 71 | $ | 7,864 | ||||||||
Net income (loss) | $ | 2,284 | $ | 35 | $ | (226 | ) | $ | 2,093 | |||||||
Provision for income taxes | 483 | 7 | 220 | 710 | ||||||||||||
Interest expense, net (b) | 20 | - | 1 | 21 | ||||||||||||
Depreciation | 17 | - | 137 | 154 | ||||||||||||
EBITDA (c) | $ | 2,804 | $ | 42 | $ | 132 | $ | 2,978 | ||||||||
Capital expenditures | $ | - | $ | 3 | $ | 0 | $ | 3 | ||||||||
Three months ended January 31, 2020 (a): | ||||||||||||||||
Revenues | $ | 4,508 | $ | - | $ | 779 | $ | 5,287 | ||||||||
Net income (loss) | $ | 2,469 | $ | - | $ | (2,131 | ) | $ | 338 | |||||||
Provision for income taxes | 101 | - | 295 | 396 | ||||||||||||
Interest income, net (b) | (5 | ) | - | (53 | ) | (58 | ) | |||||||||
Depreciation | 30 | - | 88 | 118 | ||||||||||||
EBITDA (c) | $ | 2,595 | $ | - | $ | (1,801 | ) | $ | 794 | |||||||
Capital expenditures | $ | - | $ | - | $ | 13 | $ | 13 | ||||||||
Nine months ended January 31, 2021 (a): | ||||||||||||||||
Revenues | $ | 19,376 | $ | 1,464 | $ | 486 | $ | 21,326 | ||||||||
Net income (loss) | $ | 4,684 | $ | (116 | ) | $ | (1,084 | ) | $ | 3,484 | ||||||
Provision (benefit) for income taxes | 810 | (44 | ) | 409 | 1,175 | |||||||||||
Interest expense (income), net (b) | 30 | - | (3 | ) | 27 | |||||||||||
Depreciation | 40 | - | 384 | 424 | ||||||||||||
EBITDA (c) | $ | 5,564 | $ | (160 | ) | $ | (294 | ) | $ | 5,110 | ||||||
Capital expenditures | $ | - | $ | 3 | $ | - | $ | 3 | ||||||||
Total assets as of January 31, 2021 | $ | 76,580 | $ | 1,916 | $ | 17,498 | $ | 95,892 | ||||||||
Nine months ended January 31, 2020 (a): | ||||||||||||||||
Revenues | $ | 12,553 | $ | - | $ | 1,461 | $ | 14,014 | ||||||||
Net income (loss) | $ | 1,684 | $ | - | $ | (3,711 | ) | $ | (2,027 | ) | ||||||
Benefit for income taxes | (125 | ) | - | (235 | ) | (360 | ) | |||||||||
Interest income, net (b) | (19 | ) | - | (304 | ) | (323 | ) | |||||||||
Depreciation | 13 | - | 368 | 381 | ||||||||||||
EBITDA (c) | $ | 1,553 | $ | - | $ | (3,882 | ) | $ | (2,329 | ) | ||||||
Capital expenditures | $ | 5 | $ | - | $ | 13 | $ | 18 | ||||||||
Total assets as of January 31, 2020 | $ | 68,259 | $ | - | $ | 29,055 | $ | 97,314 |
| | | | | | | | | | | | |
|
| Land |
| | |
| | |
| | | |
| | Development | | Homebuilding | | Corporate | | Consolidated | ||||
Three months ended October 31, 2021 (a) |
| |
|
| |
|
| |
|
| |
|
Revenues | | $ | 8,745 | | $ | 689 | | $ | 6,802 | | $ | 16,236 |
Net income | |
| 1,612 | |
| 12 | |
| 1,702 | |
| 3,326 |
Provision for income taxes | |
| 263 | |
| 1 | |
| 801 | |
| 1,065 |
Interest income, net (b) | |
| 1 | |
| 0 | |
| 1 | |
| 2 |
Depreciation | |
| 0 | |
| 0 | |
| 100 | |
| 100 |
EBITDA (c) | | $ | 1,876 | | $ | 13 | | $ | 2,604 | | $ | 4,493 |
Capital expenditures | | $ | 0 | | $ | 10 | | $ | 0 | | $ | 10 |
| | | | | | | | | | | | |
Three months ended October 31, 2020 (a) | |
|
| |
|
| |
|
| |
|
|
Revenues | | $ | 8,989 | | $ | 202 | | $ | 65 | | $ | 9,256 |
Net income (loss) | |
| 1,693 | |
| (66) | |
| (829) | |
| 798 |
Provision (benefit) for income taxes | |
| 313 | |
| (24) | |
| 30 | |
| 319 |
Interest income (expense), net (b) | |
| (13) | |
| 0 | |
| 1 | |
| (12) |
Depreciation | |
| 8 | |
| 0 | |
| 124 | |
| 132 |
EBITDA (c) | | $ | 2,001 | | $ | (90) | | $ | (674) | | $ | 1,237 |
Capital expenditures | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 |
| | | | | | | | | | | | |
Six months ended October 31, 2021 (a) | | | | | | | | | | | | |
Revenues | | $ | 17,206 | | $ | 2,639 | | $ | 6,898 | | $ | 26,743 |
Net income | |
| 3,418 | |
| 190 | |
| 1,355 | |
| 4,963 |
Provision for income taxes | |
| 589 | |
| 37 | |
| 827 | |
| 1,453 |
Interest income, net (b) | |
| 0 | |
| 0 | |
| 1 | |
| 1 |
Depreciation | |
| 0 | |
| 0 | |
| 204 | |
| 204 |
EBITDA (c) | | $ | 4,007 | | $ | 227 | | $ | 2,387 | | $ | 6,621 |
Capital expenditures | | $ | 0 | | $ | 11 | | $ | 0 | | $ | 11 |
Total assets as of October 31, 2021 | | $ | 88,231 | | $ | 3,357 | | $ | 13,321 | | $ | 104,909 |
| | | | | | | | | | | | |
Six months ended October 31, 2020 (a) | | | | | | | | | | | | |
Revenues | | $ | 12,845 | | $ | 202 | | $ | 415 | | $ | 13,462 |
Net income (loss) | |
| 2,399 | |
| (152) | |
| (856) | |
| 1,391 |
Provision (benefit) for income taxes | |
| 327 | |
| (51) | |
| 189 | |
| 465 |
Interest income (expense), net (b) | |
| (11) | |
| 0 | |
| 5 | |
| (6) |
Depreciation | |
| 22 | |
| 0 | |
| 248 | |
| 270 |
EBITDA (c) | | $ | 2,737 | | $ | (203) | | $ | (414) | | $ | 2,120 |
Capital expenditures | | $ | 0 | | $ | 3 | | $ | 0 | | $ | 3 |
Total assets as of October 31, 2020 | | $ | 76,777 | | $ | 1,494 | | $ | 17,449 | | $ | 95,720 |
(a) | Revenue and net income information |
(b) | Interest |
(c) | The Company uses EBITDA (which the Company defines as income (loss) before net interest |
13
and amortization, and non-cash impairment charges) in addition to net income (loss) as a key measure of profit or loss for segment performance and evaluation purposes. |
Prior to(14) SUBSEQUENT EVENTS
In November 2021, the Company operated in primarily one business segment: the real estate business.
(17) SUBSEQUENT EVENTS
In February 2021, ASW entered into a Loan Agreementan employment agreement with BOKF. The Loan AgreementChristopher V. Vitale. Mr. Vitale is evidenced by a Revolving Linethe President and Chief Executive Officer of Credit Promissory Note and is secured by a Line of Credit Mortgage, Security Agreement and Fixture Filing, between ASW and BOKF, with respectthe Company. Pursuant to a 298-acre property within the Paseo Gateway subdivision located in Rio Rancho, New Mexico.
employment agreement,
● | The parties agreed to provisions relating to vacation, paid-time-off, office location, confidentiality, invention assignment, non-competition and non-solicitation. |
● | Upon any termination of Mr. Vitale’s employment, the Company will pay and issue to Mr. Vitale any earned but unpaid base salary, the dollar value equivalent of the number of days of vacation and paid-time-off earned but not used, unreimbursed business expenses, unpaid bonus previously awarded by the Company and vested benefits, equity awards or payments (excluding any severance benefits or payments) payable or issuable under any policy or plan of the Company or under any equity award agreement or other arrangement between the Company and Mr. Vitale. |
● | Upon any termination of Mr. Vitale’s employment due to the |
● | Upon any termination of Mr. Vitale’s employment in connection with a long-term disability, by Mr. Vitale for Good Reason or by the Company without Cause, the Company will pay to Mr. Vitale a lump sum cash payment equal to 200% of the annual |
14
cost of medical and other health care benefits for Mr. Vitale, his spouse and his other dependents and an amount equal to the |
● | Payments under the employment agreement may be adjusted as a result of section 409A and section 280G of the Internal Revenue Code of 1986, as amended. |
● | In the event Mr. Vitale is made, or threatened to be made, a party to any legal action or proceeding, whether civil or criminal, including any governmental or regulatory proceeding or investigation, by reason of the fact that Mr. Vitale is or was a director or senior officer of the Company, the Company will defend, indemnify and hold harmless Mr. Vitale, and the Company will promptly pay or reimburse Mr. Vitale’s related expenses to the fullest extent contemplated or permitted from time to time by applicable law and required by the Company’s Certificate of Incorporation. During Mr. Vitale’s employment with the Company and after termination of any such employment for any reason, the Company will cover Mr. Vitale under the Company’s directors’ and officers’ insurance policy applicable to other officers and directors according to the terms of such policy, but in no event for a |
ASW made certain representationsIn November 2021, the Company granted Mr. Vitale an option to purchase 50,000 shares of common stock of the Company under the Equity Plan with an exercise price of $14.24 per share, which was the closing price on the New York Stock Exchange on the date of grant. The option will become exercisable for 100% of the option shares on November 1, 2026 if Mr. Vitale is employed by, or providing service to, the Company on such date. Subject to the definitions in the Equity Plan, in the event (a) Mr. Vitale has a termination of employment with the Company on account of death or disability, (b) the Company terminates Mr. Vitale’s employment with the Company for any reason other than cause or (c) of a change in control, then the option will become immediately exercisable for 100% of the option shares. The option has a term of ten years from the date of grant and warranties in connection with this loan and is required to comply with various covenants, reporting requirements and other customary requirements for similar loans, includingterminates at the loan having a zero balance for two periodsexpiration of fifteen consecutive days during each calendar year and ASW and its subsidiaries having at least $3.0 millionthat period. The option automatically terminates upon: (i) the expiration of unencumbered and unrestricted cash, cash equivalents and marketable securities in orderthe three month period after Mr. Vitale ceases to be entitledemployed by the Company, if the termination of his employment by Mr. Vitale or the Company is for any reason other than as hereinafter set forth in clauses (ii), (iii) or (iv); (ii) the expiration of the one year period after Mr. Vitale ceases to advances underbe employed by the loan. The loan documentation contains customary eventsCompany on account of defaultMr. Vitale’s disability; (iii) the expiration of the one year period after Mr. Vitale ceases to be employed by the Company, if Mr. Vitale dies while employed by the Company; or (iv) the date on which Mr. Vitale ceases to be employed by the Company, if the termination is for similar financing transactions, including ASW’s failure to make principal, interest or other payments when due;cause. If Mr. Vitale engages in conduct that constitutes cause after Mr. Vitale’s employment terminates, the failureoption immediately terminates. Notwithstanding the foregoing, in no event may the option be exercised after the date that is immediately before the tenth anniversary of ASW to observe or perform its covenants under the loan documentation;date of grant. Except as described above, any portion of the representations and warrantiesoption that is not exercisable at the time Mr. Vitale has a termination of ASW being false; the insolvency or bankruptcy of ASW; and the failure of ASW to maintain a net worth of at least $32 million. Upon the occurrence and during the continuance of an event of default, BOKF may declare the outstanding principal amount and all other obligations under the loan immediately due and payable. ASW incurred customary costs and expenses and paid certain fees to BOKF in connectionemployment with the loan.Company immediately terminates.
Item 2.Management’s DiscussionDiscussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
AMREP Corporation (the “Company”), through its subsidiaries, is primarily engaged in two business segments: land development and homebuilding. The Company has no foreign sales.sales or activities outside the United States. All references to the Company in this quarterly report on Form 10-Q include the Registrant and its subsidiaries. The following provides information that management believes is relevant to an assessment and understanding of the Company’s consolidated results of operations and financial condition. The information contained in this sectionItem 2 should be read in conjunction with the consolidated financial statements and related notes thereto included in this report on Form 10-Q and with the Company’s annual report on Form 10-K for the year ended April 30, 2020,2021, which was filed with the Securities and Exchange Commission on July 27, 20202021 (the “2020“2021 Form 10-K”). Many of the amounts and percentages presented in this Item 2 have been rounded for convenience of presentation. Unless the context otherwise indicates, all references to 20212022 and 20202021 are to the fiscal years ending April 30, 20212022 and 2020.
2021.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s discussion and analysis of financial condition and results of operations is based on the accounting policies used and disclosed in the 20202021 consolidated financial statements and accompanying notes that were prepared in accordance with accounting principles generally accepted in the United States of America and included as part of the 20202021 Form 10-K and in Note 1 to the consolidated financial statements included in this report on Form 10-Q. The preparation of those consolidated financial statements required management to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual amounts or results could differ from those estimates and assumptions.
15
The Company’s critical accounting policies, assumptions and estimates are described in Item 7 of Part II of the 20202021 Form 10-K. There have been no changes in these critical accounting policies.
The significant accounting policies of the Company are described in Note 1 to the consolidated financial statements contained in the 2020 Form 10-K and in Note 1 to the consolidated financial statements included in this report on Form 10-Q. Information concerning the Company’s implementation and the impact of recent accounting standards or updates issued by the Financial Accounting Standards Board is included in the notes to the consolidated financial statements contained in the 20202021 Form 10-K and in the notes to the consolidated financial statements included in this report on Form 10-Q. The Company did not adopt any accounting policy in the ninesix months ended JanuaryOctober 31, 2021 that had a material effect on its consolidated financial statements.
The Company adopted the following accounting policies effective May 1, 2020:
RESULTS OF OPERATIONS
For the three months ended JanuaryOctober 31, 2021, the Company recordedhad net income of $2,093,000,$3,326,000, or $0.29$0.45 per diluted share, compared to net income of $338,000,$798,000, or $0.04$0.10 per diluted share, for the three months ended JanuaryOctober 31, 2020. For the ninesix months ended JanuaryOctober 31, 2021, the Company recordedhad net income of $3,484,000,$4,963,000, or $0.44$0.67 per diluted share, compared to a net lossincome of $2,027,000,$1,391,000, or $0.25$0.17 per diluted share, for the ninesix months ended JanuaryOctober 31, 2020.
Revenues. The following presents information on revenues for the Company’s operations (dollars in thousands):
Three Months Ended January 31, | Nine months Ended January 31, | |||||||||||||||||||||||
2021 | 2020 | % Increase (Decrease) | 2021 | 2020 | % Increase (Decrease) | |||||||||||||||||||
Land sale revenues | ||||||||||||||||||||||||
Land sale revenues in New Mexico | $ | 5,957 | $ | 3,812 | 56 | % | $ | 17,970 | $ | 11,626 | 55 | % | ||||||||||||
Corporate land sale revenues | - | 665 | (a) | - | 665 | (a) | ||||||||||||||||||
5,957 | 4,477 | 33 | % | 17,970 | 12,291 | 46 | % | |||||||||||||||||
Home sale revenues | 1,261 | - | (a) | 1,463 | - | (a) | ||||||||||||||||||
Rental revenues | 86 | 114 | (25 | )% | 588 | 796 | (26 | )% | ||||||||||||||||
Other revenue | 560 | 696 | (20 | )% | 1,305 | 927 | 41 | % | ||||||||||||||||
Total revenues | $ | 7,864 | $ | 5,287 | 49 | % | $ | 21,326 | $ | 14,014 | 52 | % |
| | | | | | | | | | | | | | | | | |
|
| Three Months ended October 31, |
| Six Months ended October 31, |
| ||||||||||||
| | | | | | | | % Increase | | | | | | | | % Increase | |
|
| 2021 |
| 2020 |
| (Decrease) | | 2021 |
| 2020 |
| (Decrease) | | ||||
Land sale revenues | | $ | 8,466 | | $ | 8,526 |
| (1) | % | $ | 15,656 | | $ | 12,013 |
| 30 | % |
Home sale revenues | |
| 819 | |
| 202 |
| (a) | |
| 3,230 | |
| 202 |
| (a) | |
Building sales and other revenues | |
| 6,951 | |
| 528 |
| (a) | |
| 7,857 | |
| 1,247 |
| (a) | |
Total | | $ | 16,236 | | $ | 9,256 |
| 76 | % | $ | 26,743 | | $ | 13,462 |
| 99 | % |
(a) Percentage not meaningful.
Land sale revenues for the three |
| | | | | | | | | | | | | | | | |
| | Three Months ended October 31, 2021 | | Three Months ended October 31, 2020 | ||||||||||||
|
| Acres Sold |
| Revenue |
| Revenue Per Acre1 |
| Acres Sold |
| Revenue |
| Revenue Per Acre1 | ||||
Developed | |
| |
| | |
| | |
| |
| | |
| |
Residential |
| 14.6 | | $ | 8,466 | | $ | 580 |
| 17.4 | | $ | 8,376 | | $ | 481 |
Commercial |
| — | |
| — | |
| — |
| 0.4 | |
| 134 | |
| 335 |
Total Developed |
| 14.6 | | $ | 8,466 | | $ | 580 |
| 17.8 | |
| 8,510 | |
| 478 |
Undeveloped |
| — | |
| — | |
| — |
| 2.0 | |
| 16 | |
| 8 |
Total |
| 14.6 | | $ | 8,466 | | $ | 580 |
| 19.8 | | $ | 8,526 | | $ | 431 |
| | | | | | | | | | | | | | | | |
|
| Six Months ended October 31, 2021 |
| Six Months ended October 31, 2020 | ||||||||||||
|
| Acres |
| | |
| Revenue |
| |
| | |
| Revenue | ||
| | Sold | | Revenue | | Per Acre1 | | Acres Sold | | Revenue | | Per Acre1 | ||||
Developed | |
|
| |
|
| |
| |
|
| |
|
| |
|
Residential | | 33.3 | | $ | 15,656 | | $ | 470 | | 25.1 | | $ | 11,863 | | $ | 473 |
Commercial | | — | |
| — | |
| — | | 0.4 | |
| 134 | |
| 335 |
Total Developed | | 33.3 | | $ | 15,656 | | $ | 470 | | 25.5 | |
| 11,997 | |
| 470 |
Undeveloped | | — | |
| — | |
| — | | 2 | |
| 16 | |
| 8 |
Total | | 33.3 | | $ | 15,656 | | $ | 470 | | 27.5 | | $ | 12,013 | | $ | 437 |
1Revenues per acre may not calculate precisely due to the rounding of revenues to the nearest thousand dollars.
16
The change in the average selling price per acre of developed residential land for the three months ended October 31, 2021 compared to the three months ended October 31, 2020 and for the six months ended October 31, 2021 compared to the six months ended October 31, 2020 was primarily due to the location and mix of lots sold.
● | Home sale revenues for the three and six months ended October 31, 2021 were higher than the prior periods by |
Three Months Ended January 31, 2021 | Three Months Ended January 31, 2020 | |||||||||||||||||||||||
Acres Sold | Revenue | Revenue Per Acre | Acres Sold | Revenue | Revenue Per Acre | |||||||||||||||||||
Developed | ||||||||||||||||||||||||
Residential | 10.8 | $ | 5,615 | $ | 520 | 8.4 | $ | 3,696 | $ | 440 | ||||||||||||||
Commercial | - | - | - | - | - | - | ||||||||||||||||||
Total Developed | 10.8 | 5,615 | 520 | 8.4 | 3,696 | 440 | ||||||||||||||||||
Undeveloped | 62.0 | 342 | 6 | 48.9 | 116 | 2 | ||||||||||||||||||
Total | 72.8 | $ | 5,957 | $ | 82 | 57.3 | $ | 3,812 | $ | 67 |
Nine months Ended January 31, 2021 | Nine months Ended January 31, 2020 | |||||||||||||||||||||||
Acres Sold | Revenue | Revenue Per Acre | Acres Sold | Revenue | Revenue Per Acre | |||||||||||||||||||
Developed | ||||||||||||||||||||||||
Residential | 35.9 | $ | 17,478 | $ | 486 | 26.8 | $ | 11,487 | $ | 429 | ||||||||||||||
Commercial | 0.4 | 134 | 335 | - | - | - | ||||||||||||||||||
Total Developed | 36.3 | 17,612 | 485 | 26.8 | 11,487 | 429 | ||||||||||||||||||
Undeveloped | 64.0 | 358 | 6 | 52.5 | 139 | 3 | ||||||||||||||||||
Total | 100.3 | $ | 17,970 | $ | 179 | 79.3 | $ | 11,626 | $ | 147 |
| | | | | | | | | | | | | | | | | |
| | Three Months ended October 31, | | Six Months ended October 31, | | ||||||||||||
|
| | | | | |
| % Increase |
| | | | | |
| % Increase | |
|
| 2021 |
| 2020 | | (Decrease) |
| 2021 |
| 2020 | | (Decrease) | | ||||
Sale of building | | $ | 6,750 | | $ | — | | (a) | | $ | 6,750 | | $ | — | | (a) | |
Oil and gas royalties | | | 40 | | | 25 | | 60 | % | | 175 | | | 36 | | (a) | |
Public improvement district reimbursements | |
| 15 | |
| 69 | | (a) | |
| 239 | |
| 244 | | (2) | % |
Private infrastructure reimbursement covenants | |
| 31 | |
| 245 | | (87) | % |
| 83 | |
| 378 | | (78) | % |
Miscellaneous other revenues | |
| 115 | |
| 189 | | (a) | |
| 610 | |
| 589 | | (a) | |
Total | | $ | 6,951 | | $ | 528 | | (a) | | $ | 7,857 | | $ | 1,247 | | (a) | |
|
Three Months Ended January 31, | Nine months Ended January 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Oil & gas royalties | $ | 46 | $ | 499 | $ | 82 | $ | 499 | ||||||||
Private infrastructure reimbursement covenants | 84 | - | 462 | 231 | ||||||||||||
Public improvement district reimbursements | 110 | 26 | 354 | 26 | ||||||||||||
Miscellaneous other revenue | 320 | 171 | 407 | 171 | ||||||||||||
$ | 560 | $ | 696 | $ | 1,305 | $ | 927 |
Miscellaneous other revenues for(a) Percentage not meaningful.
The Company owned a 143,000 square foot warehouse and office facility located in Palm Coast, Florida during the three and ninesix months ended JanuaryOctober 31, 2021, primarilywhich was leased to a third party through August 2020 and a portion of which was leased to the same third party after August 2020. Sale of building during the three and six months ended October 31, 2021 consisted of payments for impact fee creditsthe sale of this 143,000 square foot warehouse and for installation of telecommunications equipmentoffice facility in subdivisions. October 2021.
Miscellaneous other revenues for the three and ninesix months ended JanuaryOctober 31, 2021 primarily consisted of rent received from the tenant of the building in Palm Coast, Florida and tenants at a shopping center in Albuquerque, New Mexico, payments for impact fee credits, a non-refundable option payment and sale of equipment.
The Company owned a 61,000 square foot warehouse and office facility located in Palm Coast, Florida during 2021, which was leased to a third party through August 2020 and which was sold in April 2021. Miscellaneous other revenue for the three and six months ended October 31, 2020 primarily consisted of forfeited depositsrent received from the tenant of the buildings in Palm Coast, Florida, payments for impact fee credits and non-refundable option payments.a land condemnation.
Refer to Note 7 to the consolidated financial statements contained in the 2021 Form 10-K for additional detail about the categories of building sales and other revenues.
17
Cost of Revenues. The following presents information on cost of revenues for the Company’s operations (dollars in thousands):
Three Months Ended January 31, | Nine months Ended January 31, | |||||||||||||||||||||||
2021 | 2020 | % Increase (Decrease) | 2021 | 2020 | % Increase (Decrease) | |||||||||||||||||||
Land sale costs | ||||||||||||||||||||||||
Cost of land sale revenues in New Mexico | $ | 2,916 | $ | 3,076 | (5 | )% | $ | 12,028 | $ | 9,502 | 26 | % | ||||||||||||
Cost of corporate land sale revenues | - | 477 | (a) | - | 477 | (a) | ||||||||||||||||||
$ | 2,916 | $ | 3,553 | (18 | )% | $ | 12,028 | $ | 9,979 | 21 | % | |||||||||||||
Home sale costs | $ | 1,082 | $ | - | (a) | $ | 1,256 | - | (a) |
| | | | | | | | | | | | | | | | | |
| | Three Months ended October 31, | | Six Months ended October 31, | | ||||||||||||
|
| | | | | |
| % Increase |
| | | | | |
| % Increase | |
|
| 2021 |
| 2020 |
| (Decrease) |
| 2021 |
| 2020 |
| (Decrease) | | ||||
Land sale cost of revenues | | $ | 6,154 | | $ | 6,430 |
| (10) | % | $ | 11,765 | | $ | 9,109 |
| 29 | % |
Home sale cost of revenues | |
| 629 | |
| 174 |
| (a) | |
| 2,543 | |
| 174 |
| (a) | |
Building sales and other cost of revenues | | | 3,837 | | | — | | (a) | | | 3,837 | | | — | | (a) | |
(a) Percentage not meaningful. |
22
Land sale cost of revenues |
Home sale cost of revenues for the three and |
● | Building sales and other cost of revenues during the three and six months ended October 31, 2021 consisted of the sale of a 143,000 square foot warehouse and office facility located in Palm Coast, Florida. |
General and Administrative Expenses. The following presents select information on general and administrative expenses for the Company’s operations (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| | Three Months ended October 31, | | Six Months ended October 31, | | ||||||||||||
|
| | | | | |
| % Increase |
| | | | | |
| % Increase | |
| | 2021 | | 2020 | | (Decrease) |
| 2021 |
| 2020 | | (Decrease) | | ||||
Land development | | $ | 677 | | $ | 665 |
| 2 | % | $ | 1,261 | | $ | 1,271 |
| (1) | % |
Homebuilding | |
| 212 | |
| 118 |
| 80 | % |
| 399 | |
| 231 |
| 73 | % |
Corporate | |
| 368 | |
| 740 |
| (50) | % |
| 783 | |
| 1,465 |
| (47) | % |
Total | | $ | 1,257 | | $ | 1,523 |
| (17) | % | $ | 2,443 | | $ | 2,967 |
| (18) | % |
Three Months Ended January 31, | Nine months Ended January 31, | |||||||||||||||||||||||
2021 | 2020 | % Increase (Decrease) | 2021 | 2020 | % Increase (Decrease) | |||||||||||||||||||
Land development | $ | 829 | $ | 564 | 47 | % | $ | 1,826 | $ | 1,826 | - | |||||||||||||
Homebuilding | 137 | - | (a) | 368 | 12 | (a) | ||||||||||||||||||
Corporate | 376 | 494 | (24 | )% | 2,112 | 4,907 | (57 | )% | ||||||||||||||||
$ | 1,342 | $ | 1,058 | 27 | % | $ | 4,306 | $ | 6,745 | (36 | )% |
23
Land development general and administrative expenses for the three and six months ended |
Homebuilding general and administrative expenses for the three and |
Corporate general and administrative expenses for the three and six months ended |
Interest (expense) income (expense), net. Interest income (expense), net decreasedincreased to $(21,000)$2,000 and $(27,000)$1,000 for the three and ninesix months ended JanuaryOctober 31, 2021 from $58,000$(12,000) and $323,000$(6,000) for the three and ninesix months ended JanuaryOctober 31, 2020 primarily due to a reduction in interest rates on cash balances andbank fees.
18
Other income. Other income for the eliminationthree months ended October 31, 2021 consisted of $30,000 received for a life insurance policy for a retired executive of the deferred purchase price and interest accrual related theretoCompany. Other income for the six months ended October 31, 2021 consisted of $185,000 received in connection with a bankruptcy of a warranty provider, $45,000 of debt forgiveness with respect to the salenote payable identified as “Lavender Fields – acquisition” in Note 6 above and $30,000 received for a life insurance policy for a retired executive of the Company’s fulfillment services business (refer to Note 2 toCompany. There was no other income for the consolidated financial statements contained in the 2020 Form 10-K for detail regarding the non-cash impairment charge of the deferred purchase price related to the sale of the Company’s fulfillment services business).
three months ended October 31, 2020. Other income of $950,000 for the ninesix months ended JanuaryOctober 31, 20212020 consisted of a settlement payment of $650,000 from a former business segment of the Company (refer to Note 23 to the consolidated financial statements contained in the 20202021 Form 10-K for detail regarding the settlement agreement) and $300,000 of debt forgiveness. Other.
Provision for income of $300,000 for the three months ended January 31, 2021 consisted of debt forgiveness.
taxes. The Company had a provision for income taxes of $710,000$1,065,000 and $1,175,000$1,453,000 for the three and ninesix months ended JanuaryOctober 31, 2021 compared to a provision for income taxes of $396,000$319,000 and $(360,000)$465,000 for the three and ninesix months ended JanuaryOctober 31, 2020. This change is caused by the three and nine months ended January 31, 2021 reporting income in both periods, compared to the three and nine months ended January 31, 2020 reporting a loss for the three month period and income for the nine month period.
LIQUIDITY AND CAPITAL RESOURCES
AMREP Corporation is a holding company that conducts substantially all of its operations through subsidiaries. As a holding company, AMREP Corporation is dependent on its available cash and on cash from subsidiaries to pay expenses and fund operations. The Company’s liquidity is affected by many factors, including some that are based on normal operations and some that are related to the real estate industry and the economy generally.
The Company’s primary sources of funding for working capital requirements are cash flow from operations, bank financing for specific real estate projects, a revolving line of credit and existing cash balances. The Company’s liquidity isLand and homebuilding properties generally cannot be sold quickly, and the ability of the Company to sell properties has been and will continue to be affected by many factors, including some that are based on normalmarket conditions. The ability of the Company to generate cash flow from operations is primarily dependent upon its ability to sell the properties it has selected for disposition at the prices and some that are related towithin the timeframes the Company has established for each property. The development of additional lots for sale, construction of homes or pursuing other real estate industry andprojects will require financing or other sources of funding, which may not be available on acceptable terms (or at all). If the economy generally.Company is unable to obtain such financing, the Company’s results of operations could be adversely affected. Except as described below, there have been no material changes to the Company’s liquidity and capital resources as reflected in the Liquidity and Capital Resources section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 20202021 Form 10-K.
Operating Activities
The following presents information on the Company’s operating activities (dollars in thousands):
| | | | | | | | | |
|
| October 31, |
| April 30, |
| % Increase |
| ||
| | 2021 | | 2021 | | (Decrease) |
| ||
Real estate inventory | | $ | 61,772 | | $ | 55,589 |
| 11 | % |
Investment assets, net | |
| 9,775 | |
| 13,582 |
| (28) | % |
Other assets | |
| 1,870 | |
| 645 |
| 190 | % |
Deferred income taxes, net | |
| 1,165 | |
| 2,749 |
| (58) | % |
Accounts payable and accrued expenses | |
| 4,758 | |
| 4,458 |
| 7 | % |
Taxes payable, net | |
| 29 | |
| 95 |
| (69) | % |
Accrued pension costs | |
| 35 | |
| 476 |
| (93) | % |
| |
|
| |
|
|
|
| |
19
● | Real estate inventory increased from April 30, 2021 to October 31, 2021 by $6,183,000. Real estate inventory consists of (in thousands): |
| | | | | | | | | |
|
| October 31, |
| April 30, |
| % Increase |
| ||
| | 2021 | | 2021 | | (Decrease) |
| ||
Land inventory in New Mexico | | $ | 54,148 | | $ | 49,918 |
| 8 | % |
Land inventory in Colorado | |
| 4,009 | |
| 3,975 |
| 1 | % |
Homebuilding finished inventory | |
| 214 | |
| 417 |
| (49) | % |
Homebuilding construction in process | |
| 3,401 | |
| 1,279 |
| 166 | % |
| | $ | 61,772 | | $ | 55,589 | | | |
Land inventory in New Mexico increased from $53,449,000 at April 30, 20202021 to $55,607,000 at JanuaryOctober 31, 2021 by $4,230,000 primarily due to increased land development activity and the acquisition of land land. Homebuilding finished inventory decreased from April 30, 2021 to October 31, 2021 by $203,000 primarily due to the sale of homes offset by the completion of construction of certain homes. Homebuilding construction in process increased from April 30, 2021 to October 31, 2021 by $2,122,000 due to increased homebuilding activity.
● | Investment assets, net decreased from April 30, 2021 to October 31, 2021 by $3,807,000. Investment assets, net consist of (in thousands): |
| | | | | | | | | |
|
| October 31, |
| April 30, |
| % Increase |
| ||
| | 2021 | | 2021 | | (Decrease) |
| ||
Land held for long-term investment | | $ | 9,775 | | $ | 9,775 |
| 0 | % |
Building | |
| — | |
| 10,003 |
| (a) | |
Less accumulated depreciation | |
| — | |
| (6,196) |
| (a) | |
Building, net | |
| — | |
| 3,807 |
| (a) | |
| | $ | 9,775 | | $ | 13,582 | | | |
(a) Percentage not meaningful.
As of April 30, 2021, the building was a 143,000 square foot warehouse and homebuilding construction, offsetoffice facility located in part by landPalm Coast, Florida. In October 2021, the Company sold this 143,000 square foot warehouse and home sales. Duringoffice facility. Depreciation associated with the building was $98,000 and $140,000 for the three months ended JanuaryOctober 31, 2021 and October 31, 2020 and $201,000 and $262,000 for the Company acquired 24 finished residential lots in the Volterra/Juan Tabo Hills Estates subdivision in Albuquerque, New Mexico that are classified as land held for sale within real estate inventory. Investment assets, net increased from $18,644,000 at April 30, 2020 to $18,818,000 at Januarysix months ended October 31, 2021 primarily due to capitalizationand October 31, 2020.
● | Other assets increased from April 30, 2021 to October 31, 2021 by $1,225,000 primarily due to an increase in property and equipment as a result of the acquisition of a 7,000 square foot office building in Rio Rancho, New Mexico from which the Company’s real estate business operates. |
● | Deferred income taxes, net decreased from April 30, 2021 to October 31, 2021 by $1,584,000 primarily due to use of federal net operating loss carry forwards. |
● | Accounts payable and accrued expenses increased from April 30, 2021 to October 31, 2021 by $300,000 primarily due to an increase of accounts payable partially offset by a reduction in customer deposits. |
● | Taxes payable, net decreased from April 30, 2021 to October 31, 2021 by $66,000 in connection with finalization of the Company’s tax return filings. |
● | Accrued pension costs of the Company’s frozen defined benefit pension plan (representing the Company’s unfunded pension liability) decreased from April 30, 2021 to October 31, 2021 by $441,000 primarily due to favorable investment results of plan assets. The Company recorded, net of tax, other comprehensive income of $67,000 and $133,000 for the three and six months ended October 31, 2021 and $90,000 and $180,000 for the three and six months ended October 31, 2020 reflecting the change in accrued pension costs during each period net of the related deferred tax and unrecognized prepaid pension amounts. |
20
Accounts payable and accrued expenses increased from $3,125,000 at April 30, 2020 to $4,076,000 at January 31, 2021, primarily due to an increase in builders’ deposits and land development activity in New Mexico. Accrued pension costs decreased from $5,014,000 at April 30, 2020 to $3,209,000 at January 31, 2021, primarily due to a voluntary contribution of $1,847,000 to the Company’s defined benefit pension plan.
Financing Activities
Notes payable, net increased from $3,890,000 at$3,448,000 as of April 30, 20202021 to $5,200,000 at January$5,952,000 as of October 31, 2021 primarily due to additional borrowings to fund land acquisition and development activities partially offset by repayments made on outstanding borrowings.
Refer to Note 6 to the consolidated financial statements included in this report on Form 10-Q and Notes 86 and 1719 to the consolidated financial statements contained in the 20202021 Form 10-K for additional detail about each ofnotes payable.
Investing Activities
Capital expenditures were $10,000 and $11,000 for the following outstanding financing facilities that were entered into prior to May 1, 2020:
ASW made certain representationsthree and warranties in connection with this loan and is required to comply with various covenants, reporting requirements and other customary requirements for similar loans, including the loan having a zero balance for two periods of fifteen consecutive days during each calendar year and ASW and its subsidiaries having at least $3.0 million of unencumbered and unrestricted cash, cash equivalents and marketable securities in order to be entitled to advances under the loan. The loan documentation contains customary events of default for similar financing transactions, including ASW’s failure to make principal, interest or other payments when due; the failure of ASW to observe or perform its covenants under the loan documentation; the representations and warranties of ASW being false; the insolvency or bankruptcy of ASW; and the failure of ASW to maintain a net worth of at least $32 million. Upon the occurrence and during the continuance of an event of default, BOKF may declare the outstanding principal amount and all other obligations under the loan immediately due and payable. ASW incurred customary costs and expenses and paid certain fees to BOKF in connection with the loan.
LEDC and ASW made certain representations and warranties in connection with this loan and are required to comply with various covenants, reporting requirements and other customary requirements for similar loans. The loan documentation contains customary events of default for similar financing transactions, including LEDC’s failure to make principal, interest or other payments when due; the failure of LEDC or ASW to observe or perform their respective covenants under the loan documentation; the representations and warranties of LEDC or ASW being false; the insolvency or bankruptcy of LEDC or ASW; and the failure of ASW to maintain a net worth of at least $32 million. Upon the occurrence and during the continuance of an event of default, BOKF may declare the outstanding principal amount and all other obligations under the loan immediately due and payable. LEDC incurred customary costs and expenses and paid certain fees to BOKF in connection with the loan. The Company capitalized no interest or fees related to this loan during the three months ended January 31, 2021 and interest and fees of $27,000 during the nine months ended January 31, 2021. The total book value of the property mortgaged pursuant to this loan was $761,000 as of January 31, 2021. At January 31, 2021, LEDC was in compliance with the financial covenants contained in the loan documentation.
MHWDC and ASW made certain representations and warranties in connection with this loan and are required to comply with various covenants, reporting requirements and other customary requirements for similar loans. The loan documentation contains customary events of default for similar financing transactions, including: MHWDC’s failure to make principal, interest or other payments when due; the failure of MHWDC or ASW to observe or perform their respective covenants under the loan documentation; the representations and warranties of MHWDC or ASW being false; the insolvency or bankruptcy of MHWDC or ASW; and the failure of ASW to maintain a net worth of at least $32 million. Upon the occurrence and during the continuance of an event of default, BOKF may declare the outstanding principal amount and all other obligations under the loan immediately due and payable. MHWDC incurred customary costs and expenses and paid certain fees to BOKF in connection with the loan. The Company capitalized no interest or fees related to this loan during the three and nine months ended January 31, 2021. The total book value of the property mortgaged pursuant to this loan was $1,298,000 as of January 31, 2021. At January 31, 2021, MHWDC was in compliance with the financial covenants contained in the loan documentation.
The Company’s share repurchase activity is described below:
Investing Activities
Capital expenditures were $3,000 for each of the three and ninesix months ended January 31, 2021 compared to $4,000 and $18,000 for the three and nine months ended JanuaryOctober 31, 2020 primarily reflecting purchases of office furniture and computer equipment.
for technology upgrades during each period.
Environmental and Regulatory Matters
Government restrictions, standards or regulations intended to reduce greenhouse gas emissions or potential climate change impacts may result in restrictions on land development or homebuilding in certain areas and may increase energy, transportation or raw material costs, which could reduce the Company’s profit margins and adversely affect the Company’s results of operations. Weather conditions and natural disasters can harm the Company. The occurrence of natural disasters or severe weather conditions can delay or increase costs of land development, home construction and home closings, adversely affect the cost or availability of materials or labor or damage homes or land development under construction. The Company is also subject to a significant number and variety of local, state and federal laws and regulations concerning protection of health, safety, labor standards and the environment. These matters may result in delays, may cause the Company to incur substantial compliance, remediation, mitigation and other costs, and can prohibit or severely restrict land development and homebuilding activity in environmentally sensitive areas.
Statement of Forward-Looking Information
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. The Company and its representatives may from time to time make written or oral statements that are “forward-looking”, including statements contained in this report and other filings with the Securities and Exchange Commission, reports to the Company’s shareholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, other written or oral statements, which constitute forward-looking statements, may be made by or on behalf of the Company. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “projects”, “forecasts”, “may”, “should”, variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and contingencies that are difficult to predict. All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are qualified by the cautionary statements in this section. Many of the factors that will determine the Company’s future results are beyond the ability of management to control or predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements.
The forward-looking statements contained in this report include, but are not limited to, statements regarding (1) the Company’s ability to finance its future working capital, land development, homebuilding and capital expenditure needs, (2) the Company’s expected liquidity sources, (2)including the amount of principal available for borrowing under the Company’s financing arrangements, (3) anticipated future development of the Company’s real estate holdings, (4) the timing of reimbursements under, and the general effectiveness of, the Company’s public improvement districts and private infrastructure reimbursement covenants, (5) the availability of bank financing for projects, (3)(6) the utilization of existing bank financing, (4) the timing of development of land held as investment assets, (5)(7) the backlog of homes under contract and in production and the dollar amount of expected sales revenue when such homes are closed, (6) the offering of sales incentives to home buyers, (7)(8) the effect of recent accounting pronouncements, (8)(9) the timing of recognizing unrecognized compensation expense related to shares of common stock issued under the AMREP Corporation 2016 Equity Compensation Plan, (9)(10) the future issuance of deferred common sharestock units to directors of the Company and (10)(11) the future business conditions that may be experienced by the Company.
The Company undertakes no obligation to update or publicly release any revisions to any forward-looking statement to reflect events, circumstances or changes in expectations after the date of such forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
21
Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Vice President, Finance and Accounting, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. As a result of such evaluation, the Company’s Chief Executive Officer and Vice President, Finance and Accounting have concluded that such disclosure controls and procedures were effective as of JanuaryOctober 31, 2021 to provide reasonable assurance that the information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Vice President, Finance and Accounting, as appropriate, to allow timely decisions regarding disclosure. The Company believes that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control over Financial Reporting
No change in the Company’s system of internal control over “financial reporting” (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934) occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
30
22
PART II. OTHER INFORMATION
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
The following table sets forth all purchases made by or on behalf of the Company or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Exchange Act, of shares of common stock of the Company made during each month within the three months ended January 31, 2021:
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||||
November 1, 2020 – November 30, 2020 | 143,482 | (2) | $ | 6.18 | - | 324,384 | ||||||||||
December 1, 2020 – December 31, 2020 | - | - | - | - | ||||||||||||
January 1, 2021 – January 31, 2021 | - | - | - | - | ||||||||||||
Total | 143,482 | $ | 6.18 | - | - |
(1) In September 2020, the Board of Directors of the Company authorized the Company to purchase up to 1,000,000 shares of common stock of the Company from time to time pursuant to a share repurchase program, subject to the total expenditure for the purchase of shares under the share repurchase program not exceeding $5,000,000, exclusive of any fees, commissions and other expenses related to such repurchases. Under the share repurchase program, the Company was authorized to repurchase its common stock from time to time, in amounts, at prices, and at such times as the Company deemed appropriate, subject to market conditions, legal requirements and other considerations. The Company’s repurchases could be executed using open market purchases, unsolicited or solicited privately negotiated transactions or other transactions, and could be effected pursuant to trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The share repurchase program did not obligate the Company to repurchase any specific number of shares and could be suspended, modified or terminated at any time without prior notice. The share repurchase program did not contain a time limitation during which repurchases were permitted to occur. In October 2020, the Company repurchased 675,616 shares of common stock of the Company at a price of $6.18 per share in a privately negotiated transaction pursuant to the share repurchase program. As of the date of the repurchase, the repurchased shares were retired and returned to the status of authorized but unissued shares of common stock.
(2) In November 2020, the Company repurchased 143,482 shares of common stock of the Company at a price of $6.18 per share in a privately negotiated transaction. As of the date of the repurchase, the repurchased shares were retired and returned to the status of authorized but unissued shares of common stock. The share repurchase was not completed pursuant to a publicly announced share repurchase program of the Company
31
23
E
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.
Date: | AMREP CORPORATION | |
| | |
| By: | /s/ Adrienne M. Uleau |
| | Name: Adrienne M. Uleau |
| | Title: Vice President, Finance and Accounting |
| | (Principal Accounting Officer) |
33
24
25