During the third quarter of 2014, the Company determined that, based on the characterization of certain transactions that occurred in prior periods, no intersegment interest income or expense relating to such transactions would be appropriate. As a result, the intersegment interest income and expense relating to such transactions has been removed from the presentation above for the second quarter and first six months of 2014 and there was no effect on the reported EBITDA, which the Company uses as a key measure for segment performance and evaluation purposes.

INTRODUCTION

The Company,AMREP Corporation (the “Company”), through its subsidiaries, is primarily engaged in fourtwo business segments: the Subscriptionreal estate business operated by AMREP Southwest Inc. (“AMREP Southwest”) and its subsidiaries and the Fulfillment Services business operated by Palm Coast Data LLC (“Palm Coast”) and its subsidiary, FulCircle Media, LLC (“FulCircle”),. Data concerning industry segments is set forth in Note 13 of the notes to the consolidated financial statements included in this report on Form 10-Q. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company’s foreign sales and activities are not significant.

Prior to February 9, 2015, the Company had been engaged in the Newsstand Distribution Services business and the Product Packaging and Fulfillment Services and Staffing businesses operated by Kable Media Services, Inc. and its subsidiaries (“Kable”) (the Subscription Fulfillment Services business,business. On February 9, 2015, the Newsstand Distribution Services business and the Product Packaging and Fulfillment Services business were sold. In addition, prior to April 10, 2015, the Company had also been engaged in the Staffing Services business. On April 10, 2015, the Staffing Services business was sold. The Newsstand Distribution Services business, the Product Packaging and Staffing businesses are collectively referred to as “Media Services”)Fulfillment Services business and the real estateStaffing Services business operated by AMREP Southwest Inc. (“AMREP Southwest”have been classified as “discontinued operations” in the Company’s financial statements. Financial information from prior periods has been reclassified to conform to this presentation. Refer to Item 1 of Part I of the Company’s annual report on Form 10-K for the year ended April 30, 2015, which was filed with the SEC on July 29, 2015 (the “2015 Form 10-K”), for more detail about the sale of the Newsstand Distribution Services business, the Product Packaging and its subsidiaries. The Company’s foreign salesFulfillment Services business and activities are not significant.the Staffing Services business.

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 section should be read in conjunction with the unaudited consolidated financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10-Q and with the Company’s annual report on2015 Form 10-K for the year ended April 30, 2014, which was filed with the Securities and Exchange Commission on July 29, 2014 (the “2014 Form 10-K”).10-K. Many of the amounts and percentages presented in this section have been rounded for convenience of presentation. Unless otherwise qualified, all references to 20152016 and 20142015 are to the fiscal years ending April 30, 20152016 and 20142015 and all references to the secondfirst quarter and first sixthree months of 20152016 and 20142015 mean the fiscal three month period ended July 31, 2015 and six month periods ended October 31, 2014 and 2013.2014.

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 20142015 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 20142015 Form 10-K.The10-K. 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.

The critical accounting policies, assumptions and estimates are described in Item 7 of Part II “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Policies and Estimates” in the 20142015 Form 10-K. There have been no changes in these accounting policies.

The significant accounting policies of the Company are described in Note 1 to the consolidated financial statements contained in the 20142015 Form 10-K. Information concerning the Company’s implementation and the impact of recent accounting standards issued by the Financial Accounting Standards Board is included in the notes to the consolidated financial statements contained in the 20142015 Form 10-K. The Company did not adopt any accounting policy in the secondfirst quarter of 20152016 that had a material impact on its consolidated financial statements.

RESULTS OF OPERATIONS

For the second quarter of 2015, the Company recorded net income of $254,000, or $0.03 per share, compared to net income of $52,000, or $0.01 per share, for the second quarter of 2014. Continuing Operations

For the first six monthsquarter of 2015,2016, the Company hadCompany’s continuing operations recorded a net incomeloss of $6,518,000,$1,179,000, or $0.83$0.15 per share, compared to a net loss of $635,000,$636,000 or $0.09$0.08 per share, for the same period of 2014. The results for the secondfirst quarter of 2015 included an adjustment reducing a reserve for doubtful accounts receivable2015. Revenues from a magazine wholesaler as a result of updated estimates of magazine returns and trade credits by $900,000 ($567,000 after tax, or $0.07 per share), and there was a similar $300,000 adjustment ($189,000 after tax, or $0.03 per share) in 2014. The resultscontinuing operations were$9,575,000 for the first six monthsquarter of 2015 included a non-cash pre-tax gain on a settlement agreement with a significant customer of $11,155,000 ($7,028,000 after tax, or $0.90 per share) offset in part by a non-cash impairment charge of $925,000 ($583,000 after tax, or $0.07 per share), reflecting the discontinuance of the development of certain software in the Company’s Subscription Fulfillment Services business. Revenues were$19,338,000 and $37,266,000 for the second quarter and first six months of 20152016 compared to $22,763,000 and $43,272,000$12,321,000 for the same periodsperiod in the prior year.

Revenues from the Company’s MediaFulfillment Services operations decreased from $21,555,000 and $41,833,000$11,909,000 for the secondfirst quarter and first six months of 20142015 to $16,784,000 and $34,300,000$9,181,000 for the same periodsperiod in 2015.2016. The decrease in revenues was due in part to lower revenues in 2016 of $1,438,000 from a significant customer that changed fulfillment service providers, and which consisted largely of contract termination fees that had little or no operating expenses associated with them. Magazine publishers are the principal customers of thesethe Company’s Fulfillment Services operations, and these customers have continued to be negatively impacted by increased competition from new media sources, alternative technologies for the distribution, storage and consumption of media content, weakness in advertising revenues and increases in paper costs, printing costs and postal rates and weakness in the U.S. economy.rates. The result has been reduced subscription and newsstand magazine sales, which has caused publishers to close some magazine titles, change subscription fulfillment providers or newsstand distribution providers and seek more favorable terms from Palm Coast and Kable and theirits competitors when contracts are up for bid or renewal. As a consequence of these and other factors, revenues from SubscriptionOperating expenses for Fulfillment Services operations decreased from $15,013,000 and $29,006,000$9,392,000 for the secondfirst quarter and first six months of 20142015 to $11,831,000 and $23,776,000$8,780,000 for the same periods of 2015, while revenues from Newsstand Distribution Services operations decreased from $1,871,000 and $3,856,000 for the second quarter and first six months of 2014 to $1,309,000 and $2,656,000 for the same periods of 2015. Revenues from Subscription Fulfillment Services operations are expected to further decline beginningperiod in the third fiscal quarter of 2015 as services cease to a limited number of significant clients previously disclosed to be changing service providers. Revenues from Product Packaging and Fulfillment Services and Staffing operations decreased from $4,671,000 and $8,971,000 for the second quarter and first six months of 2014 to $3,644,000 and $7,868,000 for the same periods in 2015, due primarily to a major customer moving certain business in-house. Media Services’ operating expenses were $13,512,000 and $28,049,000 (80.5% and 81.8% of Media Services revenues) for the second quarter and first six months of 2015 compared to $17,791,000 and $35,519,000 (82.5% and 84.9% of Media Services revenues) for the same periods of 2014. The decrease in operating expenses in both periods was2016, primarily attributable to lower payroll and benefits, the reversal of previously established accounts receivable reserves (discussed above), as well as lower supplies expense, consulting costs, and facilities and equipment expense.expenses. In addition, during the first quarter of 2015, the Fulfillment Services business recorded a non-cash impairment charge of $925,000 due to the discontinuance of the development of certain software. This impairment charge included previously capitalized software costs, internal labor costs and third party consulting costs. Should the adverse Fulfillment Services business conditions continue, the Fulfillment Services business may experience future impairment charges related to its long-lived assets.

Revenues from the Company’s Real Estate land sales at AMREP Southwest and its subsidiaries were $2,513,000 and $2,897,000$110,000 for the secondfirst quarter and first six months of 20152016 compared to $1,196,000 and $1,424,000$384,000 for the same periodsperiod of 2014.2015. For the second quarterfirst quarters of 2016 and first six months of 2015, and 2014, the Company’s land sales in New Mexico were as follows:

The average gross profit percentage on land sales was 12.9% and 16.8%68% for the secondfirst quarter and first six months of 20152016 compared to 16.5%42% for each of the same two periodsperiod of 2014.2015. As a result of many factors, including the nature and timing of specific transactions and the type and location of land being sold, revenues, average selling prices and related average gross profits from land sales can vary significantly from period to period and prior results are not necessarily a good indication of what may occur in future periods.

Other revenues were $41,000 and $69,000increased from $28,000 for the second quarter and first sixthree months of 2015 compared to $12,000 and $15,000$284,000 for the same periodsperiod of 2014,2016. Other revenues consist primarily asof revenues from the rental of a result ofwarehouse in Fairfield, Ohio and also from an oil and gas lease entered into by AMREP Southwest and one its subsidiaries entering into an oil and gas lease during the second quarter of 2015. ForRefer to Item 8 of Part II of the 2015 Form 10-K for further detailsdetail regarding the oil and gas lease, see Note 7 inlease.

Other operating expenses decreased from $441,000 for the footnotes that accompany the financial statements included in this Form 10-Q. During the secondfirst quarter of 2015 deferred revenue increased by $872,000 in connection withto $347,000 for the oilsame period of 2016, primarily due to reduced real estate taxes and gas lease. The deferred revenue is being recognized as revenue over the initial lease term of four yearsland maintenance costs at AMREP Southwest and approximately $38,000 was recognized during the second quarter of 2015.its subsidiaries.

General and administrative expenses of MediaFulfillment Services operations declined to $1,637,000 and $3,365,000 (9.8% and 9.8% of Media Services revenues)decreased from $1,107,000 for the secondfirst quarter and first six months of 2015 compared to $1,840,000 and $3,649,000 (8.5% and 8.7% of Media Services revenues)$865,000 for the same periodsperiod of 2014,2016, primarily due to reducedlower payroll and benefit costs due in part to lower volumes.costs. Real estate operations and corporate general and administrative expenses decreased $81,000 and $104,000increased from $827,000 in the secondfirst quarter and first six months of 2015 comparedto $1,019,000 for the same period in 2016, primarily due to increased pension costs resulting from the Company’s corporate office having assumed responsibility in 2016 for the pension expense related to the same periods in 2014.discontinued operations.

Interest expense for continuing operations was $436,000 and $855,000$379,000 for the secondfirst quarter and first six months of 2015,2016 compared to $462,000 and $927,000$392,000 for the same periodsperiod of 2014,2015, primarily due to a decliningslightly lower principal loan balance at AMREP Southwest.

The Company’s effective tax rate for continuing operations was 27.8% and 36.6%38.1% for the secondfirst quarter and first six months of 20152016 compared to 62.0% and 33.3%41.8% for the same periodsperiod of 2014. The difference between the statutory tax rate and the effective rate of the tax provision or benefit for 2015 was primarily attributable to an increase in certain deferred tax assets, and for 2014 was primarily attributable to state taxes and the accrual of interest related to unrecognized tax positions, which the Company has elected to include in its income tax expense or benefit.2015. The total tax effect of gross unrecognized tax benefits in the accompanying financial statements at both OctoberJuly 31, 20142015 and April 30, 20142015 was $58,000, which, if recognized, would have an impact on the effective tax rate. The Company believes it is reasonably possible that the liability for unrecognized tax benefits will not change in the next twelve months. 

Discontinued Operations

Prior to fiscal 2016, the Company had been engaged in the Newsstand Distribution Services, Product Packaging and Fulfillment Services and Staffing Services businesses. During 2015, these businesses were sold and the operations of those businesses have been classified as “discontinued operations” in the Company’s financial statements. Financial information for prior periods has been reclassified to conform to this presentation. The net income from discontinued operations for the first quarter of 2015 included a pre-tax gain of $11,155,000 ($7,028,000 after tax, or $0.92 per share) from a settlement agreement in the Newsstand Distribution Services business with a major customer.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s primary sourcessource of funding for working capital requirements areis cash flow from operations, a revolving credit facility between the Company’s Media Services businesses and a bank (the “Media Services Credit Facility”) and working capital made available to the Company by the terms of customer contracts.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 industries in which the Company operates and the economy generally. 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 20142015 Form 10-K.

Gain From Settlement

Pursuant to the Settlement Agreement, Kable Distribution agreed to eliminate the commission paid by Bauer to Kable Distribution for distribution services through expiration of the contract period at June 30, 2014 and to amend the payment procedures with respect to amounts received by Kable Distribution from wholesalers or retailers relating to the domestic sale by Kable Distribution of Bauer magazines to such wholesalers or retailers; Palm Coast agreed to reduce certain fees charged to Bauer for fulfillment services, with Bauer agreeing to extend the term of its fulfillment agreement to at least December 31, 2018; and the Company agreed to issue to Bauer 825,000 shares of common stock of the Company, which represented approximately 10.3% of the outstanding shares of common stock of the Company following such issuance, with Bauer agreeing to not sell or transfer such shares for a period of six months. In return for such consideration, Bauer released all claims it may have had against each of Kable Distribution, Palm Coast, the Company and its related persons, other than the obligations of Kable Distribution, Palm Coast and the Company under the Settlement Agreement, the future obligations of Kable Distribution under its distribution agreement as amended by the Settlement Agreement and the future obligations of Palm Coast under its fulfillment agreement as amended by the Settlement Agreement. In particular, the Settlement Agreement transferred to Bauer all amounts and accounts receivable owing from wholesalers to Kable Distribution relating to the domestic sale by Kable Distribution of Bauer magazines ($22,626,000) and released Kable Distribution from having to pay the accounts payable owed to Bauer relating to the domestic sale by Kable Distribution of Bauer magazines other than to the extent amounts had been received by Kable Distribution or Bauer on or after May 14, 2014 from wholesalers or retailers relating to the domestic sale by Kable Distribution of Bauer magazines to such wholesalers or retailers ($38,214,000). After considering the value of the various components of the Settlement Agreement, Kable Distribution recorded a gain of $11,155,000 during the first quarter of 2015.

Media Services

The Company’s Newsstand Distribution Services business, which is operated through Kable Distribution, had negative working capital of approximately $12,672,000 at October 31, 2014, which included outstanding borrowings by Kable Distribution of $2,238,000 under the Media Services Credit Facility. The negative working capital of Kable Distribution represents the net payment obligation due to publisher clients and other third parties, which amount will vary from period to period based on the level of magazine distribution. The negative working capital of Kable Distribution is calculated by deducting (a) the sum of the cash held by Kable Distribution plus the accounts receivable (net of estimated magazine returns to Kable Distribution) owed to Kable Distribution from wholesalers, retailers and other third parties from (b) the accounts payable (net of estimated magazine returns to publishers) and accrued expenses owed by Kable Distribution to publisher clients and other third parties plus outstanding bank borrowings of Kable Distribution under the Media Services Credit Facility. During the first quarter of 2015, the Company and its indirect subsidiaries, Kable Distribution and Palm Coast, entered into the previously-described Settlement Agreement, which significantly contributed to the reduction of negative working capital and outstanding borrowings at Kable Distribution from approximately $27,863,000 at April 30, 2014 to $12,672,000 at October 31, 2014.

Equity Issuance

During the first quarter of 2015, the Company and its indirect subsidiaries, Kable Distribution and Palm Coast, entered into the previously-described Settlement Agreement with a significant customer resulting in the issuance by the Company of 825,000 shares of its common stock. As a result of the issuance of these shares, the Company increased its common stock account by $83,000 and its contributed capital account by $4,191,000.

Operating Activities

Receivables, net decreased from $43,497,000$11,265,000 at April 30, 20142015 to $14,026,000$10,933,000 at OctoberJuly 31, 20142015 due to reduced borrowings by the buyers of the Company’s former Newsstand Distribution Services and accountsProduct Packaging and Fulfillment Services businesses. Accounts payable net and accrued expenses decreased from $74,636,000$10,284,000 at April 30, 20142015 to $33,497,000$8,826,000 at OctoberJuly 31, 2014,2015, primarily due to lower business volumes and the previously-described Settlement Agreement.timing of payments to vendors.

Real estate inventory decreasedincreased from $71,289,000$66,321,000 at April 30, 20142015 to $69,398,000$66,388,000 at OctoberJuly 31, 2014 as a result of land sales by AMREP Southwest.2015. Property, plant and equipment decreased from $23,819,000$15,763,000 at April 30, 20142015 to $22,442,000$15,467,000 at OctoberJuly 31, 20142015, primarily due to a $925,000 impairment adjustment in the first quarter of 2015 and normal depreciation of fixed assets.

Other liabilities and deferred revenue increaseddecreased from $3,058,000$4,827,000 at April 30, 20142015 to $3,930,000$4,766,000 at OctoberJuly 31, 2014 as a result2015, primarily reflecting the amortization of deferred revenue related to anthe oil and gas lease entered into by AMREP Southwest and one of its subsidiaries during the second quarter of 2015.

Investing Activities

Capital expenditures for continuing operations totaled $586,000$82,000 for the first sixthree months of 20152016 and $204,000$377,000 for the same period of 2014,2015, primarily for the MediaFulfillment Services business.

Financing Activities

The Media Services Credit Facility provides the Media Services business with a revolving credit loan and letter of credit facility of up to $15,000,000 that matures on May 12, 2015. At October 31, 2014, the borrowing availability under the Media Services Credit Facility was $7,842,000, and there was $2,582,000 outstanding against this availability. The highest amount borrowed during the first six months of 2015 was $6,569,000 and the interest rate at October 31, 2014 was 3.16%. The borrowers’ obligations under the Media Services Credit Facility are secured by substantially all of their assets other than real property.

AMREP Southwest has a loan withfrom a company owned by Nicholas G. Karabots, a significant shareholder of the Company and in which another director of the Company has a 20% participation. The loan had an outstanding principal amount of $14,418,000$13,782,000 at OctoberJuly 31, 2014,2015, is scheduled to mature on December 1, 2017, bears interest payable monthly at 8.5% per annum, and is secured by a mortgage on all real property of AMREP Southwest in Rio Rancho and by a pledge of the stock of its subsidiary, Outer Rim Investments, Inc. The total book value of the real property collateralizing the loan was approximately $66,954,000$63,944,000 as of OctoberJuly 31, 2014.2015. No payments of principal are required until maturity, except that the following amounts are required to be applied to the payment of the loan: (a) 25% of the net cash proceeds from any sales of real property by AMREP Southwest and (b) 25% of any royalty payments received by AMREP Southwest under anthe oil and gas lease discussed in Note 7 in the footnotes that accompany the financial statements included in this Form 10-Q.

At October 31, 2014, the borrowers under both the Media Services Credit Facility and theentered into by AMREP Southwest loan wereand one of its subsidiaries during the second quarter of 2015. At July 31, 2015, AMREP Southwest was in compliance with the covenants of eachthe loan facility.

Other notes payable consist of a mortgage note payable with an outstanding principal balance of $4,178,000$4,057,000 on a warehouse with a maturity date of February 2018 and an interest rate of 6.35%, and $197,000 of an asset financing loan with a maturity date of December 2015 and an interest rate of 9.0%. The amount of Other notes payable due within one year totals $221,000.

Future Payments Under Contractual Obligations$130,000.

The Company is obligated to make future payments under various contracts, includingCompany’s Fulfillment Services business had a revolving credit and security agreement with PNC Bank, N.A. (the “PNC Credit Facility”). The PNC Credit Facility expired by its debt agreementsterms on August 12, 2015. There were no borrowings during the quarter ended July 31, 2015 and lease agreements, and is subject to certain other commitments and contingencies. The table below summarizes significant contractual cash obligations asno balance outstanding at the end of Octoberthe quarter. At July 31, 2014 for2015, the items indicated (in thousands):borrowers were in compliance with the covenants of the PNC Credit Facility.

Statement of Forward-Looking Information

The Private Securities Litigation Reform Act of 1995 (the “Act”) 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 Act. 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 whether the liability for unrecognized tax benefits will change in the next twelve months, the future business conditions that may be experienced by the Company and future impairment charges that may be incurred related to the Company’s long-lived assets. 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.

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s chief financial officer and the other personsperson whose certifications accompanycertification accompanies this quarterly report, 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 chief financial officer and such other personsperson have concluded that such disclosure controls and procedures are effective 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 its chief financial officer and such other persons,person, 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 occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

Material Weakness Previously Identified

Refer to Item 9A of Part II of the 2015 Form 10-K for detail about a previously identified material weakness in the Company’s internal control over financial reporting over complex and non-routine transactions. The Company has implemented the following remediation steps to address this material weakness: (i) continual evaluation and enhancement of internal technical accounting capabilities, supported by the use of third-party advisors and consultants to assist with areas requiring specialized technical accounting expertise and (ii) enhanced awareness to identify complex technical accounting topics and early identification of situations which might require the use of third-party advisors and consultants. The material weakness will not be considered remediated until the controls are in operation for a sufficient period of time for the Company’s management to conclude that the material weaknesses have been remediated. Management will continue to assess the effectiveness of the Company’s remediation efforts in connection with management’s evaluations of internal control over financial reporting.

PART II. OTHER INFORMATION

Item 5.Other Information

The following disclosure would otherwise be filed on Form 8-K under Item 5.03:

On September 10, 2015, Section 1(a) of Article III of the By-Laws of AMREP Corporation (the “Company”) was amended to provide that the Board of Directors of the Company consists of four directors.

The following disclosure would otherwise be filed on Form 8-K under Item 5.07:

The 2015 Annual Meeting of Shareholders of the Company was held on September 10, 2015. At the meeting, shareholders holding an aggregate of 6,113,746 shares of common stock, par value $.10, of the Company out of a total of 8,056,454 shares outstanding and entitled to vote, were present in person or represented by proxy.

At the meeting, Edward B. Cloues, II was reelected as a director of the Company in Class I by the final votes set forth opposite his name, to hold office until the 2018 Annual Meeting of Shareholders and until his successor is elected and qualified:

In addition, the following proposal was voted on and approved at the meeting: