EXHIBIT 99.1
FOR: AMREP Corporation
300 Alexander Park, Suite 204
Princeton, New Jersey 08540
CONTACT: Peter M. Pizza
Vice President and
Chief Financial Officer
(609) 716-8210
FOR IMMEDIATE RELEASE
AMREP REPORTS FIRST QUARTER FISCAL 2008 RESULTS
Princeton, New Jersey, September 10, 2007 - AMREP Corporation (NYSE:AXR) today
reported net income of $6,263,000, or $0.94 per share, for its fiscal 2008 first
quarter ended July 31, 2007 compared to net income of $15,804,000, or $2.38 per
share, in the first quarter of the prior fiscal year. Results for the first
quarter of 2008 included net income from continuing operations of $6,320,000, or
$0.95 per share, and a loss from discontinued operations, net of tax, of
$57,000, or $0.01 per share, while the results for the first quarter of 2007
were entirely from continuing operations. Revenues were $51,359,000 in the first
quarter this year versus $58,269,000 in the first quarter of fiscal 2007.
The net loss from discontinued operations in the first quarter of 2008 reflected
costs incurred in connection with the settlement of all litigation related to
the Company's El Dorado, New Mexico water utility subsidiary that were in
addition to costs that were estimated and accrued for this matter in the fourth
quarter of 2007.
First quarter revenues from land sales at the Company's AMREP Southwest
subsidiary decreased from $32,490,000 in 2007 to $18,150,000 in 2008. This
revenue decrease was primarily due to fewer land sales in the Company's
principal market of Rio Rancho, New Mexico and a reduction in the average
selling price of undeveloped lots. In the first quarter of 2008, the Company
sold (i) 122 developed residential lots (totaling approximately 19 acres) and
closed one commercial land sale (totaling approximately 14 acres) at an average
selling price of $291,000 per acre, and (ii) 330 undeveloped lots (totaling
approximately 291 acres) at an average selling price of $29,000 per acre. In the
first quarter of 2007, land sales consisted of (i) 318 developed residential
lots (totaling approximately 52 acres) and ten commercial land sales (totaling
approximately 13 acres) at an average selling price of $277,000 per acre, and
(ii) 392 undeveloped lots (totaling approximately 250 acres) at an average
selling price of $59,000 per acre. The increase in the average selling price per
acre of developed land was due to a change in the mix of projects from which the
land was sold, while the decrease in the average selling price of undeveloped
land was attributable to a substantially higher proportion of undeveloped
investment land sold in the current year from locations in Rio Rancho that are
further removed from developed areas. The average gross profit percentage on
land sales increased from 65% for the first three months of 2007 to 68% for the
same period of 2008. Revenues and related gross profits from land sales can vary
significantly from period to period as a result of many factors, including the
nature and timing of specific transactions, and prior results are not
necessarily a good indication of what may occur in future periods.
As a result of the above factors, the pretax income contribution from AMREP
Southwest in the first quarter of fiscal 2008 was $11,714,000, with a
contribution to earnings per share of $1.11, compared to a pretax income
contribution of $24,243,000 and an earnings per share contribution of $2.30 in
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the first quarter of the prior year. Results for the first quarter of fiscal
2007 included a pre-tax gain of $4,107,000 (equivalent to $0.39 per share) from
the sale of certain AMREP Southwest non-inventory real estate assets, including
the Company's office building in Rio Rancho.
While there has been a softening of the Rio Rancho real estate market since last
year's first quarter, the first quarter 2008 revenues and pretax profit of AMREP
Southwest exceeded the amounts reported in each of the third and fourth quarters
of fiscal 2007.
Revenues from the Company's Kable Media Services subsidiary increased from
$20,827,000 in the first quarter of 2007 to $32,299,000 in 2008's first quarter
due to the January 2007 acquisition of Palm Coast Data Holdco, Inc. by Kable.
Revenues from Fulfillment Services operations increased from $17,572,000 in last
year's first quarter to $28,988,000 in the current year's period, including
$13,119,000 of revenues from Palm Coast. The increase in Fulfillment Services
revenues resulting from the Palm Coast acquisition was partly offset by
decreases in revenues from other parts of Kable's Fulfillment Services business.
Revenues from Kable's Newsstand Distribution Services operations were $3,311,000
and $3,255,000 in the three month periods ended July 31, 2007 and 2006. Kable's
operating expenses increased by $11,921,000 in the first quarter of 2008
compared to the same period in the prior year, with such increase being
primarily attributable to the additional operating expenses of Palm Coast, which
were offset in part by decreased payroll and benefit expenses resulting from
lower sales volumes in the other parts of the Fulfillment Services business.
As a result of the above factors, the pretax contribution from Kable was a loss
of $2,558,000, or a loss net of tax of $0.24 per share, in the first quarter of
2008, compared to pretax income of $596,000, with a contribution to earnings per
share of $0.06, in the same period of 2007. The Company recently initiated a
project to consolidate the Kable and Palm Coast fulfillment operations in order
to improve operating efficiencies and customer service and also to reduce costs.
In connection with this consolidation effort, the first quarter results for 2008
included a charge of approximately $300,000 for severance costs relating to a
workforce reduction of approximately 75 people. The Company expects to realize
annual operating cost savings of approximately $2,700,000 from this workforce
reduction.
AMREP Corporation's AMREP Southwest Inc. subsidiary is a major landholder and
leading developer of real estate in New Mexico, and its Kable Media Services,
Inc. subsidiary distributes magazines to wholesalers and provides subscription
fulfillment and related services to publishers and others. The quarterly results
should be considered in conjunction with the Company's audited financial
statements for fiscal 2007, which are included in the Company's 2007 Annual
Report on Form 10-K filed with the Securities and Exchange Commission. The 2007
Annual Report is available through the Company's website, www.amrepcorp.com, and
any shareholder may receive a hard copy of the 2007 Annual Report without charge
upon request to the Company.
*****
The statements in this news release regarding the project to consolidate the
operations of the fulfillment services business and the estimated cost savings
of the workforce reduction are forward-looking statements within the meaning of
the federal securities laws. These statements are subject to numerous risks and
uncertainties, many of which are beyond the control of AMREP and that could
cause actual results to differ materially from such statements, including,
without limitation, the Company's ability to efficiently integrate the
components of its fulfillment services business, the effect on the Company and
its customers of increased paper costs and postal rates, the Company's ability
to migrate customers to an internal data processing system and the effects of
competitive pressures. Further information about these and other relevant risks
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and uncertainties may be found in the Company's Form 10-K and its other filings
with the Securities and Exchange Commission, all of which are available from the
Commission as well as from other sources. Recipients of this news release are
cautioned to consider these risks and uncertainties and to not place undue
reliance on the forward-looking statements contained therein. AMREP disclaims
any intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
AMREP Corporation
and Subsidiaries
Financial Highlights
(Unaudited)
Three Months Ended July 31,
---------------------------
2007 2006
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Revenues $ 51,359,000 $ 58,269,000
Net income:
Continuing operations $ 6,320,000 $ 15,804,000
Discontinued operations (57,000) -
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$ 6,263,000 $ 15,804,000
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Earnings per share - Basic and
Diluted:
Continuing operations $ 0.95 $ 2.38
Discontinued operations (0.01) -
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$ 0.94 $ 2.38
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Weighted average number of common
shares outstanding 6,653,000 6,644,000
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