EXHIBIT 99.1
FOR: AMREP Corporation
300 Alexander Park, Suite 204
Princeton, NJ 08540
CONTACT: Peter M. Pizza
Vice President and Chief Financial Officer
(609) 716-8210
AMREP REPORTS SECOND QUARTER AND SIX MONTH RESULTS
Princeton, New Jersey, December 7, 2007 - AMREP Corporation (NYSE:AXR) today
reported net income of $3,467,000, or $0.55 per share, for its fiscal 2008
second quarter ended October 31, 2007, compared to net income of $16,062,000, or
$2.42 per share, for its fiscal 2007 second quarter ended October 31, 2006. For
the first six months of fiscal 2008, net income was $9,730,000, or $1.50 per
share, compared to net income of $31,866,000, or $4.79 per share, in the same
period of fiscal 2007. Results for the first six months of 2008 included a loss
on discontinued operations of $57,000, or $.01 per share, that reflected costs
incurred in connection with the settlement of all litigation related to the
Company's water utility subsidiary that were in addition to costs estimated and
accrued for this matter in the fourth quarter of 2007, while the results for the
same period in 2007 were entirely from continuing operations. Revenues were
$42,090,000 and $93,449,000 in the second quarter and first six months of 2008
compared to $56,055,000 and $114,324,000 in the same periods last year.
Revenues from land sales at the Company's AMREP Southwest subsidiary were
$3,161,000 and $21,311,000 for the three and six month periods ended October 31,
2007 compared to $31,707,000 and $64,197,000 for the same periods of the prior
year. These decreases were the result of a substantial decline in land sales in
the Company's principal market of Rio Rancho, New Mexico, due to the softening
of the real estate market in the greater Albuquerque-metro and Rio Rancho areas.
The number of permits for new home construction in both markets was down
significantly for the first ten months of calendar 2007 compared to the same
period in 2006, with Rio Rancho showing a decrease of almost 50%. The Company
believes that this decline reflected the well-publicized problems of the
national homebuilding industry, including fewer sales of both new and existing
homes, increasing numbers of mortgage delinquencies and foreclosures and a
tightening of mortgage availability. As a result of these factors, builders have
slowed the pace of building on land previously purchased from the Company in Rio
Rancho and, in some cases, have delayed or cancelled the purchase of additional
land. These factors are also believed to have contributed to a decline in sales
of undeveloped land to both builders and investors.
In Rio Rancho, the Company sells both developed and undeveloped lots to
national, regional and local homebuilders, commercial and industrial property
developers and others. The Company sold 10 acres of developed land and 11 acres
of undeveloped land at average selling prices of $274,000 and $38,000 per acre
in the second quarter of 2008 compared to sales of 61 acres of developed land
and 324 acres of undeveloped land at average selling prices of $270,000 and
$47,000 per acre in the same period in 2007. In the six months ended October 31,
2007, the Company sold 44 acres of developed land and 302 acres of undeveloped
land at average selling prices of $282,000 and $30,000 per acre compared to
sales of 127 acres of developed land and 573 acres of undeveloped land at
average selling prices of $270,000 and $52,000 per acre in the comparable period
of the prior fiscal year. See Attachment 2 for additional information.
2
Variances in the average selling price per acre of developed land in the three
and six month periods of 2008 compared to 2007 were generally due to a change in
the mix and the stage of development of specific projects from which the land
was sold. The Company offers developed and undeveloped land in Rio Rancho from a
number of different projects and selling prices may vary from project to project
and within projects depending on location, the stage of development and other
factors. The decrease in the average selling price of undeveloped land in the
second quarter and first six months of 2008 was primarily attributable to a
higher proportion of undeveloped investment land sold in the current year from
locations in Rio Rancho that are further removed from developed areas and thus
generally have lower average selling prices. The average gross profit percentage
on land sales decreased from 75% and 70% for the second quarter and first six
months of 2007 to 50% and 66% for the same periods of 2008. The reduced gross
profit percentages in fiscal 2008 were principally attributable to a change in
the mix of sales between developed and undeveloped lots sold in each of the
periods, with sales in both the three and six month periods of fiscal 2008
including a higher percentage of revenues from sales of developed lots which
generally have lower gross profit percentages than undeveloped lots. 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.
During the second quarter of 2008, the Company sold a commercial rental property
in Rio Rancho that resulted in a pre-tax gain of $1,873,000. In addition, the
Company recognized pre-tax income of $618,000 from the forfeiture of a customer
deposit under a land sale contract. During the first quarter of 2007, the
Company sold certain investment assets, including the Company's office building
in Rio Rancho, which in the aggregate contributed a pre-tax gain of $4,107,000.
Revenues from the Company's Kable Media Services operations, including both
Fulfillment Services and Newsstand Distribution Services, increased from
$22,913,000 and $43,740,000 for the second quarter and first six months of
fiscal 2007 to $35,574,000 and $67,852,000 for the same periods in 2008. These
increases were attributable to the January 2007 acquisition of Palm Coast Data
Holdco, Inc. by Kable. Revenues from Fulfillment Services operations, including
the revenues of Palm Coast, were $32,028,000 and $61,011,000 for the second
quarter and first six months of 2008 compared to $18,965,000 and $36,537,000 in
the same periods of the prior year. The increase in Fulfillment Services
revenues resulting from the Palm Coast acquisition ($14,207,000 and $27,326,000
in the second quarter and first six months) was partly offset by decreases in
revenues from other parts of Kable's Fulfillment Services business that resulted
from competitive market pressures and customer losses that occurred in earlier
periods. Revenues from Kable's Newsstand Distribution Services operations
decreased from $3,948,000 and $7,203,000 for the second quarter and first six
months of 2007 to $3,546,000 and $6,841,000 for the same periods in 2008, due
primarily to reduced billings and lower commission rates.
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.
*****
3
Attachment 1
AMREP Corporation
and Subsidiaries
Financial Highlights
(Unaudited)
Three Months Ended October 31,
------------------------------
2007 2006
---- ----
Revenues $ 42,090,000 $ 56,055,000
Net income:
Continuing operations $ 3,467,000 $ 16,062,000
Discontinued operations - -
-------------- --------------
$ 3,467,000 $ 16,062,000
Earnings per share - Basic and
Diluted:
Continuing operations $ 0.55 $ 2.42
Discontinued operations - -
-------------- --------------
$ 0.55 $ 2.42
Weighted average number of common
shares outstanding 6,327,000 6,649,000
-------------- --------------
Six Months Ended October 31,
----------------------------
2007 2006
---- ----
Revenues $ 93,449,000 $114,324,000
Net income:
Continuing operations $ 9,787,000 $ 31,866,000
Discontinued operations (57,000) -
-------------- --------------
$ 9,730,000 $ 31,866,000
Earnings per share - Basic and
Diluted:
Continuing operations $ 1.51 $ 4.79
Discontinued operations (0.01) -
-------------- --------------
$ 1.50 $ 4.79
-------------- --------------
Weighted average number of common
shares outstanding 6,490,000 6,646,000
-------------- --------------
4
Attachment 2
The Company's land sales in Rio Rancho, New Mexico have been as follows:
2007 2006
---------------------------------------- ------------------------------------------
Revenues Revenues
Acres Revenues Per Acre Acres Revenues Per Acre
Sold (in 000's) (in 000's) Sold (in 000's) (in 000's)
--------- ----------- ------------ --------- ------------ ------------
Three months ended
October 31:
Developed
Residential 10 $ 2,740 $ 274 30 $ 7,954 $ 265
Commercial - - - 31 8,504 274
--------- ----------- ------------ --------- ------------ ------------
Total Developed 10 2,740 274 61 16,458 270
Undeveloped 11 421 38 324 15,249 47
--------- ----------- ------------ --------- ------------ ------------
Total 21 $ 3,161 $ 151 385 $ 31,707 $ 82
--------- ----------- ------------ --------- ------------ ------------
Six months ended
October 31:
Developed
Residential 30 $ 9,468 $ 316 83 $ 22,456 $ 271
Commercial 14 2,921 209 44 11,798 268
--------- ----------- ------------ --------- ------------ ------------
Total Developed 44 12,389 282 127 34,254 270
Undeveloped 302 8,922 30 573 29,943 52
--------- ----------- ------------ --------- ------------ ------------
Total 346 $ 21,311 $ 62 700 $ 64,197 $ 92
--------- ----------- ------------ --------- ------------ ------------
The Company offers developed and undeveloped land in Rio Rancho from a number of
different projects and selling prices may vary from project to project and
within projects depending on location, the stage of development and other
factors.