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
(609) 716-8255 (fax)
AMREP REPORTS FIRST QUARTER FISCAL 2009 RESULTS
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Princeton, New Jersey, September 8, 2008 - AMREP Corporation (NYSE: AXR) today
reported net income of $71,000, or $0.01 per share, for its fiscal 2009 first
quarter ended July 31, 2008, compared to net income of $6,263,000, or $0.94 per
share, for the first quarter of the prior fiscal year. Results for the first
quarter of 2009 were entirely from continuing operations, while the prior year's
results consisted of net income from continuing operations of $6,320,000, or
$0.95 per share, and a net loss from discontinued operations of $57,000, or
$0.01 per share. Revenues were $35,570,000 in the first quarter of this fiscal
year versus $51,359,000 in the first quarter of fiscal 2008.
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 had been accrued for this matter in the prior year.
First quarter 2009 revenues from land sales at the Company's AMREP Southwest
subsidiary were $1,263,000 compared to $18,150,000 for the same period of fiscal
2008, with average gross profit percentages of 71% and 68% in each period. As a
result of this sharp decrease in revenues, the pretax income contribution from
AMREP Southwest in the first quarter of 2009 was $157,000 compared to
$11,714,000 in the same period of the prior year. These significant
year-over-year revenue and profit decreases reflected substantially lower land
sales in the Company's principal market of Rio Rancho, New Mexico due to the
severe decline in the real estate market in the greater Albuquerque-metro and
Rio Rancho areas that began in earlier periods. As previously reported, the
number of permits for new home construction in both markets was down
significantly for calendar 2007 compared to 2006, with Rio Rancho showing a
decrease of nearly 50%, and this trend has continued with 20% fewer building
permits issued during the first six calendar months of 2008 compared to the same
period in 2007. The Company believes that this decline has been generally
consistent with the well-publicized problems of the national home building
industry, including fewer sales of both new and existing homes, an increasing
number of mortgage delinquencies and foreclosures and a tightening of mortgage
availability. Faced with these adverse conditions, builders continued to slow
the pace of building on developed lots previously purchased from the Company in
Rio Rancho and, in some cases, delayed or cancelled the purchase of additional
developed lots. These factors have also contributed to a steep decline in the
sale of undeveloped land to both builders and investors. Revenues and gross
profits, average sales prices of land and related gross profit percentages 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 therefore
prior results are not necessarily a good indication of what may occur in future
periods.
Revenues from the Company's Kable Media Services operations, including both
Fulfillment Services and Newsstand Distribution Services, increased from
$32,299,000 for the first quarter of 2008 to $34,023,000 for the same period in
2009. This increase resulted from higher Fulfillment Services revenues, while
Newsstand Distribution Services revenues were generally comparable in 2009 and
2008. Due primarily to this revenue increase, Kable's contribution to operating
results improved considerably from a loss before taxes of $2,558,000 in the
first quarter of fiscal 2008 to a loss before taxes of $524,000 in the same
period this year.
The Company has announced a project to integrate certain aspects of Kable's
Fulfillment Services operations in order to improve operating efficiencies and
customer service and also to reduce costs. During fiscal 2008, this project
resulted in one significant workforce reduction and an announced plan to close
Kable Fulfillment Services Ohio facility and to redistribute the work performed
there to other locations. Annual operating cost reductions of approximately
$4,700,000 are expected from these combined actions. During the first quarter of
fiscal 2009, the Company incurred restructuring costs of approximately $500,000
associated with this project. The Company expects to identify additional
integration opportunities in fiscal 2009 as part of its ongoing effort to reduce
further operating costs in its Fulfillment Services business.
AMREP Corporation's AMREP Southwest Inc. subsidiary is a major landholder and
leading developer of real estate in Rio Rancho, 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 2008, which are included in the Company's 2008
Annual Report on Form 10-K filed with the Securities and Exchange Commission.
The 2008 Annual Report is available through the Company's website,
www.amrepcorp.com, and any shareholder may receive a hard copy of the 2008
Annual Report without charge upon request to the Company.
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The statements in this news release regarding the project to consolidate the
operations of the Fulfillments Services business and the estimated cost savings
of the integration project 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
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.
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(Two Schedules Follow)
Schedule 1
AMREP CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
Three Months Ended July 31,
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2008 2007
---- ----
Revenues $ 35,570,000 $ 51,359,000
Net income (loss):
Continuing operations $ 71,000 $ 6,320,000
Discontinued operations - (57,000)
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$ 71,000 $ 6,263,000
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Earnings (loss) per share - Basic and Diluted:
Continuing operations $ 0.01 $ 0.95
Discontinued operations - (0.01)
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$ 0.01 $ 0.94
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Weighted average number of common shares
outstanding 5,995,000 6,653,000
####
Schedule 2
The Company's land sales in Rio Rancho, New Mexico were as follows (dollar
amounts in thousands):
2008 2007
--------------------------------------- ------------------------------------------
Acres Revenues Acres Revenues
Sold Revenues per Acre Sold Revenues per Acre
--------- ----------- ----------- -------- ------------ ------------
Three months ended
July 31:
Developed
Residential 1.4 $ 342 $ 244 19.5 $ 6,729 $ 345
Commercial 1.0 126 126 13.7 2,920 213
--------- ----------- ----------- -------- ------------ ------------
Total Developed 2.4 468 195 33.2 9,649 291
Undeveloped 44.8 795 18 290.8 8,501 29
--------- ----------- ----------- -------- ------------ ------------
Total 47.2 $ 1,263 $ 27 324.0 $ 18,150 $ 56
--------- ----------- ----------- -------- ------------ ------------
The Company offers for sale 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.