SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
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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
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AMREP Corporation
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(Exact name of registrant as specified in its charter)
Oklahoma 59-0936128
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
641 Lexington Avenue, Sixth Floor, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 705-4700
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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 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has subject to such filing requirements
for the past 90 days.
Yes _____X______ No ___________
Number of Shares of Common Stock, par value $.10 per share, outstanding at
December 10, 1996 - 7,368,650.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
INDEX
PART I PAGE NO.
Consolidated Financial Statements:
Balance Sheets
October 31, 1996 (Unaudited) and
April 30, 1996 (Audited) 1
Statements of Operations and Retained Earnings (Unaudited)
Six Months Ended October 31, 1996 and 1995 2
Statements of Operations and Retained Earnings (Unaudited)
Three Months Ended October 31, 1996 and 1995 3
Statements of Cash Flows (Unaudited)
Six Months Ended October 31, 1996 and 1995 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis 6-7
PART II
Other Information 8
Signatures 9
Exhibit Index 10
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
October 31, 1996 and April 30, 1996
(Thousands, except par value and number of shares)
October 31, April 30,
1996 1996
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(Unaudited) (Audited)
ASSETS
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Cash and cash equivalents $ 5,662 $ 7,607
Receivables, net:
Real estate operations 8,229 11,371
Magazine circulation operations 48,602 38,234
Real estate inventory 84,055 71,916
Rental and other real estate investments 6,687 8,211
Investment property 7,274 8,042
Property, plant and equipment, at cost,
net of accumulated depreciation and
amortization of
$12,635 at October 31, 1996 and 16,925 16,995
$11,796 at April 30, 1996
Other assets 16,043 14,215
Excess of cost of subsidiary over net
assets acquired 5,191 5,205
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$ 198,668 $ 181,796
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Account payable, deposits and accrued $ 33,509 $ 33,013
expenses
Notes payable:
Amounts due within one year 19,249 17,146
Amounts subsequently due 50,320 35,036
Collateralized mortgage obligations 533 2,209
Deferred income taxes 25,840 25,840
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129,451 113,244
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Shareholders' equity:
Common stock, $.10 par value;
shares authorized -- 20,000,000
shares issued and outstanding --
7,398,650 at October 31, 1996 and
April 30, 1996 740 740
Capital contributed in excess of par value 44,928 44,928
Retained earnings 23,729 23,064
Treasury stock, at cost; 30,000 shares (180) (180)
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69,217 68,552
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$ 198,668 $ 181,796
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See notes to consolidated financial statements.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Retained Earnings (Unaudited)
Six Months Ended October 31, 1996 and 1995
(Thousands, except per share amounts)
1996 1995
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REVENUES
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Real estate operations:
Home and condominium sales $ 30,325 $ 47,551
Land sales 6,913 3,456
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37,238 51,007
Magazine circulation operations 26,908 29,065
Interest and other operations 3,492 3,260
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67,638 83,332
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COST AND EXPENSES
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Real estate cost of sales 29,577 40,714
Operating expenses:
Magazine circulation operations 22,059 23,066
Real estate commissions and selling 3,071 3,236
Other operations 3,451 3,180
General and administrative:
Real estate operations and corporate 3,465 4,299
Magazine circulation operations 3,080 3,352
Interest, net 1,827 2,053
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66,530 79,900
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Income before income taxes 1,108 3,432
PROVISION FOR INCOME TAXES 443 1,372
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NET INCOME 665 2,060
RETAINED EARNINGS, beginning of period 23,064 20,279
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RETAINED EARNINGS, end of period $ 23,729 $ 22,339
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NET INCOME PER SHARE $ 0.09 $ 0.28
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 7,369 7,395
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See notes to consolidated financial statements.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Retained Earnings (Unaudited)
Three Months Ended October 31, 1996 and 1995
(Thousands, except per share amounts)
1996 1995
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REVENUES
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Real estate operations:
Home and condominium sales $ 13,272 $ 24,046
Land sales 3,838 1,469
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17,110 25,515
Magazine circulation operations 14,549 15,148
Interest and other operations 1,571 1,747
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33,230 42,410
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COST AND EXPENSES
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Real estate cost of sales 13,946 20,337
Operating expenses:
Magazine circulation operations 11,337 11,815
Real estate commissions and selling 1,673 1,654
Other operations 1,642 1,525
General and administrative:
Real estate operations and corporate 1,698 2,245
Magazine circulation operations 1,481 1,660
Interest, net 1,017 1,043
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32,794 40,279
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Income before income taxes 436 2,131
PROVISION FOR INCOME TAXES 174 852
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NET INCOME 262 1,279
RETAINED EARNINGS, beginning of period 23,467 21,060
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RETAINED EARNINGS, end of period $ 23,729 $ 22,339
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NET INCOME PER SHARE $ 0.04 $ 0.17
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 7,369 7,396
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See notes to consolidated financial statements.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended October 31, 1996 and 1995
(Thousands)
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 665 $ 2,060
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Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation and amortization 1,239 1,059
Changes in assets and liabilities -
Receivables (7,226) (2,675)
Real estate inventory (12,139) 443
Rental and other real estate projects 1,524 1,814
Investment property 768 362
Other assets (2,190) (1,750)
Accounts payable, deposits and 496 (1,223)
accrued expenses
Deferred income taxes - 1,337
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Total adjustments (17,528) (633)
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Net cash provided (used) by
operating activities (16,863) 1,427
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (793) (3,004)
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Net cash used by investing
activities (793) (3,004)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing 35,670 15,452
Principal debt payments (19,959) (14,804)
Proceeds from exercise of stock options - 12
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Net cash provided by financing
activities 15,711 660
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Decrease in cash and cash equivalents (1,945) (917)
CASH AND CASH EQUIVALENTS,
beginning of period 7,607 9,266
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CASH AND CASH EQUIVALENTS,
end of period $ 5,662 $ 8,349
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SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid - net of amounts
capitalized $ 1,683 $ 2,256
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Income taxes paid $ 1,543 $ 35
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See notes to consolidated financial statements.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Six Months Ended October 31, 1996 and 1995
Note 1:
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The consolidated financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. The consolidated financial
statements reflect all adjustments which are, in the opinion of
management, necessary to reflect a fair presentation of the results for
the interim periods presented. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's
latest annual report on Form 10-K.
Note 2:
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Certain amounts in the October 31, 1995 Statement of Cash Flows have
been reclassified to conform to the presentation used at October 31, 1996.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Page 1 of 2)
October 31, 1996
FINANCIAL CONDITION
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Notes payable, which are collateralized by real estate inventory and magazine
circulation accounts receivable, increased by approximately $17.4 million from
April 30, 1996 to October 31, 1996, resulting from increases in both real estate
inventory and magazine circulation operation receivables.
RESULTS OF OPERATIONS
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Total revenues for the six months and second quarter ended October 31, 1996
decreased 19% and 22%, respectively, from the similar periods last year,
reflecting lower revenues from both housing sales and magazine circulation
operations, partially offset by higher revenues from land sales. Revenues from
housing sales decreased approximately 36% and 45% for the six and three month
periods, respectively, resulting from a decrease in housing unit deliveries from
426 to 249 in the six months and from 211 to 106 in the second quarter this
year, as compared to the similar periods last year, which was caused in part by
the timing of new project openings, as well as from delays in obtaining certain
governmental or utility company final approvals. The decrease in revenues was
partially offset by an increase in the average selling price of homes closed
from $111,600 to $121,800 and from $114,000 to $125,200 in the six months and
second quarter this year, respectively, as compared to the similar periods
last year. The increase in the average selling prices on homes closed resulted
both from price increases and a favorable product mix at both Rio Rancho and the
Company's Colorado home-building division, as compared to the corresponding
prior year periods. The gross margin on housing sales decreased by approximately
$4.1 million and $2.7 million in the six months and second quarter,
respectively, as compared to the similar periods last year, resulting primarily
from lower revenues on decreased unit deliveries. Revenues and related gross
profit from land sales increased primarily due to an increase in the level of
commercial and industrial lot sales. Land sale revenues and related gross
profits can vary from year to year as a result of the nature and timing of
specific transactions, and thus prior results are not an indication of amounts
that may be expected to occur in future periods. As a result of these factors,
gross profit from combined housing and land sales decreased by approximately
$2.6 million and $2.0 million in the six months and second quarter this year,
respectively, as compared to the similar periods last year.
Revenues from magazine circulation operations decreased approximately 7% and 4%
inthe six months and second quarter this year, respectively, as compared to the
similar periods last year, due to decreases in both the Fulfillment Services and
Newsstand Distribution Services.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Page 2 of 2)
October 31, 1996
Revenues from Fulfillment Services decreased approximately 5% and 3% in the six
months and second quarter this year, respectively, due primarily to lower volume
as a result of client losses which was partially offset by increased revenues
from a new contract with a major publisher. Revenues from the Newsstand
Distribution Services decreased approximately 12% and 9% in the six months and
second quarter this year, respectively, compared to the prior year due to a
lower volume of magazine sales. This sales decrease continued to reflect
residuary consumer resistance to the increased prices of magazines caused by an
increase in the cost of paper earlier this calendar year. In addition, a major
realignment of industry relationships in the distribution of magazines developed
rapidly during 1996, which led to a substantial reduction in the number of
wholesalers. These changes have adversely impacted Kable's sales and profits.
The decrease in magazine circulation operating expenses of approximately 4% in
both the six month and three month periods, resulted from and partially offset
the revenue decreases discussed above. As a result of these factors, operating
income from magazine circulation operations decreased by approximately $950,000
and $50,000 in the six months and second quarter this year, respectively, as
compared to last year.
Real estate commissions and selling expenses decreased approximately $160,000 in
the six months and remained approximately the same in the second quarter, and
did not decline commensurate with the decrease in housings sales, primarily due
to the fixed element of certain marketing costs at Rio Rancho, as well as
initial marketing costs incurred at several projects in Colorado which were
starting up during the quarters. Real estate and corporate general and
administrative expenses decreased by approximately 19% and 24% from the six
months and second quarter last year, respectively, primarily as a result of the
vacant Chief Executive Officer's position, staff reductions, and reductions in
other general real estate and corporate expenses.
Interest expense decreased in the six months and second quarter this year, due
primarily to lower average interest rates, since a large portion of the
Company's borrowings are related to the prime rate, partially offset by higher
average borrowings.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
PART II
Other Information
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Item 4. Submission of Matters to Vote of Security Holders
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(a) The Annual Meeting of Shareholders was held on September 18, 1996.
(b) At the meeting, Jerome Belson, Nicholas G. Karabots and Albert Russo
were elected as directors. The terms of office as directors of
Edward B. Cloues, II, David N. Dinkins, Harvey I. Freeman, Daniel
Friedman, Samuel N. Seidman, Mohan Vachani and James Wall continued
after the meeting.
(c) Shareholders cast votes for the election of directors as follows:
Nominee "For" "Withheld"
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Jerome Belson 6,596,698 201,454
Nicholas G. Karabots 6,596,509 201,643
Albert Russo 6,596,509 201,643
Shareholders cast votes for the proposal to amend the Corporation's
Non-Employee Directors Option Plan (i) to increase by 35,000 the
number of shares of Common Stock which may be issued on exercise of
options granted thereunder, and (ii) to extend by ten (10) years the
period during which options may be granted thereunder as follows:
Shares Voted For: 6,350,382
Shares Voted Against: 256,038
Shares Abstaining: 15,602
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
4 Amendment No. 1, dated September 26, 1996, to the Amended and
Restated Loan Agreement, between American National Bank and
Trust Company of Chicago, and Kable News Company, Inc.
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the
quarter ended October 31, 1996.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
SIGNATURES
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.
AMREP Corporation
(Registrant)
Dated: December 13, 1996 By: /s/ Mohan Vachani
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Mohan Vachani
Senior Vice President,
Chief Financial Officer
Dated: December 13, 1996 By: /s/ Peter M. Pizza
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Peter M. Pizza
Controller
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX
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4 Amendment No. 1, dated September 26, 1996, to the Amended
and Restated Loan Agreement, between American National Bank
and Trust Company of Chicago, and Kable News Company, Inc.
27 Financial Data Schedule