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 July 31, 1997
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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
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Number of Shares of Common Stock, par value $.10 per share, outstanding at
September 12, 1997 - 7,368,650.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
INDEX
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PART I PAGE NO.
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Consolidated Financial Statements:
Balance Sheets
July 31, 1997 (Unaudited) and
April 30, 1997 (Audited) 1
Statements of Operations and Retained Earnings (Unaudited)
Three Months Ended July 31, 1997 and 1996 2
Statements of Cash Flows (Unaudited)
Three Months Ended July 31, 1997 and 1996 3
Notes to Consolidated Financial Statements 4
Management's Discussion and Analysis 5-6
PART II
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Other Information 7
Signatures 8
Exhibit Index 9
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
July 31, 1997 and April 30, 1997
(Thousands, except par value and number of shares)
July 31, April 30,
1997 1997
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(Unaudited) (Audited)
ASSETS
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Cash and cash equivalents $ 9,282 $ 16,178
Receivables, net:
Real estate operations 9,926 10,486
Magazine circulation operations 54,374 43,015
Real estate inventory 85,776 86,102
Other real estate investments 4,019 4,893
Investment property 5,804 6,413
Property, plant and equipment, at cost,
net of accumulated depreciation and
amortization of $14,026 at July 31, 1997 19,050 18,974
and $13,532 at April 30, 1997
Other assets 14,471 14,059
Excess of cost of subsidiary over net assets
acquired 5,191 5,191
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$ 207,893 $ 205,311
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Accounts payable, deposits and accrued
expenses $ 34,289 $ 30,081
Notes payable:
Amounts due within one year 23,369 24,833
Amounts subsequently due 54,124 54,462
Taxes payable:
Amounts due within one year 186 512
Amounts subsequently due 13,923 13,923
Collateralized mortgage obligations 526 529
Deferred income taxes 5,137 5,137
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131,554 129,477
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Shareholders' equity:
Common stock, $.10 par value;
shares authorized -- 20,000,000 shares
issued and outstanding -- 7,398,677 at
July 31, 1997 and April 30, 1997 740 740
Capital contributed in excess of par value 44,928 44,928
Retained earnings 30,851 30,346
Treasury stock, at cost; 30,027 shares (180) (180)
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76,339 75,834
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$ 207,893 $ 205,311
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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 July 31, 1997 and 1996
(Thousands, except per share amounts)
1997 1996
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REVENUES
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Real estate operations:
Home and condominium sales $ 18,869 $ 17,053
Land sales 4,306 3,075
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23,175 20,128
Magazine circulation operations 13,006 12,478
Interest and other operations 1,614 1,802
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37,795 34,408
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COST AND EXPENSES
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Real estate cost of sales 18,563 15,489
Operating expenses:
Magazine circulation operations 10,587 10,722
Real estate commissions and selling 1,728 1,398
Other operations 1,559 1,809
General and administrative:
Real estate operations and corporate 1,792 1,909
Magazine circulation operations 1,569 1,599
Interest, net 1,156 810
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36,954 33,736
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Income before income taxes 841 672
PROVISION FOR INCOME TAXES 336 269
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NET INCOME 505 403
RETAINED EARNINGS, beginning of period 30,346 23,064
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RETAINED EARNINGS, end of period $ 30,851 $ 23,467
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NET INCOME PER SHARE $ 0.07 $ 0.05
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 7,369 7,369
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See notes to consolidated financial statements.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended July 31, 1997 and 1996
(Thousands)
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 505 $ 403
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 825 572
Changes in assets and liabilities -
Receivables (10,799) (3,236)
Real estate inventory 326 (3,107)
Other real estate projects 874 1,008
Investment property 609 462
Other assets (738) (627)
Accounts payable, deposits and accrued expenses 4,208 (114)
Taxes payable (326) 1,303)
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Total adjustments (5,021) (6,345)
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Net cash used by operating activities (4,516) (5,942)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (575) (466)
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Net cash used by investing activities (575) (466)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing 13,390 15,735
Principal debt payments (15,195) (9,106)
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Net cash (used) provided by financing
activities (1,805) 6,629
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Increase (decrease) in cash and cash equivalents (6,896) 221
CASH AND CASH EQUIVALENTS,
beginning of period
16,178 7,607
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CASH AND CASH EQUIVALENTS,
end of period $ 9,282 $ 7,828
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SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid - net of amounts capitalized $ 1,118 $ 961
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Income taxes paid $ 654 $ 1,264
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See notes to consolidated financial statements.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Three Months Ended July 31, 1997 and 1996
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 July 31, 1996 Statement of Operations and Statement
of Cash Flows have been reclassified to conform to the presentation used
at July 31, 1997.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Page 1 of 2)
July 31, 1997
RESULTS OF OPERATIONS
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Total revenues for the first quarter of fiscal 1998 increased approximately 10%
from the same period last year, reflecting increased revenues from both real
estate operations and magazine circulation operations. Revenues from housing
sales increased approximately 11%, resulting primarily from an increase in the
number of homes delivered from 143 to 163 as a result of projects opened in the
second half of fiscal 1997. The average selling price of homes closed decreased
slightly from $119,300 in 1997 to $115,800 in 1998. The gross margin on housing
sales also declined slightly from 16% to 14%, which reflected that a higher
proportion the of homes sold in New Mexico this quarter were from a new
development with smaller, less expensive homes as well as the fact that,
particularly in New Mexico, there were cost increases without a commensurate
increase in selling prices. Revenues and related gross profit from land sales
increased due to an increase in the level of commercial and industrial lot
sales, which can vary from year to year as a result of the nature and timing of
specific transactions. Thus, prior and current results are not an indication of
amounts that may be expected to occur in future periods. As a result of all
these factors, gross profit from combined housing and land sales was comparable
in both years.
Revenues from magazine circulation operations increased approximately 4% in the
first quarter this year as compared to the same period last year due to an
increase in the Fulfillment Services division. Revenues from Fulfillment
Services increased approximately 7% due primarily to revenues resulting from a
new contract with a major publisher obtained during the second quarter of fiscal
1997. Revenues from Newsstand Distribution Services were comparable to those of
the prior year. As previously disclosed, a major realignment of industry
relationships in the distribution of magazines developed during 1996 which has
led to a substantial reduction in the number of wholesalers and adversely
impacted Kable's sales and profits and which, in some cases, has allowed
wholesalers to delay payments to Kable. Magazine circulation operating expenses
for both divisions were generally comparable in both periods. As a result of
these factors, operating income from magazine circulation operations increased
by approximately $700,000 in the first quarter this year as compared to last
year.
Real Estate commissions and selling expenses increased by 24%, primarily as the
result of additional marketing costs associated with the number of projects open
for sale compared to last year, and to increased commissions associated with the
higher number of housing sales.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Page 2 of 2)
July 31, 1997
Interest expense increased in both real estate and magazine operations in the
first quarter this year due to higher average borrowings and interest rates,
since a large portion of the Company's borrowings are related to the prime rate,
partially offset by an increase in the amount of capitalized real estate
interest.
FINANCIAL CONDITION
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Receivables from magazine circulation operations increased from $43.0 million at
April 30, 1997 to $54.4 million at July 31, 1997, resulting partially from the
timing of monthly billings as well as from delays in payments experienced by
Kable from wholesalers that the Company believes is partially a result of the
industry consolidation issue as discussed above. As a result, cash decreased by
$6.9 million and accounts payable increased by approximately $4.2 million at
July 31, 1997 compared to April 30, 1997. At July 31, 1997, total borrowings
amounted to $77.5 million compared to $79.3 million at April 30, 1997.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
PART II
Other Information
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Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
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 July 31, 1997.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
SIGNATURES
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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: September 12, 1997 By: /s/ Mohan Vachani
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Mohan Vachani
Senior Vice President,
Chief Financial Officer
Dated: September 12, 1997 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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27 Financial Data Schedule