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 January 31, 1995
-------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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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 (I.R.S. 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
----------------
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 been 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 March 15, 1995 - 7,393,775.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
INDEX
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PART I PAGE NO.
------ --------
Consolidated Financial Statements:
Balance Sheets
January 31, 1995 (Unaudited) and
April 30, 1994 (Audited) 1
Statements of Operations and Retained Earnings (Unaudited)
Nine Months Ended January 31, 1995 and 1994 2
Three Months Ended January 31, 1995 and 1994 3
Statements of Cash Flows (Unaudited)
Nine Months Ended January 31, 1995 and 1994 4-5
Notes to Consolidated Financial Statements 6-7
Management's Discussion and Analysis 8-9
PART II
-------
Other Information 10
Signatures 11
Exhibit Index 12
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
January 31, 1995 and April 30, 1994
(Thousands, except par value and number of shares)
January 31, April 30,
1995 1994
----------- ---------
(Unaudited) (Audited)
ASSETS
------
Cash and temporary cash investments $ 7,979 $ 6,623
Receivables, net:
Real estate operations 10,570 13,122
Magazine circulation operations 39,786 34,281
Real estate inventory 71,263 71,102
Rental and other real estate projects 11,591 14,174
Investment property 8,798 8,604
Property, plant and equipment-at cost-
net of accumulated depreciation and
amortization: January - $10,757
April - $10,774 13,589 12,103
Other assets 13,920 13,643
Excess of cost of subsidiary over net
assets acquired 5,205 5,205
-------- --------
$182,701 $178,857
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Accounts payable, deposits and
accrued expenses $ 34,370 $ 31,915
Notes payable:
Amounts due within one year 14,114 12,725
Amounts subsequently due 37,435 38,013
Project financing 3,404 6,205
Collateralized mortgage obligations 2,577 4,406
Deferred income taxes 26,024 24,164
-------- --------
117,924 117,428
-------- --------
Shareholders' equity:
Common stock - $.10 par value
authorized: 20,000,000 shares
issued: January - 7,387,525 shares
April - 7,297,625 shares 739 730
Capital contributed in excess of par value 44,874 44,435
Retained earnings 19,164 16,264
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64,777 61,429
-------- --------
$182,701 $178,857
======== ========
See notes to consolidated financial statements.
-1-
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Retained Earnings (Unaudited)
Nine Months Ended January 31, 1995 and 1994
(Thousands, except shares and per share amounts)
1995 1994
------------ ------------
REVENUES
- --------
Real estate operations:
Home and condominium sales $ 64,081 $ 49,014
Land sales 8,703 9,574
Rental projects - 3,328
------------ ------------
72,784 61,916
Magazine circulation operations 31,945 25,241
Interest and other operations 4,897 4,329
------------ ------------
109,626 91,486
------------ ------------
COSTS AND EXPENSES
- ------------------
Real estate cost of sales 59,490 46,237
Operating expenses:
Magazine circulation operations 23,731 18,233
Rental projects 607 5,091
Real estate commissions and selling 4,558 3,598
Other 4,600 3,907
General and administrative:
Real estate operations and corporate 5,560 6,143
Magazine circulation operations 3,825 3,795
Interest, net 2,437 2,124
------------ ------------
104,808 89,128
------------ ------------
Income before provision
for income taxes 4,818 2,358
PROVISION FOR INCOME TAXES 1,918 896
------------ ------------
Net income 2,900 1,462
RETAINED EARNINGS, beginning of period 16,264 13,892
------------ ------------
RETAINED EARNINGS, end of period $ 19,164 $ 15,354
============ ============
NET INCOME PER SHARE $ 0.40 $ 0.21
============ ============
Weighted average number of common
shares outstanding 7,329,818 7,024,223
============ ============
See notes to consolidated financial statements.
-2-
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Retained Earnings (Unaudited)
Three Months Ended January 31, 1995 and 1994
(Thousands, except shares and per share amounts)
1995 1994
------------ -----------
REVENUES
- --------
Real estate operations:
Home and condominium sales $ 21,270 $ 17,190
Land sales 3,738 3,277
Rental projects - 413
------------ ------------
25,008 20,880
Magazine circulation operations 11,677 9,108
Interest and other operations 1,275 1,394
------------ ------------
37,960 31,382
------------ ------------
COSTS AND EXPENSES
- ------------------
Real estate cost of sales 19,978 16,305
Operating expenses:
Magazine circulation operations 8,626 6,633
Rental projects 267 577
Real estate commissions and selling 1,594 1,187
Other 1,427 1,194
General and administrative:
Real estate operations and corporate 1,882 2,377
Magazine circulation operations 1,347 1,278
Interest, net 886 760
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36,007 30,311
------------ ------------
Income before provision
for income taxes 1,953 1,071
PROVISION FOR INCOME TAXES 778 407
------------ ------------
Net income 1,175 664
RETAINED EARNINGS, beginning of period 17,989 14,690
------------ ------------
RETAINED EARNINGS, end of period $ 19,164 $ 15,354
============ ============
NET INCOME PER SHARE $ 0.16 $ 0.09
============ ============
Weighted average number of common
shares outstanding 7,367,552 7,276,052
============ ============
See notes to consolidated financial statements.
-3-
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Statements of Cash Flows (Unaudited) (Page 1 of 2)
Nine Months Ended January 31, 1995 and 1994
(Thousands)
1995 1994
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from real estate operations
and other $ 79,753 $ 64,195
Cash received from magazine circulation
operations, net of publisher payments 27,848 19,756
Interest received 812 813
Cash paid to suppliers and employees (97,284) (79,764)
Cash paid to acquire land (67) (1,473)
Interest paid (3,015) (2,909)
Income taxes paid (58) (27)
---------- ----------
Net cash provided by operating activities 7,989 591
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,007) (1,580)
Proceeds from restructuring of general
partnership interest of The Classic
at West Palm Beach - 400
Payment for purchase of Fulfillment
Corporation of America, net of cash acquired (1,744) -
Other, net 600 (249)
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Net cash used by investing activities (3,151) (1,429)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing 24,411 15,274
Principal debt payments (28,341) (16,735)
Proceeds from exercise of stock options 448 100
Proceeds from sale of stock - 161
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Net cash used by financing activities (3,482) (1,200)
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Increase (decrease) in cash and temporary cash
investments 1,356 (2,038)
CASH AND TEMPORARY CASH INVESTMENTS, beginning
of period 6,623 6,856
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CASH AND TEMPORARY CASH INVESTMENTS, end
of period $ 7,979 $ 4,818
========== ==========
See notes to consolidated financial statements.
-4-
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Statements of Cash Flows (Unaudited) (Page 2 of 2)
Nine Months Ended January 31, 1995 and 1994
(Thousands)
1995 1994
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RECONCILIATION OF NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net income $ 2,900 $ 1,462
---------- ----------
Adjustments to reconcile net income to
net cash provided by operating activities -
Depreciation and amortization 4,699 4,064
Changes in assets and liabilities -
Receivables (190) (6,586)
Real estate inventory (161) (7,790)
Rental and other real estate projects 2,583 5,184
Investment property (194) 547
Other assets (3,634) (3,337)
Accounts payable, deposits and
accrued expenses 126 6,268
Deferred income taxes 1,860 779
---------- ----------
Total adjustments 5,089 (871)
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Net cash provided by
operating activities $ 7,989 $ 591
========== ==========
Supplemental schedule of noncash investing activities (dollars in thousands):
Stock issuance in connection with purchase
of magazine circulation operations assets: $ - $ 4,101
Restructuring of general partnership interest
in The Classic at West Palm, resulting in
decreases in the following:
Rental project inventory $ - $ 23,550
Accounts payable, deposits payable, and
accrued expenses - 679
Project financing - 22,471
See notes to consolidated financial statements.
-5-
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited) (Page 1 of 2)
Nine Months Ended January 31, 1995 and 1994
Note 1:
------- The January 31, 1994, financial statements have been
reclassified to conform to the presentation used at January
31, 1995, and such reclassifications were not material.
Note 2:
------- FULFILLMENT SERVICE ACQUISITION
In January 1995, Kable Fulfillment Services of Ohio, Inc. (a
wholly-owned subsidiary of the Company) acquired assets and
liabilities of Fulfillment Corporation of America (FCA), an
Ohio based subscription service operation. The purchase price
of FCA was $2,070,000, and the Company accounted for the
acquisition using the purchase method of accounting. The
allocation of the purchase price is preliminary and will be
finalized upon the completion of the Company's evaluation of
certain obligations of FCA prior to the merger and
acquisition related costs. Accordingly, further adjustments
may result.
The following unaudited condensed consolidated pro forma
income statements reflect the combined results of operations
for the nine months ended January 31, 1995, and 1994, as if
the acquisition had been consummated on May 1, 1993. In
addition, they include purchase accounting adjustments
reducing depreciation and amortization, and increasing
interest expense associated with additional borrowings to
finance the acquisition.
(Thousands, except
per share amounts)
1995 1994
-------- --------
Total revenues $117,854 $101,799
Total costs and expenses 113,329 100,297
-------- --------
Income before income taxes 4,525 1,502
Provision for income taxes -
(39.8% for 1995 and 38% for 1994) 1,801 571
-------- --------
Net income $ 2,724 $ 931
======== ========
Net income per share $ 0.37 $ 0.13
======== ========
-6-
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited) (Page 2 of 2)
Nine Months Ended January 31, 1995 and 1994
Note 3:
------- 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.
-7-
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Page 1 of 2)
January 31, 1995
FINANCIAL CONDITIONS
--------------------
The acquisition of the assets and liabilities of Fulfillment
Corporation of America (FCA) by Kable Fulfillment Services of
Ohio, Inc. (See Note 2) for the purchase price of $2,070,000 was
financed by additional borrowings.
RESULTS OF OPERATIONS
---------------------
The improvement in the results for the nine months and third
quarter as compared to the similar periods last year reflects an
increase in gross profit from housing sales of approximately
$1,970,000 and $570,000, respectively, and an increase in the
pretax income from Kable News operations of approximately $850,000
and $330,000, respectively. In addition, general and
administrative expenses related to real estate and corporate
decreased approximately $580,000 and $500,000, respectively,
primarily due to lower legal costs and consulting fees. The third
quarter this year reflects an increase in gross profit from land
sales of approximately $300,000, as compared to the third quarter
last year. Also, the nine months of fiscal 1994 results include a
loss of $1,763,000 from rental projects, principally The Classic
at West Palm Beach, compared to $607,000 in the nine months this
year.
These operating improvements were offset by a decrease in gross
profit from land sales of approximately $1,020,000 in the nine
months this year as compared to the similar period last year. In
addition, increased real estate commissions and selling expenses
increased in the nine months and third quarter this year by
$960,000 and $400,000, respectively, as compared to the similar
periods last year. These increases were in proportion to the
increased revenues at the Brandywine and Country Meadows housing
projects (which were in their start-up phase last year) and to the
increase in revenue at Rio Rancho.
The increase in gross profit from housing sales was primarily due
to increased volume and increases in housing prices. The number
of housing units closed increased by 73 units, from 558 to 631, in
the nine months fiscal 1995, and by 13 units, from 192 to 205, in
the third quarter fiscal 1995, as compared to the similar periods
last year.
-8-
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Page 2 of 2)
January 31, 1995
The increase in pretax income from Kable News operations in the
nine months and third quarter fiscal 1995, as compared to the
similar periods last year, (from approximately $2,760,000 last
year to $3,610,000 this year in the nine months and from
$1,050,000 last year to $1,380,000 this year in the third quarter)
primarily reflects substantially improved results from newsstand
operations.
The increase in interest expense in the nine months and third
quarter of fiscal 1995, as compared to the similar periods last
year, is due to increased borrowings related to real estate
operations and Kable News operations, and an increase in the prime
interest rate. This increase was partially offset by
capitalization of interest on construction projects this year.
-9-
<PAGE>
PART II
Other Information
-----------------
Item 6. Exhibits and Reports on Form 8-K
------- --------------------------------
(a) Exhibits:
4. Third Amendment to Loan Agreement between
American National Bank and Trust Company of
Chicago, and Kable News Company, Inc. dated
January 3, 1995.
27. Financial Data Schedule.
(b) Reports on Form 8-K:
During the quarter ended January 31, 1995,
Registrant filed a Current Report on Form 8-K
(Date of earliest event reported: January 12,
1995) reporting under Item 2. Acquisition or
Disposition of Assets and Item 7. Financial
Statements and Exhibits. Registrant will file
any required Financial Statements and pro forma
financial information not later than March 28,
1995 (the date which is 60 days after the date
the Current Report on Form 8-K must be filed).
-10-
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: March 15, 1995 By: /s/ Anthony B. Gliedman
-----------------------
Chairman of the Board,
Chief Executive Officer
and President
Dated: March 15, 1995 By: /s/ Rudolph J. Skalka
-----------------------
Vice President, Finance
and Principal Accounting
Officer
-11-
<PAGE>
EXHIBIT INDEX
-------------
4. Third Amendment to Loan Agreement between
American National Bank and Trust Company of
Chicago, and Kable News Company, Inc., dated
January 3, 1995.
27. Financial Data Schedule
-12-
EXHIBIT 4
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT, entered into as of this 3rd day of
January, 1995, by and between AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO, a national banking association with its principal place of business
located at 33 North LaSalle Street, Chicago, Illinois 60690 (herein called the
"Bank") and KABLE NEWS COMPANY, INC., an Illinois corporation with its principal
place of business located at 16 South Wesley Avenue, Mt. Morris, Illinois 61054
(herein called the "Company").
WITNESSETH:
WHEREAS, the Company and the Bank have previously entered into a certain
Loan Agreement dated as of September 30, 1992, as amended on July 12, 1993 and
November 15, 1993 (herein called the "Existing Agreement"); and
WHEREAS, the Company and the Bank desire to amend the Existing Agreement in
order to increase the commitment limit and extend the maturity date on the
revolving line of credit, to extend a term loan to the Company and to make
certain other amendments to the Existing Agreement;
NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, the parties agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1 Certain Definitions.
(a) "Amended Agreement" shall mean the Existing Agreement, as amended
by Article II hereof.
(b) "Effective Date" shall have the meaning set forth in Article III
hereof.
1.2 Other Definitions. All of the terms which are defined in the Existing
Agreement shall have the same meanings herein unless the context requires
otherwise or unless such terms are defined differently herein.
ARTICLE II
AMENDMENT
2.1 Amendments of Existing Agreement. The Existing Agreement is hereby
amended, effective as of and subject to the occurrence of the Effective Date, as
follows:
(a) Section 1.1 (Amount) is hereby amended in its entirety to read as
follows:
"1.1 Amount.
(a) Credit Loan. Subject to the terms of this
Agreement, the Company may borrow from the Bank and the Bank will
thereupon lend to the Company, and the Company shall repay in
accordance with the terms of this Agreement and may reborrow at
any time prior to August 31, 1996 any amount which is a multiple
of $100,000 up to a maximum amount at any one time outstanding of
$27,500,000 (herein called the "Credit" or the "Credit Loan"),
provided that the Bank receives prior to the initial borrowing
the representations and certificates required by Sections 7.1 and
7.2 and, prior to all subsequent borrowings, the representations
and certificates required by Section 7.2. Notwithstanding the
foregoing requirement that borrowings by the Company be in
multiples of $100,000, the Bank has consented to the Company
<PAGE>
borrowing $43,275.10 from the Bank as of the Effective Date upon
the terms and conditions as set forth in the "Installment Note"
(as hereinafter defined); provided, however, that the principal
balance outstanding on the Installment Note from time to time
shall be considered a draw against and reduce the amount
available to the Company under the Credit Loan.
(b) Term Loan. Subject to the terms of this
Agreement, the Company may borrow from the Bank and the Bank will
thereupon lend to the Company $2,000,000 (herein called the "Term
Loan"), provided that the Bank receives prior to the initial
borrowing the representations and certificates required by
Sections 7.1 and 7.2."
(b) The first sentence of Section 1.2 (a) (Revolving Note) is hereby
deleted in its entirety and the following sentence is hereby substituted in its
place:
"Except as provided in Section 1.2 (b) hereof, the
borrowing under the revolving credit described in Section 1.1(a)
hereof will be evidenced by a note (herein called the "Revolving
Note") in the form of Exhibit I hereto dated as of January 3,
1995 which is payable to the order of the Bank on August 31, 1996
(herein called the "Maturity Date"), in the then applicable
principal amount of all loans from time to time outstanding."
The Revolving Note attached hereto as Exhibit I is hereby substituted
in the place of the Revolving Note that is attached to the Existing Agreement as
Exhibit I.
(c) Section 1.2 (b) (Installment Note) is hereby amended in its
entirety to read as follows:
"1.2 (b) Installment Note. The Company's
borrowing of $43,275.10 under the Credit Loan will be evidenced
by an Installment Note (Secured) (herein called the "Installment
Note") in the form of Exhibit II A hereto dated as of January 3,
1995 in the principal amount of $43,275.10 made by the Company
payable to the order of the Bank.
The Installment Note attached hereto as Exhibit II A is hereby substituted
in the place of the Installment Note that is attached to the Existing Agreement
as Exhibit II."
<PAGE>
(d) A new Section 1.2 (c) (Term Note) is hereby added to the Existing
Agreement as follows:
"1.2 (c) Term Note. The Company's borrowing of
two million dollars ($2,000,000) under the Term Loan will be
evidenced by a Term Note (herein called the "Term Note") in the
form of Exhibit II B dated as of January 3, 1995 in the principal
amount of two million dollars ($2,000,000) made by the Company
payable to the order of the Bank.
The Term Note attached hereto as Exhibit II B is hereby attached to the
Existing Agreement as Exhibit II B.
(e) A new Section 1.3 (c) (Interest on Term Note) is hereby added to
the Existing Agreement as follows:
"1.3 (c) Interest on Term Note. The Term Note
will bear interest at the Prime Rate. The interest rate will
change if and when the Prime Rate changes and such change shall
be effective as of and on the date following the relevant change
in the Prime Rate. The Term Note will bear interest after the
Maturity Date at the rate of three percent (3%) in excess of the
Prime Rate. Interest on the Term Note will be payable on the
last business day of each month during the term of such Term
Note. Interest shall be computed on the basis of a 360-day year
and shall be charged for the actual number of days elapsed unless
otherwise specified herein."
(f) Section 1.4 (Commitment Fee) is hereby amended in its entirety to
read as follows:
"1.4 Commitment Fee. The Company shall pay to the Bank
quarterly in arrears a commitment fee equal to one quarter of one
percent (1/4%) of the difference between (a) $27,500,000; and (b) the
average daily amount of the $27,500,000 line of credit that is
outstanding during the preceding quarter, with such commitment fee
payable on the fifteenth (15th) day of the first month following the
end of each quarter during the term of this Agreement."
<PAGE>
(g) The Monthly Compliance Certificate attached hereto as Exhibit V
is hereby substituted in the place of the Monthly Compliance Certificate that is
attached to the Existing Agreement as Exhibit V.
(h) The Monthly Collateral Report attached hereto as Exhibit VI is
hereby substituted in the place of the Collateral Monthly Collateral Report that
is attached to the Existing Agreement as Exhibit VI.
(i) The Collateral Reconciliation Report attached hereto as Exhibit
VII is hereby substituted in the place of the Collateral Reconciliation Report
that is attached to the Existing Agreement as Exhibit VII.
(j) The first sentence of Section 3.1 (Financial Position) is hereby
deleted in its entirety and the following sentence is hereby substituted in its
place:
"The Company (which shall for purposes of this Section 3.1
mean the Company and the "Subsidiary," as such term is hereinafter
defined) will maintain the following financial positions:"
(k) Section 4.1 (Fixed Assets) is hereby amended in its entirety to
read as follows:
"4.1 Fixed Assets. The Company will not spend an amount in
excess of $1,500,000 for fixed assets during any fiscal year of the
Company during the term of this Agreement."
(l) Section 4.3 (a) is hereby amended in its entirety to read as
follows:
"(a) Loans or guarantees contemplated by this or other
agreements with the Bank or loans, guarantees, indebtedness,
liabilities or obligations contemplated by the Asset Purchase and Sale
Agreement dated as of December 22, 1994 by and among Kable Fulfillment
Services of Ohio, Inc., the Company's wholly-owned subsidiary (the
"Subsidiary"), and Fulfillment Corporation of America;"
<PAGE>
(m) Section 4.7 (e) is hereby amended in its entirety to read as
follows:
"(e) Loans or advances to the Parent not exceeding
$3,500,000.00 in the aggregate at any time, a loan to RRGCC dated
September 30, 1992 in the original principal amount of $183,900.01,
including any renewals or extensions of such loan, and loans or
advances to or investments in the Subsidiary not exceeding
$4,500,000.00 in the aggregate at any time."
(n) Section 5.3 (Loans to Parent and RRGCC) is hereby amended in its
entirety to read as follows:
"5.3 Loans or Advances to Parent, RRGCC and Subsidiary. The
Company will cooperate with the Bank in enforcing any and all obligations of the
Parent, RRGCC and the Subsidiary to the Company pursuant to loans or advances
made to the Parent, RRGCC or the Subsidiary in accordance with Section 4.7 (e)
and in ensuring that the Parent, RRGCC and the Subsidiary comply with any and
all covenants and warranties entered into in connection with such loans or
advances."
(o) The Guaranty attached hereto as Exhibit X is hereby substituted
in the place of the Guaranty that is attached to the Existing Agreement as
Exhibit X.
(p) Section 7.1 (Initial Credit Loan) is hereby amended in its
entirety to read as follows:
"7.1 Initial Loans. The obligation of the Bank to make the
initial loans under this Agreement or to extend the term of the
Existing Agreement pursuant to the terms and provisions of this
Agreement shall be subject to the satisfaction of each of the
following conditions precedent:
(a) Resolutions. The Bank shall have received
such certificates as to resolutions of the Boards of Directors of
both the Company and the Subsidiary, as to incumbency and
signatures of the officers of the Company and the Subsidiary and
as to any other matters (and copies of such other documents
relevant to this Agreement, certified if requested), as the Bank
may reasonably request with respect to any matter relevant to
this Agreement.
(b) Security Agreements. The Company shall have
executed and delivered to the Bank counterparts of a security
agreement, together with all amendments, if any, thereafter made
from time to time thereto (the "Security Agreement")
substantially in the form of Exhibit IVA attached hereto; and the
Subsidiary shall have executed and delivered to the Bank
counterparts of a security agreement, together with all
amendments, if any, thereafter made from time to time thereto
(the "Subsidiary Security Agreement") substantially in the form
of Exhibit IVB attached hereto.
<PAGE>
(c) Financing Statements. The Company shall have
delivered to the Bank UCC-1 financing statements or continuation
statements, if applicable, suitable for filing in the States of
Illinois, New York and California, covering the collateral
subject to the Security Agreement, duly executed by the Company
and showing the Bank as the secured party; and the Subsidiary
shall have delivered to the Bank UCC-1 financing statements or
continuation statements, if applicable, suitable for filing in
the State of Ohio, covering the collateral subject to the
Subsidiary Security Agreement, duly executed by the Subsidiary
and showing the Bank as the secured party.
(d) Opinions of Counsel. The Company shall
deliver to the Bank opinions of counsel for the Company and the
Subsidiary that are reasonably acceptable to counsel for the
Bank.
(e) Expenses. The Bank shall have received
reimbursement from the Company for legal fees and other out-of-
pocket expenses incurred in the preparation of this Agreement and
all related documents.
(f) Certificate of Accountants.
(intentionally deleted)
(g) Delivery and Pledge of Stock. The Parent
shall pledge to the Bank all of the issued and outstanding shares
of the stock of the Company as security for the Parent's Guaranty
and agrees to pledge any additional shares that it receives by
way of stock dividends; and the Company shall pledge to the Bank
all of the issued and outstanding shares of the stock of the
Subsidiary as security for the payment of all Notes and the
performance of the Company's obligations under this Agreement and
agrees to pledge any additional shares that it receives by way of
stock dividends. The Parent and the Company shall upon the
execution and delivery of this Agreement execute and deliver to
the Bank Pledge Agreements in the form attached hereto as
Exhibits IXA and IXB, respectively. Such shares shall be
endorsed in blank or accompanied by duly executed stock powers
which shall be deemed to be pledges of investment securities
under and pursuant to the applicable provisions of the Uniform
Commercial Code and shall be held by the Bank only as security
<PAGE>
for the Parent's guaranty of payment of the Company's obligations
under this Agreement and as security for the payment of all Notes
and the performance of the Company's obligations under this
Agreement, respectively."
(q) Section 7.2 (e) (Monthly Compliance Certificate, Monthly
Collateral Report and Collateral Reconciliation Report) is hereby amended in its
entirety to read as follows:
"(e) Monthly Compliance Certificate, Monthly
Collateral Report and Collateral Reconciliation Report. The
Company shall complete and deliver to the Bank a current Monthly
Compliance Certificate, a current Monthly Collateral Report and a
current Collateral Reconciliation Report in substantially the
forms attached hereto as Exhibits V, VI and VII, respectively:"
(r) Section 7.2 (f) (Certificate) is hereby amended in its entirety
to read as follows:
"(f) Certificate. The Company shall deliver to
the Bank a certificate, signed by the Chairman of the Board,
President or any Vice President of the Company and dated the date
of any loan, that to such person's knowledge no Event of Default
as defined in Section 6 exists or is imminent, and that the
representations and warranties of the Company contained in this
Agreement are true on and as of the date of the loan;"
(s) Section 8.9 (Notices) is hereby amended in its entirety to read
as follows:
"8.9 Notices. Any written notice required or
permitted by this Agreement may be given by depositing it in the
U.S. mail, postage prepaid, or by faxing it with a copy of the
fax transmission deposited in the U.S. mail on the date of the
fax transmission, addressed to the Company at 641 Lexington
Avenue, Sixth Floor, New York, New York 10022, Attention: Daniel
Friedman, Chairman and Chief Executive Officer, and to 16 South
Wesley Avenue, Mt. Morris, Illinois 61054, Attention: David
Bakener, Controller; addressed to the Parent at 641 Lexington
Avenue, Sixth Floor, New York, New York 10022, Attention: Mohan
Vachani, Senior Vice President; and addressed to the Bank at 33
North LaSalle Street, Chicago, Illinois 60690, Attention: James
R. Popp, Vice President."
<PAGE>
(t) Section 9.1 (a) (Maximum Loan Amount) is hereby amended in its
entirety to read as follows:
"9.1 (a) Maximum Loan Amount. On any given day
during the term of this Agreement, the "Maximum Loan Amount" for
purposes of the Revolving Note (and the maximum amount that the
Company may borrow thereunder) is hereby defined as the lesser of
(i) 80% of the "Net Account Receivables" (as hereinafter defined)
of the Company and the Subsidiary; and (ii) $27,500,000 less the
unpaid principal balance of the Installment Note on such date.
For purposes of this Agreement, the term "Net Account
Receivables" of the Company and the Subsidiary means the amount
shown on line 10 of the most recent Monthly Collateral Report
delivered to the Bank, plus all estimated net billings shown on
the then current Collateral Reconciliation Report and minus all
collections that are deposited in the "Cash Collateral Account"
(as defined in Section 9.1(b)(ix) hereof). The estimated net
billings of the Company and the Subsidiary will then be adjusted
to the extent necessary on the next Monthly Collateral Report
submitted to the Bank to reflect the actual net billings of the
Company and the Subsidiary. To the extent that there is any
discrepancy between the net billings as shown on the Collateral
Reconciliation Report and those shown on the Monthly Collateral
Report, the net billings on the Monthly Collateral Report shall
control in all respects."
2.2 Amendment of Exhibits. All exhibits to the Existing Agreement are
hereby amended to reflect all of the amendments made in Article 2.1 hereof.
ARTICLE III
EFFECTIVE DATE
This Amendment shall become effective as of the date set forth above when
all of the following conditions shall have occurred:
(a) The Bank shall receive counterparts of this Amendment duly
executed on behalf of the Company;
<PAGE>
(b) The Bank shall have received certified resolutions of the Board
of Directors of the Company authorizing this Amendment, the transactions
contemplated hereby and the borrowings under the amended agreement, together
with an incumbency certificate setting forth the current officers of the Company
and giving a sample of the true signature of each such officer;
(c) The Bank shall have received a certificate from the Chairman of
the Board, the President or any Vice President of the Company stating that:
(i) All of the representations and warranties set forth in
Section 2 of the Existing Agreement are true and correct as of the Effective
Date as if then made and no Event of Default, and no event which might mature
into an Event of Default, has occurred and is continuing at the Effective Date;
and
(ii) No litigation, arbitration, governmental or regulatory
proceeding is pending or, to the knowledge of the Company, threatened against
the Company or its subsidiaries or affecting the business or operations of the
Company or its subsidiaries which has not been disclosed by the Company or its
subsidiaries to the Bank and which, if adversely determined, might materially
adversely affect the financial condition or operations of the Company or impair
the ability of the Company to perform its obligations under this Amended
Agreement or any note or other instrument executed thereto, and no material
development not so disclosed has occurred in any litigation, arbitration,
governmental or regulatory proceeding so previously disclosed might have such
effect.
<PAGE>
(d) The Bank shall have received when due the financial statements,
certificates and other information called for by Sections 7.1 and 7.2 of the
Existing Agreement as amended herein; and
(e) All documents executed or submitted pursuant hereto by the
Company and the Parent shall be satisfactory in form and substance to the Bank
and its counsel; the Bank and its counsel shall have received all information,
and such counterpart originals or such certified or other copies of such
materials, as the Bank or its counsel may reasonably request; and all legal
matters incident to the transactions contemplated by this Amendment shall be
satisfactory to counsel to the Bank.
ARTICLE IV
MISCELLANEOUS
4.1 Continuation of Existing Agreement. Except as otherwise
amended or required by Article II hereof, the Existing Agreement shall continue
in full force and effect in all respects.
4.2 Execution in Counterparts. This Amendment which may be
executed by the parties hereto in several counterparts (each of which shall be
executed by the Company and the Bank and be deemed to be an original, and all of
which shall constitute together but one and the same agreement), shall be
construed in accordance with Sections 8.13 and 8.14 of the Existing Agreement.
4.3 Entire Agreement. This Amendment and the Exhibits attached
hereto represent the entire agreement between the parties with respect to the
<PAGE>
amendment of the Existing Agreement, and there are no other arrangements or
agreements between the parties with respect to such transactions which are not
embodied herein.
IN WITNESS WHEREOF, the parties hereto have caused this Amended
Agreement to be executed by their respective officers hereunto duly authorized
as of the day and year first above written.
COMPANY: KABLE NEWS COMPANY, INC., an Illinois
corporation
By : /s/Daniel Freidman
------------------
Its: Chairman & Chief Executive Officer
----------------------------------
ATTEST
By : /s/Valerie Asciutto
-------------------
Its: Asst. Secretary
----------------
BANK: AMERICAN NATIONAL BANK AND TRUST COMPANY
OF CHICAGO, a national banking
association
By: /s/James R. Popp
---------------
James R. Popp, Vice President
<PAGE>
The following attachments to the Third Amendment to Loan Agreement
between American National Bank and Trust Company of Chicago and Kable News
Company, Inc. are not filed as part of Exhibit 4 to the Quarterly Report on
Form 10-Q. Registrant hereby undertakes and agrees to furnish a copy of each
such omitted attachment to the Securities Exchange Commission upon request.
Exhibit No. Description
----------- -----------
I $27,500,000 Promissory Note (Secured)
IIA $43,275.10 Installment Note (Secured)
IIB $2,000,000 Installment Note (Secured)
IVA Security Agreement between Kable News
Company, Inc. and American National
Bank and Trust Company of Chicago
IVB Security Agreement between Kable
Fulfillment Services of Ohio, Inc.
and American National Bank and Trust
Company of Chicago
V Monthly Compliance Certificate
VI Monthly Collateral Report Accounts
Receivable Collateral
VII Collateral Reconciliation Reports
(Prospective)
IXA Pledge Agreement between American
National Bank and Trust Company of
Chicago and AMREP Corporation
IXB Pledge Agreement between American
National Bank and Trust Company of
Chicago and Kable News Company, Inc.
X Guaranty
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<S> <C>
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<FISCAL-YEAR-END> APR-30-1995
<PERIOD-END> JAN-31-1995
<CASH> 7,979
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<INVENTORY> 91,652
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0
0
<OTHER-SE> 64,038
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<SALES> 72,784
<TOTAL-REVENUES> 109,626
<CGS> 59,490
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