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
-------------------------
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
---------------
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.
<PAGE>
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
<PAGE>
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
------------ -----------
(Unaudited) (Audited)
ASSETS
- ------
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
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
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
============ ===========
See notes to consolidated financial statements.
<PAGE>
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
------------ -----------
REVENUES
- --------
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
- -----------------
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
------------- -----------
RETAINED EARNINGS, end of period $ 23,729 $ 22,339
============= ===========
NET INCOME PER SHARE $ 0.09 $ 0.28
============= ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 7,369 7,395
============= ===========
See notes to consolidated financial statements.
<PAGE>
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
------------- -----------
REVENUES
- --------
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
- -----------------
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
------------- -----------
RETAINED EARNINGS, end of period $ 23,729 $ 22,339
============= ===========
NET INCOME PER SHARE $ 0.04 $ 0.17
============= ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 7,369 7,396
============= ===========
See notes to consolidated financial statements.
<PAGE>
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
----------- -----------
Total adjustments (17,528) (633)
----------- -----------
Net cash provided (used) by
operating activities (16,863) 1,427
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (793) (3,004)
----------- -----------
Net cash used by investing
activities (793) (3,004)
----------- -----------
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
----------- -----------
Net cash provided by financing
activities 15,711 660
----------- -----------
Decrease in cash and cash equivalents (1,945) (917)
CASH AND CASH EQUIVALENTS,
beginning of period 7,607 9,266
----------- -----------
CASH AND CASH EQUIVALENTS,
end of period $ 5,662 $ 8,349
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid - net of amounts
capitalized $ 1,683 $ 2,256
=========== ===========
Income taxes paid $ 1,543 $ 35
=========== ===========
See notes to consolidated financial statements.
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Six Months Ended October 31, 1996 and 1995
Note 1:
- -------
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:
- -------
Certain amounts in the October 31, 1995 Statement of Cash Flows have
been reclassified to conform to the presentation used at October 31, 1996.
<PAGE>
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
- -------------------
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
- ---------------------
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.
<PAGE>
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.
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
PART II
Other Information
-----------------
Item 4. Submission of Matters to Vote of Security Holders
- ------- -------------------------------------------------
(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"
-------------------- --------- ----------
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
- ------- --------------------------------
(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.
<PAGE>
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
-----------------
Mohan Vachani
Senior Vice President,
Chief Financial Officer
Dated: December 13, 1996 By: /s/ Peter M. Pizza
------------------
Peter M. Pizza
Controller
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX
-------------
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
AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AGREEMENT
------------------------------------------------------
This Amendment No. 1 to Amended and Restated Loan Agreement ("Amendment")
is made as of the 26th of September, 1996 by and between AMERICAN NATIONAL BANK
AND TRUST COMPANY OF CHICAGO, a national banking association ("Bank"), with its
principal office located at 33 North LaSalle Street, Chicago, Illinois 60690,
and KABLE NEWS COMPANY, INC. ("Company"), an Illinois corporation, with its
principal place of business located at 16 South Wesley Avenue, Mt. Morris,
Illinois 61054.
W I T N E S S E T H:
--------------------
WHEREAS, Company and Bank previously entered into a certain Amended
and Restated Loan Agreement dated as of October 6, 1995 (the "Agreement"); and
WHEREAS, Company has requested that certain provisions of the
Agreement be amended as set forth herein, and that Bank advance a $2,500,000
term loan, and extend the maturity of the Credit Loan.
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, and of any extension of credit heretofore, now or hereafter
made by Bank to Company, the parties hereto hereby agree as follows:
1. All capitalized terms used herein without definition shall
have the meanings set forth in the Agreement.
2. Section 1.1 of the Agreement is 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 the
Maturity Date any amount which is a multiple of $100,000 up to a
maximum amount at any one time outstanding of $32,500,000 (herein
called the "Credit" or the "Credit Loan"), provided that the Bank
receives prior to the initial borrowing the certificates required
by Sections 7.1 and 7.2 and, prior to all subsequent borrowings, the
representations and certificates required by Section 7.2.
(b) Term Loan I. Pursuant to the Existing Agreement,
the Company has borrowed from the Bank a term loan in the original
principal amount of $2,000,000 ("Term Loan I").
(c) Term Loan II. Pursuant to the terms hereof, the Bank
agrees to make a term loan to the Company in the principal amount of
$2,500,000 ("Term Loan II"). Term Loan I and Term Loan II are
collectively referred to herein as "Term Loans" or individually as a
"Term Loan".
(d) Installment Loan. That certain installment loan of
the Company in the original principal amount of $43,275.10 as of
January 3, 1995 has been paid in full by the Company as of April 22, 1996.
3. Section 1.2 of the Agreement is amended in its entirety to
read as follows:
"1.2 Notes.
------
(a) Revolving Note. The borrowing under the Revolving
Credit described in Section 1.1(a) will be evidenced by a note (herein
called the "Revolving Note"), in the form of Exhibit I hereto, dated
September 26, 1996, which is payable to the order of the Bank on August
31, 1999, in the principal amount of $32,500,000. The principal amount
of the Credit Loan outstanding as of the date hereof shall be recorded by
the Bank on computer or other records of the Bank, and the principal
amount of each additional Credit Loan and of any payment of principal of
the Revolving Note may be evidenced by notations made by the Bank on
such records, showing the date and amount of each additional Credit
Loan or payment of principal. The aggregate unpaid amount of Credit
Loans set forth on such records shall be rebuttable presumptive evidence
of the principal amount thereof owing and unpaid if the Bank records all
of the Credit Loans and makes notations of all of the payments of
principal on such records, but the Bank shall not be under any obligation
to do so.
(b) Term Note I. The Company's borrowing of Two Million
Dollars ($2,000,000) under Term Loan I is evidenced by a Term Note ("Term
Note I") 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 and previously delivered to the Bank.
(c) Term Note II. The Company's borrowing of Two Million Five
Hundred Thousand Dollars ($2,500,000) under Term Loan II is evidenced by a
Term Note II ("Term Note II") dated as of September 26, 1996, in the
principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000)
made by the Company payable to the order of the Bank. Term Loan II shall
bear interest as specified in Section 1.5(b) below, shall be repayable in
accordance with the terms of Term Note II, and shall be secured by the
assets of the Company as set forth herein and in the Security Agreement
executed pursuant hereto. Term Loan II shall be funded on the Closing Date
hereof, and the proceeds of which will be used for the purchase of certain
equipment and certain working capital needs. Term Note I and Term Note II
are collectively referred to herein as "Term Notes" or individually as a
"Term Note".
4. Section 1.5 of the Agreement is amended in its entirety to
read as follows:
"1.5 Interest on Term Loans.
-----------------------
(a) Term Loan I 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. Term Loan I will bear interest after the
Maturity Date at the rate of three percent (3%) per annum in excess of the
Prime Rate. Interest on Term Loan I will be payable on the last Business
Day of each month during the term of such Term Loan I.
(b) Term Loan II will bear interest at a rate at all times
equal to the Prime Rate plus one-half percent (1/2%). 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. Term Loan II will bear interest after the Maturity Date at the rate
of three and one-half percent (3-1/2%) per annum in excess of the Prime
Rate. Interest on Term Loan II will be payable on the last Business Day of
each month during the term of such Term Loan II.
5. The first sentence of Section 3.1(b) of the Agreement is
amended in its entirety to read as follows:
"At all times during the term of this Agreement, maintain a
"Tangible Net Worth" (the tax paid equity of the Company represented by
the amount by which total tangible assets of the Company exceeds total
liabilities) of at least (i) $1,750,000 for the period from September 1,
1996 -- February 28, 1997, and (ii) $2,000,000 for the period from March
1, 1997 -- thereafter."
6. Section 3.1 of the Agreement is amended by inserting the
following as a new Section 3.1(c) thereof:
"(c) Cash Flow. As of the end of each fiscal quarter of the
Company commencing April 30, 1997, maintain for the preceding four (4)
fiscal quarters a ratio of Cash Flow to the Company's Debt Service of at
least: (i) 1.25 to 1.00 before giving effect to any dividends or other
distributions declared or paid by the Company during such period
("Distributions"); and (ii) 1.00 to 1.00 after giving effect to any
Distributions. As used herein, the term "Cash Flow" means, with respect to
the Company for any period, the total net profit after taxes of the
Company for the immediately preceding four (4) fiscal quarters, plus the
aggregate amount of the Company's depreciation, amortization, taxes and
the interest expense for such period. As used herein, the term "Debt
Service" means, with respect to the Company for such period, the Company's
interest expense for such period, plus the aggregate principal amount of
all indebtedness for borrowed money of the Company payable or becoming due
during such period."
7. Section 4.1 of the Agreement is amended in its entirety to read as
follows:
"4.1 Net Capital Expenditures. The Company shall not make or incur any
Net Capital Expenditures if, after giving effect thereto, the aggregate
amount of all Net Capital Expenditures by the Company in any fiscal year
would exceed One Million Five Hundred Thousand Dollars ($1,500,000),
without the prior written consent of the Bank.
As used herein, "Net Capital Expenditures" means all (x) expenditures
made and liabilities incurred for the acquisition of any fixed asset or
improvement, replacement, substitution or addition thereto which has a
useful life of more than one year and including, without limitation, those
arising in connection with Capital Leases less (y) the aggregate amount of
Indebtedness incurred by the Company in connection with such Capital
Expenditures; "Capital Leases" means any lease of property by the Company
at, in accordance with generally accepted accounting principles, should be
capitalized for financial reporting purposes and reflected as a liability
on the balance sheet of the Company."
8. Section 4.3 of the Agreement is amended by adding the
following thereto:
"(e) Any Indebtedness represented by equipment or other operating
leases or Capital Leases."
9. All references in Section 8.1(g) and 8.1(i) of the
Agreement to "Term Note" shall be deemed to be references to "Term Notes".
10. Section (8.1(h) of the Agreement is amended by deleting the
date "August 31, 1998" and substituting therefore the date "August 31, 1999".
11. (a) The first paragraph of Section 9.1 of the Agreement is
amended in its entirety to read as follows:
"9.1 Collateral. In order to collateralize and secure the payment
of the Obligations, the Company hereby grants to the Bank, pursuant to the
Security Agreement, a continuing first priority security interest in the
collateral described in the Security Agreement (which, together with any
collateral assigned to the Bank in order to maintain the loan value of the
collateral, is hereinafter called the "Collateral") and in the proceeds
from any disposition of new Collateral."
(b) The second paragraph of Section 9.1 of the Agreement (beginning with
the words "All Accounts Receivables..." is deleted in its entirety.
(c) All references in Section 9.1 or elsewhere in the Agreement to the
"Security Agreement" shall be deemed to be references to the Amended and
Restated Security Agreement dated as of the date hereof.
12. The Monthly Collateral Report attached to the Agreement as
Exhibit IV is hereby amended by deleting item No. 14 and inserting in lieu
thereof the following:
"14. Amount Outstanding on Term Loan II - $2,500,000."
13. Collateral. To induce Bank to enter into this Amendment
and to make the increased Term Loan available to Company, Company hereby agrees,
acknowledges and confirms with Bank that (i) the security interest granted to
Bank in the Collateral as provided in Section 9 of the Agreement is hereby
confirmed and remains in full force and effect, and (ii) such security interest
in the Collateral shall extend to and the Collateral shall secure all of the
increased Term Loans, in addition to all other Obligations of Company under the
Agreement.
14. Company shall deliver to Bank a new Revolving Note dated as of
the date hereof in the principal amount of $32,500,000 (the "Replacement Note"),
in the form attached hereto, which Replacement Note shall be issued to Bank in
replacement of and substitution for, and not in payment of, the Revolving Note
dated October 6, 1995 and all Obligations evidenced thereby shall hereafter be
evidenced by the Replacement Note. All references in the Agreement to the
"Revolving Note" shall hereafter be deemed to refer to the Replacement Note.
Upon delivery of the executed Replacement Note by Company to Bank, Bank shall
mark the prior Revolving Note as "cancelled and replaced".
15. Company hereby represents and warrants to Bank that the
execution, delivery and performance by it of this Amendment has been duly
authorized by all necessary corporate action, and that this Amendment is a
legal, valid and binding obligation of Company enforceable against it in
accordance with its terms, except as the enforcement thereof may be subject to
(a) the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors' rights generally and (b) general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
16. Company hereby represents and warrants to Bank that the
execution, delivery and performance by Company of this Amendment does not, and
will not, contravene or conflict with any provision of (i) law, (ii) any
judgment, decree, or order, or (iii) Company's articles of incorporation or
by-laws, and does not, and will not, contravene or conflict with, or cause any
Lien to arise under, any provision of any agreement or instrument binding upon
Company or upon any property of Company.
17. Company hereby certifies that each of the representations
and warranties contained in the Agreement and each of the other agreements
delivered in connection therewith (the "Other Agreements") is true and correct
in all material respects on and as of the date hereof as if made on the date
hereof, except to the extent specifically amended pursuant to this Amendment and
that no Event of Default or Default currently exists under the Agreement or any
of the Other Agreements or will exist after or be triggered by the execution and
delivery of this Amendment.
18. Except as specifically amended above, the Loan Agreement, as
amended, and each of the Other Agreements shall remain in full force and effect
and is hereby ratified and confirmed.
19. The execution, delivery and effectiveness of this Amendment
shall be limited precisely as written and shall not be deemed to (i) be a
consent to any waiver or modification of any other term or condition of the Loan
Agreement or any of the Other Agreements or (ii) prejudice any right, power or
remedy which Bank now has or may have in the future under or in connection with
the Loan Agreement or any of the Other Agreements. Upon the effectiveness of
this Amendment each reference in the Loan Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of similar import shall mean and be a
reference to the Loan Agreement as amended hereby.
20. This Amendment shall be deemed to be effective as of September
27, 1996, provided that Company shall deliver to Bank the documents described on
the attached Schedule of Documents upon the execution hereof.
21. This Amendment may be executed in separate counterparts, each
of which shall, collectively and separately, constitute one agreement. To the
extent the terms of this Amendment conflict with the terms of the Agreement or
any Exhibit or Schedule thereto, the terms of this Amendment shall be
controlling.
22. Section 4.2(b) of the Agreement, after the words "80% of the
purchase price", is hereby amended by adding the following: "of any real
property".
23. Section 9.1(b)(iv) of the Agreement, after the word
"business", is hereby amended by adding the following: "and except for Permitted
Liens (as defined in the Security Agreement)".
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed and delivered by their respective duly authorized officers as
of the day and year first above written.
ATTEST: KABLE NEWS COMPANY, INC.
By:_______________________
Its:_______________________ By: ________________________________
Name:____________________________
Its: ____________________________
AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO
By: ________________________________
Name: Elizabeth G. Brandt
Its Commercial Banking Officer
<PAGE>
TERM NOTE II
$2,500,000 Chicago, Illinois
September __, 1996
FOR VALUE RECEIVED, the undersigned, KABLE NEWS COMPANY, INC., an
Illinois corporation ("Borrower"), hereby UNCONDITIONALLY PROMISES TO PAY to the
order of AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a national banking
association (the "Bank"), at its principal place of business in Chicago,
Illinois or such other place as Bank may designate from time to time hereafter,
the principal sum of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000), in
installments of principal and interest as hereinafter provided. The first
installment of principal in the amount of One Hundred Twenty-Five Thousand
Dollars ($125,000), plus accrued interest, shall be due and payable on November
30, 1996, and successive installments of One Hundred Twenty-Five Thousand
Dollars ($125,000), plus accrued interest, shall be due and payable on the last
day of each February, May, August and November of each year, with the last
installment of One Hundred Twenty-Five Thousand Dollars ($125,000), plus accrued
interest, due and payable on August 31, 2001. Borrower's obligations and
liabilities to Bank under this Note, and all other obligations and liabilities
of Borrower to Bank (including without limitation all debts, claims and
indebtedness) whether primary, secondary, direct, contingent, fixed or otherwise
heretofore now and/or from time to time hereafter owing, due or payable, however
evidenced, created, incurred, acquired or owing and however arising, whether
under this Note, any agreement, instrument or document heretofore, now or from
time to time hereafter executed and delivered to Bank by or on behalf of
Borrower, or by oral agreement or operation of law or otherwise, shall be
"Obligations" of Borrower as such term is defined in the Loan Agreement.
This Note is a Term Note issued pursuant to Section 1.2 of that
certain Amended and Restated Loan Agreement dated as of October 6, 1995, between
Borrower and the Bank, as amended by Amendment No. 1 to Amended and Restated
Loan Agreement dated concurrently herewith (as so amended, the "Loan
Agreement"), and is entitledto the benefit and security of the terms and
provisions thereof and of the documents delivered pursuant thereto, to which
reference is hereby made for a statement of all of the terms and conditions
under which the Term Loan evidenced hereby is made. All capitalized terms
herein, unless otherwise defined, shall have the meanings ascribed to them in
the Loan Agreement.
The rate of interest to be charged by Bank to Borrower hereunder
shall accrue at such interest rate as is specified in the Loan Agreement, and
shall fluctuate from time to time concurrently with each increase or decrease in
the Prime Rate, whichever is applicable.
This Note may be prepaid in whole or in part at any time without
penalty; provided, however, that Borrower may use only funds obtained directly
from AMREP Corporation, an Oklahoma corporation ("AMREP"), for the purpose of
such prepayment, and further, provided, that such prepayment funds received by
Borrower from AMREP may not have been obtained by AMREP directly or indirectly
from Borrower.
If any payment on this Note becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
Upon and after the occurrence of an Event of Default, this Note
shall or may, as provided in the Loan Agreement, and without demand, notice or
legal process of any kind, become or be declared immediately due and payable.
Demand, presentment, protest, notice of nonpayment, and protest and notice of
acceleration are hereby waived by Borrower.
The indebtedness evidenced by this Note is secured by a first
priority continuing security interest and lien granted by Borrower in favor of
the Bank pursuant to the Loan Agreement and the other documents and agreements
delivered in connection therewith, including, without limitation, that certain
Security Agreement of Borrower in favor of the Bank dated as of September 30,
1992, as amended and restated by that certain Amended and Restated Security
Agreement dated concurrently herewith. The Bank may, at its option, enforce its
rights against any collateral securing this Note without enforcing its rights
against Borrower, any guarantor of the indebtedness evidenced hereby or any
other property or indebtedness. Borrower agrees that, without releasing or
impairing Borrower's liability hereunder, the Bank may, at any time, release,
surrender, substitute or exchange any collateral securing this Note and may at
any time release, substitute or exchange any party primarily or secondarily
liable for the indebtedness evidenced by this Note.
THIS NOTE HAS BEEN EXECUTED, DELIVERED AND ACCEPTED AT AND SHALL
HAVE BEEN DEEMED TO HAVE BEEN MADE AT CHICAGO, ILLINOIS AND SHALL BE INTERPRETED
AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF ILLINOIS OTHER THAN LAWS PERTAINING TO CONFLICTS,
AND THE PARTIES HERETO WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON THEM
AND CONSENT THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED
TO THE PARTIES AT THEIR RESPECTIVE PRINCIPAL PLACES OF BUSINESS AND SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) BUSINESS DAYS AFTER THE SAME SHALL
HAVE BEEN DEPOSITED IN THE UNITED STATES REGISTERED MAIL, POSTAGE PREPAID. THE
PARTIES AGREE THAT, AFTER CONSIDERATION OF THEIR RESPECTIVE PRINCIPAL PLACES OF
BUSINESS, THE PLACE OF THE EXECUTION AND PERFORMANCE OF THIS NOTE, AND THE
INCONVENIENCE OF OTHER POSSIBLE FORUM LOCATIONS, THE PROPER FORUM FOR ANY SUIT
OR PROCEEDING UNDER THIS NOTE SHALL BE THE CIRCUIT COURT OF COOK COUNTY,
ILLINOIS, AND EACH PARTY, FOR THE PURPOSES OF ANY SUCH SUIT OR PROCEEDING,
IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURT IN ANY SUCH SUIT OR
PROCEEDING.
BORROWER IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION
WITH THIS NOTE OR THE LOAN AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
THEREWITH, OR (II) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR
RELATED TO THIS NOTE OR THE LOAN AGREEMENT OR ANY SUCH AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed
and delivered by a duly authorized officer in Chicago, Illinois, on the date
first above written.
KABLE NEWS COMPANY, INC.
ATTEST:
By:_______________________________
By:___________________________ Name: ______________________
Its:____________________________ Title:______________________
<PAGE>
REVOLVING NOTE
$32,500,000 Chicago, Illinois
September __, 1996
FOR VALUE RECEIVED, the undersigned, KABLE NEWS COMPANY, INC., an
Illinois corporation ("Borrower"), hereby UNCONDITIONALLY PROMISES TO PAY to
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a national banking
association ("Bank"), at its principal place of business in Chicago, Illinois,
or at such other place as the holder of this Note may designate from time to
time in writing, in lawful money of the United States of America and in
immediately available funds, the principal amount of Thirty-Two Million Five
Hundred Thousand Dollars ($32,500,000), or such lesser principal amount as may
be outstanding pursuant to the Loan Agreement (as hereinafter defined) with
respect to the Credit Loan, together with interest on the unpaid principal
amount of this Note outstanding from time to time.
This Note is a Revolving Note issued pursuant to Section 1.2(a) of
that certain Amended and Restated Loan Agreement, dated as of October 6, 1995,
between Borrower and the Bank, as amended by that certain Amendment No. 1 to
Amended and Restated Loan Agreement dated concurrently herewith (as so amended,
the "Loan Agreement"), and is entitled to the benefit and security of the terms
and provisions thereof and of the documents delivered pursuant thereto, to which
reference is hereby made for a statement of all of the terms and conditions
under which the Credit Loan evidenced hereby is made. All capitalized terms
herein, unless otherwise defined, shall have the meanings ascribed to them in
the Loan Agreement.
The principal amount of the indebtedness evidenced hereby shall be
payable in the amounts and on the dates specified in the Loan Agreement and, if
not sooner paid in full, on August 31, 1999. Interest thereon shall be paid
until such principal amount is paid in full at such interest rates and at such
times as are specified in the Loan Agreement.
If any payment on this Note becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
Upon and after the occurrence of an Event of Default, this Note
shall or may, as provided in the Loan Agreement, and without demand, notice or
legal process of any kind, become or be declared immediately due and payable.
Demand, presentment, protest, notice of nonpayment, and protest and
notice of acceleration are hereby waived by Borrower.
The indebtedness evidenced by this Note is secured by a first
priority continuing security interest and lien granted by Borrower in favor of
the Bank pursuant to the Loan Agreement and the other documents and agreements
delivered in connection therewith, including, without limitation, that certain
Security Agreement of Borrower in favor of the Bank dated as of September 30,
1992 as amended and restated by that certain Amended and Restated Security
Agreement dated concurrently herewith. The Bank may, at its option, enforce its
rights against any collateral securing this Note without enforcing its rights
against Borrower, any guarantor of the indebtedness evidenced hereby or any
other property or indebtedness. Borrower agrees that, without releasing or
impairing Borrower's liability hereunder, the Bank may, at any time, release,
surrender, substitute or exchange any collateral securing this Note and may at
any time release, substitute or exchange any party primarily or secondarily
liable for the indebtedness evidenced by this Note.
THIS NOTE HAS BEEN EXECUTED, DELIVERED AND ACCEPTED AT AND SHALL
HAVE BEEN DEEMED TO HAVE BEEN MADE AT CHICAGO, ILLINOIS AND SHALL BE INTERPRETED
AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF ILLINOIS OTHER THAN LAWS PERTAINING TO CONFLICTS,
AND THE PARTIES HERETO WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON THEM
AND CONSENT THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED
TO THE PARTIES AT THEIR RESPECTIVE PRINCIPAL PLACES OF BUSINESS AND SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) BUSINESS DAYS AFTER THE SAME SHALL
HAVE BEEN DEPOSITED IN THE UNITED STATES REGISTERED MAIL, POSTAGE PREPAID. THE
PARTIES AGREE THAT, AFTER CONSIDERATION OF THEIR RESPECTIVE PRINCIPAL PLACES OF
BUSINESS, THE PLACE OF THE EXECUTION AND PERFORMANCE OF THIS NOTE, AND THE
INCONVENIENCE OF OTHER POSSIBLE FORUM LOCATIONS, THE PROPER FORUM FOR ANY SUIT
OR PROCEEDING UNDER THIS NOTE SHALL BE THE CIRCUIT COURT OF COOK COUNTY,
ILLINOIS, AND EACH PARTY, FOR THE PURPOSES OF ANY SUCH SUIT OR PROCEEDING,
IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURT IN ANY SUCH SUIT OR
PROCEEDING.
BORROWER IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH
THIS NOTE OR THE LOAN AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
THEREWITH, OR (II) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR
RELATED TO THIS NOTE OR THE LOAN AGREEMENT OR ANY SUCH AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
This Note has been issued in replacement of and in substitution for,
and not in payment of, the Revolving Note of Borrower to the Bank dated October
6, 1995 in the original principal amount of $32,500,000, and any and all
previous promissory notes issued by the Borrower to the Bank in respect of the
indebtedness evidenced thereby; and all outstanding Obligations evidenced by
such prior promissory note including, without limitation, all accrued unpaid
interest, shall hereafter be evidenced by this Note.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed
and delivered by a duly authorized officer in Chicago, Illinois, on the date
first above written.
KABLE NEWS COMPANY, INC.
ATTEST:
By:_________________________ By: _________________________________
Its:________________________ Name: _________________________
Title:_________________________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with legend, if applicable)
</LEGEND>
<CIK> 0000006207
<NAME> AMREP CORP.
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1996
<PERIOD-END> OCT-31-1996
<EXCHANGE-RATE> 1
<CASH> 5,662
<SECURITIES> 0
<RECEIVABLES> 56,831
<ALLOWANCES> 0
<INVENTORY> 98,016
<CURRENT-ASSETS> 0
<PP&E> 29,560
<DEPRECIATION> (12,635)
<TOTAL-ASSETS> 198,668
<CURRENT-LIABILITIES> 0
<BONDS> 70,102
0
0
<COMMON> 740
<OTHER-SE> 68,477
<TOTAL-LIABILITY-AND-EQUITY> 198,668
<SALES> 37,237
<TOTAL-REVENUES> 67,637
<CGS> 29,577
<TOTAL-COSTS> 55,088
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,825
<INCOME-PRETAX> 1,108
<INCOME-TAX> 443
<INCOME-CONTINUING> 665
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 665
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0
</TABLE>
