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, 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
- -------------------------------------------------------------------------
(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 March 12, 1997 - 7,368,650.
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
INDEX
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PART I PAGE NO.
- ------ --------
Consolidated Financial Statements:
Balance Sheets
January 31, 1997 (Unaudited) and
April 30, 1996 (Audited) 1
Statements of Operations and Retained Earnings (Unaudited)
Nine Months Ended January 31, 1997 and 1996 2
Statements of Operations and Retained Earnings (Unaudited)
Three Months Ended January 31, 1997 and 1996 3
Statements of Cash Flows (Unaudited)
Nine Months Ended January 31, 1997 and 1996 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis 6-7
PART II
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Other Information 8
Signatures 9
Exhibit Index 10
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
January 31, 1997 and April 30, 1996
(Thousands, except par value and number of shares)
January 31, April 30,
1997 1996
----------- -----------
(Unaudited) (Audited)
ASSETS
- ------
Cash and cash equivalents $ 6,952 $ 7,607
Receivables, net:
Real estate operations 9,470 11,371
Magazine circulation operations 44,695 38,234
Real estate inventory 88,558 71,916
Rental and other real estate 5,812 8,211
investments
Investment property 7,288 8,042
Property, plant and equipment, at
cost,
net of accumulated depreciation
and amortization of $13,050 at
January 31, 1997 and $11,796 at 18,197 16,995
April 30, 1996
Other assets 14,549 14,215
Excess of cost of subsidiary over
net assets acquired 5,191 5,205
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$ 200,712 $ 181,796
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Account payable, deposits and $ 27,550 $ 33,013
accrued expenses
Notes payable:
Amounts due within one year 14,431 17,146
Amounts subsequently due 62,876 35,036
Collateralized mortgage obligations 531 2,209
Deferred income taxes 25,840 25,840
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131,228 113,244
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Shareholders' equity:
Common stock, $.10 par value;
shares authorized -- 20,000,000
shares issued and outstanding
-- 7,398,650 at January 31,
1997 and April 30, 1996 740 740
Capital contributed in excess of
par value 44,928 44,928
Retained earnings 23,996 23,064
Treasury stock, at cost; 30,000
shares (180) (180)
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69,484 68,552
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$ 200,712 $ 181,796
========== ==========
See notes to consolidated financial statements.
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Retained Earnings (Unaudited)
Nine Months Ended January 31, 1997 and 1996
(Thousands, except per share amounts)
1997 1996
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REVENUES
- --------
Real estate operations:
Home and condominium sales $ 47,977 $ 68,365
Land sales 10,848 4,840
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58,825 73,205
Magazine circulation operations 40,671 43,210
Interest and other operations 4,903 4,861
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104,399 121,276
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COST AND EXPENSES
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Real estate cost of sales 46,844 58,434
Operating expenses:
Magazine circulation operations 33,393 34,331
Real estate commissions and selling 4,840 4,701
Other operations 4,908 4,757
General and administrative:
Real estate operations and corporate 5,145 6,585
Magazine circulation operations 4,711 5,140
Interest, net 3,005 3,072
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102,846 117,020
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Income before income taxes 1,553 4,256
PROVISION FOR INCOME TAXES 621 1,702
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NET INCOME 932 2,554
RETAINED EARNINGS, beginning of
period 23,064 20,279
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RETAINED EARNINGS, end of period $ 23,996 $ 22,833
=========== ==========
NET INCOME PER SHARE $ 0.13 $ 0.35
=========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 7,369 7,390
=========== ==========
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 January 31, 1997 and 1996
(Thousands, except per share amounts)
1997 1996
----------- ----------
REVENUES
- --------
Real estate operations:
Home and condominium sales $ 17,652 $ 20,814
Land sales 3,935 1,384
----------- ----------
21,587 22,198
Magazine circulation operations 13,763 14,145
Interest and other operations 1,411 1,601
----------- ----------
36,761 37,944
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COST AND EXPENSES
- -----------------
Real estate cost of sales 17,267 17,720
Operating expenses:
Magazine circulation operations 11,334 11,265
Real estate commissions and selling 1,769 1,465
Other operations 1,457 1,577
General and administrative:
Real estate operations and 1,680 2,286
corporate
Magazine circulation operations 1,631 1,788
Interest, net 1,178 1,019
36,316 37,120
Income before income taxes 445 824
PROVISION FOR INCOME TAXES 178 330
NET INCOME 267 494
RETAINED EARNINGS, beginning of period 23,729 22,339
----------- ----------
RETAINED EARNINGS, end of period $ 23,996 $ 22,833
=========== ==========
NET INCOME PER SHARE $ 0.04 $ 0.07
=========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 7,369 7,379
=========== ==========
See notes to consolidated financial statements.
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended January 31, 1997 and 1996
(Thousands)
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 932 $ 2,554
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Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 1,966 1,647
Changes in assets and liabilities -
Receivables (4,560) 1,287
Real estate inventory (16,758) (581)
Rental and other real estate projects 2,399 2,460
Investment property 754 282
Other assets (976) (1,339)
Accounts payable, deposits and accrued
expenses (4,663) (2,431)
Deferred income taxes - 1,680
Gain from sale of real estate inventory
related to reduction in accounts payable (579) -
-------- -------
Total adjustments (22,417) 3,005
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Net cash provided (used) by operating
activities (21,485) 5,559
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,617) (4,328)
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Net cash used by investing activities (2,617) (4,328)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing 54,622 21,247
Principal debt payments (31,175) (23,931)
Proceeds from exercise of stock options - 27
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Net cash provided by financing activities 23,447 (2,657)
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Decrease in cash and cash equivalents (655) (1,426)
CASH AND CASH EQUIVALENTS,
beginning of period 7,607 9,266
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CASH AND CASH EQUIVALENTS,
end of period $ 6,952 $ 7,840
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid - net of amounts capitalized $ 4,142 $ 3,014
======= =======
Income taxes paid $ 2,430 $ 22
======= =======
SUPPLEMENTAL INFORMATION REGARDING NON-CASH
OPERATING ACTIVITIES:
Reduction in accounts payable related to sale
of real estate inventory $ 800 $ -
======= =======
See notes to consolidated financial statements.
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Nine Months Ended January 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:
- -------
Certain amounts in the January 31, 1996 Statement of Cash
Flows have been reclassified to conform to the presentation used
at January 31, 1997.
<PAGE>
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, 1997
FINANCIAL CONDITION
- -------------------
Notes payable, which are collateralized by real estate inventory and
magazine circulation accounts receivable, increased by approximately
$25 million from April 30, 1996 to January 31, 1997, resulting from
corresponding increases in both real estate inventory and magazine
circulation operation receivables.
RESULTS OF OPERATIONS
- ---------------------
Total revenues for the nine months and third quarter ended January 31,
1997, decreased 14% and 3%, 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 30% and 15%
for the nine and three month periods, respectively, resulting from a
decrease in housing unit deliveries from 601 to 403 in the nine months
and from 175 to 154 in the third quarter this year, as compared to the
similar periods last year, which is due in part to the lengthening of
the regulatory approval process and resultant delays in opening
subdivisions for sale, as well as a soft real estate market in Rio
Rancho in 1997 compared to 1996. In addition, the average selling
price of homes closed declined moderately in the third quarter this
year, as compared to the third quarter last year, from $118,900 to
$114,600. The decrease in the average selling price in the third
quarter was primarily due to a high portion of home closings this year
in a lower priced project in Rio Rancho, compared to the third quarter
last year. The decrease in revenues in the nine months this year was
partially offset by an increase in the average selling price of homes
closed to $119,100 from $113,800 in the nine months last year. The
increase in the average selling prices on homes closed in the nine
months 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 nine months last year. The gross margin on housing
sales decreased by approximately $5.8 million and $1.7 million in the
nine months and third quarter, respectively, as compared to the similar
periods last year, resulting primarily from lower revenues on decreased
unit deliveries, and, in addition, in the third quarter this year the
decrease in the average selling price of homes closed discussed above.
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 $2.8 million and $0.2 million in the nine months and
third quarter this year, respectively, as compared to the similar
periods last year.
<PAGE>
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, 1997
Revenues from magazine circulation operations decreased approximately
6% in the nine months this year, as compared to the similar period last
year, due to generally comparable decreases in both the Fulfillment
Services and Newsstand Distribution Services. Revenues in the third
quarter decreased approximately 3%, as compared to the similar period
last year, due to decreases in the Fulfillment Services.
Revenues from Fulfillment Services decreased approximately 4% in both
periods of fiscal 1997, as a result of lower activity levels resulting
from client losses in prior periods which were only partially offset by
additional revenues associated with a new contract with a major
publisher. Expenses of the Fulfillment Services division increased
about 3% in the third quarter of 1997 compared to the prior year,
principally as a result of additional staffing requirements for the new
contract with a major publisher which were only partially offset by other
reductions. For the nine months, Fulfillment related
expenses have decreased 1%. Revenues from the Newsstand Distribution
Services decreased approximately 8% in the nine months in fiscal 1997
compared to the prior year due to a lower volume of retail magazine
sales, while revenues in the third quarter remained the same as last
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 and has
adversely impacted Kable's sales and profits. Newsstand's divisional
expenses have decreased 8% and 6% in the nine and three month periods,
which has been in response to and partially offset the revenue
decreases discussed above. As a result of these factors, operating
income from magazine circulation operations decreased by approximately
$1,300,000 and $350,000 in the nine months and third quarter this year,
respectively, as compared to last year.
Real estate commissions and selling expenses increased approximately
$140,000 and $300,000 in the nine months and third quarter this year,
as compared to the similar periods last year, primarily because of
marketing costs associated with the start-up of an additional number of
projects open for sales in Colorado. Real estate and corporate general
and administrative expenses decreased by approximately 22% and 27% from
the nine months and third 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 increased in the third quarter this year, compared to
the similar period last year, due primarily to higher average
borrowings partially offset by lower average interest rates, and an
increase in capitalized interest primarily at the Colorado projects.
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
PART II
Other Information
-----------------
Item 5. Other Matters
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The Company has reached an agreement with the Internal
Revenue Service (IRS) which resolves all outstanding issues
(including those related to Section 458 of the Internal Revenue Code)
resulting from the IRS's audit of the years 1984 through 1989. As a
result, the Company has paid an assessment of approximately $200,000
for federal taxes (including interest), and anticipates no
significant further payments for either state or federal taxes for
those years.
As previously announced, the IRS is also in the process of
reviewing the Company's tax returns for the years 1990 through 1994,
and, in due course, is expected to review the 1995 tax return. While
the Company cannot be totally certain of the results of these audits,
it currently estimates that the total additional amount that will be
due for federal and state taxes, when the reviews of the tax returns
for the years 1990 - 1995 are ultimately finalized, will be
approximately $8.5 million plus interest (estimated to be
approximately $3.3 million as of January 31, 1997), which amount is
expected to be payable at varying times over the next several years.
The Company has previously provided reserves to cover such additional
taxes and the estimated interest thereon that will eventually be
payable, and therefore does not expect that they will impact reported
earnings.
Item 6. Exhibits and Reports on Form 8-K
------- --------------------------------
(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 January 31, 1997.
<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: March 12, 1997 By: /s/ Mohan Vachani
-----------------------
Mohan Vachani
Senior Vice President,
Chief Financial Officer
Dated: March 12, 1997 By: /s/ Peter M. Pizza
-----------------------
Peter M. Pizza
Controller
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX
-------------
27 Financial Data Schedule
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000006207
<NAME> AMREP CORP.
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JAN-31-1997
<EXCHANGE-RATE> 0
<CASH> 6,952
<SECURITIES> 0
<RECEIVABLES> 54,165
<ALLOWANCES> 0
<INVENTORY> 101,658
<CURRENT-ASSETS> 0
<PP&E> 31,247
<DEPRECIATION> (13,050)
<TOTAL-ASSETS> 200,712
<CURRENT-LIABILITIES> 0
<BONDS> 77,838
0
0
<COMMON> 740
<OTHER-SE> 68,744
<TOTAL-LIABILITY-AND-EQUITY> 200,712
<SALES> 58,825
<TOTAL-REVENUES> 104,399
<CGS> 46,844
<TOTAL-COSTS> 85,145
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,005
<INCOME-PRETAX> 1,553
<INCOME-TAX> 621
<INCOME-CONTINUING> 932
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 932
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0
</TABLE>
