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, 1998
------------------------------------------------
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 10, 1998 - 7,368,650.
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
INDEX
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PART I PAGE NO.
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Consolidated Financial Statements:
Balance Sheets
January 31, 1998 (Unaudited) and
April 30, 1997 (Audited) 1
Statements of Income and Retained Earnings (Unaudited)
Three Months Ended January 31, 1998 and 1997 2
Statements of Income and Retained Earnings (Unaudited)
Nine Months Ended January 31, 1998 and 1997 3
Statements of Cash Flows (Unaudited)
Nine Months Ended January 31, 1998 and 1997 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, 1998 and April 30, 1997
(Dollar amounts in thousands, except par value)
January 31, 1998 April 30, 1997
---------------- --------------
(Unaudited) (Audited)
ASSETS
- ------
Cash and cash equivalents $ 4,731 $ 16,178
Receivables, net:
Real estate operations 11,084 10,486
Magazine circulation operations 58,665 43,015
Real estate inventory 93,162 86,102
Investment property 5,132 6,413
Other real estate investments 1,525 4,893
Property, plant and equipment, at cost,
net of accumulated depreciation and
amortization of $12,992 at January 31, 17,639 18,974
1998 and $13,532 at April 30, 1997
Other assets 15,658 14,059
Excess of cost of subsidiaries over net
assets acquired 6,238 5,191
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$ 213,834 $ 205,311
=============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Accounts payable, deposits and accrued
expenses $ 34,192 $ 30,081
Notes payable:
Amounts due within one year 29,786 24,833
Amounts subsequently due 46,232 54,991
Taxes payable:
Amounts due within one year 1,799 512
Amounts subsequently due 13,923 13,923
Deferred income taxes 4,882 5,137
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130,814 129,477
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Shareholders' equity:
Common stock, $.10 par value;
shares authorized -- 20,000,000; shares
issued --7,398,677 at January 31, 1998
and April 30, 1997 740 740
Capital contributed in excess of par value 44,928 44,928
Retained earnings 37,532 30,346
Treasury stock, at cost; 30,027 shares (180) (180)
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83,020 75,834
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$ 213,834 $ 205,311
=============== =============
See notes to consolidated financial statements.
1
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings (Unaudited)
Three Months Ended January 31, 1998 and 1997
(Amounts in thousands, except per share amounts)
1998 1997
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REVENUES
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Real estate operations:
Home and condominium sales $ 19,964 $ 17,652
Land sales 6,946 3,935
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26,910 21,587
Magazine circulation operations 14,516 13,831
Interest and other operations 5,423 1,343
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46,849 36,761
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COSTS AND EXPENSES
- ------------------
Real estate cost of sales 21,325 17,090
Operating expenses:
Magazine circulation operations 11,049 11,334
Real estate commissions and selling 1,771 1,769
Other operations 884 1,457
General and administrative:
Real estate operations and corporate 2,140 1,857
Magazine circulation operations 1,680 1,631
Interest, net 1,096 1,178
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39,945 36,316
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INCOME BEFORE INCOME TAXES 6,904 445
PROVISION FOR INCOME TAXES 2,762 178
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NET INCOME 4,142 267
RETAINED EARNINGS, beginning of period 33,390 23,729
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RETAINED EARNINGS, end of period $ 37,532 $ 23,996
============ ===========
NET INCOME PER SHARE - BASIC AND DILUTED $ 0.56 $ 0.04
============ ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC AND DILUTED 7,369 7,369
============ ===========
See notes to consolidated financial statements.
2
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings (Unaudited)
Nine Months Ended January 31, 1998 and 1997
(Amounts in thousands, except per share amounts)
1998 1997
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REVENUES
- --------
Real estate operations:
Home and condominium sales $ 58,332 $ 47,977
Land sales 18,375 10,848
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76,707 58,825
Magazine circulation operations 42,710 40,919
Interest and other operations 8,767 4,655
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128,184 104,399
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COSTS AND EXPENSES
- ------------------
Real estate cost of sales 59,738 46,362
Operating expenses:
Magazine circulation operations 32,945 33,393
Real estate commissions and selling 5,370 4,840
Other operations 3,979 4,908
General and administrative:
Real estate operations and corporate 5,895 5,627
Magazine circulation operations 4,871 4,711
Interest, net 3,409 3,005
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116,207 102,846
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INCOME BEFORE INCOME TAXES 11,977 1,553
PROVISION FOR INCOME TAXES 4,791 621
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NET INCOME 7,186 932
RETAINED EARNINGS, beginning of period 30,346 23,064
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RETAINED EARNINGS, end of period $ 37,532 $ 23,996
=========== ==========
NET INCOME PER SHARE - BASIC AND DILUTED $ 0.98 $ 0.13
=========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC AND DILUTED 7,369 7,369
=========== ==========
See notes to consolidated financial statements.
3
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended January 31, 1998 and 1997
(Amounts in thousands)
1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 7,186 $ 932
--------- --------
Adjustments to reconcile net income to net cash used by
operating activities -
Depreciation and amortization 2,505 1,966
Changes in assets and liabilities, net of effects
from purchase of assets of business:
Receivables, net (15,987) (4,560)
Real estate inventory (7,060) (16,758)
Other real estate investments 3,368 2,399
Investment property 1,281 754
Other assets (1,347) (976)
Accounts payable, deposits and accrued expenses 4,061 (4,663)
Taxes payable 1,287 -
Deferred income taxes (255) -
Gain from sale of real estate inventory related to
reduction in accounts payable - (579)
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Total adjustments (12,147) (22,417)
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Net cash used by operating activities (4,961) (21,485)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,783) (2,617)
Purchase of assets of business, net of cash acquired (2,202) -
Book value of fixed assets sold 1,305 -
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Net cash used by investing activities (2,680) (2,617)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing 30,242 54,622
Principal debt payments (34,048) (31,175)
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Net cash provided (used) by financing activities (3,806) 23,447
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DECREASE IN CASH AND CASH EQUIVALENTS (11,447) (655)
CASH AND CASH EQUIVALENTS, beginning of period 16,178 7,607
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CASH AND CASH EQUIVALENTS, end of period $ 4,731 $ 6,952
========== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid - net of amounts capitalized $ 3,016 $ 4,142
========= ========
Income taxes paid $ 3,759 $ 2,430
========= ========
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.
4
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Nine Months Ended January 31, 1998 and 1997
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 as previously reported in the April 30, 1997 Consolidated
Balance Sheet and January 31, 1997 Consolidated Statement of Income and
Statement of Cash Flows have been reclassified to conform to the
presentation used at January 31, 1998.
5
<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, 1998
RESULTS OF OPERATIONS
- ---------------------
Total revenues for the three and nine month periods ended January 31, 1998
increased 27% and 23%, respectively, from the same periods last year,
reflecting higher revenues from both real estate and magazine circulation
operations.
Revenues from real estate operations increased 25% and 30% during the three and
nine month periods ended January 31, 1998, respectively, compared to the prior
year, resulting from increases in both home and condominium and land sales.
Revenues from home and condominium sales increased 13% and 22% in the three and
nine month periods, respectively, which generally reflect an increase in total
unit deliveries from 154 to 165 in the third quarter and from 403 to 497 in the
nine month period as compared to the same periods last year. This increase was
due in part to increased home deliveries in Colorado resulting from additional
projects from which homes are being sold and delivered, as well as from
deliveries contributed from the Company's northern California operations, which
were acquired by the Company in September 1997. Although housing revenues
increased, there was a slight decrease in the gross profit percentage for
housing, which resulted from a number of factors, including a change in the mix
of homes delivered and higher lot development costs. In addition, the Company
closed an increased number of large commercial land sales in New Mexico
throughout this fiscal year compared to the prior year, which resulted in
increased revenues of 77% from land sales for the quarter and 69% for the nine
month period. 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 increased by approximately $1.1 million in the third quarter and
by approximately $4.5 million in the nine months this year, respectively, as
compared to the similar periods last year.
Revenues from magazine circulation operations increased approximately 5% and 4%
in the three and nine months periods ended January 31, 1998, as compared to the
same periods last year, due to increases in both Fulfillment Services and
Newsstand Distribution Services. Revenues from Fulfillment Services increased
approximately 5% in both the three and nine month periods this year,
respectively, due primarily to increased volumes resulting from a new contract
with a major publisher, which was partially offset by decreased volumes in other
areas of the business. Revenues from Newsstand Distribution Services
increased approximately 4% and 2% in the three and nine month periods this year,
respectively, compared to the prior year, due to a modest increase in the volume
of magazine sales.
6
<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, 1998
The major realignment and consolidation of relationships in the distribution
chain for magazines which developed during 1996 continues to affect the
industry, and the Company continues to address the situation. Magazine
circulation operating expenses have decreased from approximately 81% of related
revenues last year to approximately 77% of related revenues in the current year,
reflecting the completed integration of the acquisition of Kable's Ohio
operations and the favorable impact of cost reduction initiatives. As a result
of these factors, operating income from magazine circulation operations
increased by approximately $970,000 and $2,240,000 in the third quarter and nine
months this year, respectively, as compared to last year.
During the third quarter of fiscal 1998, the Company sold the Rio Rancho Golf
and Country Club, and its 50% limited partnership interest in The Classic at
West Palm Beach, a congregate care facility in Florida, and recognized an
aggregate non-recurring gain of approximately $4.2 million, which amount is
included in "Interest and other operations".
Real estate commissions and selling expenses increased approximately $530,000 in
the nine months, primarily as a result of the increased volume, as well as from
an increase in the number of projects open for sale. Real estate and corporate
general and administrative expenses increased $283,000 in the three month period
and $268, 000 in the nine months, principally as a result of the Company's
expansion into northern California in September 1997. General and administrative
costs of the magazine circulation operations increased by approximately 3% in
both the three and nine month periods, respectively, commensurate with the
revenue increase.
Interest expense increased in both real estate and magazine operations in both
the third quarter and nine months period this year primarily due to higher
average borrowings partially offset by an increase in the amount of capitalized
real estate interest.
FINANCIAL CONDITION
- -------------------
Receivables from magazine circulation operations increased from $43.0 million at
April 30, 1997, to $58.7 million at January 31, 1998, resulting partially from
the timing of monthly billings as well as from delays in payments experienced by
Kable from wholesalers which Kable believes is partially a result of the
industry consolidation issue as referred to above. As a result, cash decreased
by $11.4 million and accounts payable, deposits and accrued expenses increased
by approximately $4.1 million at January 31, 1998 compared to April 30, 1997.
7
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
PART II
Other Information
-----------------
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 Registrant during the
quarter ended January 31, 1998.
8
<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 13, 1998 By: /s/ Mohan Vachani
-----------------
Mohan Vachani
Senior Vice President,
Chief Financial Officer
Dated: March 13, 1998 By: /s/ Peter M. Pizza
------------------
Peter M. Pizza
Vice President, Controller
9
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX
-------------
27 Financial Data Schedule.
10
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<ARTICLE> 5
<LEGEND>
FDS - 3RD QUARTER
</LEGEND>
<CIK> 0000006207
<NAME> AMREP CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> JAN-31-1998
<EXCHANGE-RATE> 1
<CASH> 4,731
<SECURITIES> 0
<RECEIVABLES> 69,749
<ALLOWANCES> 0
<INVENTORY> 99,819
<CURRENT-ASSETS> 0
<PP&E> 30,631
<DEPRECIATION> 12,992
<TOTAL-ASSETS> 213,834
<CURRENT-LIABILITIES> 0
<BONDS> 46,232
0
0
<COMMON> 740
<OTHER-SE> 82,280
<TOTAL-LIABILITY-AND-EQUITY> 213,834
<SALES> 76,707
<TOTAL-REVENUES> 128,184
<CGS> 59,738
<TOTAL-COSTS> 96,662
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,409
<INCOME-PRETAX> 11,977
<INCOME-TAX> 4,791
<INCOME-CONTINUING> 7,186
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,186
<EPS-PRIMARY> 0.98
<EPS-DILUTED> 0
</TABLE>
