SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2000
______________________________________
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
___________
AMREP Corporation
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Oklahoma 59-0936128
_______________________________________________________________________________
(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
September 12, 2000 - 6,624,796.
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FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
INDEX
PART I PAGE NO.
Consolidated Financial Statements:
Balance Sheets
July 31, 2000 (Unaudited) and
April 30, 2000 (Audited) 1
Statements of Operations and Retained Earnings (Unaudited)
Three Months Ended July 31, 2000 and 1999 2
Statements of Cash Flows (Unaudited)
Three Months Ended July 31, 2000 and 1999 3
Notes to Consolidated Financial Statements 4
Management's Discussion and Analysis 5-7
Quantitative and Qualitative Disclosures about Market Risk 7
PART II
Other Information 8
Signatures 9
Exhibit Index 10
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FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
July 31, 2000 and April 30, 2000
(Thousands, except par value and number of shares)
July 31, 2000 April 30,2000
--------------- ---------------
(Unaudited) (Audited)
ASSETS
Cash and cash equivalents $ 11,397 $ 12,934
Real estate operations 9,160 9,108
Magazine circulation operations 46,076 45,366
Real estate inventory 72,045 70,548
Property, plant and equipment, at cost,
net of accumulated depreciation and
amortization of $14,512 at July 31, 2000
and $14,032 at April 30, 2000. 17,602 17,852
Other assets 10,974 11,437
Excess of cost of subsidiary over net
assets acquired 5,191 5,191
--------------- ---------------
$ 172,445 $ 172,436
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 13,606 $ 17,783
Deposits and accrued expenses 10,800 8,137
Notes payable:
Amounts due within one year 13,445 15,599
Amounts subsequently due 38,827 31,312
--------------- ---------------
52,272 46,911
Taxes payable:
Amounts due (receivable) within one year (410) (1,002)
Amounts subsequently due 5,999 5,999
--------------- ---------------
5,589 4,997
Deferred income taxes 2,666 2,627
--------------- ---------------
84,933 80,455
--------------- ---------------
Shareholders' equity:
Common stock, $.10 par value;
shares authorized - 20,000,000;
shares issued -7,399,677
at July 31, 2000 and 7,398,677
issued at April 30, 2000 740 740
Capital contributed in excess of
par value 44,936 44,930
Retained earnings 47,044 47,258
Treasury stock, at cost; 745,981
shares at July 31, 2000 and 158,327
shares at April 30, 2000 (5,208) (947)
--------------- ---------------
87,512 91,981
--------------- ---------------
$ 172,445 $ 172,436
=============== ===============
See notes to consolidated financial statements.
1
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Retained Earnings (Unaudited)
Three Months Ended July 31, 2000 and 1999
(Thousands, except per share amounts)
2000 1999
--------------- ---------------
REVENUES
Real estate operations:
Land sales $ 2,771 $ 8,226
Home and condominium sales 2,213 18,711
--------------- ---------------
4,984 26,937
Magazine circulation operations 12,329 13,000
Interest and other operations 897 2,098
--------------- ---------------
18,210 42,035
--------------- ---------------
COSTS AND EXPENSES
Real estate cost of sales:
Land sales 1,356 5,863
Home and condominium sales 2,207 16,493
Operating expenses:
Magazine circulation operations 10,206 10,466
Real estate commissions and selling 327 1,590
Other operations 549 1,011
General and administrative:
Real estate operations and corporate 930 1,942
Magazine circulation operations 2,173 1,569
Interest, net 818 913
--------------- ---------------
18,566 39,847
--------------- ---------------
Income (loss) before income taxes (356) 2,188
PROVISION (BENEFIT ) FOR INCOME TAXES (142) 875
--------------- ---------------
NET INCOME (LOSS) (214) 1,313
RETAINED EARNINGS, beginning of period 47,258 46,089
--------------- ---------------
RETAINED EARNINGS, end of period $ 47,044 $ 47,402
=============== ===============
EARNINGS (LOSS) PER SHARE-BASIC AND DILUTED $ (0.03) $ 0.18
=============== ===============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 6,922 7,362
=============== ===============
See notes to consolidated financial statements.
2
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FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended July 31,2000 and 1999
(Thousands)
2000 1999
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ (214) $ 1,313
--------------- ---------------
Adjustments to reconcile net income to
net cash provided (used) by operating
activities -
Depreciation and amortization 754 1,158
Non-cash credits and charges:
Loss on disposition of fixed assets - 17
Pension benefit accrual (185) (35)
Expense recorded on issuance of
treasure stock - 92
Changes in assets and liabilities -
Receivables (762) 684
Real estate inventory (1,497) 14,979
Other assets 375 (594)
Accounts payable, deposits and
accrued expenses (1,514) (7,870)
Taxes payable 592 (1,158)
Deferred income taxes 39 323
--------------- ---------------
Total adjustments (2,198) 7,596
--------------- ---------------
Net cash provided (used) by
operating activities (2,412) 8,909
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (231) (220)
--------------- ---------------
Net cash used by investing
activities (231) (220)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing 20,960 3,520
Principal debt payments (15,599) (23,213)
Proceeds from exercise of stock option 6 -
Purchase of Treasury stock (4,261) (257)
--------------- ---------------
Net cash provided (used) by
financing activities 1,106 (19,950)
--------------- ---------------
Decrease in cash and cash equivalents (1,537) (11,261)
CASH AND CASH EQUIVALENTS,beginning of period 12,934 23,553
--------------- ---------------
CASH AND CASH EQUIVALENTS, end of period $ 11,397 $ 12,292
=============== ===============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid - net of amounts capitalized $ 1,013 $ 1,025
=============== ===============
Income taxes paid (refunded) $ (771) $ 1,698
=============== ===============
See notes to consolidated financial statements.
3
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FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Three Months Ended July 31, 2000 and 1999
(1) BASIS OF PRESENTATION
The accompanying unaudited financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission for interim financial information. The April 30, 2000
balance sheet amounts have been derived from the April 30, 2000 audited
financial statements of the Registrant. Since the accompanying consolidated
financial statements do not include all the information and footnotes required
by generally accepted accounting principles for complete financial statements,
it is suggested that they be read in conjunction with the financial statements
and notes thereto included in the Registrant's April 30, 2000 Annual Report on
Form 10-K. In the opinion of management, the accompanying unaudited financial
statements include all adjustments, which are of a normal recurring nature,
necessary to reflect a fair presentation of the results for the interim periods
presented. The results of operations for such interim periods are not
necessarily indicative of the results to be expected for the full fiscal year.
(2) INFORMATION ABOUT THE COMPANY'S OPERATIONS IN DIFFERENT
INDUSTRY SEGMENTS:
The following schedules set forth summarized data relative to the industry
segments in which the Company operates for the three month periods ended July
31, 2000 and 1999.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Land Home Corporate
Sales Building Distribution Fulfillment and Other Consolidated
THREE MONTHS:
July 2000 (Thousands):
Revenues $ 3,055 $ 2,239 $ 3,833 $ 8,496 $ 587 $ 18,210
Expenses (excluding interest) 2,124 2,434 3,710 8,349 1,131 17,748
Interest expense, net 114 29 491 139 45 818
--------- -------- -------- --------- -------- --------
Pretax income (loss)
contribution $ 817 $ (224) $ (368) $ 8 $ (589) $ (356)
========= ========= ========= ========= ========= =========
Identifiable assets $ 75,126 7,128 51,892 18,470 19,829 172,445
--------------------------------------------------------------------------------------------------------------
July 1999 (Thousands):
Revenues $ 8,339 $ 19,839 $ 4,655 $ 8,345 $ 857 $ 42,035
Expenses (excluding interest) 6,461 19,096 3,763 8,272 1,342 38,934
Interest expense, net 105 182 419 152 55 913
--------- -------- -------- --------- -------- --------
Pretax income (loss)
contribution $ 1,773 $ 561 $ 473 $ (79) $ (540) $ 2,188
========= ========= ========= ========= ========= =========
Identifiable assets $ 75,861 19,556 54,633 19,441 21,037 190,528
--------------------------------------------------------------------------------------------------------------
Certain amounts in July 1999 have been reclassified to conform to the current year presentation.
</TABLE>
4
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
July 31, 2000
RESULTS OF OPERATIONS
Total revenues for the first quarter of fiscal 2001 decreased to $18.2 million
from $42.0 million in the comparable period of the prior year, principally as a
result of the restructuring of the Company's real estate operations, including
the continuing wind-down of homebuilding activities.
Revenues from land sales for the first quarter of fiscal 2001 decreased to $2.8
million from $8.2 million in the comparable period of the prior year, primarily
due to a lower volume of sales of residential lots to builders. Revenues from
residential lot sales decreased to $2.4 million in the first quarter of the
current year from $6.8 million in the same period last year, primarily because
the prior year period included sales to other homebuilders in Colorado with an
aggregate sales value of over $3.0 million made as part of the Company's
restructuring plan to sell its remaining real estate assets in Colorado, whereas
there were no comparable sales in the current year period. In addition, revenues
from the sale of commercial and industrial land decreased to $400,000 in the
first quarter of the current year from $1.5 million in the same period last
year. The average gross profit percentage on land sales increased from 29% in
the first quarter of fiscal 2000 to 51% in the first quarter of fiscal 2001
mainly because the prior year had included a higher percentage of sales of
residential lots, including those in Colorado discussed above, which have
generally been at lower gross profit percentages than the commercial and
industrial land sales have historically achieved. Land sale revenues and related
gross profits can vary from period to period 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.
Revenues from housing sales decreased to $2.2 million in the first quarter of
fiscal 2001 from $18.7 million in the same period last year, as the Company
delivered only 8 homes in the current year compared to 127 in the prior year.
This decrease reflected the effects of the restructuring of the Company's real
estate operations, as discussed above, and is expected to continue as
homebuilding activities are completed.
Revenues from magazine circulation operations decreased to $12.3 million in the
first quarter of the current year compared to $13.0 million in the comparable
period of the prior year, which reflected a decrease in the distribution segment
of this business. Revenues from the Newsstand Distribution Services decreased
approximately $800,000 (18%) in this year's first quarter compared to the prior
year, resulting from customer losses and decreased sales percentages, which was
5
<PAGE>
partially offset by a revenue increase of $150,000 (2%) in Fulfillment
operations. Partially offsetting this revenue decrease was a decrease of
$260,000 (2%) in magazines circulation operating expenses, due in part to
payroll-related reductions and reduced bad debt expense.
Revenues from "Interest and other operations" decreased by $1.2 million in the
first quarter of fiscal 2001 compared to the prior year due to the wind-down of
ancillary operations related to homebuilding. In addition, the prior year
included the recognition of management fee and equity income of approximately
$700,000 from the sale of a project in California in which the Company was a
joint venture participant. Other operations expenses decreased by approximately
$500,000 which was commensurate with the decrease in ancillary revenues noted
above.
Real estate commissions and selling expenses decreased as a result of the
wind-down of homebuilding operations. Real estate and corporate general and
administrative expenses also decreased due to the effects of the Company's
restructuring, including the wind-down of homebuilding activities. General and
administrative costs of magazine circulation operations increased by
approximately $600,000, due in part to the accrual of severance and related
benefits associated with the previously announced October 31, 2000 retirement of
Kable's chief executive officer. Interest expense decreased moderately due to
lower borrowing requirements within the real estate segments, offset in part by
increased interest in the magazine circulation operations resulting from
slightly higher receivable balances.
As previously reported, the Company has been involved for several years in an
ongoing process of audits of its Federal tax returns by the Internal Revenue
Service ("IRS") for fiscal years 1984 through 1996. The Company has previously
resolved all issues and paid taxes and related interest due for the years 1984
through 1992, and reached an interim agreement and paid all amounts due on
certain issues for the years 1993 through 1996. In September 2000, the IRS
presented to the Company a proposal to settle all remaining federal tax matters
for these years. Until a final settlement has been approved by the Company and
the IRS, however, these examinations remain open. If the proposed settlement
becomes final, the amount actually owed for taxes and interest would be less
than the amount accrued for this liability, and a tax benefit would be
recognized at that time. While the exact amount of the potential tax benefit is
uncertain and requires, among other things, the approval of the final agreement
by the IRS and the determination of related interest, as well as a determination
of resulting state tax adjustments, it could approximate $3.5 million.
LIQUIDITY AND CAPITAL RESOURCES
During the past several years, the Company has financed its operations from
internally generated funds from home and land sales and magazine circulation
operations, and from borrowings under its various lines-of-credit and
construction loan agreements.
6
<PAGE>
Over the past eighteen months, the Company has restructured its real estate
operations by winding-down homebuilding activities and selling a portion of its
landholdings in Colorado, California and Oregon. During this period, both
inventories and debt have been substantially reduced. At July 31, 2000,
inventories amounted to $72.0 million compared to $70.5 million at April 30,
2000 and $92.1 million at April 30, 1999, while notes payable amounted to $52.3
million at July 31, 2000, $46.9 million at April 30, 2000 and $74.7 million at
April 30, 1999.
In connection with a previously announced self-tender "Dutch Auction", the
Company reacquired 587,654 shares of its stock to be held as treasury stock at a
cost of approximately $4.3 million, including expenses, during the quarter ended
July 31, 2000. The Company also announced the resumption of a program which had
commenced in April 1999 to purchase up to 300,000 shares of its common stock
from time to time in the open market, under which 143,300 shares had been
reacquired until the program was suspended in November 1999.
The Company believes that cash provided from operations together with existing
cash balances, its lines-of-credit and land development loans will be sufficient
to maintain liquidity at a satisfactory level.
Statement of Forward-Looking Information
Certain information included herein and in other Company statements, reports and
filings with the Securities and Exchange Commission is forward-looking within
the meaning of the Private Securities Litigation Reform Act of 1995. Refer to
Item 7 of the Annual Report on Form 10-K for a discussion of the assumptions and
factors on which these statements are based. Any changes in the actual outcome
of these assumptions and factors could produce significantly different results;
accordingly, all forward-looking statements should be evaluated with the
understanding of their inherent uncertainty.
Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes to the Company's market risk for the
three-month period ended July 31, 2000. See Item 7(A) of the Company's Annual
Report on Form 10-K for the fiscal year ended April 30, 2000 for additional
information regarding quantitative and qualitative disclosures about market
risk.
7
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PART II
Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10(a) Employment Termination and Consulting Agreement
and General Release dated July 28, 2000 between the
Registrant and Kable News Company, Inc. and Daniel
Friedman
27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the
Registrant during the quarter ended July 31, 2000.
8
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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: September 14, 2000 By: /s/ Mohan Vachani
Mohan Vachani
Senior Vice President,
Chief Financial Officer
Dated: September 14, 2000 By: /s/ Peter M. Pizza
Peter M. Pizza
Vice President,
Controller
9
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FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX
10(a) Employment Termination and Consulting Agreement
and General Release dated July 28, 2000 between the
Registrant and Kable News Company, Inc. and Daniel
Friedman
27. Financial Data Schedule
10
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