-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IXhAmYeqYkFDhN2TZA6INAt+q2QIDRmp/R6NVhkagP137p2HQmLKErlVKL6WMkCR pD2AJqujMy/escD+FJJBIQ== 0000006207-01-500014.txt : 20010917 0000006207-01-500014.hdr.sgml : 20010917 ACCESSION NUMBER: 0000006207-01-500014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010731 FILED AS OF DATE: 20010914 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMREP CORP CENTRAL INDEX KEY: 0000006207 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 590936128 STATE OF INCORPORATION: OK FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04702 FILM NUMBER: 1737248 BUSINESS ADDRESS: STREET 1: 641 LEXINGTON AVENUE STREET 2: 6TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2127054700 MAIL ADDRESS: STREET 1: 641 LEXINGTON AVE STREET 2: 6TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN REALTY & PETROLEUM CORP DATE OF NAME CHANGE: 19671019 10-Q 1 q0701.txt FIRST QUARTER FILING 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, 2001 -------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 14, 2001 - 6,573,586. FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION PAGE NO. - ------- -------- Item 1. Consolidated Financial Statements: Balance Sheets July 31, 2001 (Unaudited) and April 30, 2001 (Audited) 1 Statements of Operations and Retained Earnings (Unaudited) Three Months Ended July 31, 2001 and 2000 2 Statements of Cash Flows (Unaudited) Three Months Ended July 31, 2001 and 2000 3 Notes to Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis 5-7 Item 3. Quantitative and Qualitative Disclosures about Market Risk 7 PART II. OTHER INFORMATION - -------- Item 6. Exhibits and Reports on Form 8-K 8 SIGNATURES 9 FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets July 31, 2001 and April 30, 2001 (Thousands, except par value and number of shares) July 31, 2001 April 30,2001 ------------------ ------------------ (Unaudited) (Audited) ASSETS $ 10,409 $ 15,941 Cash and cash equivalents Receivables, net: Real estate operations 6,318 7,070 Magazine circulation operations 43,239 37,533 Real estate inventory 69,537 73,347 Property, plant and equipment, at cost, net of accumulated depreciation and amortization of $15,707 at July 31, 2001 and $15,286 at April 30, 2001. 14,037 14,314 Other assets 11,563 11,448 Excess of cost of subsidiary over net assets acquired 5,191 5,191 ------------------ ------------------ $ 160,294 $ 164,844 ================== ================== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable $ 21,677 $ 19,735 Deposits and accrued expenses 7,583 7,591 Notes payable: Amounts due within one year 32,929 9,490 Amounts subsequently due 5,509 34,770 ------------------ ------------------ 38,438 44,260 Taxes payable 1,298 1,595 Deferred income taxes 1,882 1,882 ------------------ ------------------ 70,878 75,063 ------------------ ------------------ Commitments and Contingencies Shareholders' equity: Common stock, $.10 par value; shares authorized - 20,000,000; shares issued -7,399,677 at July 31, 2001 and April 30, 2001 740 740 Capital contributed in excess of par value 44,935 44,935 Retained earnings 49,450 49,815 Treasury stock, at cost; 826,091 shares at July 31, 2001 and April 30, 2001 (5,709) (5,709) ------------------ ------------------ 89,416 89,781 ------------------ ------------------ $ 160,294 $ 164,844 ================== ================== See notes to consolidated financial statements. 1 FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations and Retained Earnings (Unaudited) Three Months Ended July 31, 2001 and 2000 (Thousands, except per share amounts) 2001 2000 ---------------- ----------------- REVENUES Real estate operations: Land sales $ 7,266 $ 2,771 Home and condominium sales - 2,213 ---------------- ----------------- 7,266 4,984 Magazine circulation operations 11,598 12,329 Interest and other operations 786 897 ---------------- ----------------- 19,650 18,210 ---------------- ----------------- COSTS AND EXPENSES Real estate cost of sales: Land sales 6,472 1,356 Home and condominium sales 23 2,207 Operating expenses: Magazine circulation operations 9,722 10,206 Real estate commissions and selling 150 327 Other operations 619 549 General and administrative: Real estate operations and corporate 986 1,250 Magazine circulation operations 1,770 1,853 Interest, net 516 818 ---------------- ----------------- 20,258 18,566 ---------------- ----------------- Loss before income taxes (608) (356) BENEFIT FROM INCOME TAXES (243) (142) ---------------- ----------------- NET LOSS (365) (214) RETAINED EARNINGS, beginning of period 49,815 47,258 ---------------- ----------------- RETAINED EARNINGS, end of period $ 49,450 $ 47,044 ================ ================= NET LOSS PER SHARE - BASIC AND DILUTED $ (0.06) $ (0.03) ================ ================= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,574 6,922 ================ ================= See notes to consolidated financial statements. 2 FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) Three Months Ended July 31,2001 and 2000 (Thousands) 2001 2000 ----------------- ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (365) $ (214) ----------------- ------------------ Adjustments to reconcile net income to net cash provided (used) by operating activities - Depreciation and amortization 650 754 Non-cash credits and charges: Pension benefit accrual (96) (185) Bad debt expense 74 128 Changes in assets and liabilities - Receivables (5,028) (890) Real estate inventory 3,810 (1,497) Other assets (248) 375 Accounts payable, deposits and accrued expenses 1,934 (1,514) Taxes payable (297) 592 Deferred income taxes - 39 ----------------- ------------------ Total adjustments 799 (2,198) ----------------- ------------------ Net cash provided (used) by operating activities 434 (2,412) ----------------- ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (144) (231) ----------------- ------------------ Net cash used by investing activities (144) (231) ----------------- ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt financing 56,295 20,960 Principal debt payments (62,117) (15,599) Proceeds from exercise of stock option - 6 Purchase of treasury stock - (4,261) ----------------- ------------------ Net cash (used) provided by financing activities (5,822) 1,106 ----------------- ------------------ Decrease in cash and cash equivalents (5,532) (1,537) CASH AND CASH EQUIVALENTS, beginning of period 15,941 12,934 ----------------- ------------------ CASH AND CASH EQUIVALENTS, end of period $ 10,409 $ 11,397 ================= ================== SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid - net of amounts capitalized $ 742 $ 1,013 ================= ================== Income taxes paid (refunded ) $ 54 $ (771) ================= ================== See notes to consolidated financial statements. 3 FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Three Months Ended July 31, 2001 and 2000 (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, 2001 balance sheet amounts have been derived from the April 30, 2001 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 audited consolidated financial statements and notes thereto included in the Registrant's 2001 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, 2001 and 2000.
THREE MONTH Land Home Corporate Operations Building Distribution Fulfillment and Other Consolidated ---------- ---------- ------------ ----------- --------- ------------ July 2001 (Thousands): Revenues $ 7,509 $ 16 $ 3,567 $ 8,031 $ 527 $ 19,650 Expenses(excluding interest) 7,322 111 3,283 8,209 817 19,742 Interest expense, net 45 - 351 83 37 516 ---------- ---------- ----------- ----------- --------- ------------ Pretax income (loss) contribution $ 142 $ (95) $ (67) $ (261) $ (327) $ (608) ========== ========== =========== =========== ========= ============ Identifiable assets $ 79,595 $ 2,208 $ 39,758 $ 19,138 $19,595 $ 160,294 _______________________________________________________________________________________________________________________________ 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 _______________________________________________________________________________________________________________________________
4 FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations - ------------- Results of Operations for the Three Months ended July 31, 2001 - -------------------------------------------------------------- Revenues from land sales increased from $2.8 million in the first quarter of fiscal 2001 to $7.3 million in the same period this year as the result of a large land sale in California made as part of the Company's program to dispose of all real estate assets in markets outside of New Mexico. This sale contributed substantial cash to the Company but only a very small profit. Gross profits from land sales were lower in the current fiscal year because of a decline in the sales volume of residential lots to other homebuilders as well as in the number of commercial and industrial land sales made in the Company's core New Mexico market. 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 necessarily an indication of amounts that may be expected to occur in future periods. In addition, there were no revenues from the sale of homes and condominiums in the first quarter of the current fiscal year, as the Company has completed substantially all home sales activities as part of its previously announced real estate restructuring. There was $2.2 million of revenues from the sale of 8 homes in the first quarter of the prior year. As of July 31, 2001, the Company had 3 remaining homes completed and under contract, all of which closed in August 2001. First quarter revenues from magazine circulation operations of the Company's Kable News Company ("Kable") subsidiary decreased from $12.3 million in fiscal 2001 to $11.6 million in the current year. Revenues from Fulfillment Services decreased from $8.5 million last year to $8.0 million in the current year, primarily as the result of the loss of sweepstakes processing business for customers, while Newsstand Distribution Services' revenues decreased from $3.8 million last year to $3.6 million in the current year, primarily as the result of decreased magazine sales for existing customers. Operating results for Kable were comparable on a year to year basis, however, as reduced costs substantially offset the revenue decrease. Real estate commissions and selling expenses decreased by more than 50% in the first quarter of fiscal 2002 compared to the same period last year as a result of the continuing wind-down of homebuilding operations and elimination of related costs. Real estate and corporate general and administrative expenses also decreased by approximately 21%, due in part to the effects of the Company's real estate restructuring and related downsizing of administrative functions. In addition, the prior year included an accrual of approximately $350,000 for severance and related benefits of Kable's CEO and other corporate personnel. General and administrative costs of magazine circulation operations decreased approximately 4% from the prior year, which is the net effect of savings 5 resulting from a cost reduction program implemented throughout Kable, particularly within the Distribution Services segment, partly offset by additional costs incurred in connection with the start-up of the Company's internet-related activities and other new business opportunities. Net interest expense decreased approximately 37% due to lower borrowing levels in both real estate and magazine circulation operations and also lower interest rates. 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. Cash Flows From Financing Activities - ------------------------------------ The Company's subsidiaries have two line of credit arrangements, both of which are collateralized by various assets. Based upon collateral availability, the Company had an aggregate borrowing availability of $33.4 million at July 31, 2001 against which $32.3 million had been borrowed. Kable News Company has a line-of-credit agreement with a group of banks under which, as a result of a modification of the agreement entered into in June 2001, the commitment amount was reduced to $25.6 million as of July 31, 2001. This line, under which $24.8 million was outstanding at July 31, 2001, bears interest at the prime rate plus 1%, matures on May 1, 2002, is secured by substantially all of Kable's assets and is guaranteed by the Company. In accordance with the June 2001 modification, the commitment amount will be reduced to $23.5 million at December 31, 2001. The Company has initiated discussions with the lead bank to explore a modification and/or reformulation of the lending group, and is also in discussions with other potential lenders; while no agreements have been reached at this time and there are no assurances that the Company will be able to renegotiate or extend the terms of the credit agreement beyond May 1, 2002 or find replacement lenders, management believes that Kable will be able to replace this line of credit before May 1, 2002. The other line-of-credit borrowings by the Company's principal real estate subsidiary are used to support real estate development in New Mexico. These loans are collateralized by certain real estate assets, are subject to available collateral and various financial performance and other covenants and certain of them are guaranteed by the Company. At July 31, 2001 the maximum available under real estate line-of-credit arrangements totaled $7.8 million of which borrowings of $7.5 million were outstanding. 6 Cash Flows From Operating Activities - ------------------------------------ Inventories amounted to $69.5 million at July 31, 2001 compared to $73.3 million at April 30, 2001. This change includes a $4.7 million decrease in inventories outside of New Mexico, principally as a result of the sale of property in California mentioned above, offset by an approximate $.9 million increase in New Mexico, where several sites are presently under development. Receivables from magazine circulation operations increased by approximately $5.7 million at July 31, 2001 compared to April 30, 2001 primarily as the result of the timing of distribution billings. Statement of Forward-Looking Information - ---------------------------------------- Certain information included herein, including management's belief that Kable will be able to replace its existing line of credit beyond May 1, 2002 if required to do so, 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. Item 3. 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, 2001. See Item 7(A) of the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2001 for additional information regarding quantitative and qualitative disclosures about market risk. 7 PART II OTHER INFORMATION ------------------------- Item 6. Exhibits and Reports on Form 8-K ------- -------------------------------- (a) Exhibits: None (b) Reports on Form 8-K No reports on Form 8-K were filed by the Registrant during the quarter ended July 31, 2001. 8 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, 2001 By: /s/ Peter M. Pizza Peter M. Pizza Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 9 -----END PRIVACY-ENHANCED MESSAGE-----