10-Q 1 axr0205.txt 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, 2004 ------------------------------------------------- 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 been subject to such filing requirements for the past 90 days. Yes X No ------- ------ Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes No X ------ ------ Number of Shares of Common Stock, par value $.10 per share, outstanding at October 31, 2004 - 6,618,112. AMREP CORPORATION AND SUBSIDIARIES INDEX ----- PART I. FINANCIAL INFORMATION PAGE NO. --------- Item 1. Financial Statements Consolidated Balance Sheets (Unaudited) October 31, 2004 and April 30, 2004 1 Consolidated Statements of Operations and Retained Earnings (Unaudited) Three Months Ended October 31, 2004 and 2003 2 Consolidated Statements of Operations and Retained Earnings (Unaudited) Six Months Ended October 31, 2004 and 2003 3 Consolidated Statements of Cash Flows (Unaudited) Six Months Ended October 31, 2004 and 2003 4 Notes to Consolidated Financial Statements 5 - 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 10 Item 4. Controls and Procedures 10 - 11 PART II. OTHER INFORMATION Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 12 Item 4. Submission of Matters to a Vote of Security Holders 12 Item 6. Exhibits 12 SIGNATURE 13 EXHIBIT INDEX 14 PART I. FINANCIAL INFORMATION Item 1. Financial Statements ------- -------------------- AMREP CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets ( Unaudited ) (Thousands, except par value and number of shares) October 31, April 30, 2004 2004 ------------------ ------------------ ASSETS ------ Cash and cash equivalents $ 28,899 $ 26,805 Receivables, net: Magazine operations 51,676 42,768 Real estate operations 7,363 6,297 ------------------ ------------------ 59,039 49,065 Real estate inventory 56,368 58,221 Property, plant and equipment, at cost, net of accumulated depreciation and amortization of $23,063 at October 31, 2004 and $21,009 at April 30, 2004 21,048 21,299 Other assets 10,926 10,584 Goodwill 5,191 5,191 ------------------ ------------------ TOTAL ASSETS $ 181,471 $ 171,165 ================== ================== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Accounts payable and accrued expenses $ 42,858 $ 41,931 Notes payable: Amounts due within one year 14,282 1,830 Amounts subsequently due 2,432 10,813 ------------------ ------------------ 16,714 12,643 Taxes payable 561 1,867 Deferred income taxes 6,864 5,996 Accrued pension cost 3,206 3,206 ------------------ ------------------ TOTAL LIABILITIES 70,203 65,643 ------------------ ------------------ Shareholders' equity: Common stock, $.10 par value; shares authorized - 20,000,000; 7,414,704 shares issued at October 31, 2004 and 7,409,204 at April 30, 2004 741 741 Capital contributed in excess of par value 45,252 45,133 Retained earnings 75,391 69,815 Accumulated other comprehensive loss ( 4,614) ( 4,614) Treasury stock, at cost; 796,092 shares at October 31, 2004 and 803,592 at April 30, 2004 ( 5,502) ( 5,553) ------------------ ------------------ TOTAL SHAREHOLDERS' 111,268 105,522 ------------------ ------------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 181,471 $ 171,165 ================== ================== See notes to consolidated financial statements. 1 AMREP CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations and Retained Earnings (Unaudited) Three Months Ended October 31, 2004 and 2003 (Thousands, except per share amounts) 2004 2003 ------------------ ------------------- REVENUES -------- Magazine operations $ 25,099 $ 25,200 Real estate operations - land sales 7,804 6,744 Interest and other operations 840 758 ------------------ ------------------- 33,743 32,702 ------------------ ------------------- COSTS AND EXPENSES ------------------ Magazine operating expenses 20,333 20,905 Real estate cost of sales 2,847 3,385 Real estate commissions and selling 389 277 Other operations 1,377 567 General and administrative: Magazine operations 1,848 2,167 Real estate operations and corporate 890 823 Interest expense, net 176 267 ------------------ ------------------- 27,860 28,391 ------------------ ------------------- Income before income taxes 5,883 4,311 PROVISION FOR INCOME TAXES 1,688 1,595 ------------------ ------------------- NET INCOME 4,195 2,716 RETAINED EARNINGS, beginning of period 71,196 61,669 ------------------ ------------------- RETAINED EARNINGS, end of period $ 75,391 $ 64,385 ================== =================== NET INCOME PER SHARE - BASIC AND DILUTED $ 0.63 $ 0.41 ================== =================== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,615 6,594 ================== =================== See notes to consolidated financial statements. 2 AMREP CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations and Retained Earnings (Unaudited) Six Months Ended October 31, 2004 and 2003 (Thousands, except per share amounts) 2004 2003 ------------------- ------------------- REVENUES -------- Magazine operations $ 48,749 $ 51,193 Real estate operations - land sales 17,486 13,138 Interest and other operations 1,741 1,988 ------------------- ------------------- 67,976 66,319 ------------------- ------------------- COSTS AND EXPENSES ------------------ Magazine operating expenses 39,250 41,638 Real estate cost of sales 7,325 5,998 Real estate commissions and selling 1,038 479 Other operations 2,112 1,174 General and administrative: Magazine operations 3,914 4,764 Real estate operations and corporate 1,744 1,821 Interest expense, net 320 528 ------------------- ------------------- 55,703 56,402 ------------------- ------------------- Income before income taxes 12,273 9,917 PROVISION FOR INCOME TAXES 4,052 3,670 ------------------- ------------------- NET INCOME 8,221 6,247 DIVIDEND ( 2,645) ( 1,648) RETAINED EARNINGS, beginning of period 69,815 59,786 ------------------- ------------------- RETAINED EARNINGS, end of period $ 75,391 $ 64,385 =================== =================== NET INCOME PER SHARE - BASIC AND DILUTED $ 1.24 $ 0.95 =================== =================== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,611 6,591 =================== =================== See notes to consolidated financial statements. 3 AMREP CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) Six Months Ended October 31, 2004 and 2003 (Thousands) 2004 2003 ----------------- ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 8,221 $ 6,247 ----------------- ------------------ Adjustments to reconcile net income to net cash provided by operating activities - Depreciation and amortization 2,436 2,487 Non-cash credits and charges: Pension expense accrual 60 772 Bad debt reserve ( 141) 138 Stock based compensation - Directors' 135 109 Changes in assets and liabilities - Receivables ( 9,833) ( 12,666) Real estate inventory 1,853 2,600 Other assets ( 725) ( 1,169) Accounts payable and accrued expenses 867 8,038 Taxes payable ( 1,306) 550 Deferred income taxes 868 1,504 ----------------- ------------------ Total adjustments ( 5,786) 2,363 ----------------- ------------------ Net cash provided by operating activities 2,435 8,610 ----------------- ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 1,982) ( 2,797) Proceeds from sale of property, plant and equipment 180 - ----------------- ------------------ Net cash used by investing activities ( 1,802) ( 2,797) ----------------- ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt financing 7,189 18,094 Principal debt payments ( 3,118) ( 15,295) Proceeds from exercise of stock options 35 18 Dividends paid ( 2,645) ( 1,648) ----------------- ------------------ Net cash provided by financing activities 1,461 1,169 ----------------- ------------------ Increase in cash and cash equivalents 2,094 6,982 CASH AND CASH EQUIVALENTS, beginning of per 26,805 16,443 ----------------- ------------------ CASH AND CASH EQUIVALENTS, end of period $ 28,899 $ 23,425 ================= ================== SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid - net of amounts capitalized $ 273 $ 407 ================= ================== Income taxes paid - net of refunds $ 4,490 $ 1,616 ================= ================== See notes to consolidated financial statements. 4 AMREP CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Three and Six Months Ended October 31, 2004 and 2003 (1) Basis of Presentation --------------------- The accompanying unaudited consolidated financial statements included herein have been prepared by AMREP Corporation (the "Registrant" or the "Company") pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information, and do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. 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 a good indication of what may occur in future periods. The unaudited consolidated financial statements herein should be read in conjunction with the Company's annual report on Form 10-K for the year ended April 30, 2004 which was previously filed with the Securities and Exchange Commission. (2) Information About the Company's Operations in Different Industry ---------------------------------------------------------------- Segments -------- The following tables set forth summarized data relative to the industry segments in which the Company operated for the three and six month periods ended October 31, 2004 and 2003. Certain amounts included in "Interest and other operations" on the Consolidated Statements of Operations are classified below within the Land Operations and Corporate and Other segments, depending upon the nature of the business activity. THREE MONTHS Land Corporate Operations Distribution Fulfillment and Other Consolidated ---------- ------------ ----------- ---------- ------------ October 2004 (Thousands): Revenues $ 7,950 $ 3,132 $ 21,967 $ 694 $ 33,743 Operating and SG&A expenses 3,766 2,474 19,707 1,737 27,684 Management fee 225 29 196 (450) - Interest expense, net - 1 153 22 176 ---------- ------------ ----------- ---------- ------------ Pretax income contribution $ 3,959 $ 628 $ 1,911 $ (615) $ 5,883 ========== ============ =========== ========== ============ -------------------------------------------------------------------------------------------------------------- October 2003 (Thousands): Revenues $ 6,839 $ 2,968 $ 22,232 $ 663 $ 32,702 Operating and SG&A expenses 4,204 2,661 20,412 847 28,124 Management fee 193 48 135 ( 376) - Interest expense, net - 7 207 53 267 ---------- ------------ ---------- ---------- ------------ Pretax income contribution $ 2,442 $ 252 $ 1,478 $ 139 $ 4,311 ========== ============ =========== ========== ============ -------------------------------------------------------------------------------------------------------------- 5 SIX MONTHS Land Corporate Operations Distribution Fulfillment and Other Consolidated ---------- ------------ ----------- ---------- ------------ October 2004 (Thousands): Revenues $ 17,782 $ 6,313 $ 42,436 $ 1,445 $ 67,976 Operating and SG&A expenses 9,435 5,116 38,048 2,784 55,383 Management fee 450 58 392 (900) - Interest expense, net - (3) 280 43 320 ---------- ------------ ----------- ---------- ------------ Pretax income contribution $ 7,897 $ 1,142 $ 3,716 $ (482) $ 12,273 ========== ============ =========== ========== ============ Identifiable assets $ 71,742 $ 39,531 $ 42,005 $ 23,002 $ 176,280 Intangible assets $ - $ 3,893 $ 1,298 $ - $ 5,191 -------------------------------------------------------------------------------------------------------------- October 2003 (Thousands): Revenues $ 13,726 $ 6,217 $ 44,976 $ 1,400 $ 66,319 Operating and SG&A expenses 7,651 5,513 40,890 1,820 55,874 Management fee 386 96 270 (752) - Interest expense, net - 12 408 108 528 ---------- ------------ ----------- ---------- ------------ Pretax income contribution $ 5,689 $ 596 $ 3,408 $ 224 $ 9,917 ========== ============ =========== ========== ============ Identifiable assets $ 72,244 $ 42,320 $ 40,560 $ 17,624 $ 172,748 Intangible assets $ - $ 3,893 $ 1,298 $ - $ 5,191 --------------------------------------------------------------------------------------------------------------
(3) Pending Transaction - Condemnation of Utility Company Subsidiary ---------------------------------------------------------------- In September 2004, a jury verdict was reached in the court proceedings in connection with the condemnation of the Company's El Dorado water utility subsidiary (the "Utility") in Santa Fe, New Mexico which valued the Utility at $11 million. The condemning authority, the Eldorado Water & Sanitation District (the "District"), had proposed a $6.2 million valuation, which amount is in excess of the Company's carrying value of the assets and which the Company had contested. On November 9, 2004, the Court entered its Judgment confirming the jury verdict in the condemnation case, and required the District to deposit $7 million into the Court's account by December 1, 2004. The Company may apply to withdraw these monies subject to any third-party claims. The Court granted the District possession of the Utility fifteen days after the date of the deposit, and required that the remaining balance of the verdict be deposited with 6% interest no later than June 1, 2005. The District made the initial required $7 million deposit on November 15, 2004, and took possession of the Utility's assets on December 1, 2004. If the District does not deposit the remaining balance of $4 million before June 1, 2005, the condemnation is considered abandoned and the District must return the Utility's assets to the Company. The Company believes that the District is seeking the additional financing that it requires to complete the condemnation, but the Company is unable to predict whether the District will obtain this financing or whether it will complete the condemnation in accordance with the Court's order. (4) Shareholders' Equity -------------------- The Company's Board of Directors declared special dividends of $0.40 per share ($2,645,000) on July 13, 2004 and $0.25 per share ($1,648,000) and July 9, 2003. The Board indicated that the declaration and payment of dividends in the future would be determined from time-to-time in the future in light of conditions then existing, including earnings, financial condition, cash position, and capital requirements and other needs. 6 Item 2. Management's Discussion and Analysis of Financial Condition ------ ----------------------------------------------------------- and Results of Operations ------------------------- INTRODUCTION ------------ The Company is primarily engaged in three business segments: the Real Estate business operated by AMREP Southwest Inc. and its various subsidiaries and the Fulfillment Services and Newsstand Distribution Services businesses operated by Kable News Company, Inc. and its various subsidiaries. The Company operates primarily in North America, and its foreign sales and activities are not significant. The following provides information that management believes is relevant to an assessment and understanding of the Company's consolidated results of operations and financial condition. The discussion should be read in conjunction with the consolidated financial statements and accompanying notes. The Company's fiscal year ends on April 30, and all references in this Item 2 to the second quarter or first six months of 2005 and 2004 mean the three or six month periods ended October 31, 2004 and October 31, 2003, respectively. CRITICAL ACCOUNTING POLICIES AND ESTIMATES ------------------------------------------ Management's discussion and analysis of financial condition and results of operations is based on the accounting policies used and disclosed in the 2004 consolidated financial statements and accompanying notes that were prepared in accordance with accounting principles generally accepted in the United States of America and included as part of the Company's annual report on Form 10-K for the year ended April 30, 2004 (the "2004 Form 10-K"). The preparation of those financial statements required management to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The significant accounting policies of the Company are described in Note 2 to the 2004 consolidated financial statements, and the critical accounting policies and estimates are described in Management's Discussion and Analysis included in the 2004 Form 10-K. Information concerning the implementation and the impact of new accounting standards issued by the Financial Accounting Standards Board (FASB) is included in the notes to the 2004 consolidated financial statements. The Company did not adopt an accounting policy in the first six months of 2005 that had a material impact on its financial condition, liquidity or results of operations. RESULTS OF OPERATIONS --------------------- For the second quarter of fiscal 2005, net income was $4,195,000, or $0.63 per share, compared to net income of $2,716,000, or $0.41 per share, in the same period of fiscal 2004. Revenues were $33,743,000 in the second quarter this year versus $32,702,000 in the same period last year. For the first six months of fiscal 2005, the Company reported revenues of $67,976,000 and net income of $8,221,000, or $1.24 per share. For the comparable period last year, the Company had revenues of $66,319,000 and net income of $6,247,000, or $0.95 per share. Revenues from the Company's Kable News Company subsidiary were $25,099,000 in the second quarter of 2005 compared to $25,200,000 in the same quarter last year. This small decline was the result of the net effect of a 1.2% revenue decline in Kable's Fulfillment Services segment offset in part by a 5.5% revenue 7 increase in its Newsstand Distribution Services business. For the six month period ended October 31, Kable's revenues decreased from $51,193,000 last year to $48,749,000 this year primarily due to a 5.6% decrease in revenues from the Fulfillment Services segment which was offset in part by a 1.5% increase in Newsstand Distribution Services' revenues. The decline in Fulfillment Services' revenues was principally the result of customer losses at Kable's Colorado fulfillment business which had been identified and known prior to Kable's acquisition of that business in 2003. Kable's operating expenses decreased 2.7% and 5.7% in the second quarter and first six months 2005 compared to the same periods last year. Fulfillment Services' operating expenses decreased 2.9% and 5.8% in the second quarter and first six months 2005 compared to the same periods of the prior year resulting in part from reduced payroll as well as reductions in various equipment charges, and amounted to 86% and 84% of related revenues in the second quarter and first six months of 2004 compared to 84% for both of these periods in 2004. Operating costs for Newsstand Distribution Services decreased 0.8% and 4.6% in the second quarter and first six months 2005 compared to the same periods last year primarily as a result of reduced pension and health insurance expenses, and amounted to 57.6% and 58.6% of related revenues in the second quarter and first six months of 2005 compared to 61.3% and 62.4% for these same periods in 2004. Revenues from land sales at the Company's AMREP Southwest subsidiary increased from $6,744,000 in the second quarter of 2004 to $7,804,000 in the same quarter of the current year. For the six month period, these revenues increased from $13,138,000 last year to $17,486,000 this year. This improvement was the result of increased sales of both commercial properties and undeveloped residential lots in the Company's principal market of Rio Rancho, New Mexico so far in fiscal 2005. The gross profit on land sales increased from 50% and 54% in the second quarter and first six months of 2004, respectively, to 64% and 58% for the same periods of 2005 because a higher proportion of undeveloped lots, which generally have higher gross profit margins than developed lots, were sold in the current year. Pretax profit from real estate operations also improved significantly in both the second quarter and first six months of 2005 versus the same periods last year, reflecting the higher revenues and gross profit percentages this year. As previously reported, revenues and related gross profits from land sales can vary significantly from period to period as a result of many factors, including the nature and timing of specific transactions, so that prior results are not necessarily a good indication of what may occur in future periods. Real estate commissions and selling expenses increased as a percentage of related revenues from 4.1% and 3.6% for the second quarter and first six months of 2004 to 5.0% and 5.9% for the same periods of 2005 due to closing more land sales this year with the involvement of a broker. Such costs generally vary depending upon the terms of specific sale transactions. Real estate and corporate general and administrative expenses increased in the second quarter of 2005 versus the same period of 2004 principally as a result of the initial costs of Sarbanes-Oxley Act compliance, but decreased for the six month period ended October 31, 2005 compared to the same period in 2004 primarily due to reduced pension expense. Kable's general and administrative costs decreased during both the second quarter and first six months of 2005 compared to the same periods of 2004 mainly because of decreased pension and health insurance costs. Interest expense also decreased in both the second quarter and first six months of 2005 versus 2004 because of lower borrowing requirements in all segments of the Company's operations. Revenues associated with interest and other operations increased in the second quarter of 2005 as compared to the same period in 2004 as a result of higher levels of cash equivalents and mortgage note receivables, but decreased for the first six months of 2005 because the prior year included the recovery of past due interest on a large delinquent mortgage. Costs of other operations increased in both the second quarter and six month period of 2005 principally because of legal costs associated with condemnation proceedings involving the Company's utility subsidiary in New Mexico. 8 In September 2004, a jury verdict was reached in the court proceedings in connection with the condemnation of the Company's El Dorado water utility subsidiary (the "Utility") in Santa Fe, New Mexico which valued the Utility at $11 million. The condemning authority, the Eldorado Water & Sanitation District (the "District"), had proposed a $6.2 million valuation, which amount is in excess of the Company's carrying value of the assets and which the Company had contested. On November 9, 2004, the Court entered its Judgment confirming the jury verdict in the condemnation case, and required the District to deposit $7 million into the Court's account by December 1, 2004. The Company may apply to withdraw these monies subject to any third-party claims. The Court granted the District possession of the Utility fifteen days after the date of the deposit, and required that the remaining balance of the verdict be deposited with 6% interest no later than June 1, 2005. The District made the initial required $7 million deposit on November 15, 2004 and took possession of the Utility's assets on December 1, 2004. If the District does not deposit the remaining balance of $4 million before June 1, 2005, the condemnation is considered abandoned and the District must return the Utility's assets to the Company. The Company believes that the District is seeking the additional financing that it requires to complete the condemnation, but the Company is unable to predict whether the District will obtain this financing or whether it will complete the condemnation in accordance with the Court's order. The Company's effective tax rate decreased to 29% and 33% in the second quarter and first six months of 2005 from 37% in the same periods last year due to the effect of a tax benefit associated with a charitable contribution of land made by the real estate business in the second quarter of 2005. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- During the past several years, the Company has financed its operations from internally generated funds from real estate sales and magazine operations, and from borrowings under its various lines of credit and development loan agreements. Cash Flows From Financing Activities ------------------------------------ Kable has a line of credit with a bank which allows it to borrow up to $30,000,000 based upon a prescribed percentage of eligible accounts receivable, as defined. At October 31, 2004, borrowing availability was approximately $23,125,000, against which $12,188,000 was outstanding. This line of credit bears interest at the bank's prime rate (4.75% at October 31, 2004) plus 0.25%, and is collateralized by substantially all of Kable's assets. This agreement matures on May 1, 2005, and Kable has initiated discussions with the current lender as well as with other potential lenders to obtain financing beyond this date. Kable also has other borrowing arrangements to finance capital expenditures which allow borrowings totaling approximately $4,959,000 against which $4,526,000 was outstanding at October 31, 2004 at a weighted average interest rate of 5.4%. AMREP Southwest has a loan agreement with a bank providing a maximum borrowing capacity of approximately $6,100,000 to support its operations in New Mexico. Loans under this facility bear interest at the prime rate (4.75% at October 31, 2004) less 0.50%, are collateralized by certain real estate assets and are subject to available collateral and various financial performance and other covenants. At October 31, 2004, the borrowing availability under this agreement was approximately $5,500,000, and no amounts were outstanding. On July 13, 2004, the Company's Board of Directors declared a special dividend of $0.40 per share payable on August 18, 2004 to shareholders of record on July 27, 2004. The Board indicated that it may consider special dividends from time-to-time in the future in light of conditions then existing, including earnings, financial condition, cash position, and capital requirements and other needs 9 Cash Flows From Operating Activities ------------------------------------ Real estate inventory was $56,368,000 at October 31, 2004 compared to $58,221,000 at April 30, 2004. Kable's receivables increased from $42,768,000 at April 30, 2004 to $51,676,000 at October 31, 2004 as the result of the timing and seasonality of billings. Future Payments Under Contractual Obligations --------------------------------------------- The Company is obligated to make future payments under various contracts such as debt agreements and lease agreements, and it is subject to certain other commitments and contingencies. There have been no material changes to Future Payments Under Contractual Obligations as reflected in the Liquidity and Capital Resources section of Management's Discussion and Analysis in the Company's 2004 Form 10-K. Refer to notes 7, 11 and 12 to the consolidated financial statements in the 2004 Form 10-K for additional information on long-term debt and commitments and contingencies. 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 Company's 2004 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. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Item 3. Quantitative and Qualitative Disclosures About Market Risk ------ ---------------------------------------------------------- The Company has several credit facilities or loans that require the Company to pay interest at a rate that may change periodically. These variable rate obligations expose the Company to the risk of increased interest expense in the event of increases in short-term interest rates. At October 31, 2004, approximately $12,188,000 of the Company's total debt of $16,714,000 was subject to variable interest rates. Refer to Item 7(A) of the Company's 2004 Form 10-K for additional information regarding quantitative and qualitative disclosures about market risk. Item 4. Controls and Procedures ------ ----------------------- Evaluation of Disclosure Controls and Procedures An evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report was carried out by the Company's management, with the participation of the Company's chief financial officer and the other executive officers whose certificates accompany this quarterly report. Based on that evaluation, the chief financial officer and the other executive officers concluded that such disclosure controls and procedures have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. A controls system, 10 no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Subsequent to the date of the most recent evaluation of internal controls, there were no significant changes in internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses. 11 PART II. OTHER INFORMATION Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ------ ----------------------------------------------------------- Pursuant to the Registrant's 2002 Non-Employee Directors' Stock Plan, on September 15, 2004 the Registrant issued an aggregate of 7,500 Shares of its Common Stock, par value $.10 per share, to its six non-employee directors as partial payment for their services as directors for the preceding six months. These issuances were not registered under the Securities Act of 1933, as amended, by reason of the exemption provided in Section 4(2) of such Act for transactions by an issuer not involving any public offering. Item 4. Submission of Matters to a Vote of Security Holders ------- --------------------------------------------------- The 2004 Annual Meeting of Shareholders of the Registrant was held on September 21, 2004. At the meeting, Lonnie A. Coombs and Samuel N. Siedman were reelected directors of the Registrant by the following votes: For Withheld --- -------- Lonnie A. Coombs 6,197,604 2,992 Samuel N. Siedman 6,188,919 11,677 Item 6. Exhibits ------ -------- Exhibits -------- 31.1 Certification required by Rule 13a - 14 (a) under the Securities Exchange Act of 1934. 31.2 Certification required by Rule 13a - 14 (a) under the Securities Exchange Act of 1934. 31.3 Certification required by Rule 13a - 14 (a) under the Securities Exchange Act of 1934. 32 Certification required pursuant to 18 U.S.C. Section 1350. 12 SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMREP CORPORATION (Registrant) Dated: December 8, 2004 By: /s/ Peter M. Pizza ------------------ Peter M. Pizza Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 13 EXHIBIT INDEX ------------- Exhibit No. Description -- ----------- 31.1 Certification required by Rule 13a - 14 (a) under the Securities Exchange Act of 1934. 31.2 Certification required by Rule 13a - 14 (a) under the Securities Exchange Act of 1934. 31.3 Certification required by Rule 13a - 14 (a) under the Securities Exchange Act of 1934. 32 Certification required pursuant to 18 U.S.C. Section. 14