SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2001
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to _____________________
Commission File Number 1-4702
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AMREP Corporation
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(Exact name of registrant as specified in its charter)
Oklahoma 59-0936128
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
641 Lexington Avenue, Sixth Floor, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 705-4700
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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
December 10, 2001 - 6,573,586.
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
INDEX
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PART I. FINANCIAL INFORMATION PAGE NO.
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Item 1. Consolidated Financial Statements:
Balance Sheets
October 31, 2001 (Unaudited) and
April 30, 2001 (Audited) 1
Statements of Operations and Retained Earnings (Unaudited) 2
Three Months Ended October 31, 2001 and 2000
Statements of Operations and Retained Earnings (Unaudited)
Six Months Ended October 31, 2001 and 2000 3
Statements of Cash Flows (Unaudited)
Six Months Ended October 31, 2001 and 2000 4
Notes to Consolidated Financial Statements 5 - 6
Item 2. Management's Discussion and Analysis 7 - 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 9
PART II. OTHER INFORMATION
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Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
EXHIBIT INDEX 12
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
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AMREP CORPORATION AND SUBSIDIARIES
Concolidated Balance Sheets
(Thousands, except parvalue and number of shares)
October 31, 2001 April 30, 2001
------------------ ------------------
(Unaudited) (Audited)
ASSETS
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Cash and cash equivalents $ 15,467 $ 15,941
Receivables, net:
Real estate operations 6,864 7,070
Magazine circulation operations 44,744 37,533
Real estate inventory 61,476 73,347
Property, plant and equipment, at cost, net
of accumulated depreciation and
amortization of $16,080 at October 31,
2001 and $15,286 at April 30, 2001 14,993 14,314
Other assets 10,150 11,448
Excess of cost of subsidiary over
net assets acquired 5,191 5,191
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$ 158,885 $ 164,844
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Accounts payable $ 27,049 $ 19,735
Deposits and accrued expenses 8,287 7,591
Notes payable:
Amounts due within one year 21,902 9,490
Amounts subsequently due 6,238 34,770
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28,140 44,260
Taxes payable 2,572 1,785
Deferred income taxes 1,692 1,692
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67,740 75,063
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Commitments and contingencies
Shareholders' equity:
Common stock, $.10 par value;
shares authorized - 20,000,000; shares
issued - 7,399,677 at October 31, 2001
and April 30, 2001 740 740
Capital contributed in excess
of par value 44,935 44,935
Retained earnings 51,179 49,815
Treasury stock, at cost; 826,091 shares
at October 31, 2001 and April 30, 2001 (5,709) (5,709)
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91,145 89,781
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$ 158,885 $ 164,844
================== ==================
See notes to consolidated financial statements.
1
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Retained Earnings (Unaudited)
Three Months Ended October 31, 2001 and 2000
(Thousands, except per share amounts)
2001 2000
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REVENUES
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Real estate operations:
Land sales $ 13,537 $ 3,112
Home and condominium sales 635 507
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14,172 3,619
Magazine circulation operations 13,112 12,740
Interest and other operations 934 1,032
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28,218 17,391
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COSTS AND EXPENSES
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Real estate cost of sales:
Land sales 10,940 1,165
Home and condominium sales 717 1,166
Operating expenses:
Magazine circulation operations 9,712 9,917
Real estate commissions and selling 452 256
Other operations 621 577
General and administrative:
Real estate operations and corporate 822 907
Magazine circulation operations 1,630 1,676
Interest, net 442 803
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25,336 16,467
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Income before income taxes 2,882 924
PROVISION FOR INCOME TAXES 1,153 370
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NET INCOME 1,729 554
RETAINED EARNINGS, beginning of period 49,450 47,045
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RETAINED EARNINGS, end of period $ 51,179 $ 47,599
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NET INCOME PER SHARE - BASIC
AND DILUTED $ 0.26 $ 0.08
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WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 6,574 6,629
================== ===================
See notes to consolidated financial statements.
2
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Retained Earnings (Unaudited)
Six Months Ended October 31, 2001 and 2000
(Thousands, except per share amounts)
2001 2000
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REVENUES
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Real estate operations:
Land sales $ 20,803 $ 5,883
Home and condominium sales 635 2,720
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21,438 8,603
Magazine circulation operations 24,710 25,069
Interest and other operations 1,720 1,929
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47,868 35,601
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COSTS AND EXPENSES
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Real estate cost of sales:
Land sales 17,412 2,521
Home and condominium sales 740 3,373
Operating expenses:
Magazine circulation operations 19,434 20,123
Real estate commissions and selling 602 583
Other operations 1,240 1,126
General and administrative:
Real estate operations and corporate 1,808 2,157
Magazine circulation operations 3,400 3,529
Interest, net 958 1,621
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45,594 35,033
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Income before income taxes 2,274 568
PROVISION FOR INCOME TAXES 910 227
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NET INCOME 1,364 341
RETAINED EARNINGS, beginning of period 49,815 47,258
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RETAINED EARNINGS, end of period $ 51,179 $ 47,599
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NET INCOME PER SHARE -
BASIC AND DILUTED $ .21 $ .05
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WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 6,574 6,775
================== ===================
See notes to consolidated financial statements.
3
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended October 31, 2001 and 2000
(Thousands)
2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,364 $ 341
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Adjustments to reconcile net income
to net cash provided (used)
by operating activities -
Depreciation and amortization 1,267 1,536
Non-cash credits and charges:
(Gain) on disposition of fixed assets - (192)
Inventory and joint venture valuation
adjustments - 283
Pension benefit accrual (192) ( 369)
Bad debt reserve 324 232
Changes in assets and liabilities -
Receivables (7,329) 4,939
Real estate inventory 11,871 (5,176)
Other assets 1,017 265
Accounts payable, deposits
and accrued expenses 8,010 (2,313)
Taxes payable 787 840
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Total adjustments 15,755 45
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Net cash provided by
operating activities 17,119 386
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,473) (1,251)
Proceeds from assets sold - 990
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Net cash used
by investing activities (1,473) (261)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing 12,915 13,125
Principal debt payments (29,035) (9,873)
Proceeds from exercise of stock option - 6
Purchase of treasury stock - (4,492)
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Net cash used by
financing activities (16,120) (1,234)
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Decrease in cash and cash equivalents (474) (1,109)
CASH AND CASH EQUIVALENTS, beginning
of period 15,941 12,934
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CASH AND CASH EQUIVALENTS, end
of period $ 15,467 $ 11,825
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SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid - net of
amounts capitalized $ 958 $ 1,621
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Income taxes paid (refunded) $ 67 $ (771)
================= ==================
See notes to consolidated financial statements.
4
AMREP CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Six Months Ended October 31, 2001 and 2000
(1) BASIS OF PRESENTATION
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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 accounting principles generally accepted in the United States 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
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INDUSTRY SEGMENTS
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The following schedules set forth summarized data relative to the industry
segments in which the Company operates for the three and six month periods ended
October 31, 2001 and 2000. Certain amounts included in "Interest and other
operations" on the Consolidated Statements of Operations are classified below
within the land operations and homebuilding segments, depending upon the nature
of business activity.
THREE MONTHS Land Home Corporate
Operations Building Distribution Fulfillment and Other Consolidated
October 2001 (Thousands):
Revenues $ 13,852 $ 651 $ 4,191 $ 8,921 $ 603 $ 28,218
Expenses(excluding interest) 11,938 813 3,191 8,151 801 24,894
Interest expense, net 36 - 312 59 35 442
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Pretax income (loss)
contribution $ 1,878 $ (162) $ 688 $ 711 $ (233) $ 2,882
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October 2000 (Thousands):
Revenues $ 3,576 $ 529 $ 3,574 $ 9,166 $ 546 $ 17,391
Expenses(excluding interest) 1,954 1,309 3,488 8,105 808 15,664
Interest expense, net 81 5 524 151 42 803
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Pretax income (loss)
contribution $ 1,541 $ (785) $ (438) $ 910 $ (304) $ 924
=========== =========== ============ =========== ========= ============
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5
SIX MONTHS Land Home Corporate
Operations Building Distribution Fulfillment and Other Consolidated
October 2001 (Thousands):
Revenues $ 21,361 $ 667 $ 7,758 $ 16,952 $ 1,130 $ 47,868
Expenses(excluding interest) 19,260 924 6,474 16,360 1,618 44,636
Interest expense, net 81 - 663 142 72 958
----------- ----------- ------------ ---------- ----------- ------------
Pretax income (loss)
contribution $ 2,020 $ (257) $ 621 $ 450 $ (560) $ 2,274
=========== ========= ============ ========== ============ ============
Identifiable assets $ 70,951 $ 2,890 $ 47,215 $ 17,879 $ 19,950 $ 158,885
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October 2000 (Thousands):
Revenues $ 6,643 $ 2,769 $ 7,407 $ 17,662 $ 1,120 $ 35,601
Expenses(excluding interest) 4,078 3,757 7,198 16,454 1,925 33,412
Interest expense, net 195 34 1,015 290 87 1,621
----------- ----------- ------------ ----------- ----------- ------------
Pretax income (loss)
contribution $ 2,370 $(1,022) $ (806) $ 918 $ (892) $ 568
=========== =========== ============ =========== =========== ============
Identifiable assets $ 82,409 $ 6,010 $ 44,581 $ 16,473 $ 20,598 $ 170,071
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6
AMREP CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Results of Operations for the Three and Six Months ended October 31, 2001 and
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2000
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Revenues from real estate operations were $14.2 million and $21.4 million for
the fiscal year 2002 three and six month periods ended October 31, 2001,
respectively, compared to $3.6 million and $8.6 million in the comparable
periods of the prior fiscal year. Substantially all of these revenues in both
years were derived from land sales, and increased in the current fiscal year
periods primarily due to large land sales in California and Colorado in the
first two quarters of the current year which were made as part of the Company's
restructuring of its real estate operations, including a program to dispose of
all real estate assets in markets outside of New Mexico. Although these land
sales generated a substantial amount of cash, the gross profits realized were
marginal and, as a result, the average gross profit percentage on all land sales
was 19% in the second quarter and 16% in the first six months of the current
year compared to 63% and 57% in the comparable periods of the prior year. In Rio
Rancho, gross profits on land sales were 48% and 44% in the three and six month
periods of fiscal 2002, respectively, compared to 67% and 60% in the same
periods last year. This decrease reflected the fact that the current year's
activity included proportionately more sales of developed lots from projects
that contribute a lower average gross profit than realized in the prior year,
which included a larger proportion of undeveloped lots that on average
contribute a higher gross profit percentage. 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 past results are not an indication of
amounts that may be expected to occur in future periods. In addition, real
estate results were also favorably impacted in the three and six month periods
of the current year as the company sold the final homes under development, and
costs and expenses from the wind-down of homebuilding activities were less than
those incurred in the prior year.
Revenues from magazine circulation operations increased to approximately $13.1
million in the second quarter ended October 31, 2001 from $12.7 million in the
same period last year, and for the six months ended October 31, 2001 decreased
from $25.1 million last year to $24.7 million this year. Revenues from Newsstand
Distribution Services increased approximately $600,000 in this year's second
quarter and $400,000 for the six month period compared to last year, partly due
to improved magazine sales as well as an increase in the Company's average
commission due to a changed mix of sales. Revenues from Fulfillment Services
decreased by approximately $200,000 and $700,000 in the three and six month
periods of fiscal 2002, respectively, compared to the same period last year due
in large part to the loss of sweepstakes processing business for one customer.
Magazine circulation operating expenses decreased by approximately $200,000 in
the second quarter and $700,000 in the six month period, due in part to
payroll-related and other cost reductions, principally in the Newsstand
Distribution Services division.
7
Real estate commissions and selling expenses increased in both the three and six
month periods ended October 31, 2001, but these expenses did not increase
proportionately to sales because the sales in California and Colorado discussed
above had minimal variable selling costs. Real estate and corporate general and
administrative expenses decreased in both the second quarter and six months of
this year compared to the same periods last year reflecting the implementation
of a cost reduction program and other budgetary controls. General and
administrative costs of magazine circulation operations decreased by 3% and 4%
for the three and six month periods ended October 31, 2001, respectively, as a
result of these measures. Interest expense decreased in both periods due to
lowering average borrowings and reduced 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. Most borrowings are made by subsidiaries and
guaranteed by the Company.
The Company's Kable News Company subsidiary has a line-of-credit 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 October
31, 2001, at which time $20.1 million was outstanding. This line bears interest
at the prime rate plus 1% and matures on May 1, 2002. In accordance with the
June 2001 modification, the commitment amount will be further reduced to $23.5
million at December 31, 2001.
Kable's current lenders have advised Kable that they do not intend to renew
their lending commitments beyond May 1, 2002, and the Company and Kable have
therefore initiated discussions with other potential lenders. Expressions of
interest have been received from several of these sources, but no agreements
have been reached at this time and there are no assurances that Kable will be
able to find replacement lenders or renegotiate or extend the terms of the
current credit agreement beyond May 1, 2002, however, management believes that
Kable will be able to replace this line of credit before May 1, 2002.
The other line-of-credit borrowings are used principally to support real estate
development in New Mexico. These loans are collateralized by certain real estate
assets and are subject to available collateral and various financial performance
and other covenants. At October 31, 2001, the maximum available under real
estate lines-of-credit was $9.3 million, of which $4.8 million of borrowings
were outstanding.
During the past several years, the Company has restructured its real estate
operations by winding-down homebuilding activities and selling a substantial
portion of its landholdings in Colorado, and all of its landholdings in
California and Oregon. At October 31, 2001, inventories had decreased to $61.5
million compared to $73.3 million at April 30, 2001 principally as a result of
sales of property in California and Colorado. In addition, notes payable
relating to real estate operations had decreased to $7.4 million October 31,
8
2001 from $13.2 million at April 30, 2001, principally from the use of proceeds
of land sales, and notes payable of magazine circulation operations had
decreased to $20.7 million at October 31, 2001 from $31.1 million at April 30,
2001.
Statement of Forward-Looking Information
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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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
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There have been no material changes to the Company's market risk for the six
month period ended October 31, 2000. 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.
9
PART II
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Other Information
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Item 4. Submission of Matters to a Vote of Security Holders.
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The 2001 Annual Meeting of Shareholders of the Registrant was convened on
September 20, 2001 and adjourned to October 4, 2001.
At the adjourned meeting, Lonnie A. Coombs and Samuel N. Seidman were reelected
directors of the Registrant by the following votes:
For Withheld
Lonnie A. Coombs 6,008,789 13,217
Samuel N. Seidman 6,008,269 13,737
Item 6. Exhibits and Reports on Form 8-K.
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(a) Exhibits:
4(a) Sixth Modification Agreement dated as of September 28, 2001, to the
Loan Agreement dated as of September 15, 1998 between Kable News
Company, Inc. and American National Bank and Trust Company of Chicago,
as Agent and the Lenders, as defined therein.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Registrant during the quarter ended
October 31, 2001.
10
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
SIGNATURES
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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 11, 2001 By: /s/ Peter M. Pizza
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Peter M. Pizza Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
11
AMREP CORPORATION ANDSUBSIDIARIES
EXHIBIT INDEX
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4(a) Sixth Modification Agreement dated as of September 28, 2001, to
the Loan Agreement dated as of September 15, 1998 between Kable
News Company, Inc. and American National Bank and Trust Company
of Chicago, as Agent and the Lenders, as defined therein.