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
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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
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
------------------------------
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
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Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes No X
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Number of Shares of Common Stock, par value $.10 per share, outstanding at
October 31, 2004 - 6,618,112.
AMREP CORPORATION AND SUBSIDIARIES
INDEX
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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
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33,743 32,702
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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
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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
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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
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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
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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
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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
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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
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Pretax income contribution $ 3,959 $ 628 $ 1,911 $ (615) $ 5,883
========== ============ =========== ========== ============
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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
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Pretax income contribution $ 2,442 $ 252 $ 1,478 $ 139 $ 4,311
========== ============ =========== ========== ============
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5
SIX MONTHS Land Corporate
Operations Distribution Fulfillment and Other Consolidated
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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
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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
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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
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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
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(3) Pending Transaction - Condemnation of Utility Company Subsidiary
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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