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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended April 30, 1995 Commission File Number 1-4702
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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
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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 (I.R.S. Employer
incorporation or organization) Identification No.)
641 Lexington Ave, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-541-7300
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Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
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Common Stock $.10 par value New York Stock Exchange
Pacific Stock Exchange
Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Aggregate market value of voting stock held by non-affiliates of Registrant,
computed by reference to the last sales price of such Common Stock on July 21,
1995, on the New York Stock Exchange Composite Tape: $29,481,660.
Number of shares of Common Stock, par value $.10 per share, outstanding at July
21, 1995 - 7,395,677.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents of Registrant are incorporated by
reference into the indicated parts of this report: Definitive Proxy Statement
for 1995 Annual Meeting Part III
PART I
Item 1. Business
- ------- --------
GENERAL
The Company* is a real estate developer and builder of housing,
national distributor of magazines and a provider of subscription fulfillment
services for publishers. It is the developer and major builder of
single-family homes at Rio Rancho, New Mexico and more recently has entered
the Denver, Colorado homebuilding market. The Company also provides
environmental and economic consulting and project management services.
Data concerning Industry Segments is set forth in Note 14 of Notes to
Consolidated Financial Statements. The Company's foreign sales and
activities are not significant.
REAL ESTATE OPERATIONS
Real Estate Operations consist of (i) the construction and sale of
housing, (ii) the development and sale of housing sites, and (iii) the sale
of tracts for residential, industrial and commercial uses.
HOUSING OPERATIONS
The Company builds and markets low to medium priced housing,
principally single-family homes ranging in size from approximately 800 to
2,800 square feet. It presently is building at Rio Rancho, New Mexico;
Broomfield, Colorado; Parker, Colorado; and Freehold, New Jersey.
A substantial majority of the Company's building is at Rio Rancho,
where the prices of the homes and condominiums presently being sold by the
Company range from approximately $64,300 to $185,000, although most are in
the $95,000 to $150,000 range. In fiscal l995, the Company delivered 658
housing units at Rio Rancho at an average price of $94,300 whereas in fiscal
l994 it delivered 637 housing units there at an average price of $82,500.
The Company does the development work at Rio Rancho. See "DEVELOPMENT
OPERATIONS - Rio Rancho" for information concerning Rio Rancho.
* As used herein "Company" includes the Registrant and its subsidiaries
unless the context indicates otherwise.
The Company recently entered and has three active projects in the
Colorado market. One is in Broomfield (a suburb of Denver), where it has a
total of 196 lots, 70 of which were acquired already developed in February
1993 and the balance in March l994. Building at this project commenced in
July 1993, and the Company is building homes there designed to sell at
prices ranging from $119,000 to $144,000. In fiscal 1995 the Company
delivered 82 homes at an average price of $128,000 whereas in fiscal 1994 it
delivered 26 homes at an average price of $116,000.
In November 1993, the Company acquired 101 partially developed lots in
a project at Parker (also a suburb of Denver) and has completed the
development work on all lots. Building at this project commenced in March
1994, and the Company is building homes there designed to sell at prices
ranging from $125,000 to $150,000. In fiscal 1995 the Company delivered 48
homes at an average price of $133,600.
In March l994 the Company purchased 484 acres of undeveloped
residential property at a second location in Parker which has been zoned for
approximately 1,800 homes. The Company began the development work in fiscal
1995 and anticipates it will commence building homes at this project during
the current fiscal year. It plans to build homes there designed to sell in
the $115,000 to $150,000 range. It also may sell lots or tracts from this
property to other builders or developers.
The Company was a limited partner with a one-third interest in a
limited partnership which in 1990 commenced construction of a 390-unit
townhouse project in Freehold, New Jersey. The project encountered
financial difficulties and in August 1992 the partnership was restructured
with a subsidiary of the Company becoming the sole general partner with a
50% interest. Pursuant to New Jersey law, 20% of the units must be priced
substantially below market, but the remaining units may be sold at market
(the "Market Price Units") and are designed to sell in the $106,000 to
$159,000 range. From inception through April 1993, 70 units were
delivered. In fiscal 1995, 50 Market Price Units were delivered at an
average price of $155,200 and 24 of the below market units were delivered at
an average price of $55,800. In fiscal l994, 67 Market Price Units were
delivered at an average price of $149,600 and 25 of the below market units
were delivered at an average price of $53,850.
Until January 1994, the Company was the general partner and majority
owner of a limited partnership which owns a 300 unit "congregate living"
rental facility in West Palm Beach, Florida. The facility, which was
completed in fiscal l99l, was designed to provide alternative housing for
active seniors. In January l994, an unrelated third party became the
general partner of the partnership and the Company became a limited partner,
but as a limited partner it continues to have an equity interest in the
partnership. A subsidiary of the Company is continuing to manage the
facility. Approximately 244 units currently are rented for terms of up to
twelve months. 30 of the units were converted for operation as an Assisted
Care Living Facility ("ACLF") in fiscal 1995 and those units are fully
rented. An additional 30 units will be converted to an ACLF operation
during the current fiscal year.
Until fiscal 1994, AMREP and a subsidiary held all of the partnership
interests in a limited partnership which owns 247 units of moderately-priced
rental housing in Orlando, Florida. There then was a restructuring of that
partnership in which an unrelated third party became the general partner and
the Company became a 50% limited partner. A subsidiary of the Company
continues to manage the project under a year-to-year contract. Substantially
all of the units currently are leased for terms of from 6 to 12 months.
The Company participates in a joint venture which builds single-family
homes in the Eldorado at Santa Fe, New Mexico subdivision ("Eldorado"),
although the Company is not the builder. In fiscal l995 the venture sold 14
homes. During fiscal 1995, a subsidiary of the Company entered into a joint
venture arrangement (Saratoga Square Homes Joint Venture) for the
development and construction of a 42 unit townhome project in Brooklyn, New
York.
The Company builds a number of different models of houses at each of
its developments, which it changes periodically based on experience and
market research. At Rio Rancho the houses are designed by the Company's own
staff. The Company acts as general contractor, supervising all development
and building activities, but employs subcontractors for most construction
work. However, the Company performs some site preparation work with its own
equipment and personnel and its employees do final preparation and cleaning
work on housing units.
At the Colorado developments the houses are designed by an outside
architect. The Company acts as general contractor but employs
subcontractors for all construction and site preparation work.
The houses at the Freehold project are designed by an outside
architect. A 75% owned subsidiary of the Company is the general contractor,
but it employs subcontractors for all construction and site preparation
work.
The Company's housing is of frame construction and the Company has no
reason to anticipate difficulty in obtaining all necessary materials as
needed. At Rio Rancho and the Colorado projects, the Company enters into
contracts with subcontractors and suppliers of materials pursuant to which
prices are established for a specific period, generally six months. Such
contracts are generally used for all subcontractors or all suppliers. The
Company generally uses more than one subcontractor for each trade and more
than one supplier of each type of material. However, at Rio Rancho
particularly, a substantial increase in orders and a shortage of
subcontractors caused production problems during fiscal 1994 and the early
part of the past year. The Company addressed the situation with a number of
measures, which included the adoption of a program of metered construction
starts and work scheduling based on the availability of all trades to
complete a house once started. As a result of these measures, construction
time has been substantially reduced.
The Company's construction and development departments are
headquartered at Rio Rancho, New Mexico, but it has local project managers
for its building activities elsewhere.
DEVELOPMENT OPERATIONS
The Company develops the housing sites at Rio Rancho and at the 484
acre tract in Parker, Colorado. The development activity includes the
obtaining of necessary governmental approvals, installation of utilities and
necessary storm drains, and building or improving the roads. The
engineering work is performed by both outside firms and Company employees,
but development work generally is performed by outside contractors.
The Company sells developed residential lots to outside builders at
both Rio Rancho and Eldorado. In fiscal 1995, outside builders purchased
238 lots at Rio Rancho for an aggregate of $3,674,000 and 99 lots at
Eldorado for an aggregate of $2,691,000.
Rio Rancho
This project consists of 91,049 contiguous acres in Sandoval County,
New Mexico, near Albuquerque, of which some 71,900 acres have been platted
into approximately 107,700 homesite and commercial lots and 16,200 acres are
dedicated to community facilities, roads and drainage. At April 30, 1995, a
total of approximately 77,000 of the lots had been sold. The Company
currently owns approximately 25,000 acres at Rio Rancho of which some 9,000
acres are in contiguous blocks suitable for development. The balance is in
scattered lots which require the purchase of a sufficient number of
adjoining lots to create tracts suitable for development. Rio Rancho (most
of the populated portion of which is in an incorporated city) has a
population of over 45,000.
Piped water, electricity and telephone service are supplied by
independent public utility companies to all homes, and most are also
serviced by piped gas and sewage utilities. Sewage disposal for lots not
serviced by the utility system is by individual septic tank.
The Company is required to make deposits with the electric, gas, water
and sewage companies when their utility lines are extended to new sections.
A substantial part of such deposits are returned as houses are built and the
utility service commences.
Since early 1977, no lots have been sold except with houses on them or
to outside builders. Over 50,000 lots were sold prior to 1977 and most of
these are in areas where utilities have not yet been installed. However,
under the contracts pursuant to which the lots were sold if, when the
purchaser is ready to build a home utilities have not reached the site of
his lot, the Company is obligated to exchange a lot in an area then serviced
by water, telephone and electric utilities for a lot of the purchaser,
without cost to the purchaser. The Company has not incurred significant
costs related to such exchanges.
The commercial areas at Rio Rancho presently house in excess of 350
business and professional offices, seven shopping centers with over 900,000
square feet of store and office space, and a 55,000 square foot office
building largely occupied by the Company. In addition, a number of
individual office buildings and stores are located throughout the community.
Seven financial institutions have offices at Rio Rancho. The industrial
areas presently have approximately 70 buildings with over 2,145,000 square
feet, including a manufacturing facility containing approximately 1,300,000
square feet built and used by Intel Corporation.
Eldorado at Santa Fe
This subdivision, consisting of approximately 6,000 acres platted into
lots, is located 10 miles southeast of Santa Fe, New Mexico. Approximately
1,650 single-family homes have been built and sold at this subdivision. If
the current rate of sales continues, the remaining inventory of
approximately 175 lots at Eldorado will be sold during fiscal l997.
SALE OF NON-RESIDENTIAL TRACTS
The Company sells developed and undeveloped tracts at Rio Rancho and
may sell tracts from its 484 acre property in Parker, Colorado. In fiscal
1995 16 tracts were sold at Rio Rancho at prices ranging from approximately
$40,000 to over $1,000,000.
MARKETING
The Company's homes are generally purchased as principal residences.
The designs of the various models built by the Company are based on market
research, which is done principally by Company personnel. At Rio Rancho the
Company sells its housing almost entirely from models on-site, both directly
and through brokers. At Freehold, the Company sells directly from models
on-site without brokers. At the Colorado developments the Company sells its
housing through brokers operating out of on- site sales offices.
Industrial and commercial tracts at Rio Rancho are marketed by a
separate department, both directly and through brokers.
There is no significant seasonality to either housing or tract sales.
However, unusually severe winter weather can disrupt construction
activities, and when this occurs there can be a slow down in housing sales
in the immediately ensuing months followed by a "bunching" as deliveries
catch up.
BACKLOG
Almost all contracts for the sale of housing sold by the Company are
subject to the buyer's ability to obtain financing. The Company thus does
not consider any such contracts to be firm, although historically
approximately 80% of persons who signed contracts to purchase housing
actually closed their purchase.
At July 1, l995, the Company had signed contracts for the purchase of
389 units of housing for an aggregate purchase price of approximately
$44,545,000 whereas at July l, l994 it had signed contracts for 614 units
with an aggregate purchase price of approximately $60,900,000. The decrease
in backlog at July 1, 1995 from the prior year is due, in part, to the
construction scheduling improvements attained during fiscal 1995, as
discussed above.
At July l, l995, the Company had contracts for the sale of 240 lots to
builders for an aggregate purchase price of $8,038,000 and three contracts
for the sale of unimproved real estate for an aggregate purchase price of
$3,700,000. At July 1, l994 it had contracts for the sale of 238 lots to
builders for an aggregate purchase price of $7,200,000 and four contracts
for the sale of unimproved real estate for an aggregate purchase price of
$1,030,000.
COMPETITION
The construction and sale of homes is a highly competitive business.
Each of the Company's housing projects competes with other builders who
offer similarly priced housing. To a limited extent the Rio Rancho
development competes with developments in other places having climates
attractive to those who wish to escape the rigorous climates of the north,
although a large majority of the housing there is purchased by New Mexico
residents.
Historically, the Company has generally concentrated on the
construction of affordable housing with relatively few options, leaving
custom house building and relatively expensive houses generally to other
builders. While it has no plans to do custom building, the Company
gradually has been increasing the upper price level of its houses to
accommodate a full spectrum of middle income buyers.
MORTGAGE FINANCING
The ability of the Company to sell houses is dependent upon the
availability of adequate mortgage financing on terms prospective customers
can afford. At Rio Rancho, the Company arranges mortgages principally with
funds made available or guaranteed by State Housing Authorities and the
Federal Housing Administration, and at all locations with various
conventional mortgage lenders.
MAGAZINE AND CIRCULATION OPERATIONS
Through its wholly-owned subsidiary, Kable News Company, Inc., the
Company (i) performs subscription fulfillment and related services and (ii)
distributes periodicals nationally and in Canada and, to a small degree,
overseas. Kable employs approximately 1,430 persons, approximately 1,200 of
whom are involved in its fulfillment activities and 230 in distribution
activities. Kable maintains state of the art computer hardware and software
in support of its fulfillment and distribution operations.
FULFILLMENT SERVICES
Kable's Fulfillment Services Division performs a number of
fulfillment and fulfillment related activities, principally magazine
subscription fulfillment services, list services and product fulfillment
services. This Division has been growing rapidly in recent years, and the
business was substantially increased with the acquisition by a subsidiary
of Kable in January 1995 of the business of Fulfillment Corporation of
America, Inc. ("FCA"), an Ohio based fulfillment company. The Division
accounted for 54% of Kable's total revenues in fiscal l994 while it
accounted for 59% in fiscal 1995 with revenues from FCA business only
beginning in January 1995. During the first two months of the current
fiscal year the Division generated 64% of Kable's revenues.
In its magazine subscription fulfillment service, this Division
processes new orders, receives and accounts for payments, prepares labels
for mailing each issue, handles subscriber telephone inquiries and
correspondence, prepares renewal and statement notifications, maintains the
client's subscriber list and database, generates marketing and statistical
reports, and prints forms and promotional materials for its client
publishers. Although by far the largest number of magazine titles for which
Kable performs fulfillment services are consumer publications, Kable also
performs services for a number of trade (business) publications utilizing
the broad capabilities of its extensive database system.
List services clients are primarily publishers. In this activity
the Division maintains clients' customer lists, selects names for clients
who rent their lists, merges rented lists with the client's lists to
eliminate duplication for clients' promotional mailings, and sorts and
sequences mailing labels to provide optimum postal discounts for clients.
This Division provides product fulfillment services primarily for
its publishers clients. In this activity it receives, warehouses, processes
and ships merchandise.
Kable now performs fulfillment services for approximately 425
different magazine titles for some 280 clients. No fulfillment client
accounted for as much as 10% of fulfillment revenues in fiscal l995. Kable
maintains more than 21,300,000 active subscriber names for its client
publishers. In a typical month Kable produces almost 21,200,000 mailing
labels for its client publishers' printers and also produces and mails
approximately 7,750,000 billing and renewal statements.
There are a large number of companies which perform fulfillment
services and with which Kable competes, two of which are many times larger
than Kable. Since publishers utilize only a single fulfillment service for
a particular publication, there is intensive competition to obtain
fulfillment contracts with publishers. Kable has a staff whose primary duty
is to solicit fulfillment business.
DISTRIBUTION
In its distribution operation, Kable annually distributes magazines
for over 270 publishers. No distribution client accounted for as much as
10% of distribution revenues in fiscal 1995. Among the titles are many
special interest magazines, including automotive, crossword puzzles, men's
sophisticates, comics, romance and sports. In a typical month, Kable
distributes to wholesalers nearly 37,600,000 copies of the various titles.
Typical of the industry, Kable purchases the publications from its
publishers and sells them to approximately 360 independent wholesale
distributors in the United States and Canada. The wholesale distributors in
turn sell the publications to individual retail outlets. All parties
generally have full return rights for unsold copies. In fiscal 1995,
distribution activities accounted for 41% of Kable's revenues.
While Kable does not handle all publications of all of its publisher
clients, it usually is the exclusive distributor for the publications it
distributes. Kable generally does not physically handle any product. It
determines in consultation with the wholesalers and publishers the number of
copies of each issue to be distributed, and generates and delivers to each
publisher's printer shipping instructions with the addresses of the
wholesalers and the number of copies of product to be shipped to each. All
magazines have an "off sale" date (generally the on-sale date of the next
issue) following which the retailers return unsold copies to the
wholesalers, who destroy them after accounting for returned merchandise in a
manner satisfactory to Kable.
Kable has a distribution sales and marketing force of about 100
persons, the responsibility of which is to work with wholesalers and
retailers to promote product sales and to assist in determining the number
of copies of product to be delivered to each retailer.
Kable generally makes substantial advances to publishers against
future sales, mostly for printing, paper and production costs prior to the
product going on sale, but is usually not paid by wholesalers for product
until some time after the product has gone on sale. Kable is therefore
exposed to potential credit risks with both the publishers and the
wholesalers. Its ability to make a profit is dependent in part on its skill
in estimating the number of copies of an issue which should be printed and
distributed and limiting its advance to the publisher accordingly.
There are six national distributors with whom Kable competes. Since
publishers utilize only a single distributor to distribute a particular
line, there is intensive competition between distributors to obtain
distribution rights from publishers. All six of these large competitors are
owned by or affiliated with a magazine publishing company. Such companies
publish a substantial portion of all magazines published in the United
States, and the competition for the distribution rights to the remaining
publications thus has intensified.
CONSULTING SERVICES
In February 1992 the Company began providing environmental
consulting services, and has expanded this operation to include economic
development consulting and project management services.
COMPANY OFFICES
Although the Company's principal executive offices are in New York
City, its operations (other than Kable News) are centralized in Rio Rancho
in a modern office building owned by the Company. Kable News has an
executive and sales office in New York City, but its operations are centered
in Mt. Morris, Illinois, and Marion, Ohio.
EMPLOYEES
The Company has approximately 1,700 employees (including Kable),
none of whom is represented by a union. The Company provides retirement,
health and other benefits for its employees and considers its employee
relations to be good.
Item 2. Properties.
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The information contained in Item 1 of this report with respect to
properties owned by the Company is hereby incorporated herein by reference.
Item 3. Legal Proceedings.
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The Registrant and/or its subsidiaries are involved in various
claims and legal actions incident to their operations, which in the opinion
of management based upon advice of counsel, will not materially affect the
consolidated financial position or results of operations of the Registrant
and its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders.
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Not Applicable.
Executive Officers of Registrant
- --------------------------------
Set forth below is certain information concerning persons who are
executive officers of Registrant.
Name Office Held Age
---- ----------- ---
Anthony B. Gliedman Chairman of the Board, 53
President and Chief
Executive Officer of the
Registrant since July
1991; Executive
Vice President of Regis-
trant from December
1990 until July 1991;
Name Office Held Age
---- ----------- ---
Executive Vice President
of the Trump Organization,
real estate development,
from prior to 1990 to
December 1990.
Daniel Friedman Chairman of the Board 60
of Kable News Company, Inc.,
a wholly owned subsidiary of
Registrant, since prior to
1990; Senior Vice President
of the Registrant since
prior to 1990.
James Wall President of AMREP Southwest 58
Inc. ("ASI"), and of AMREP
Southeast, Inc., wholly
owned subsidiaries of
Registrant, since January
1991; Vice President of
ASI from prior to 1990
to January 1991; General
Manager of Southwest
Operations since prior
to 1990; Senior Vice
President of Registrant
since September 1991.
Harvey W. Schultz Senior Vice President of 54
Registrant since March
1992; President of AMREP
Solutions, Inc., a wholly-
owned subsidiary of the
Registrant, since March
1992; President of HWS
Solutions, Inc.,
environmental consultants
from 1991 to March 1992;
President of Ocean View
Associates, real estate
development, and Senior
Vice President of Forest City
Ratner Companies, real estate
development, during 1990.
Name Office Held Age
---- ----------- ---
Mohan Vachani Senior Vice President - 53
Chief Financial Officer
of the Registrant since June
1993; Consultant to the
Registrant from September
1992 to June 1993;
Vice President-
Chief Financial Officer
of Bedford Properties,
Inc., real estate manage-
ment and development,
from prior to 1990 until
June 1993.
Valerie Asciutto Vice President-General 42
Counsel of Registrant since
July 1992; Vice President -
Real Estate Lending of
Community Capital Bank
(commercial bank) from
September 1991 to May
1992; attorney in private
practice from prior to
1990 to September 1991.
Each executive officer holds office until the first meeting of
directors following the annual meeting of stockholders and until his or her
successor is duly chosen and qualified.
PART II
Item 5. Market for Registrant's Common Equity and
- ------- Related Stockholder Matters.
----------------------------
The Registrant's common stock is traded on the New York Stock Exchange,
the Chicago Stock Exchange and the Pacific Stock Exchange under the symbol
AXR. On July 19, 1995, there were approximately 2,400 holders of record of
Registrant's Common Stock. Registrant has not paid any cash dividends, and
it has agreed in connection with certain long-term borrowings not to pay
cash dividends in amounts exceeding one-half of the Registrant's net worth.
The range of high and low closing prices for the last two years by fiscal
quarter, is presented below:
FIRST SECOND THIRD FOURTH
------------ ------------- ------------- ------------
HIGH LOW HIGH LOW HIGH LOW HIGH LOW
------ ----- ------ ----- ------ ----- ------ -----
1995 8 6 7/8 8 1/8 7 1/8 8 1/4 5 1/2 8 1/4 6 1/8
1994 7 1/2 5 1/2 10 1/8 6 1/4 9 3/4 7 9 7 5/8
Item 6. Selected Financial Data.
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(In thousands of dollars except per share amounts)
Year Ended April 30,
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1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
Revenues $ 152,525 $ 126,088 $ 93,660 $ 73,365 $ 69,567
Income (Loss)
Continuing operations $ 4,015 $ 2,372 $ 41 $ (6,826) $ (6,161)
Gain on sale of
discontinued operations - - - - 1,873
---------- ---------- ---------- ---------- ----------
Net Income (Loss) $ 4,015 $ 2,372 $ 41 $ (6,826) $ (4,288)
========== ========== ========== ========== ==========
Income (Loss) Per Share
Continuing operations $ 0.55 $ 0.33 $ 0.01 $ (1.03) $ (0.93)
Gain on sale of
discontinued operations - - - - 0.28
---------- ---------- ---------- ---------- ----------
Net Income (Loss)
Per Share $ 0.55 $ 0.33 $ 0.01 $ (1.03) $ (0.65)
========== ========== ========== ========== ==========
Total Assets $ 186,142 $ 178,857 $ 179,944 $ 168,390 $ 181,361
Notes Payable 56,229 50,738 31,899 34,462 37,914
Project Financing 2,891 6,205 41,228 32,164 32,251
Collateralized Mortgage
Obligations 2,533 4,406 6,473 7,390 8,407
Shareholders' Equity 65,921 61,429 54,102 54,055 60,881
Cash Dividends - - - - -
Item 7. Management's Discussion and Analysis of Financial
- ------- Condition and Results of Operations.
------------------------------------
RESULTS OF OPERATIONS
- ---------------------
1995 versus 1994
- ----------------
Total revenues for the year ended April 30, 1995 increased 21% over
fiscal 1994, reflecting substantially higher revenues from both home and
condominium sales and magazine circulation operations. Revenues from home
and condominium sales increased approximately 30% in fiscal 1995 over 1994,
resulting from an increase in both housing unit deliveries and the average
revenues per housing unit closed. 862 housing units were delivered in 1995
compared to 758 in 1994, which results in part from the continued growth of
the Company's Colorado operations, which were in the start-up phase during
fiscal 1994. In addition, the average revenue per unit closed increased to
$102,200 in 1995 from $89,100 in 1994, resulting from price increases and a
shift to the building of larger, more expensive houses in Rio Rancho, as
well as to the increased number of housing deliveries from the Company's
Colorado home-building division, where average home prices are generally
higher than those of Rio Rancho. The gross margin on housing sales was 13%
and 12% in fiscal 1995 and 1994, respectively. Revenues from land sales
were $11.7 million in fiscal 1995 and $13.1 million in 1994, with related
gross margins of 56% in fiscal 1995 and 59% in 1994. The amount of revenues
and related gross margin percentages from land sales varies from year to
year as a result of the nature and timing of specific transactions, and is
not an indication of amounts that may be expected to occur in future
periods. As a result of these factors, gross profit from housing and land
sales increased by approximately $1.7 million in fiscal 1995 compared to the
prior year.
Revenues from magazine circulation operations increased 32% to $46.2
million in fiscal 1995 from 1994. The increase is due, in part, to the
acquisition in January 1995 of the business of Fulfillment Corporation of
America (see Note 2 of Notes to Consolidated Financial Statements ("Note"),
and from the inclusion of a full year's results for certain newsstand
distribution contracts acquired from Capital Distribution Company in August
1993, as well as from general growth in both fulfillment subscription and
newsstand distribution services. Profit margins of the Newsstand and
Fulfillment Divisions have historically been comparable, however, primarily
as a result of the FCA acquisition, margins of the Fulfillment Division,
have been adversely impacted during the transition period. It is expected
that the profit margins of the divisions will generally be comparable upon
completion of the transition period. Total operating expenses as a percent
of circulation revenues were 74% in 1995 and 73% in 1994, and general and
administrative expense was 12% and 13% of related revenues in fiscal 1995
and 1994, respectively. Primarily as a result of these factors, operating
income from the magazine operations increased by approximately $1.8 million
in fiscal 1995 over the prior year.
Real estate commissions and selling expenses as a percent of related
real estate revenues were 6.5% and 6.3% in fiscal 1995 and 1994,
respectively. Real estate and corporate general and administrative expenses
decreased from $8.1 million in fiscal 1994 to $7.6 million in fiscal 1995
due to lower consulting and legal expenses.
Revenues less costs and expenses from interest and other operations
increased by approximately $360,000, due to various non-recurring matters.
In addition, as a result of the restructuring of the Company's equity
interests in two rental projects in Florida in fiscal 1994, which resulted
in the deconsolidation of these operations (see Note 5), there were no
rental project revenues or gain on partnership restructuring in the current
year, compared to $3.7 million and $1.2 million, respectively, in the prior
year.
Interest expense increased in fiscal 1995 due to higher interest rates,
since a large portion of the Company's borrowings are related to the prime
rate, as well as higher average borrowings. In addition, costs associated
with rental projects decreased as a result of the deconsolidation of these
operations as discussed above, partially offset by costs incurred in fiscal
1995 related to the funding of, and the establishment of a reserve for,
certain continuing cash requirements of The Classic (see Note 5). Also,
1994 reflects a valuation provision of $1.1 million on Florida real estate
not under current development which did not occur in 1995.
1994 versus 1993
- ----------------
Total revenues for the year ended April 30, 1994 increased 35% over
fiscal 1993, as a result of continued growth as discussed below.
Revenues from home and condominium sales increased approximately 54% in
fiscal 1994 from fiscal 1993, due primarily from an increase in housing unit
deliveries to 758 in 1994 from 570 in 1993, which resulted in part from the
initial deliveries of the Company's Colorado operations during fiscal 1994.
In addition, the average revenue per unit closed increased to $89,100 in
1994 from $77,100 in fiscal 1993, which reflects price increases as well as
a shift to the building of larger, more expensive houses. The gross margin
on housing sales was 16% in fiscal 1993 and 12% in 1994, with the variation
resulting from differences in developed lot costs in those years. Revenues
from land sales were $13.1 million in 1994 and $8.0 million in 1993, with
related gross margins of 59% in fiscal 1994 and 61% in 1993. The amount of
revenues and related gross margin percentages from land sales varies as a
result of the nature and timing of specific transactions, and is not an
indication of amounts that may be expected to occur in future periods. As a
result of these factors, gross profit in housing and land sales increased by
approximately $4.0 million in fiscal 1994 over 1993.
Revenues from magazine circulation operations increased 19% in fiscal
1994 from 1993. The increase is due, in part, to substantially improved
results from newsstand revenues, primarily related to the acquisition of
newsstand distribution contracts of Capital Distributing Company in August
1993. Operating expenses as a percent of magazine circulation revenues were
73% in both fiscal 1994 and 1993, and general and administrative expense
decreased from 17% of related revenues in fiscal 1993 to 13% in fiscal 1994,
as a result of improved efficiencies related to the increased volume.
Primarily as a result of these factors, operating income from the magazine
circulation operations increased by approximately $2.0 million over the
prior year.
Real estate commissions and selling expenses as a percent of real
estate revenues decreased from 8.9% to 6.3% of related revenues resulting
from cost reduction measures and increased efficiencies related to volume
growth. Real estate and corporate general and administrative expenses
increased from $7.2 million to $8.1 million as a result of increased legal
and certain other non-recurring expenses, whereas the prior year also
included a refund of general insurance premiums and certain other
non-recurring expense reductions.
Revenue from interest and other operations declined approximately 14%
in fiscal 1994 from 1993, due primarily to a $440,000 decrease in interest
income from land sales receivables and mortgages securing collateralized
mortgage obligations, an approximate $200,000 reduction in rental revenues
in the Denver area as the rental units were sold by the end of fiscal 1993,
and a non-recurring $200,000 gain from the sale of a commercial building in
fiscal 1993. In addition, other operations costs related to the above other
operations revenues increased approximately 15% to $5.3 million from $4.6
million in fiscal 1993, primarily due to increased costs at the Rio Rancho
Country Club and certain other non-recurring expenses.
Interest expense decreased by approximately $400,000 in fiscal 1994
from 1993, due to the increased amount of interest capitalized on
construction projects which was partially offset by increased interest costs
on higher borrowings. In addition, 1994 reflects a gain of $1.2 million
recorded in connection with the restructuring of the Company's general
partnership interest in the Colonial Pointe project (see Note 5) and a
valuation provision of $1.1 million on Florida real estate not under current
development which did not occur in 1993.
Inflation
- ---------
During the past three years, revenues and costs have been affected to a
modest extent by inflation.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the past several years, the Company has financed its operations
from internally generated funds from home and land sales, magazine
circulation operations and borrowings under its various lines-of-credit and
construction loan agreements.
Cash Flows From Financing Activities-
- -------------------------------------
At April 30, 1995, the Company had line-of-credit arrangements with
several financial institutions collateralized by various assets which
amounted to an aggregate borrowing availability of $44.75 million. One of
these lines (under which $27.5 million was available against which
approximately $25.2 million was outstanding as of April 30, 1995) is
available for Kable News Company (Kable) operations. Borrowings under this
line-of-credit, which expires August 31, 1996, must be collateralized 125%
or more by certain Kable accounts receivable. The line-of-credit agreement
limits the payment of dividends by, and loans from, Kable to the Company.
The other lines-of-credit are used principally to support real estate
construction in New Mexico. At April 30, 1995, they totaled $17.25 million
against which approximately $11.5 million was drawn. These lines-of- credit
are collateralized by certain real estate assets and are subject to various
financial performance and other covenants. The Company also has borrowed in
excess of $11.0 million in land acquisition, development and construction
loans for its New Jersey and Colorado projects. A substantial amount of
these loans originally were due to mature in fiscal 1996, but, renewals have
been received on these credit arrangements, and, as a result, repayments are
due at various dates during fiscal 1997. The Company is also having
discussions with other lenders seeking additional working capital, although
there are no assurances these discussions will be fruitful.
Notes payable outstanding, including lines-of-credit discussed above,
were $56.2 million at April 30, 1995, compared to $50.7 million at April 30,
1994, and $31.9 million at April 30, 1993. The increase at April 30, 1994,
compared to April 30, 1993, was due principally to the acquisition and
initial development work of projects in connection with the Company's
expansion in Colorado. The increase at April 30, 1995, compared to the
prior year, was due in part to the borrowing associated with the Company's
acquisition of Fulfillment Corporation of America (see Note 2), as well as
to increased construction activity in Colorado.
Cash Flows From Operating Activities-
- -------------------------------------
Inventories amounted to $72.5 million at April 30, 1995 compared to
$71.1 million and $48.0 million at April 30, 1994 and 1993, respectively.
The increase at April 30, 1995 and 1994, over April 30, 1993 is due to the
acquisition and initial development of several real estate projects in
connection with the Company's expansion into the Colorado market. This
activity also resulted in the increase in accounts payable, deposits and
accrued expenses by approximately $8 million at April 30, 1995 and 1994
compared to fiscal 1993. Receivables increased by approximately $11.7
million at April 30, 1994 compared to April 30, 1993, and by $2.6 million at
April 30, 1995 compared to the prior year resulting, in part, from an
increase in related revenues.
Cash Flows From Investing Activities-
- -------------------------------------
The Company believes that its available funds will be adequate to
provide for capital expenditures, which are not expected to exceed $1.75
million in fiscal 1996.
The Company believes that cash provided from operations together with
existing cash balances, its lines-of-credit and development and construction
loans will be sufficient to maintain liquidity at a satisfactory level
subject to developments related to the dispute with the Internal Revenue
Service described below.
As discussed in Note 11 of Notes to Consolidated Financial Statements
("Note 11"), during fiscal year 1992 the Internal Revenue Service ("IRS")
completed a review of the Company's tax returns for fiscal years 1984
through 1989. The Company believes it has reached agreement with the IRS on
all but one of the adjustments proposed by the IRS and does not expect any
significant additional tax liability from those issues. The remaining issue
concerns the method by which the Company utilizes a provision of the
Internal Revenue Code (the "Code") to adjust taxable income of Kable for the
amount related to the return of magazines within a specified period
following the close of the tax year. The Company, its outside accountants,
its outside tax advisor and its outside counsel believe the Company's method
is correct under the Code, although the IRS has issued regulations which
require a contrary method. The matter is being reviewed within the
appellate division of the IRS and the Company has been led to believe that
the review will be completed by the end of the current fiscal year or the
beginning of the next fiscal year. If the appellate division does not
accede to the Company's position, the IRS will issue a notice of deficiency
to the Company, and if that happens, the Company plans to commence a lawsuit
against the IRS in the United States Tax Court. The Company has been
informed that the IRS has issued notices of deficiency to two other
taxpayers in which the IRS contests those taxpayers' adjustments to taxable
income which were made in reliance on the same Code provision and use the
same method as that used by the Company. Those taxpayers have commenced
litigation against the IRS in the Tax Court. As set forth in Note 11, the
total amount of taxes and interest which would be payable should the IRS
ultimately prevail in all respects would be in excess of $37 million.
The Company does not know whether the IRS will ultimately prevail and
in any event believes it unlikely that the matter will be finally resolved
before the beginning of its 1998 fiscal year. The Company has not
identified sources of funds should the IRS prevail but, depending on the
circumstances then present, the sources could involve the sale of equity,
the sale of debentures and/or the sale of assets.
Item 8. Financial Statements and Supplementary Data.
- ------- --------------------------------------------
(See next page)
Report of Independent Public Accountants
----------------------------------------
To the Shareholders and
Board of Directors of
AMREP Corporation:
We have audited the accompanying consolidated balance sheets of AMREP
Corporation and subsidiaries as of April 30, 1995 and 1994, and the related
consolidated statements of operations, shareholders' equity and cash flows
for each of the three years in the period ended April 30, 1995. These
consolidated financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AMREP Corporation and
subsidiaries as of April 30, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period
ended April 30, 1995, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in
our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
June 23, 1995
AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED BALANCE SHEETS (Page 1 of 2)
------------------------------------------
APRIL 30, 1995 AND 1994
-----------------------
(Dollar amounts in thousands)
ASSETS 1995 1994
------ ---------- ---------
CASH AND CASH EQUIVALENTS $ 9,266 $ 6,623
RECEIVABLES, net:
Real estate operations 10,644 13,122
Magazine circulation operations 39,391 34,281
REAL ESTATE INVENTORY 72,464 71,102
RENTAL AND OTHER REAL ESTATE PROJECTS 11,622 14,174
INVESTMENT PROPERTY 8,751 8,604
PROPERTY, PLANT AND EQUIPMENT,
at cost, net of accumulated
depreciation and amortization 14,128 12,103
OTHER ASSETS 14,671 13,643
EXCESS OF COST OF SUBSIDIARY
OVER NET ASSETS ACQUIRED 5,205 5,205
---------- ---------
TOTAL ASSETS $ 186,142 $ 178,857
========== =========
The accompanying notes to consolidated financial statements are an integral
part of these consolidated balance sheets.
AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED BALANCE SHEETS (Page 2 of 2)
------------------------------------------
APRIL 30, 1995 AND 1994
-----------------------
(Dollar amounts in thousands except par value)
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994
------------------------------------ ---------- ---------
ACCOUNTS PAYABLE, DEPOSITS AND
ACCRUED EXPENSES $ 32,048 $ 31,915
NOTES PAYABLE:
Amounts due within one year 6,214 12,725
Amounts subsequently due 50,015 38,013
RENTAL AND OTHER REAL ESTATE PROJECT
FINANCING 2,891 6,205
COLLATERALIZED MORTGAGE OBLIGATIONS 2,533 4,406
DEFERRED INCOME TAXES 26,520 24,164
---------- ---------
TOTAL LIABILITIES 120,221 117,428
---------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $.10 par value;
shares authorized--20,000,000;
shares issued and outstanding--
7,393,650 in 1995, and 7,297,625 in 1994 739 730
Capital contributed in excess of par value 44,903 44,435
Retained earnings 20,279 16,264
---------- ---------
TOTAL SHAREHOLDERS' EQUITY 65,921 61,429
---------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 186,142 $ 178,857
========== =========
The accompanying notes to consolidated financial statements are an integral
part of these consolidated balance sheets.
AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Amounts in thousands, except per share amounts)
Year ended April 30,
--------------------------------
1995 1994 1993
---------- ---------- ----------
REVENUES:
Real estate operations-
Home and condominium sales $ 88,084 $ 67,501 $ 43,944
Land sales 11,734 13,126 8,004
Rental projects - 3,741 5,845
Gain on partnership restructuring - 1,245 -
---------- ---------- ----------
99,818 85,613 57,793
Magazine circulation operations 46,186 35,029 29,529
Interest and other operations 6,521 5,446 6,338
---------- ---------- ----------
152,525 126,088 93,660
---------- ---------- ----------
COSTS AND EXPENSES:
Real estate cost of sales 81,939 64,439 39,800
Operating expenses-
Magazine circulation operations 34,257 25,535 21,592
Rental operations 980 5,525 7,682
Real estate commissions and
selling 6,492 5,060 4,623
Other operations 6,034 5,319 4,637
General and administrative-
Real estate operations and
corporate 7,621 8,146 7,164
Magazine circulation operations 5,388 4,503 5,068
Interest, net 3,086 2,635 3,028
Real estate valuation provision - 1,100 -
---------- ---------- ----------
145,797 122,262 93,594
---------- ---------- ----------
Income before income taxes 6,728 3,826 66
PROVISION FOR INCOME TAXES 2,713 1,454 25
---------- ---------- ----------
NET INCOME $ 4,015 $ 2,372 $ 41
========== ========== ==========
NET INCOME PER SHARE $ 0.55 $ 0.33 $ 0.01
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 7,345 7,091 6,618
========== ========== ==========
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
-----------------------------------------------
(Amounts in thousands)
Capital
Contributed
In
Excess
Common Stock of
------------ Par Retained
Shares Amount Value Earnings Total
------ ------ ----- -------- -----
BALANCE, April 30, 1992 6,618 $ 662 $ 39,542 $13,851 $54,055
Net income - - - 41 41
Stock issuance 1 - 6 - 6
-------- -------- -------- -------- -------
BALANCE, April 30, 1993 6,619 662 39,548 13,892 54,102
Net income - - - 2,372 2,372
Stock issuance in connection
with purchase of magazine
circulation operations
assets 576 58 4,043 - 4,101
Stock issuance in connection
with restructuring of
general partnership interest
in The Classic 66 7 589 - 596
Exercise of stock options and
other stock issuance 37 3 255 - 258
-------- -------- -------- -------- -------
BALANCE, April 30, 1994 7,298 730 44,435 16,264 61,429
Net income - - - 4,015 4,015
Exercise of stock options 96 9 468 - 477
-------- -------- -------- -------- -------
BALANCE, April 30, 1995 7,394 $ 739 $ 44,903 $20,279 $65,921
======== ======== ======== ======== =======
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (Page 1 of 2)
---------------------------------------------------
(Amounts in thousands)
Year ended April 30,
-----------------------------------
1995 1994 1993
---------- ---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,015 $ 2,372 $ 41
Adjustments to reconcile net income to net
cash provided (used) by operating activities-
Depreciation and amortization and other 6,687 5,478 4,507
Real estate valuation provision - 1,100 -
Changes in assets and liabilities-
Receivables - net 131 (11,709) 2,611
Real estate inventory (1,362) (20,107) 2,102
Rental and other real estate projects 2,552 2,710 (1,233)
Investment property (147) 2,592 320
Other assets (5,800) (5,137) (4,408)
Accounts payable, deposits and accrued expenses (2,199) 8,785 (181)
Deferred income taxes 2,356 1,773 974
Gain on restructuring of general partnership interest in
Colonial Pointe (1994) and sale of property, plant
and equipment (1993) - (1,245) (201)
---------- ---------- -----------
Net cash provided (used) by operating activities 6,233 (13,388) 4,532
---------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,116) (1,852) (1,591)
Proceeds from sale of property, plant and equipment - - 1,671
Payment for Fulfillment Corporation of America - net (1,744) - -
Other - net 600 400 319
---------- ---------- -----------
Net cash provided (used) by investing activities (4,260) (1,452) 399
---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing 35,996 33,551 15,966
Principal debt payments (35,803) (19,798) (18,744)
Proceeds from the sale of stock and
exercise of stock options 477 854 -
---------- ---------- -----------
Net cash provided (used) by financing activities 670 14,607 (2,778)
---------- ---------- -----------
Increase (decrease) in cash and cash equivalents 2,643 (233) 2,153
CASH AND CASH EQUIVALENTS,
beginning of year 6,623 6,856 4,703
---------- ---------- -----------
CASH AND CASH EQUIVALENTS,
end of year $ 9,266 $ 6,623 $ 6,856
========== ========== ===========
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (Page 2 of 2)
---------------------------------------------------
(Amounts in thousands)
Year ended April 30,
-----------------------------------
1995 1994 1993
---------- ---------- -----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid - net of amounts capitalized $ 3,356 $ 3,736 $ 7,207
========== ========== ===========
Income taxes paid (refunded) $ 233 $ 29 $ (1,353)
========== ========== ===========
SUPPLEMENTAL INFORMATION REGARDING NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Assets and liabilities assumed upon
consolidation of PERMA $ - $ - $ 14,290
========== ========== ===========
Investment property received in
satisfaction of receivables $ - $ - $ 4,430
========== ========== ===========
Stock issuance in connection with purchase of
magazine circulation operations assets $ - $ 4,101 $ -
========== ========== ===========
Restructuring of general partnership interests
in The Classic and Colonial Pointe resulting
in decreases in the following:
Rental and other real estate projects $ - $ 31,880 $ -
Accounts payable, deposits and accrued expenses - 721 -
Project financing - 32,004 -
========== ========== ===========
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL REPORTING
---------------------------------------------------------
POLICIES:
---------
Principles of consolidation-
---------------------------
The consolidated financial statements include the accounts of AMREP
Corporation (Company), an Oklahoma corporation, and its subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation. The consolidated balance sheets are presented in an
unclassified format, since the Company operates in the real estate industry
and its operating cycle is greater than one year.
Home and condominium sales-
--------------------------
Sales of homes and condominiums and related costs and expenses are recorded
when title and other attributes of ownership have been conveyed to the buyer
by means of a closing. Payments received from buyers prior to closing are
recorded as deposits.
Land sales-
----------
Land sales are recorded when the parties are bound by the terms of the
contract, all consideration (including adequate cash) has been exchanged and
all conditions precedent to closing have been performed. Profit is recorded
either in its entirety or on the installment method depending upon, among
other things, the ability to estimate the collectibility of the unpaid sales
price. In the event the buyer defaults on his obligation, the property is
taken back into inventory or investment property at its receivable balance,
net of any deferred profit, but not in excess of fair market value less
estimated costs to sell. Until a sale has been recorded, revenues are
deferred and total customer payments are reflected as deposits.
Magazine circulation operations-
-------------------------------
Revenues from distribution of periodicals and subscription fulfillment
activities represent commissions earned from the distribution of
publications for client publishers and fees earned from subscription
fulfillment activities. Magazine distribution revenues are recorded at the
time the publications go on sale and subscription revenues are recorded when
earned. The publications generally are sold on a fully returnable basis,
which is in accordance with prevailing trade practice. All publications are
billed after shipment but, since they are fully returnable if not ultimately
sold to consumers, the Company provides for estimated returns by charges to
income which are based on sales experience.
Environmental management and consulting-
---------------------------------------
Revenue from environmental consulting, planning and project management is
generally recognized on a percentage of completion basis throughout the
completion of the related contract. Revenues associated with these
operations are included in "Interest and other operations" and the
associated expenses are included in "Operating expenses-Other operations" in
the accompanying consolidated statements of operations.
Real estate inventory-
---------------------
Homes and condominiums completed or under construction are stated at the
lower of net realizable value or cost, including interest costs capitalized
during construction.
Land and improvements are stated at the lower of net realizable value or
cost (except in certain instances where property is repossessed as discussed
under "Land sales") which includes the development cost, certain amenities,
capitalized interest and capitalized real estate taxes. These costs are
allocated to individual homesites based upon the relative sales value of
salable homesites within each section of a community.
Valuation reserves on real estate inventory are determined on a project by
project basis.
Investment property-
-------------------
Investment property represents vacant, undeveloped land not held for sale in
the normal course of business. Investment property is stated at the lower
of net realizable value or cost, except in certain instances where property
is repossessed as discussed under "Land sales".
Property, plant and equipment-
-----------------------------
Items capitalized as part of property, plant and equipment are recorded at
cost. Expenditures for maintenance and repair and minor renewals are charged
to expense as incurred, while those expenditures which improve or extend the
useful life of existing assets are capitalized.
Upon sale or other disposition of assets, their cost and the related
accumulated depreciation or amortization are removed from the accounts and
the resulting gain or loss, if any, is reflected in operations.
Depreciation and amortization of property, plant and equipment are provided
principally by the straight-line method at various rates calculated to
amortize the book values of the respective assets over their estimated
useful lives which range from 5 to 50 years for utility plant and equipment
and 3 to 40 years for all other property, plant and equipment.
Excess of cost of subsidiary over net assets acquired-
-----------------------------------------------------
The excess of cost of subsidiary over assets acquired reflects a purchase
made prior to October 31, 1970, the effective date of APB Opinion No. 17.
Such excess of cost is not being amortized to operations as management is of
the opinion that there has been no diminution of value.
Federal income taxes-
--------------------
The Company and its subsidiaries file a consolidated Federal income tax
return. Deferred taxes are provided for the income tax effect of temporary
differences in reporting transactions for financial and tax purposes.
Net income per share-
--------------------
Net income per common share outstanding is based on the weighted average
number of common shares outstanding during each year. Common share
equivalents (stock options) were excluded from the income per share
computations because of their insignificant effect for all years presented.
Consolidated statements of cash flows-
-------------------------------------
Cash equivalents consist of short term, highly liquid investments which have
an original maturity of ninety days or less.
Financial statement presentation-
--------------------------------
Certain amounts in the 1994 and 1993 consolidated financial statements have
been reclassified to conform with the 1995 presentation.
(2) ACQUISITION:
------------
In January 1995, Kable Fulfillment Services of Ohio, Inc. (a wholly-owned
affiliate of the Company) acquired certain assets and liabilities of
Fulfillment Corporation of America (FCA), an Ohio-based subscription service
operation. The purchase price of FCA was $2,070,000, and the Company
accounted for the acquisition using the purchase method of accounting. The
allocation of the purchase price is subject to finalization upon the
completion of the Company's evaluation of certain obligations of FCA prior
to the merger. Accordingly, further adjustments which are not expected to
be material may result.
The following unaudited condensed consolidated pro forma income statements
reflect the combined results of operations for fiscal 1995 and 1994, as if
the acquisition had been consummated on May 1, 1993. In addition, they
include purchase accounting adjustments reducing depreciation and
amortization, and increasing interest expense associated with additional
borrowings to finance the acquisition.
1995 1994
---------- ----------
(Thousands, except per
share amounts)
Total revenues $ 160,754 $ 139,451
Total costs and expenses 153,302 136,078
---------- ----------
Income before income taxes 7,452 3,373
Provision for income taxes 3,003 1,282
---------- ----------
Net income $ 4,449 $ 2,091
========== ==========
Net income per share $ 0.61 $ 0.29
========== ==========
The pro forma results are presented for informational purposes only and are
not necessarily indicative of what results of operations actually would have
been had such acquisition been consummated at the beginning of such period
or of future operations or results.
(3) RECEIVABLES:
------------
Receivables consist of:
April 30,
------------------------
1995 1994
---------- ----------
Real estate operations-
Mortgage and other receivables $ 8,596 $ 9,358
Allowance for doubtful accounts (608) (693)
---------- ----------
7,988 8,665
Mortgages securing collateralized
mortgage obligations (see Note 8) 2,656 4,457
---------- ----------
$ 10,644 $ 13,122
========== ==========
Magazine circulation operations-
Accounts receivable (maturing
within one year) $ 96,362 $ 88,636
Allowances for-
Estimated returns (55,565) (53,035)
Doubtful accounts (1,406) (1,320)
---------- ----------
$ 39,391 $ 34,281
========== ==========
Mortgage and other receivables bear interest at rates ranging from 5.75% to
12% and result primarily from land sales. Magazine circulation operations
receivables collateralize a general purpose line- of-credit utilized for the
magazine circulation operations (See Note 8).
Receivables from real estate operations consist of amounts due from various
parties primarily in the state of New Mexico active in real estate
development and are generally collateralized by the related land.
Receivables from magazine circulation operations consist of amounts due from
a large number of payors involved in diverse activities and subject to
differing economic conditions, which do not represent any concentrated
credit risk to the Company.
Maturities of principal on real estate receivables, exclusive of mortgages
securing collateralized mortgage obligations, at April 30, 1995, are as
follows:
Year Ending April 30,
- ---------------------------
(Thousands)
1996 $ 4,917
1997 1,362
1998 938
1999 322
2000 165
Thereafter 892
-----------
$ 8,596
===========
(4) REAL ESTATE INVENTORY:
----------------------
Real estate inventory consists of:
April 30,
------------------------
1995 1994
---------- ----------
(Thousands)
Land and improvements held for sale or
development, net of valuation reserves
of $2,580 at April 30, 1995 and 1994 $ 46,744 $ 45,895
Homes-
Land and improvements 8,798 8,410
Construction costs 15,958 14,991
Condominiums-
Land improvements 39 448
Construction costs 925 1,358
---------- ----------
$ 72,464 $ 71,102
========== ==========
Accumulated capitalized interest costs included in real estate inventory at
April 30, 1995 and 1994 were $2,894,000 and $1,787,000, respectively.
Interest costs capitalized during fiscal 1995, 1994 and 1993 were
$1,817,000, $940,000, and $207,000, respectively. Accumulated capitalized
real estate taxes included in the inventory of land and improvements at
April 30, 1995 and 1994 were $5,001,000 and $5,064,000, respectively. Real
estate taxes capitalized during fiscal 1995, 1994, and 1993 were $133,000,
$63,000 and $485,000, respectively. Previously capitalized interest costs
and real estate taxes charged to real estate cost of sales were $906,000,
$509,000 and $417,000 in fiscal 1995, 1994 and 1993, respectively.
During fiscal 1994, the Company charged off certain real estate development
costs totaling $1,700,000 on projects not under current development. This
charge-off resulted from a 1994 provision of $1,100,000 and utilization of
$600,000 of existing valuation reserves recorded in prior years.
(5) RENTAL AND OTHER REAL ESTATE PROJECTS:
--------------------------------------
Investments in rental and other real estate projects consist of the following:
April 30,
------------------------
1995 1994
---------- ----------
(Thousands)
Rental project -
The Classic limited partnership interest $ 2,353 $ 1,862
PERMA (the Freehold Clark Limited
Partnership) total assets 9,269 12,312
---------- ----------
$ 11,622 $ 14,174
========== ==========
The Classic-
-----------
The Classic in West Palm Beach, Florida, a 300 unit congregate living
facility was completed in fiscal 1991. In fiscal 1994, the company
converted its general partner interest in The Classic at West Palm Beach
Limited Partnership (The Classic) to a 50% limited partner interest for
consideration of $400,000 paid by the new general partner. In addition, the
project financing of The Classic was restructured whereby the Company paid
$387,000 cash and issued 66,193 shares of the Company's common stock valued
at $596,000 to the holder of The Classic obligation primarily for accrued
interest and was released from its obligations under the financing
arrangement. Accordingly, the Company discontinued consolidating The
Classic into the accompanying consolidated financial statements and carries
its net investment (which is expected to be realized through excess cash
flows, as defined) on the cost recovery basis. In order to protect its net
investment, the Company, thus far, is funding the cash requirements of The
Classic, and in this regard, the Company established a $275,000 reserve in
fiscal 1994 against which cash funded was applied. During fiscal 1995, the
Company funded an additional $680,000 and established an additional reserve
of $300,000 for estimated future cash requirements.
Colonial Pointe-
---------------
In fiscal 1994, the Company entered into an agreement to sell its general
partner interest in the Colonial Pointe Apartments Limited Partnership
(Colonial Pointe) for a purchase price of $100,000 and became a 50% limited
partner. In addition, the Company was relieved from its obligations under
the Colonial Pointe project financing arrangements. Accordingly, the Company
discontinued consolidating Colonial Pointe into the accompanying
consolidated financial statements, recognized a gain of $1,245,000 and no
longer carries an investment in Colonial Pointe.
PERMA (the Freehold Clark Limited Partnership)-
----------------------------------------------
During fiscal 1990, the Company became a 33 1/3% limited partner of the
Freehold Clark Associates Limited Partnership (Partnership). The
Partnership was formed to develop and market a 390 unit condominium housing
project in Freehold, New Jersey. On August 24, 1992, PERMA Corporation
(PERMA), a wholly- owned subsidiary of the Company, became the general
partner of the Partnership with a 50% ownership interest. In connection
therewith, PERMA obtained a 75% ownership interest in a related construction
company. As a result, the financial statements of these entities
(collectively, the PERMA Project) are included in the Company's consolidated
financial statements.
The investment in the PERMA Project and related project financing are as
follows:
April 30,
------------------------
1995 1994
---------- ----------
(Thousands)
Land and improvements $ 3,907 $ 6,618
Homes inventory 4,213 3,769
---------- ----------
8,120 10,387
Other-
Deposits in escrow and collateral accounts 342 1,012
Other assets 807 913
---------- ----------
Total investment $ 9,269 $ 12,312
========== ==========
Project financing (see Note 8) $ 2,891 $ 6,205
========== ==========
As of April 30, 1995, 236 units have been completed and closed. An
additional 59 units are currently under construction, of which 39 units are
sold but not yet closed.
Accumulated capitalized interest costs included in this project at April 30,
1995 and 1994 were $1,732,000 and $2,189,000, respectively. Interest costs
capitalized during fiscal 1995, 1994 and 1993 were $863,000, $716,000 and
$418,000, respectively. Accumulated capitalized real estate taxes included
in this project at April 30, 1995 and 1994 were $0 and $65,000,
respectively. Real estate taxes capitalized during fiscal 1995, 1994 and
1993 have been fully amortized and were $124,000, $95,000 and $21,000,
respectively. Previously capitalized interest costs and real estate taxes
charged to real estate cost of sales were $1,509,000, $1,330,000 and
$118,000 in fiscal 1995, 1994 and 1993, respectively.
Saratoga Square Homes-
---------------------
During fiscal 1995, a subsidiary of the Company entered into a joint venture
arrangement for the development and construction of a 42 unit townhome
project in New York. As of April 30, 1995, the Company's investment in this
project, which entitles it to a 50% general partnership interest and is
accounted for on the equity method, as well as the total assets and
liabilities of the joint venture, were not significant. In connection with
this joint venture, the Company has guaranteed a construction loan, which
expires December 1996. The maximum amount the joint venture may borrow
under this arrangement is approximately $4.7 million, of which approximately
$300,000 was outstanding as of April 30, 1995 and which is not included in
the accompanying consolidated balance sheets.
(6) PROPERTY, PLANT AND EQUIPMENT:
------------------------------
Property, plant and equipment consists of:
April 30,
------------------------
1995 1994
---------- ----------
(Thousands)
Land, buildings and improvements $ 10,973 $ 10,167
Furniture and fixtures 7,390 6,830
Utility plant and equipment 4,886 4,017
Other 1,585 1,863
---------- ----------
24,834 22,877
Accumulated depreciation and
amortization (10,706) (10,774)
---------- ----------
$ 14,128 $ 12,103
========== ==========
Depreciation and amortization (including amounts for rental and other real
estate projects - see Note 5) charged to operations amounted to $1,356,000,
$1,671,000 and $1,859,000 in fiscal 1995, 1994 and 1993, respectively.
(7) OTHER ASSETS:
-------------
Other assets are comprised of:
April 30,
------------------------
1995 1994
---------- ----------
(Thousands)
Prepaid expenses and other deferred charges $ 5,522 $ 3,837
Purchased magazine distribution contracts,
net of accumulated amortization of $749 and
$321 for fiscal years 1995 and 1994,
respectively 3,530 3,958
Security deposits 2,655 2,166
Escrow monies and collateral deposits 1,325 2,010
Other 1,639 1,672
---------- ----------
$ 14,671 $ 13,643
========== ==========
During fiscal 1994, the Company purchased certain magazine distribution
contracts from an unrelated party for 575,595 shares of the Company's common
stock valued at $4,101,000. The total costs incurred in the purchase of the
magazine distribution contracts including $178,100 of legal fees have been
capitalized and are being amortized on the straight-line basis over the
related contracts terms of ten years.
(8) DEBT FINANCING:
---------------
Debt financing consists of:
April 30,
------------------------
1995 1994
---------- ----------
(Thousands)
Notes payable -
Line-of-credit borrowings -
Real estate operations and other $ 11,462 $ 8,557
Magazine circulation operations 25,200 22,530
Denver real estate operations 8,804 7,745
Mortgages and other notes payable 6,057 5,895
Fixed rate long-term note 3,386 4,515
Utility note payable 1,320 1,496
---------- ----------
56,229 50,738
PERMA Project financing (see Note 5) 2,891 6,205
Collateralized mortgage obligations (see Note 3) 2,533 4,406
---------- ----------
$ 61,653 $ 61,349
========== ==========
The aggregate amount of debt maturities (after giving effect to extensions
and renewals finalized subsequent to April 30, 1995) is as follows:
PERMA
and
Collateralized
Mortgage
Year Ending April 30, Notes Payable Obligations Total
----------------------- --------------- -------------- ------------
(Thousands)
1996 $ 6,214 $ 2,891 $ 9,105
1997 41,493 - 41,493
1998 4,446 - 4,446
1999 1,836 - 1,836
2000 1,595 - 1,595
Thereafter 645 2,533 3,178
--------------- -------------- ------------
$ 56,229 $ 5,424 $ 61,653
=============== ============== ============
Line-of-credit borrowings-
-------------------------
The Company has several line-of-credit arrangements with various financial
institutions to support general corporate and real estate operations. These
lines have a maximum amount available for borrowings of approximately $17.25
million, limited to available collateral, against which approximately $11.45
million were drawn as of April 30, 1995. These lines-of-credit bear
interest ranging from prime (9% at April 30, 1995) plus 1% to 1.75% (with a
weighted average effective rate of interest of 10.4% at April 30, 1995) and
are collateralized by certain real estate assets and are subject to certain
financial performance and other covenants. Borrowings pursuant to these
line-of-credit agreements are due at various dates during fiscal 1997. The
president of one of the Company's subsidiaries, who is also a member of the
Board of Directors of the Company, serves as a member of the board of
directors of the financial institution from which $10.75 million of these
lines-of-credit were obtained.
At April 30, 1995, the Company had drawn $25.2 million against a $27.5
million line-of-credit arrangement which is generally restricted to magazine
circulation operations. This line-of-credit agreement bears interest at
prime plus .5% and is collateralized by accounts receivable arising from
magazine circulation operations and contains various restrictive covenants
which, among other things, limits the payments of dividends and loans from
the magazine circulation subsidiary to the Company. Borrowings pursuant to
this line-of-credit agreement are due August 31, 1996.
Denver real estate operations-
-----------------------------
The Company has entered into several construction loan agreements with
financial institutions to finance certain of its real estate construction
operations in Denver, Colorado with maximum amounts available for borrowing
of approximately $11,700,000 limited to available collateral. As of April
30, 1995 and 1994, the outstanding balances on these construction loan
agreements totaled $2,161,000 and $1,102,000, respectively. These
borrowings bear interest at prime plus 1.5% to 2.5% per annum (with a
weighted average effective rate of interest of 11.0% at April 30, 1995) and
are payable as related home sales close, with the entire remaining balance
due at various dates during fiscal 1996 and 1997. These borrowings are
secured by the related real estate inventory.
During fiscal 1994, the Company entered into a note payable to a partnership
in connection with the acquisition of land in Denver, Colorado. As of April
30, 1995 and 1994, the outstanding balance on this note was $6,643,000.
This note bears interest payable quarterly at prime, not to exceed 8% or
less than 6% per annum, and is payable in annual principal payments
beginning February 1, 1996, (ranging from $1,200,000 to $1,400,000) through
maturity on February 1, 2000. This note is secured by the related land.
The Company anticipates renewing, extending or replacing certain of these
construction loan agreements as they become due in fiscal 1996. The Company
is also having discussions with other lenders seeking additional working
capital, although there are no assurances these discussions will be
fruitful.
Mortgages and other notes payable-
---------------------------------
Mortgages and other notes payable had interest rates ranging from 6% to
11.5% at April 30, 1995, and are primarily collateralized by property, plant
and equipment and certain land inventory.
Fixed rate long-term note-
-------------------------
During fiscal 1993, the Company exercised its option to exchange a
$5,644,000 variable rate note maturing August 1, 1992 for a five-year,
7.464% fixed rate note with quarterly interest payments beginning November
1, 1992 and annual principal payments beginning August 1, 1993. As of April
30, 1995, the outstanding balance on this note was $3,386,000. This
borrowing imposes restrictions on, among other things, consolidated debt,
the sale of assets and properties other than in the ordinary course of
business, mergers and liens, and the payment of cash dividends in amounts
exceeding one-half of the Company's net worth.
Utility note payable-
--------------------
The Company has a note in the amount of $1,320,000 at April 30, 1995,
maturing September 1, 1996 with monthly installments of principal and
interest at 1.5% above the prime rate (9.0% at April 30, 1995). This note
is collateralized by certain utility plant and equipment and other utility
assets.
PERMA project financing-
-----------------------
The Company has outstanding borrowings related to the PERMA project totaling
$2,891,000 at April 30, 1995 and $6,205,000 at April 30, 1994. Payments are
due as closings occur, including principal and interest at prime plus 1%,
until maturity on December 31, 1995.
Collateralized mortgage obligations-
-----------------------------------
In fiscal years 1986 through 1988, AMREP Financial Corporation, a subsidiary
of the Company, participated in the issuance of collateralized mortgage
obligations (CMO's), with original principal balances aggregating
$13,750,000, through an unrelated financial intermediary. Each series, (12
in total) was issued in three to five classes bearing interest at rates
ranging from 7.6% to 12.5% per annum, with stated maturities, assuming no
prepayments, from January, 2015 to October, 2017. CMO payment schedules
vary with each series, and payments are due quarterly, semi-annually and
annually. Actual maturities vary to the extent of principal prepayments on
the mortgage loans collateralizing the CMO's. These CMO's are
collateralized only by the principal and the accrued interest receivable
(see Note 3) of the related mortgage loans.
(9) BENEFIT PLANS:
--------------
Stock option plans-
------------------
A summary of activity in the Company's 1992 Stock Option Plan, the
Non-Employee Directors Option Plan and the 1982 Incentive Stock Option Plan
is presented below:
Year ended April 30,
-----------------------------------
1995 1994 1993
---------- ---------- -----------
Common stock options outstanding at
beginning of year 249,325 248,000 285,250
Granted at $5.13 to $8.88 per share 96,500 43,000 5,000
Options exercised at $4.06 to $7.44
per share (96,025) (16,547) (1,500)
Expired or cancelled (24,200) (25,128) (40,750)
---------- ---------- -----------
Common stock options outstanding at
end of year 225,600 249,325 248,000
========== ========== ===========
Available for future grant at year
end 186,750 282,000 325,000
========== ========== ===========
During fiscal 1993, the shareholders approved the 1992 Stock Option Plan as
well as the Non-Employee Directors Option Plan for which 315,000 and 15,000
shares, respectively, were reserved. At April 30, 1995, options to purchase
132,500 shares under the Stock Option Plan and 7,000 shares under the
Non-Employee Directors Option Plan were outstanding at prices ranging from
$5.13 to $8.88 per share and 181,250 and 5,500 shares were available for
future grant, respectively.
The 1982 Incentive Stock Option Plan expired on June 30, 1992. However,
options to purchase 86,100 shares remain outstanding at April 30, 1995 at a
price of $4.75 per share.
Under the Company's 1992 Stock Option Plan shares are reserved for issuance
to officers and other key employees. Options may be granted in such amounts,
at such times, and with such exercise prices as the stock option committee
may determine.
Outstanding options heretofore granted are exercisable over a two to four
year period beginning one year from date of grant. As of April 30, 1995,
111,600 options were exercisable under the Company's stock option plans.
The Non-Employee Directors Option Plan provides for an automatic issuance of
options to purchase 500 shares of common stock to each non-employee director
annually at the fair market value at the date of grant. The options are
exercisable one year after the date of grant and expire five years after the
date of grant.
Savings plan-
------------
The Company has a savings plan to which the Company makes contributions.
The plan provides for Company contributions of 16 2/3% of eligible
employees' defined contributions up to a maximum of 1% of such employees'
compensation. The Company's contributions to the plan amounted to $125,000,
$113,000 and $99,000, in fiscal 1995, 1994 and 1993, respectively.
Retirement plans-
----------------
The Company has two retirement plans, including a plan assumed in connection
with the acquisition of FCA (see Note 2), which are non-contributory,
defined benefit plans which together cover substantially all full-time
employees. The plans provide retirement benefits based on length of service
and a percentage of qualifying compensation during employment. In fiscal
1995, 1994 and 1993, the Company contributed $952,000, $693,000 and
$806,000, respectively, to the plans. Assets are invested primarily in
United States Treasury obligations, equity and debt securities and money
market funds. Net periodic pension cost for fiscal 1995, 1994 and 1993 was
comprised of the following components:
Year ended April 30,
-----------------------------------
1995 1994 1993
---------- ---------- -----------
(Thousands)
Service cost - benefits
earned during the period $ 854 $ 762 $ 709
Interest cost on projected
benefit obligation 1,283 1,122 1,012
Actual return on assets (962) (673) (1,022)
Net amortization and deferral (449) (599) (132)
---------- ---------- -----------
Net periodic pension cost $ 726 $ 612 $ 567
========== ========== ===========
Assumptions used in the accounting were:
Year ended April 30,
-----------------------------------
1995 1994 1993
---------- ---------- -----------
Discount rates 8.00% 8.00% 8.25%
Rates of increase in compensation
levels 4.50-5.00% 5.00% 5.25%
Expected long-term rate of return
on assets 8.00-9.00% 9.00% 9.00%
The following table sets forth the plans' funded status and amounts
recognized in the Company's consolidated balance sheets:
April 30,
------------------------
1995 1994
---------- ----------
(Thousands)
Actuarial present value of benefit obligations:
Vested benefit obligation $ 15,741 $ 11,377
========== ==========
Accumulated benefit obligation $ 16,712 $ 12,153
========== ==========
Projected benefit obligation $ 20,188 $ 15,468
Assets at fair value 18,693 13,736
---------- ----------
Excess of projected benefit obligation
over assets (1,495) (1,732)
Unrecognized net loss 2,658 2,472
Unrecognized prior service cost (benefit) (51) 99
Unrecognized net transition asset (278) (417)
---------- ----------
Prepaid pension cost $ 834 $ 422
========== ==========
(10) INCOME TAXES:
-------------
Effective May 1, 1993, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes". Adoption of SFAS
No. 109 had no impact on the tax liability recorded by the Company as of the
date of adoption. The Company accounted for income taxes under SFAS No. 96
during fiscal year 1993.
The provision for income taxes consists of the following:
Year ended April 30,
-----------------------------------
1995 1994 1993
---------- ---------- -----------
(Thousands)
Current:
Federal $ 232 $ (405) $ (960)
State and local 125 86 11
---------- ---------- -----------
357 (319) (949)
---------- ---------- -----------
Deferred:
Federal 2,105 3,980 982
State and local 363 384 (8)
Benefit for operating loss carryforwards - (5,826) -
Net change in valuation allowance (112) 3,235 -
---------- ---------- -----------
2,356 1,773 974
---------- ---------- -----------
Total provision for income taxes $ 2,713 $ 1,454 $ 25
========== ========== ===========
Components of net deferred income tax liability are as follows:
April 30,
------------------------
1995 1994
---------- ----------
(Thousands)
Deferred income tax assets-
Tax loss carryforwards (Federal and state) $ 5,953 $ 5,826
Real estate inventory valuation 1,454 1,607
Other 1,090 708
---------- ----------
Total deferred income tax assets 8,497 8,141
---------- ----------
Deferred income tax liabilities-
Installment sales (1,998) (2,843)
Reserve for periodicals and paperbacks (20,032) (16,853)
Gain on partnership restructuring (473) (473)
Depreciable assets (956) (1,138)
Expenses capitalized for financial reporting
purposes, expensed for tax (2,127) (1,967)
Differences related to timing of partnership
income (1,545) (1,033)
Other (4,763) (4,763)
---------- ----------
Total deferred income tax liability (31,894) (29,070)
---------- ----------
Valuation allowance for realization of
of state tax loss carryforwards (3,123) (3,235)
---------- ----------
Net deferred income tax liability $ (26,520) $ (24,164)
========== ==========
The following table reconciles taxes computed at the U.S. Federal statutory
income tax rate to the Company's actual tax provision:
Year ended April 30,
-----------------------------------
1995 1994 1993
---------- ---------- -----------
(Thousands)
Computed tax provision at
statutory rate $ 2,288 $ 1,301 $ 23
Increase (reduction) in tax resulting from:
State income taxes, net of Federal
income tax effect 442 153 2
Reduction in valuation alowance (112) - -
Other 95 - -
---------- ---------- -----------
Actual tax provision $ 2,713 $ 1,454 $ 25
========== ========== ===========
At April 30, 1995, the Company had Federal net operating loss carryforwards
totaling $6,396,000, all of which expire in fiscal 2009.
(11) COMMITMENTS AND CONTINGENCIES:
------------------------------
Noncancellable leases-
---------------------
The Company is obligated under long-term noncancellable leases for equipment
and various real estate properties. Certain real estate leases provide that
the Company will pay for taxes, maintenance and insurance costs and include
renewal options. Rental expense for fiscal 1995, 1994 and 1993 was
approximately $3,737,000, $3,144,000 and $3,216,000, respectively. The
approximate minimum rental commitments for years subsequent to April 30,
1995, are as follows:
Year Ending April 30,
---------------------
(Thousands)
1996 $ 2,276
1997 1,943
1998 1,355
1999 1,039
2000 779
Thereafter 2,936
--------
Total future minimum
rental payments $ 10,328
========
Revenue agent review-
---------------------
During fiscal year 1992, the Internal Revenue Service (IRS) completed a
review of the Company's tax returns for fiscal years 1984 through 1989, and
issued a report (RAR) thereon in which several adjustments were proposed.
Management vigorously objected to all the significant proposed adjustments
and believes it has reached agreement with the IRS on all but one of these
adjustments without incurring any significant additional tax liability. The
remaining issue concerns the method by which the Company utilizes a
provision of the Internal Revenue Code (Code) to adjust taxable income for
an amount related to the return of magazines within a specified period
following the close of the tax year. Were the remaining such issue
ultimately to be decided in favor of the IRS in every respect, a current
obligation for taxes, which has already been recorded in the Company's
financial statements as a deferred tax liability at an estimated amount for
all tax years from 1984 through 1995 of approximately $20 million, would
result. In addition, a liability for related interest for which no reserve
has been recorded of approximately $17 million would result.
The RAR is currently under review within the appellate division of the IRS.
Management continues to vigorously object to this entire proposed
adjustment, and plans to continue using the methods of reporting
transactions for income tax purposes which it has used in prior years.
Management, its outside accountants, it outside tax advisor and outside
counsel believe the Company's methods are, and have been, correct under the
Code. However, the IRS has issued regulations which are contrary to the
method by which the Company computed its deductions under the Code. It is
not expected that the Company's dispute with the IRS will be resolved during
the coming fiscal year due to the time requirements normally associated with
the appellate process and the fact that, if it is ultimately necessary, the
Company intends to undertake litigation to oppose any IRS determination.
Accordingly, no amount is expected to be payable to the IRS as a result of
the RAR within the coming year.
The Company and its outside counsel are of the view that it is more likely
than not that the Company will ultimately prevail in its position and that
the IRS regulations in this area will be declared invalid. Counsel has
advised, however, that the issues involved are not free from doubt and that
there can be no certainty that the administrative appeals process (or, if
necessary, the courts) will ultimately rule in favor of the Company.
The IRS is in the process of conducting an audit of fiscal years 1990
through 1992, and has notified the Company that an audit of fiscal years
1993 through 1995 will also be conducted. Other than the disputed issue
discussed and quantified above, no material adjustments are expected to
arise as a result of this audit.
Rio Rancho lot exchanges-
------------------------
In connection with homesite sales at Rio Rancho, New Mexico, if water,
electric and telephone utilities have not reached the lot site when a
purchaser is ready to build a home, the Company is obligated to exchange a
lot in an area then serviced by such utilities for a lot of the purchaser,
without cost to the purchaser. The Company does not incur significant costs
related to the exchange of lots.
(12) LITIGATION:
-----------
The Company and/or its subsidiaries are involved in various claims and legal
actions incident to their operations, which in the opinion of management,
based upon advice of counsel, will not materially affect the consolidated
financial position or results of operations of the Company and its
subsidiaries.
(13) FAIR VALUE OF FINANCIAL INSTRUMENTS:
------------------------------------
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments" (SFAS 107), requires the Company to disclose
the estimated fair value of its financial instruments. The following
methods and assumptions were used to estimate the fair value of each class
of financial instruments for which the fair value differs from the carrying
value.
Mortgage receivables-
--------------------
The fair value of the Company's long-term fixed-rate mortgage receivables is
estimated to be $5.4 million versus a carrying amount of $5.5 million as of
April 30, 1995 and $6.4 million versus a carrying amount of $6.2 million as
of April 30, 1994, based on the discounted value of future cash flows using
the current rates at which similar loans would be made.
Notes payable-
-------------
The fair value of the Company's long-term fixed-rate notes payable is
estimated to be $13.1 million versus a carrying amount of $13.3 million as
of April 30, 1995 and $8.9 million versus a carrying amount of $9.0 million
as of April 30, 1994, based on the discounted value of future cash flows
using the current rates at which the Company believes it could obtain
similar financing.
CMO's (liabilities) and related mortgages securing CMO's (assets)-
-----------------------------------------------------------------
The fair value of the Company's mortgages securing CMO's (assets) of $2.7
million at April 30, 1995 and $4.6 million at April 30, 1994 (versus a
carrying amount of $2.7 million at April 30, 1995 and $4.5 million at April
30, 1994) was estimated based on the present value of residual cash flows
plus the fair value of the CMO's. The fair value of the CMO's (liabilities)
was assumed to be equal to the outstanding principal balance plus accrued
interest totaling $2.7 million at April 30, 1995 and $4.5 million at April
30, 1994.
(14) INFORMATION ABOUT THE COMPANY'S OPERATIONS IN DIFFERENT
-------------------------------------------------------
INDUSTRY SEGMENTS:
------------------
The Company operates principally in two industries, real estate and magazine
circulation operations. Real estate operations involve the construction and
sale of single- family homes, condominiums and other projects, as well as
the subdivision of large tracts of land for sale to individuals, builders
and others. Magazine circulation operations involve national and
international distribution of periodicals and paperback books, and
subscription fulfillment activities on behalf of various client publishers.
Total revenue by industry includes revenues from unaffiliated customers as
reported in the accompanying consolidated statements of operations.
Operating income represents total revenue less operating expenses.
In computing operating income, general corporate expenses, interest expense
and income taxes are excluded. Selling expense is allocated between
industry segments based on the Company's evaluation of the work performed
for each segment.
Identifiable assets by industry are those assets that are used in the
Company's operations in each industry segment.
The following schedules set forth summarized data relative to the industry
segments:
Magazine
Real Estate Circulation Other
Operations Operations Operations Corporate Eliminations Consolidated
---------- ---------- ---------- --------- ------------ ------------
1995 (Thousands):
Net revenues from
unaffiliated customers $ 105,060 $ 46,595 $ 870 $ - $ - $ 152,525
Intersegment revenues - - 72 - (72) -
---------- ---------- ---------- --------- ------------ ------------
Total revenue $ 105,060 $ 46,595 $ 942 $ - $ (72) $ 152,525
========== ========== ========== ========= ============ ============
Operating income $ 6,199 $ 6,951 $ 140 $ - $ (72) $ 13,218
========== ========== ========== ========= ============
Corporate expenses (3,404)
Interest (3,086)
------------
Income before
provision for income
taxes $ 6,728
============
Identifiable assets at
April 30, 1995 $ 122,654 $ 60,957 $ 551 $ 1,980 $ - $ 186,142
========== ========== ========== ========= ============ ============
Identifiable depreciation $ 679 $ 654 $ 2 $ 21 $ - $ 1,356
========== ========== ========== ========= ============ ============
Identifiable capital
expenditures $ 1,205 $ 2,150 $ 29 $ 123 $ - $ 3,507
========== ========== ========== ========= ============ ============
[CAPTION]
Magazine
Real Estate Circulation Other
Operations Operations Operations Corporate Eliminations Consolidated
---------- ---------- ---------- --------- ------------ ------------
1994 (Thousands):
Net revenues from
unaffiliated customers $ 90,113 $ 35,128 $ 847 $ - $ - $ 126,088
Intersegment revenues - 79 72 - (151) -
---------- ---------- ---------- --------- ------------ ------------
Total revenue $ 90,113 $ 35,207 $ 919 $ - $ (151) $ 126,088
========== ========== ========== ========= ============ ============
Operating income $ 7,013 $ 5,169 $ 169 $ - $ (151) $ 12,200
========== ========== ========== ========= ============
Corporate expenses (3,684)
Interest (including
$2,055 in operating
expenses-rental projects) (4,690)
------------
Income before
provision for income
taxes $ 3,826
============
Identifiable assets at
April 30, 1994 $ 125,620 $ 51,135 $ 405 $ 1,697 $ - $ 178,857
========== ========== ========== ========= ============ ============
Identifiable depreciation $ 1,151 $ 482 $ - $ 38 $ - $ 1,671
========== ========== ========== ========= ============ ============
Identifiable capital
expenditures $ 996 $ 848 $ - $ 8 $ - $ 1,852
========== ========== ========== ========= ============ ============
Magazine
Real Estate Circulation Other
Operations Operations Operations Corporate Eliminations Consolidated
---------- ---------- ---------- --------- ------------ ------------
1993 (Thousands):
Net revenues from
unaffiliated customers $ 63,244 $ 29,627 $ 789 $ - $ - $ 93,660
Intersegment revenues - 230 90 - (320) -
---------- ---------- ---------- --------- ------------ ------------
Total revenue $ 63,244 $ 29,857 $ 879 $ - $ (320) $ 93,660
========== ========== ========== ========= ============ ============
Operating income $ 6,993 $ 3,197 $ 177 $ - $ (320) $ 10,047
========== ========== ========== ========= ============
Corporate expenses (3,730)
Interest (including
$3,223 in operating
expenses-rental projects) (6,251)
-------------
Income before
provision for income
taxes $ 66
============
Identifiable assets at
April 30, 1993 $ 142,593 $ 35,093 $ 277 $ 1,981 $ - $ 179,944
========== ========== ========== ========= ============ ============
Identifiable depreciation $ 1,387 $ 435 $ - $ 37 $ - $ 1,859
========== ========== ========== ========= ============ ============
Identifiable capital
expenditures $ 1,315 $ 255 $ - $ 21 $ - $ 1,591
========== ========== ========== ========= ============ ============
Selected Quarterly Financial Data (Unaudited)
(In thousands of dollars except per share amounts)
Quarter Ended
---------------------------------------------------
July 31, October 31, January 31, April 30,
1994 1994 1995 1995
------------ ------------ ------------ ------------
Revenues $ 35,755 $ 35,911 $ 37,960 $ 42,899
Real estate cost of sales 19,925 19,587 19,978 22,448
Operating expenses 10,156 11,572 11,949 14,086
Net Income $ 1,010 $ 715 $ 1,175 $ 1,115
============ ============ ============ ============
Net Income Per Share $ 0.14 $ 0.10 $ 0.16 $ 0.15
============ ============ ============ ============
Quarter Ended
---------------------------------------------------
July 31, October 31, January 31, April 30,
1993 1993 1994 1994
------------ ------------ ------------ ------------
Revenues $ 31,012 $ 29,092 $ 31,382 $ 34,602
Real estate cost of sales 15,782 14,150 16,305 18,202
Operating expenses (A) 10,553 10,911 9,804 10,171
Net Income (B) $ 634 $ 164 $ 664 $ 910
============ ============ ============ ============
Net Income Per Share (B) $ 0.10 $ 0.02 $ 0.09 $ 0.12
============ ============ ============ ============
(A) As discussed in Note 1 of Notes to Consolidated Financial Statements
certain amounts have been reclassified to conform with fiscal year 1995
presentation.
(B) As discussed in Note 4 of Notes to Consolidated Financial Statements,
during the fourth quarter of fiscal year 1994, the Company reduced the
carrying value of real estate inventory by $1,100,000.
Item 9. Changes in and Disagreements with Accountants on Accounting
- ------- and Financial Disclosure.
-------------------------
Not Applicable.
PART III
The information called for by Part III is hereby incorporated by
reference from the information set forth and under the headings "Voting
Securities", "Security Ownership of Management", "Election of Directors",
and "Executive compensation" in Registrant's definitive proxy statement for
the 1995 Annual Meeting of Shareholders, which meeting involves the election
of directors, such definitive proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A within 120
days after the end of the fiscal year covered by this Annual Report on Form
10-K. In addition, information on Registrant's executive officers has been
included in Part I above under the caption "Executive Officers of the
Registrant".
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
- -------- Reports on Form 8-K.
--------------------
(a) 1. The following financial statements and supplementary
financial information are filed as part of this report:
AMREP Corporation and Subsidiaries:
Report of Independent Public
Accountants -
Arthur Andersen LLP
Consolidated Balance Sheets - April 30,
1995 and 1994
Consolidated Statements of Operations for
the Three Years Ended April 30,
1995
Consolidated Statements of Shareholders'
Equity for the Three Years Ended
Apri1 30, 1995
Consolidated Statements of Cash Flows
for the Three Years Ended
April 30, 1995
Notes to Consolidated Financial
Statements
Selected Quarterly Financial Data
2. The following financial statement schedules are filed as
part of this report:
AMREP Corporation and Subsidiaries:
Schedule II Valuation and Qualifying Accounts
Financial statement schedules not included in this Annual Report on
Form 10-K have been omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
3. Exhibits:
The exhibits filed in this
report are listed in the Exhibit Index.
The Registrant agrees,
upon request of the Securities and Exchange
Commission, to file as an exhibit each
instrument defining the rights of holders of
long-term debt of the Registrant and its
consolidated subsidiaries which has not been
filed for the reason that the total amount of
securities authorized thereunder does not
exceed 10% of the total assets of the
Registrant and its subsidiaries on a
consolidated basis.
(b) During the quarter ended April 30, 1995, Registrant filed a
Current Report on Form 8-K/A-1 dated March 27, 1995 reporting under Item 7.
Financial Statements and Exhibits filing the following financial statements
of Fulfillment Corporation of America:
1. Audited Financial
Statements for the Twelve Months ended
December 31, 1993 and 1992.
2. Unaudited Statements
of Operations and Statements of Cash Flows
for the Nine Months ended September 30, 1994
and 1993, Balance Sheet as of September 30,
1994, and Notes to Financial Statements.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMREP CORPORATION
(Registrant)
Dated: July 28, 1995 By /s/ Mohan Vachani
-----------------
Mohan Vachani
Senior Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Registrant
and in the capacities and on the dates indicated.
/s/ Mohan Vachani
-----------------
Anthony B. Gliedman Mohan Vachani
Chairman of the Board, Senior Vice President - Chief
President and Director Financial Officer and Director
Principal Executive Officer Principal Financial
Officer*
Dated: July 28, 1995
/s/ Peter M. Pizza /s/ Harvey I. Freeman
------------------ ---------------------
Peter M. Pizza Harvey I. Freeman
Controller Director
Dated: July 28, 1995 Dated: July 28, 1995
/s/ Jerome Belson /s/ Daniel Friedman
----------------- -------------------
Jerome Belson Daniel Friedman
Director Director
Dated: July 28, 1995 Dated: July 28, 1995
/s/ Edward B. Cloues, II
------------------------ ------------------------
Edward B. Cloues, II Nicholas G. Karabots
Director Director
Dated: July 28, 1995 Dated:
/s/ Joseph Cohen /s/ Samuel N. Seidman
---------------- ---------------------
Joseph Cohen Samuel N. Seidman
Director Director
Dated: July 28, 1995 Dated: July 28, 1995
/s/ James Wall
-------------------- --------------
David N. Dinkins James Wall
Director Director
Dated: Dated: July 28, 1995
* Also acting as Principal Executive Officer in the absence of the Chief
Executive Officer, solely for the purpose of signing this Annual Report.
AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Page 1 of 2)
- -------------------------------------------------------------
(Thousands)
Additions
------------------------
Charges
Balance at (Credits) to Charged Balance
Beginning Costs and to Other at End
of Period Expenses Accounts Deductions of Period
--------- -------- -------- ------------- ---------
Description
-----------
FOR THE YEAR ENDED
APRIL 30, 1995:
Allowance for doubtful
accounts (included in
receivables - real
estate operations on
the consolidated
balance sheet) $ 693 $ 2 $ - $ 87(A) $ 608
--------- -------- -------- ---------- ---------
Allowance for estimated
returns and doubtful
accounts (included in
receivables - magazine
circulation operations
on the consolidated
balance sheet) $ 54,355 $ 2,984 $ - $ 368(A) $ 56,971
--------- -------- -------- ---------- ---------
Real estate valuation
reserve $ 2,580 $ - $ - $ -(B) $ 2,580
--------- -------- -------- ---------- ---------
FOR THE YEAR ENDED
APRIL 30, 1994:
Allowance for doubtful
accounts (included in
receivables - real
estate operations on
the consolidated
balance sheet) $ 1,000 $ 116 $ - $ 423(A) $ 693
--------- -------- -------- ---------- ---------
Allowance for estimated
returns and doubtful
accounts (included in
receivables - magazine
circulation operations
on the consolidated
balance sheet) $ 45,440 $ 9,230 $ - $ 315(A) $ 54,355
--------- -------- -------- ---------- ---------
AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Page 2 of 2)
- -------------------------------------------------------------
(Thousands)
Additions
------------------------
Charges
Balance at (Credits) to Charged Balance
Beginning Costs and to Other at End
of Period Expenses Accounts Deductions of Period
--------- -------- -------- ------------- ---------
Real estate valuation
reserve $ 3,425 $ 1,100 $ - $ 1,945(B) $ 2,580
--------- -------- -------- ---------- ---------
FOR THE YEAR ENDED
APRIL 30, 1993:
Allowance for doubtful
accounts (included in
receivables - real
estate operations on
the consolidated
balance sheet) $ 878 $ 158 $ - $ 36(A) $ 1,000
--------- -------- -------- ---------- ---------
Allowance for estimated
returns and doubtful
accounts (included in
receivables - magazine
circulation operations
on the consolidated
balance sheet) $ 46,483 $ (76) $ - $ 967(A) $ 45,440
--------- -------- -------- ---------- ---------
Real estate valuation
reserve $ 3,425 $ - $ - $ -(B) $ 3,425
--------- -------- -------- ---------- ---------
NOTE: (A) Uncollectible accounts written off.
(B) Reserves utilized to reduce inventory valuation.
EXHIBIT INDEX
(3)(i)(a)Articles of Incorporation, as amended -
Incorporated by reference to Exhibit
(3)(i)(a) to Annual Report on Form 10-K of
Registrant for the fiscal year ended April
30, 1993.
(3)(i)(b)Certificate of Merger - Incorporated by
reference to Exhibit (3)(i)(b) to Annual
Report on Form 10-K of Registrant for the
fiscal year ended April 30, 1993.
(3)(ii)(a)Amendment to Section 1(a) of Article III of
the By-Laws, filed herewith.
(3)(ii)(b)By-Laws as restated September 23, 1994,
filed herewith.
(4)(a) Loan Agreement between American National
Bank and Trust Company of Chicago and Kable
News Company, Inc. dated as of September 30,
1992 - Incorporated by reference to Exhibit
4(a) to Registrant's Quarterly Report on
Form 10-Q for the quarter ended October 31,
1992.
(4)(b) First Amendment to Loan Agreement between
American National Bank and Trust Company of
Chicago and Kable News Company, Inc. dated
as of July 12, 1993 - Incorporated by
reference to Exhibit 4(a) to Registrant's
Quarterly Report on Form 10-Q for the
quarter ended July 31, 1993.
(4)(c) Second Amendment to Loan Agreement between
American National Bank and Trust Company of
Chicago and Kable News Company, Inc. dated
as of November 15, 1993 - Incorporated by
reference to Exhibit 4 to Registrant's
Quarterly Report on Form 10-Q for the
quarter ended October 31, 1993.
4(d) Third Amendment to Loan Agreement between
American National Bank and Trust Company of
Chicago and Kable News Company, Inc. dated
January 3, 1995 - Incorporated by reference
to Exhibit 4 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended
January 31, 1995.
(10)(a) Agreement and Plan of Reorganization between
Registrant and Capital Distributing Company,
Kappa Publishing Group, Inc. and Nick G.
Karabots dated August 4, 1993 - Incorporated
by reference to Exhibit 10 to Registrant's
Quarterly Report on Form 10-Q for the
quarter ended October 31, 1993.
(10)(b) Employment Agreement dated as of October 1,
1993 between Registrant and Anthony B.
Gliedman, Chief Executive Officer, Chairman
and President of Registrant - Incorporated
by reference to Exhibit 10(a) to
Registrant's Quarterly Report on Form 10-Q
for the quarter ended January 31, 1994.
(10)(c) Employment Agreement dated as of October 1,
1993 between Registrant and Daniel Friedman,
Senior Vice President of Registrant -
Incorporated by reference to Exhibit 10(b)
to Registrant's Quarterly Report on Form 10-
Q for the quarter ended January 31, 1994.
(10)(d) Employment Agreement dated as of October 1,
1993 between Registrant and James Wall,
Senior Vice President of Registrant -
Incorporated by reference to Exhibit 10(c)
to Registrant's Quarterly Report on Form 10-
Q for the quarter ended January 31, 1994.
(10)(e) Employment Agreement dated as of October 1,
1993 between Registrant and Harvey W.
Schultz, Senior Vice President of Registrant
- Incorporated by reference to Exhibit 10(d)
to Registrant's Quarterly Report on Form 10-
Q for the quarter ended January 31, 1994.
(10)(f) Employment Agreement dated as of October 1,
1993 between Registrant and Mohan Vachani,
Senior Vice President - Chief Financial
Officer of Registrant - Incorporated by
reference to Exhibit 10(e) to Registrant's
Quarterly Report on Form 10-Q for the
quarter ended January 31, 1994.
(10)(g) 1982 Incentive Stock Option Plan -
Incorporated by reference to Exhibit (10)(s)
to Annual Report on Form 10-K of Registrant
for the fiscal year ended April 30, 1993.
(10)(h) 1992 Stock Option Plan - Incorporated by
reference to Exhibit A to the Proxy
Statement of Registrant for the Annual
Meeting of Shareholders held on September
24, 1992.
(10)(i) Non-Employee Directors Option Plan -
Incorporated by reference to Exhibit B to
the Proxy Statement of Registrant for the
Annual Meeting of Shareholders held on
September 24, 1992.
(10)(j) Loan Agreement dated December 17, 1993
between Registrant and Anthony B. Gliedman,
Incorporated by reference to Exhibit 10(k)
to the Annual Report on Form 10-K of
Registrant for the fiscal year ended April
30, 1994.
(10)(k) Bonus Plan for Executives and Key Employees
of Registrant, Incorporated by reference to
Exhibit 10(l) to the Annual Report on Form
10-K of Registrant for the fiscal year ended
April 30, 1994.
(21) Subsidiaries of Registrant, filed herewith.
(23) Consent of Arthur Andersen LLP, filed
herewith.
(27) Financial Data Schedule