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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, 1998 Commission File Number 1-4702
-------------- ------


OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from__________ to __________

AMREP CORPORATION
-------------------------------------------------------
(Exact name of registrant as specified in its Charter)

Oklahoma 59-0936128
- ---------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

641 Lexington Ave., 6th Floor
______New York, New York____________ 10022
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (212) 705-4700

Securities registered pursuant to Section 12(b) of the Act:

Name of Each Exchange
Title of Each Class on Which Registered

Common Stock $.10 par value New York 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
24, 1998, on the New York Stock Exchange Composite Tape: $31,134,346.

Number of shares of Common Stock, par value $.10 per share, outstanding at
July 24, 1998 - 7,368,650.

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 1998 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 provider of fulfillment and related services for
publishers and others.

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

The Company is the major developer and builder of single-family homes at Rio
Rancho, New Mexico and has regional offices in the Denver, Colorado and
Sacramento, California metropolitan areas. Real Estate Operations consist
primarily of (i) the construction and sale of housing, (ii) the development
and sale of housing sites, and (iii) the sale of tracts of land for
residential, industrial and commercial uses.

HOUSING OPERATIONS

The Company builds and markets a broad spectrum of housing, principally
affordable to medium priced single-family homes ranging in size from
approximately 900 to 2,500 square feet. It presently is building in Rio
Rancho, New Mexico; the Denver, Colorado metro area; Portland, Oregon; Reno,
Nevada and the Sacramento metro area of northern California. In addition, in
the Sacramento area the Company is developing and building multi-family
housing through a joint venture in which it is a participant.

The Company builds a number of different models of houses at its
developments, which it changes periodically based on experience and market
research. At Rio Rancho, almost all 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, at Rio Rancho, the Company also performs some
site preparation work with its own equipment and personnel and its employees
do final preparation and cleaning work on housing units.

At its developments in Colorado, California, Nevada and Oregon, the houses
are designed by an outside architect or engineer. The Company acts solely as
general contractor and employs subcontractors for all construction and site
preparation work.

The Company's single-family housing is of frame construction, and the Company
does not anticipate difficulty in obtaining necessary materials as needed.
When possible, the Company enters into contracts with subcontractors and
suppliers of materials pursuant to which prices are established for a
specific period, usually six months. Such contracts are usually used for all
subcontractors and all suppliers.

The Company has construction and development departments in its regional
offices in the Denver, Colorado and Sacramento, California metropolitan
areas, as well as at its headquarters in Rio Rancho, New Mexico.

________________________

* As used herein, "Company" includes the Registrant and its subsidiaries
unless the context indicates otherwise.

2



Rio Rancho, New Mexico

This community consists of 91,049 contiguous acres in Sandoval County, New
Mexico, near Albuquerque, of which some 72,500 acres have been platted into
approximately 111,000 homesite and commercial lots and 16,300 acres are
dedicated to community facilities, roads and drainage with the remainder
consisting of bulk unplatted land. At April 30, 1998, a total of
approximately 79,000 of the lots had been sold. The Company currently owns
approximately 24,000 acres at Rio Rancho, of which some 8,000 acres are in
contiguous blocks suitable for development. The balance is in scattered lots
which may 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 50,000.

The majority of the Company's building is at Rio Rancho, where the base
prices of the homes and condominiums presently being sold by the Company
range from approximately $76,000 to $200,000, although most are in the
$90,000 to $126,000 range. Presently, the Company is predominantly
delivering homes from two major subdivisions. In fiscal l998, the Company
delivered 405 housing units at Rio Rancho at an average price of $110,000.

Colorado

The Company entered the suburban Denver market in 1993. Its major project in
this market is Bradbury Ranch in Parker, in the southeastern part of the
Denver metro area, where in 1994 it acquired 484 acres of undeveloped
residential property zoned for approximately 1,700 homes. Development work
at Bradbury began in fiscal 1995. As of April 30, 1998 the Company has
closed 110 homes in the $130,000 to $175,000 price range, in the first phase
of the project (65 in fiscal 1998).

In fiscal 1998, the Company also delivered 84 homes in several other smaller
projects in the Denver metro area, at an average price of $140,000. The
Company owns approximately 700 additional lots at such projects, some of
which it plans to sell to other builders.

During fiscal 1984 and 1985, the Company built 102 of a projected total of
800 units of townhouses and apartment condominiums at another project in the
Denver area, but stopped construction because of Denver's economic slow
down. Construction of an additional 98 units at this project recommenced in
1997, and the Company delivered 75 units in fiscal 1998 at an average price
of $94,000.

California, Nevada and Oregon

In September 1997, the Company's subsidiary, Shasta Real Estate Company,
purchased substantially all the assets of SKK Enterprises, Inc. and related
entities ("SKK"), a homebuilder and land developer with operations in the
Sacramento metro area of northern California; Portland, Oregon and Reno,
Nevada. In most cases, there are equity participants with Shasta in each of
the projects in which it purchased an interest from SKK and in each of the
projects which have subsequently been started. The projects are most
frequently organized as partnerships or limited liability companies. In many
cases, the other equity participants have significant rights of control over
the activities of the joint venture, and Shasta therefore accounts for these
entities under the equity method of accounting.

Shasta acquired SKK's interests in three projects which were underway in the
Sacramento area with a total of 327 homes under construction or planned to be
built. Shasta also acquired interests in one project in Reno, Nevada with 55
homes planned, and two projects in Portland, Oregon with an aggregate of
approximately 37 homes planned and approximately 300 lots to be developed for
its own use and for sale to other builders which were in various stages of
pre-construction development.

3



Since the acquisition, Shasta has delivered a total of 74 homes in all of its
projects, including 43 homes in projects accounted for under the equity method.
It has also acquired and begun the development of two new projects in
Sacramento and acquired the land for an additional project in Portland,
consisting of an aggregate of 220 lots at the three projects. Several other
projects are now under review.

At April 30, 1998, Shasta was also developing 2 projects for multi-family
housing in the Sacramento area with a total of approximately 564 units. One
project, which is owned with other equity participants, has commenced
construction. The other project, which was wholly-owned, was sold in June
1998. With regard to the multi-family projects, Shasta utilizes the
expertise of outside design and management firms to plan and build the
projects.

Other Projects

The Company is the general partner with a 50% interest in a limited
partnership which in 1990 commenced construction of a townhouse project in
Freehold, New Jersey. The project was substantially completed in fiscal
1998.

The Company participates in a joint venture which builds single-family homes
in the Eldorado at Santa Fe, New Mexico subdivision, although the Company is
not the builder. In fiscal l998, the venture sold 2 homes.

Until January 1994, the Company was the general partner and majority owner of
a limited partnership which owns a congregate living rental facility in West
Palm Beach, Florida. In January l994, an unrelated third party became the
general partner of the partnership, and the Company became a limited partner,
with a continuing equity interest in the partnership. In December 1997, the
entire facility was sold to a third party by the limited partnership for
approximately $27.3 million, and the Company recognized a gain of
approximately $3.0 million upon the sale and distribution of cash to the
Company.

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. The Company's management
subsidiary 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.

DEVELOPMENT OPERATIONS

The Company develops residential and non-residential sites at Rio Rancho and
housing sites at Eldorado in New Mexico and at its projects in Colorado,
California and Oregon. 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 outside firms and, in Rio Rancho, by Company employees as well,
but development work at all locations is performed by outside contractors.

The Company sells developed residential lots to outside builders at Rio
Rancho, Eldorado and at some of its projects in Colorado, California and
Oregon. The Company sells undeveloped lots to outside builders and other
commercial purchasers at Rio Rancho and in California, and may begin to do so
in Colorado.

Rio Rancho, New Mexico

In fiscal 1998, the Company sold 140 lots to builders at Rio Rancho (of which
the substantial majority were undeveloped) for an aggregate of $2.1
million. Since early 1977, no lots have been sold to consumers except with
houses on them. Over 50,000 lots were sold prior to 1977, and most of these
are in

4



areas where utilities have not yet been installed. However, under
certain of the contracts pursuant to which the lots were sold, if utilities
have not reached the respective lot when the purchaser is ready to build a
home, 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 500 business
and professional offices, 15 shopping centers with over 1,250,000 square feet
of store and office space, and a 55,000 square foot office building in part
occupied by the Company. In addition, a number of individual office
buildings and stores are located throughout the community. Eleven financial
institutions have offices at Rio Rancho. The industrial areas presently have
approximately 77 buildings with over 3.2 million square feet, including a
manufacturing facility containing approximately 2.1 million square feet built
and occupied by Intel Corporation.

Eldorado at Santa Fe, New Mexico

This subdivision, consisting of approximately 2,000 single-family homes on
6,000 acres platted into lots, is located 10 miles southeast of Santa Fe, New
Mexico. Approximately 40 lots remain to be sold. In fiscal 1998, the
Company sold 29 developed lots at Eldorado for an aggregate of $1.3 million.

Colorado

The Company is currently developing approximately 160 acres of the 484 acre
Bradbury Ranch project into 582 lots. It intends to sell at least half of the
lots to other builders and build and sell its own houses on the remaining lots.
The Company has sold 183 of these lots to other builders through April 30, 1998.
From time to time, the Company may also sell developed lots from its other
projects to builders; the Company sold an additional 5 lots to other builders
from one other project during fiscal 1998. In fiscal 1998, the Company sold
102 developed lots at the Colorado projects for an aggregate of $3.2 million.

California, Nevada and Oregon

The Company's business plan for Shasta's operations call for it to develop
and sell sites to builders for residential use and also to acquire and
re-sell undeveloped property. In fiscal 1998, the Company, through joint
venture arrangements, sold 35 developed lots in California and 24 developed
lots in Oregon.

SALE OF NON-RESIDENTIAL TRACTS

The Company sells developed and undeveloped tracts at Rio Rancho to
commercial users and may sell tracts from its Bradbury Ranch property in
Parker, Colorado. The Company's plans for future projects in California
include a small number of non-residential tracts. In fiscal 1998, 27 tracts
of varying sizes were sold at Rio Rancho at an aggregate price of $18.3
million.

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 on-site models, both directly
and through brokers. At the Colorado developments, the Company sells its
housing through brokers operating out of on-site sales offices. In
California, Oregon and Nevada, the Company sells directly from on-site models
with brokers.

5



Non-residential land at Rio Rancho is marketed by a separate department, both
directly and through brokers. At all other locations, land sales are most
often sold 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 by the Company are subject to
the buyer's ability to obtain financing and the Company does not consider any
such contracts to be firm. Historically, approximately 75% of the persons
who signed contracts to purchase housing actually closed their purchase.

At April 30, l998, at all locations, the Company had signed contracts for the
sale of 272 units of housing for an aggregate purchase price of approximately
$33.3 million. At April 30, l997, it had signed contracts for 247 units with
an aggregate purchase price of approximately $29.3 million.

At April 30, l998, at all locations, the Company had contracts for the sale
of 206 lots to builders for an aggregate purchase price of $6.5 million and 5
contracts for the sale of commercial and industrial real estate for an
aggregate purchase price of $5.5 million. At April 30, 1997, the Company had
contracts for the sale of 260 lots to builders for an aggregate purchase
price of $6.2 million and 5 contracts for the sale of commercial and
industrial real estate for an aggregate purchase price of $5.5 million.

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
housing with relatively few options, leaving custom house building and
relatively expensive houses to other builders. During the past several
years, the Company has been increasing the upper price level of its houses to
accommodate a broader income spectrum of buyers. The Company has recently
entered the semi-custom market at its Rio Rancho development and is expanding
its design-services to include more options at its Rio Rancho and Colorado
projects. The California, Nevada and Oregon projects already include homes
for which a large range of options are available.

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. Buyers at all locations utilize various conventional mortgage
lenders. In Rio Rancho and Colorado, the home buyers most frequently arrange
mortgages with funds made available or guaranteed by state housing
authorities and federal housing programs.

The Company has operated a mortgage brokerage company at Rio Rancho since
1988. The California acquisition included a mortgage brokerage operation as
well. The Company plans to coordinate activities at the two locations and
expand its mortgage brokerage business there.

6


MAGAZINE DISTRIBUTION AND FULFILLMENT OPERATIONS

Through its wholly-owned subsidiary, Kable News Company, Inc. ("Kable"), the
Company (i) performs subscription fulfillment and related services and (ii)
distributes periodicals nationally and in Canada and, to a small degree,
overseas. As of July 1, 1998, Kable employed approximately 1,240 persons,
approximately 1,010 of whom were involved in its fulfillment activities and
230 in distribution activities.

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. The division
accounted for 68% of Kable's total revenues in both fiscal 1998 and 1997.

In the magazine subscription fulfillment service operation, Kable 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 subscriber lists and
databases, generates marketing and statistical reports, and prints forms and
promotional materials. Kable performs all of these services for many
clients, but some clients utilize only certain of them. 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.

In August 1996, Kable commenced the processing of "sweepstakes" entries for a
major publisher, opening the envelopes mailed in by contestants, furnishing
the pertinent data electronically to the client and performing certain
incidental functions. Revenues from this activity represented over 18% of the
division's total revenues for fiscal 1998.

List services clients are primarily publishers. In this activity, Kable
maintains clients' customer lists, selects names for clients who rent their
lists, merges rented lists with the clients' lists to eliminate duplication
for clients' promotional mailings, and sorts and sequences mailing labels to
provide optimum postal discounts for clients.

Product fulfillment services are provided primarily for Kable's publisher
clients. In this activity, the division receives, warehouses, processes and
ships merchandise.

Kable now performs fulfillment services for approximately 450 different
magazine titles for some 210 clients and maintains approximately 15.5 million
active subscriber names for its client publishers. In a typical month, Kable
produces almost 16 million mailing labels for its client publishers and also
produces and mails approximately 4.7 million billing and renewal statements.

There are a large number of companies which perform fulfillment services and
with which Kable competes, two of which are much larger than Kable. Since
publishers utilize only a single fulfillment service for a particular
publication, there is intense 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
225 publishers. 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 over 31.5
million copies of various titles. Kable purchases the publications from its
publishers and sells them to approximately 190 independent wholesale
distributors in the United States and Canada. The wholesale distributors in

7



turn sell the publications to individual retail outlets. All parties
generally have full return rights for unsold copies. In both fiscal 1998 and
1997, distribution activities accounted for 32% of Kable's revenues.

While the Kable Distribution division 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.

A realignment of industry relationships in the distribution of magazines
started during fiscal 1996 and rapidly grew to major proportions. It was
triggered by the decision of certain major retailers with multiple outlets to
sharply reduce the number of wholesalers with whom the retailers would deal.
This has led to a substantial continuing reduction in the number of
wholesalers through the merger of certain wholesalers, the formation by
certain other wholesalers of cooperatives to bid for the business of such
retailers, and the complete retirement from the business by a number of
wholesalers. The consolidation has reduced the number of Kable's wholesale
customers by approximately one-half since 1995, which has increased the
concentration of its customer base, wholesaler revenue source and trade
accounts receivable. These changes contributed to demands by most remaining
wholesalers to purchase magazines at lower prices which many publishers,
including Kable's, have accepted. Management believes that industry changes
will continue with the potential for further adverse consequences for
publishers and possibly their national distributors, including Kable.

Kable has a distribution sales and marketing force which works with
wholesalers and retailers to promote product sales and 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, which publishers may use to help pay for printing, paper and
production costs prior to the product going on sale, but it 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 on limiting its advances to the publisher
accordingly.

There are five national distributors with whom Kable competes. Since
publishers utilize only a single distributor to distribute a particular line,
there is intense competition between distributors to obtain distribution
rights from publishers. Each of these large competitors is 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 is
intense.

COMPANY OFFICES

The Company's principal executive offices are in New York City in leased
offices. Real estate operations are headquartered in Rio Rancho in a modern
office building owned by the Company, while the Denver, Colorado and
Sacramento, California divisions are operated from leased offices. Kable
News has an executive and sales office in New York City, and its operations
are centered in both owned and leased facilities in Mt. Morris, Illinois and
Marion, Ohio.

8



EMPLOYEES

The Company has approximately 1,450 employees (including Kable), none of whom
is represented by a union. The Company provides retirement, health and other
benefits to its employees and considers its employee relations to be good.

Item 2. Properties
- ------- ----------

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
- ------- -----------------

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 in part 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
- ------- ---------------------------------------------------

Not Applicable.

Executive Officers of Registrant
- --------------------------------

Set forth below is certain information concerning persons who are
executive officers of Registrant.

Name Office Held Age
- ----- ----------- -----

Daniel Friedman Senior Vice President of Registrant 63
since prior to 1993; Chairman of the
Board and President of Kable News Company,
Inc., a wholly-owned subsidiary of the
Registrant since prior to 1993.

James Wall Senior Vice President of Registrant 61
since prior to 1993; Chairman of the
Board and President of AMREP Southwest
Inc., a wholly-owned subsidiary of
Registrant, since February 1996; President
of AMREP Southwest Inc. since prior to
1993.

Mohan Vachani Senior Vice President - Chief Financial 56
Officer of Registrant since 1993.

Valerie Asciutto Senior Vice President - General Counsel of 45
Registrant since April 1997; Vice President
- General Counsel of Registrant since prior
to 1993 to April 1997.

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.

9


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 under
the symbol AXR. On July 24, 1998, there were approximately 2,460 holders of
record of the common stock. The Registrant has historically not paid cash
dividends. 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
---- ---- ---- ---- ---- ---- ---- ----

1998 $ 4 5/8 $ 3 1/2 $ 7 1/4 $ 4 5/8 $ 6 7/8 $ 5 1/4 $ 10 1/2 $ 6 1/4
1997 $ 5 1/8 $ 4 $ 5 1/2 $ 4 1/8 $ 5 $ 3 7/8 $ 4 5/8 $ 3 1/2


Item 6. Selected Financial Data
- ------- -----------------------

The following selected consolidated financial data of the Company are
qualified by reference to and should be read in conjunction with the
consolidated financial statements, related notes thereto and other financial
data elsewhere herein. These historical results are not necessarily
indicative of the results to be expected in the future.

(In thousands of dollars except per share amounts)
Year Ended April 30,
------------------------------------------------------


1998 1997 (A) 1996 1995 1994
--------- --------- --------- --------- ---------
Revenues $ 171,368 $ 146,389 $ 161,802 $ 152,525 $ 126,088
Net Income $ 8,206 $ 7,282 $ 2,785 $ 4,015 $ 2,372
Earnings Per Share $ 1.11 $ 0.99 $ 0.38 $ 0.55 $ 0.33


Total Assets $ 229,768 $ 205,311 $ 181,796 $ 186,142 $ 178,857
Notes Payable $ 84,248 $ 79,824 $ 54,391 $ 61,653 $ 61,349
Shareholders' Equity $ 84,040 $ 75,834 $ 68,552 $ 65,921 $ 61,429
Cash Dividends $ - $ - $ - $ - $ -



(A) Includes a tax benefit in the amount of $6,250,000 (the equivalent of
$.85 per share) to reflect the settlement of 1984 through 1989 tax
examinations.


Item 7. Management's Discussion and Analysis of Financial
- ------- Condition and Results of Operations
-------------------------------------------------

FORWARD-LOOKING STATEMENTS
- --------------------------

This Form 10-K, both in this Item 7 and elsewhere, contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements may be identified by terminology such as
"believes", "anticipates", "expects", "plans" or similar words. Although the
Company believes such statements are based on reasonable assumptions, they
involve certain risks and uncertainties. These risks and uncertainties
include, but are not limited to, the level of demand for residential homes in
the markets in which the Company is selling or plans to sell homes, the level
of demand for land in the markets in which the Company sells land, the
possibility of further change in the

10




magazine distribution system for magazines which the Company distributes, and
changes in interest rates and general economic conditions.

RESULTS OF OPERATIONS
- ---------------------

Year Ended April 30, 1998 Compared to Year Ended April 30, 1997
- ---------------------------------------------------------------

Total revenues for the year ended April 30, 1998 increased approximately 17%
from 1997, reflecting increases in revenues from both real estate and
magazine circulation operations.

Revenues from real estate operations increased by 23% in 1998 resulting from
increases in both housing and land sales. Revenues from housing sales
increased 16% as a result of an increase in total housing deliveries from 599
to 677. This increase was due to increased home deliveries in Colorado
resulting from additional projects from which homes were delivered, as well
as from deliveries contributed by the Company's northern California
operations, which were acquired in September 1997, and was offset in part by
fewer home closings in Rio Rancho, which reflects an increase in competition
throughout the surrounding market region. The average selling price of homes
sold increased slightly, from $114,600 to $117,800.

The gross margin on housing sales increased by approximately $.5 million
principally due to the increase in the number of homes closed. The average
gross margin percentage was 13% in 1997 and 12% in 1998. Revenues and
related gross profit from land sales increased by approximately $8.2 million
and $5.6 million, respectively, in 1998 from 1997, primarily due to an
increase in the level of commercial and industrial lot sales. The average
gross profit percentage on land sales increased from 42% in 1997 to 50% in
1998 because of the mix of land sales between Colorado, Florida and New
Mexico. Land sale revenues and related gross profits can vary from year to
year as a result of the nature and timing of specific transactions, and are
not an indication of amounts that may be expected to occur in future
periods. As a result of these factors, gross profit from real estate
operations increased by approximately $6.1 million in fiscal 1998 compared to
the prior year, predominately from the increased land sales.

Revenues from magazine circulation operations increased by approximately 5%
in 1998, due to increases in both Fulfillment Services and Newsstand
Distribution Services. Revenues from Fulfillment Services increased
approximately 5%, due primarily to increased volumes in product fulfillment
and sweepstakes processing services. Revenues from Distribution Services
increased approximately 6%, due to a modest increase in the volume of
magazine sales.

The major realignment and consolidation of relationships in the distribution
chain for magazines which developed during 1996 continues to affect the
industry, and the Company continues to address the situation. Magazine
circulation operating expenses have decreased from approximately 81% of
related revenues last year to approximately 77% of related revenues in the
current year, reflecting the completed integration of the acquisition of
Kable's Ohio operations and the favorable impact of cost reduction
initiatives. As a result of these factors, operating income from magazine
circulation operations increased by approximately $2.9 million in 1998, as
compared to last year.

During 1998, the Company sold the Rio Rancho Golf and Country Club and its
50% limited partnership interest in The Classic at West Palm Beach, a
congregate care facility in Florida, and recognized an aggregate
non-recurring gain of approximately $4.2 million, which amount is included in
"Interest and other operations".

Real estate commissions and selling expenses increased approximately 8%,
primarily as a result of the increased volume, as well as from an increase
in the number of projects open for sale. Real estate and corporate general
and administrative expenses increased 10%, principally as a result of the
Company's expansion into northern California commencing in September 1997.
General and administrative costs of

11



the magazine circulation operations increased by approximately 4%, moderately
lower than the revenue increase.

Interest expense increased by approximately 9% in 1998, primarily due to
higher average borrowings related to increased levels of receivables and
inventories, partially offset by an increase in the amount of capitalized
real estate interest.

Year Ended April 30, 1997 Compared to Year Ended April 30, 1996
- ---------------------------------------------------------------

Total revenues for the year ended April 30, 1997 decreased approximately 10%
from 1996, reflecting a decrease in revenues from housing sales and magazine
circulation operations which was partially offset by higher revenues from
land sales.

Revenues from housing sales decreased approximately 23% in 1997 from 1996,
resulting from a corresponding decrease in housing unit deliveries from 775
to 599. This decrease resulted from several factors, including a lengthening
of the regulatory approval process and delays in utility installations in
Colorado and New Mexico with resultant delays in the opening of projects for
sale during 1997, as well as a softer real estate market in New Mexico in
1997 compared to 1996. The average selling price of homes was comparable in
both years ($114,600 in 1997 compared to $115,700 in 1996).

The gross margin on housing sales decreased by approximately $6.4 million
principally due to the decrease in both the number of homes closed and gross
margin percentage. The average gross margin percentage declined from 17% to
13% due to a shift in the mix of projects from which homes were sold in 1997
compared to 1996. Revenues and related gross profit from land sales
increased by approximately $8.0 million and $2.4 million, respectively, in
1997 from 1996, primarily due to an increase in the level of commercial and
industrial lot sales. The average gross profit percentage on land sales
decreased from 53% in 1996 to 42% in 1997 because of the mix of land sales
between Colorado, Florida and New Mexico. Land sale revenues and related
gross profits can vary from year to year as a result of the nature and timing
of specific transactions, and are not an indication of amounts that may be
expected to occur in future periods. As a result of these factors, gross
profit from combined housing and land sales decreased by approximately $4.0
million in 1997 compared to the prior year.

Revenue from magazine circulation operations declined approximately 5% from
1996 as a result of decreases in both Fulfillment Services and Distribution
Services. Revenues in Fulfillment Services decreased about 5% due to lower
activity levels resulting from client losses in prior periods which were only
partially offset by additional revenues associated with new contracts.
Revenues from Distribution Services decreased about 6% due to a lower volume
of retail magazine sales in 1997, which resulted in part from a continuing
trend of increasing magazine prices which began in 1996. In addition, a
major realignment of industry relationships in the distribution of magazines
developed during 1996 which led to a substantial reduction in the number of
wholesalers which in some cases has allowed wholesalers to delay payments to
Kable and which adversely impacted sales and profits.

Operating expenses of magazine circulation operations decreased by
approximately $1.8 million (4%) in 1997 from 1996, responding to and
offsetting the revenue decrease discussed above. Operating expenses as a
percentage of revenues amounted to 81% and 80% in 1997 and 1996,
respectively. As a result of these factors, operating income of the magazine
circulation operations decreased by approximately $1.2 million from 1996.

Real estate commissions and selling expenses increased by approximately 7%
over 1996 because of marketing costs associated with the start up of
additional projects in Colorado. Real estate and corporate general and
administrative expenses decreased by approximately 24% as a result of ongoing
cost reduction measures adopted in response to the lower volume of activity
in 1997. In addition, 1996

12



amounts included the accrual of amounts due under the terms of an employment
contract with the Company's former Chief Executive Officer who left office
during 1996 due to a disability.

Interest expense increased by about 3% due to higher average borrowings for
the magazine circulation operations and higher average interest rates. In
addition, in 1997 the financial statements reflect a net benefit for income
taxes in the amount of $5.6 million as a result of an adjustment of $6.25
million to the provision for Deferred Income Taxes following the conclusion
of certain federal tax audits. See Note 9 to the consolidated financial
statements.

LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------

During the past several years, the Company has financed its operations
from internally generated funds from home and land sales and magazine
circulation operations, and from borrowings under its various lines-of-credit
and construction loan agreements.

Cash Flows From Financing Activities
- ------------------------------------

At April 30, 1998, the Company had line-of-credit arrangements with
several financial institutions collateralized by various assets which,
subject to collateral availability, amounted to an aggregate borrowing
availability of approximately $91.1 million. One of these lines (under which
$37.0 million was available and against which approximately $35.5 million was
outstanding as of April 30, 1998) is available for Kable News Company
operations. Borrowings under this line-of-credit, which expires August 31,
2000, 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 line-of-credit borrowings are used principally to support
real estate construction in New Mexico, California and Colorado. These loans
are collateralized by certain real estate assets and are subject to available
collateral and various financial performance and other covenants. At April
30, 1998, the maximum available under real estate lines-of-credit totaled
$54.1 million of which borrowings of $24.7 million were outstanding against
collateral of an equal amount.

Notes payable outstanding, including lines-of-credit discussed above,
were $84.2 million at April 30, 1998, compared to $79.8 million at April 30,
1997, and $54.4 million at April 30, 1996. The increase at April 30, 1998
compared to prior years resulted from additional development and expansion
activity in California and Colorado, as well as additional borrowings under
Kable's line-of-credit due to increased accounts receivable balances. A
subsidiary of the Company has also guaranteed approximately $9.8 million of
mortgages and notes payable of certain joint ventures in which it is a
participant.

The Company anticipates timely renewing, extending or replacing those loan
agreements under which loans become due in fiscal 1999.

Cash Flows From Operating Activities
- ------------------------------------

Inventories amounted to $99.9 million at April 30, 1998, compared to $92.5
million and $80 million at April 30, 1997 and 1996, respectively. The
increase at April 30, 1998 is due to the acquisition and initial development
of several real estate projects in connection with the Company's expansion
into the California and Colorado markets as well as initial development on
several new sites in New Mexico. This activity also contributed to the
increase in accounts payable, deposits and accrued expenses at April 30, 1998
compared to prior periods.

Receivables from magazine circulation operations increased by approximately
$14.4 million compared to the prior year, resulting from the timing of
monthly billings as well as from delays in payments

13




experienced by Kable from wholesalers, which Kable believes is partially a
result of the industry consolidation issue referred to above.

Cash Flows From Investing Activities
- ------------------------------------

Capital expenditures decreased in 1998 from 1997, due to lower requirements
of the Company's utility subsidiary. The Company believes that its available
funds will be adequate to provide for anticipated capital expenditures.

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.

As discussed in Note 9 to the consolidated financial statements, the Company
reached an agreement with the IRS during 1997 to resolve all issues resulting
from the IRS's examination of tax years 1984 through 1989, and paid all
amounts due. In addition, in 1997 the Company reclassified a portion
of the previously established deferred tax liability, and established an
equivalent liability for Taxes Payable (including anticipated interest
thereon through the expected date of payment) in the amount of $13.9 million,
which represents the estimated amounts due for tax years 1990 - 1995 based
upon a tax treatment consistent with the matters resolved in 1997.
Examinations of the Company's tax returns for the years 1990 - 1996 are
presently in various stages of completion, and the exact amount of taxes and
interest attributable to any given tax year will only be known and payable
after the IRS completes its review and computes the amount of the adjustment
for such year. The Company believes that with cash on hand, anticipated
earnings and bank lines, it will be able to pay the amounts classified as
Taxes Payable when they become due. For tax years beginning in 1996, the
Company's taxes have been calculated in a manner consistent with the 1997
agreement with the IRS and tax regulations.

Inflation
- ---------

Inflation has a long-term effect on the Company because increasing costs of
land, materials and labor result in increasing sales prices of its homes. In
general, these price increases have been commensurate with the general rate
of inflation in the Company's housing markets and have not had a significant
adverse effect on the sale of the Company's homes. A significant
inflationary risk faced by the housing industry generally is that rising
housing costs, including land and interest costs, will substantially outpace
increases in the income of potential purchasers. In recent years, in the
price ranges in which it sells homes, the Company has not found the risk to
be a significant problem.

Inflation has a lesser short-term effect on the Company because the Company
generally negotiates fixed price contracts with its subcontractors and
material suppliers for the construction of its homes. These prices usually
are applicable for a specified number of residential buildings or for a time
period of approximately six months.

Year 2000
- ---------

The Company utilizes a number of software systems in conjunction with its
real estate and magazine circulation operations. The Company has and will
continue to make certain investments in its software systems and applications
to ensure the Company is Year 2000 compliant. The financial impact of
becoming Year 2000 compliant has not been and is not expected to be material
to the Company's financial position or results of operations in a given year.

14



Recent Accounting Pronouncements
- --------------------------------

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income",
which establishes standards for reporting and display of comprehensive income
and its components (revenues, expenses, gains and losses) in a full set of
general-purpose financial statements. The Company will adopt SFAS No. 130 in
its fiscal year 1999.

In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information", which changes the way public companies
report information about operating segments. SFAS No. 131, which is based on
the management approach to segment reporting, establishes requirements to
report selected segment information quarterly, and to report entity-wide
disclosures about products and services, major customers, and the material
countries in which the entity holds assets and reports revenues. The Company
will adopt SFAS No. 131 in its fiscal year 1999.

Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------

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, 1998 and 1997, and the related
consolidated statements of income, shareholders' equity and cash flows for
each of the three years in the period ended April 30, 1998. These 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
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 audit 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, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period
ended April 30, 1998 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. Schedule II accompanying the
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 our 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

Albuquerque, New Mexico
June 26, 1998

15



AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED BALANCE SHEETS (Page 1 of 2)
-----------------------------------------
APRIL 30, 1998 AND 1997
-----------------------
(Dollar amounts in thousands)



ASSETS 1998 1997
------ ---------- ----------

CASH AND CASH EQUIVALENTS $ 20,517 $ 16,178

RECEIVABLES, net:
Real estate operations 11,107 10,486
Magazine circulation operations 57,408 43,015

REAL ESTATE INVENTORY 99,904 92,515

OTHER REAL ESTATE INVESTMENTS 1,497 4,893

PROPERTY, PLANT AND EQUIPMENT,
at cost, net of accumulated
depreciation and amortization 17,658 18,974

OTHER ASSETS 15,473 14,059

EXCESS OF COST OF SUBSIDIARIES
OVER NET ASSETS ACQUIRED, net 6,204 5,191
---------- ----------
TOTAL ASSETS $ 229,768 $ 205,311
========== ==========


The accompanying notes to consolidated financial statements are an
integral part of these consolidated balance sheets.

16




AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED BALANCE SHEETS (Page 2 of 2)
-----------------------------------------
APRIL 30, 1998 AND 1997
-----------------------
(Dollar amounts in thousands, except par value)


LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
------------------------------------ ----------- ----------

ACCOUNTS PAYABLE, DEPOSITS AND
ACCRUED EXPENSES $ 40,352 $ 30,081

NOTES PAYABLE:
Amounts due within one year 28,511 24,833
Amounts subsequently due 55,737 54,991

TAXES PAYABLE:
Amounts due within one year 4,616 512
Amounts subsequently due (including interest) 13,923 13,923

DEFERRED INCOME TAXES 2,589 5,137

TOTAL LIABILITIES 145,728 129,477

COMMITMENTS AND CONTINGENCIES (Notes 10 and 11)

SHAREHOLDERS' EQUITY:
Common stock, $.10 par value;
shares authorized--20,000,000;
shares issued --7,398,677 in 1998 and 1997 740 740
Capital contributed in excess of par value 44,928 44,928
Retained earnings 38,552 30,346
Treasury stock, at cost; 30,027 shares (180) (180)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 84,040 75,834
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 229,768 $ 205,311
========== ==========

The accompanying notes to consolidated financial statements are an
integral part of these consolidated balance sheets.

17


AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Amounts in thousands, except per share amounts)

Year Ended April 30,
------------------------------------
1998 1997 1996
--------- --------- ---------
REVENUES:
Real estate operations-
Home and condominium sales $ 79,730 $ 68,647 $ 89,697
Land sales 25,102 16,891 8,901
--------- --------- ---------
104,832 85,538 98,598

Magazine circulation operations 56,939 54,152 57,149
Interest and other operations 9,597 6,699 6,055
--------- --------- --------
171,368 146,389 161,802
--------- --------- --------

COSTS AND EXPENSES:
Real estate cost of sales 82,660 69,418 78,401
Operating expenses-
Magazine circulation operations 43,835 43,966 45,785
Real estate commissions and selling 7,424 6,850 6,373
Other operations 4,680 6,635 6,376
General and administrative-
Real estate operations and corporate 8,031 7,322 9,573
Magazine circulation operations 6,657 6,428 6,728
Interest, net 4,404 4,050 3,925
--------- -------- --------
157,691 144,669 157,161
--------- -------- --------
INCOME BEFORE INCOME TAXES 13,677 1,720 4,641

PROVISION (BENEFIT) FOR INCOME TAXES 5,471 (5,562) 1,856
--------- --------- ---------
NET INCOME $ 8,206 $ 7,282 $ 2,785
========= ========= =========
EARNINGS PER SHARE - BASIC AND DILUTED $ 1.11 $ 0.99 $ 0.38
========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 7,369 7,369 7,384
========= ========= =========


The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.

18




AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
-----------------------------------------------
(Amounts in thousands)




Capital
Contributed
Common Stock In Excess Treasury
---------------- of Retained Stock at
Shares Amount Par Value Earnings Cost Total
------ ------ --------- --------- -------- --------

BALANCE, April 30, 1995 7,394 $ 739 $ 44,903 $ 20,279 $ - $ 65,921

Net income - - - 2,785 - 2,785

Exercise of stock options 5 1 25 - - 26

Treasury stock purchased - - - - (180) (180)
----- ------ --------- --------- ------- --------

BALANCE, April 30, 1996 7,399 740 44,928 23,064 (180) 68,552

Net income - - - 7,282 - 7,282
----- ------ --------- --------- ------- --------

BALANCE, April 30, 1997 7,399 740 44,928 30,346 (180) 75,834

Net income - - - 8,206 - 8,206
----- ------ --------- --------- ------- --------

BALANCE, April 30, 1998 7,399 $ 740 $ 44,928 $ 38,552 $ (180) $ 84,040

===== ====== ========= ========= ======= ========



The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.

19




AMREP CORPORATION AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Amounts in thousands)
Year Ended April 30,
--------------------------------
1998 1997 1996
--------- ---------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,206 $ 7,282 $ 2,785
Adjustments to reconcile net income
to net cash (used) provided by operating
activities-
Depreciation and amortization 3,259 2,743 2,309
Gain from exchange of real estate inventory - (579) -
for accounts payable
Changes in assets and liabilities,
excluding the effect of acquisition-
Receivables - net (14,753) (3,896) 250
Real estate inventory (7,389) (12,673) 1,257
Other real estate investments 3,396 3,318 3,411
Other assets (1,777) (757) (223)
Accounts payable, deposits and accrued
expenses 10,224 168 (978)
Taxes payable 4,104 12,135 1,943
Deferred income taxes (2,548) (20,703) (680)
--------- -------- --------
Net cash (used) provided by operating
activities 2,722 (12,962) 10,074
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,998) (3,900) (5,358)
Book value of property, plant and equipment
sold 1,393 - 861
Amount paid for acquisition (2,202) - -
--------- -------- --------
Net cash used by investing activities (2,807) (3,900) (4,497)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing 55,212 66,225 28,226
Principal debt payments (50,788) (40,792) (35,488)
Proceeds from the sale of stock and exercise
of stock options - - 26
--------- -------- --------
Net cash provided (used) by financing
activities 4,424 25,433 (7,236)
--------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 4,339 8,571 (1,659)

CASH AND CASH EQUIVALENTS, beginning of year 16,178 7,607 9,266
--------- -------- --------
CASH AND CASH EQUIVALENTS, end of year $ 20,517 $ 16,178 $ 7,607
========= ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid - net of amounts capitalized $ 4,093 $ 3,903 $ 3,634
========= ======== ========
Income taxes paid $ 3,952 $ 2,673 $ 553
========= ======== ========

Acquisition of real estate assets:
Identifiable assets acquired $ 1,168 $ - $ -
Excess of cost over net assets acquired 1,081 - -
Liabilities assumed (47) - -
--------- -------- --------
Amount paid for acquisition $ 2,202 $ - $ -
========= ======== ========

The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.

20




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. The Company, through its principal subsidiaries, AMREP
Southwest Inc. and Kable News Company, Inc. ("Kable") , is a regional
builder of single-family homes and land developer with operations
throughout the western United States, with principal operations in New
Mexico, California and Colorado, and also distributes magazines to
wholesalers and provides subscription fulfillment and other services to
publishers. The Company's investments in partnerships (and similar
entities), in which the Company's interest is 50% or less, or in which
the Company does not effectively control the joint venture, are
accounted for by the equity method. 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
recognized when title and other attributes of ownership have been
conveyed to the buyer by means of a closing.

Land sales
----------

Land sales are recognized when the parties are bound by the terms of
the contract, all consideration (including adequate cash) has been
exchanged and title and other attributes of ownership have been
conveyed to the buyer by means of a closing. 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 at its receivable balance, net of
any deferred profit, but not in excess of fair market value less
estimated costs to sell.

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, however, 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.

Cash and cash equivalents
-------------------------

Cash equivalents consist of short term, highly liquid investments which
have an original maturity of ninety days or less, and that are readily
convertible into cash.

21




Real estate inventory
---------------------

Homes and condominiums completed or under construction are stated at
the lower of accumulated cost, including interest costs capitalized
during construction, or fair value.

Land and improvements are stated at the lower of accumulated cost
(except in certain instances where property is repossessed as discussed
above under "Land sales") which includes the development cost, certain
amenities, capitalized interest and capitalized real estate taxes, or
fair value.

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 subsidiaries over net assets acquired
-------------------------------------------------------

The excess of amounts paid for business acquisitions over the net fair
value of the assets acquired and liabilities assumed is carried as an
asset. The portion of this amount that arose in connection with the
acquisition of Kable ($5,191,000) , is not being amortized to
operations since this acquisition was made prior to the effective date
of APB Opinion No. 17, and management is of the opinion that there has
been no diminution of value. The remaining $1,081,000 arose in
connection with the acquisition of certain real estate assets during
1998, and is being amortized over ten years. Amortization expense was
$68,000 in 1998.

Income taxes
------------

Income taxes are accounted for in accordance with SFAS No. 109
"Accounting for Income Taxes". Under SFAS No. 109, deferred tax assets
and liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities, and are measured by
using enacted tax rates expected to apply to taxable income in the
years in which those differences are expected to reverse.

Earnings per share
------------------

Basic earnings per share outstanding is based on the weighted average
number of common shares outstanding during each year. Diluted earnings
per share is computed assuming the issuance of common shares for all
dilutive stock options outstanding (using the treasury stock method)
during the reporting period. SFAS No. 128, "Earnings Per Share",
requires restatement of all prior period earnings per share
information. As there are no differences in the calculations of
earnings per share for prior periods, no restatement is required.


22



Stock options
-------------

The Company grants stock options to certain employees and directors for
a fixed number of shares with an exercise price not less than the fair
value of the shares at the date of grant. The Company accounts for the
stock option grants in accordance with Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees". In
October 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123, "Accounting for Stock-Based Compensation". The Company
has adopted the disclosure-only provisions of SFAS No. 123 (see Note 8).

Impairment of long-lived assets
-------------------------------

Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of", established standards for the recognition and
measurement of impairment losses on long-lived assets. The Company
adopted SFAS No. 121 in the first quarter of fiscal 1997. The adoption
did not result in the recognition of an impairment loss.

Management's estimates and assumptions
--------------------------------------

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.

Recent accounting pronouncements
--------------------------------

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income", which establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and
losses) in a full set of general-purpose financial statements. The
Company will adopt SFAS No. 130 in its fiscal year 1999.

In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information", which changes the way public
companies report information about operating segments. SFAS No. 131,
which is based on the management approach to segment reporting,
establishes requirements to report selected segment information
quarterly, and to report entity-wide disclosures about products and
services, major customers, and the material countries in which the
entity holds assets and reports revenues. The Company will adopt SFAS
No. 131 in its fiscal year 1999.

Financial statement presentation
--------------------------------

Certain prior year amounts in the consolidated financial statements
have been reclassified to conform with the 1998 presentation.

23



(2) RECEIVABLES:
------------

Receivables consist of: April 30,
-----------------------
1998 1997
--------- ---------
(Thousands)
Real estate operations-
Mortgage and other receivables $ 11,011 $ 10,658
Allowance for doubtful accounts (291) (690)
--------- ---------
10,720 9,968
Mortgages securing collateralized
mortgage obligations (see Note 7) 387 518
--------- ---------
$ 11,107 $ 10,486
========= =========
Magazine circulation operations-
Accounts receivable (maturing within
one year) $ 113,649 $ 96,337
Allowances for-
Estimated returns (54,738) (52,059)
Doubtful accounts (1,503) (1,263)
--------- ---------
$ 57,408 $ 43,015
========= =========

Mortgage and other receivables bear interest at rates ranging from 8.0%
to 12.0% 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 7).

The Company extends credit to various companies in the real estate and
magazine circulation industries which may be affected by changes in
economic or other external conditions. Financial instruments that may
potentially subject the Company to a significant concentration of risk
primarily consist of trade accounts receivable from wholesalers in the
magazine distribution industry. The Company's policy is to manage its
exposure to credit risk through credit approvals and limits and, where
appropriate, to be secured by collateral, and to provide an allowance
for doubtful accounts for potential losses based upon factors
surrounding the credit risk of specific customers, historical trends
and other financial information.

Maturities of principal on real estate receivables, exclusive of
mortgages securing collateralized mortgage obligations, at April 30,
1998 are as follows (in thousands): 1999 - $8,422; 2000 - $1,053; 2001
- - $226; 2002 - $24; 2003 - $166; 2004 and thereafter - $1,120.

(3) REAL ESTATE INVENTORY:
----------------------

Real estate inventory consists of:
April 30,
----------------------
1998 1997
--------- ---------
(Thousands)
Land and improvements held for sale or
development, net of valuation allowance of
$1,880 at April 30, 1998 and $2,459 at April
30, 1997 $ 63,839 $ 69,438
Homes and condominiums-
Land and improvements 15,037 7,930
Construction costs 21,028 15,147
--------- ---------
$ 99,904 $ 92,515
========= =========


24




Accumulated capitalized interest costs included in real estate
inventory at April 30, 1998 and 1997 were $5,716,000 and $4,962,000,
respectively. Interest costs capitalized during 1998, 1997 and 1996
were $3,226,000, $2,543,000 and $1,980,000, respectively. Accumulated
capitalized real estate taxes included in the inventory of land and
improvements at April 30, 1998 and 1997 were $5,635,000 and $5,724,000,
respectively. Real estate taxes capitalized during 1998, 1997 and 1996
were $165,000, $157,000 and $166,000, respectively. Previously
capitalized interest costs and real estate taxes charged to real estate
cost of sales were $2,726,000, $1,741,000 and $1,272,000 in 1998, 1997
and 1996, respectively.

(4) OTHER REAL ESTATE INVESTMENTS:
------------------------------

Investments in other real estate projects principally consist of the
following:

April 30,
--------------------
1998 1997
--------- --------
(Thousands)

Unconsolidated joint ventures $ 766 $ -
Consolidated joint venture 731 2,540
The Classic limited partnership interest - 2,353
--------- --------
$ 1,497 $ 4,893
========= ========

Unconsolidated Joint Ventures
-----------------------------

The Company participates in a number of joint ventures in which it does
not have management control. These joint ventures are primarily
engaged in the development, construction and sale of single-family or
multi-family residential properties. Combined condensed financial
information concerning the Company's unconsolidated joint venture
activities follows (in thousands):

April 30,
--------------------
1998 1997
--------- --------
(Thousands)

Cash $ 83 $ 200
Receivables 1,090 -
Inventories 8,506 -
--------- --------
Total Assets $ 9,679 $ 200
========= ========

Mortgages and notes payable $ 8,100 $ -
Other liabilities 755 -
Equity of:
The Company 766 100
Others 58 100
--------- --------
Total Liabilities and Equity $ 9,679 $ 200
========= ========


25




The joint ventures finance land and inventory investments primarily
through a variety of borrowing arrangements. A subsidiary of the
Company has guaranteed these mortgages payable, as well as an
additional $1,743,000 of mortgage debt on a project which the Company
is a non-equity participant.

Year Ended April 30,
----------------------
1998 1997
--------- ---------
(Thousands)

Revenues $ 5,729 $ 16,273
Cost of sales 5,680 15,277
Other expenses - net 472 -
--------- ---------
Total pretax income (loss) $ (423) $ 996
========= =========
The Company's share of pretax income (loss)$ (100) $ 498
========= =========

The Company's share of 1998 pretax loss includes management fees earned
from unconsolidated joint ventures.

Consolidated Joint Venture
--------------------------

A wholly-owned subsidiary of the Company has a 50% general partnership
interest in a real estate project which was formed to develop and
market a 380 unit condominium housing project in Freehold, New Jersey.
This subsidiary also has a 75% ownership interest in a related
construction company. As a result, the financial statements of these
entities are included in the Company's consolidated financial
statements. The investment in this asset at April 30, 1998 and 1997,
principally represents net inventories; all project financing has been
repaid. As of April 30, 1998, this project is substantially complete.

Accumulated capitalized interest costs included in this project at
April 30, 1998 and 1997 were $241,000 and $509,000, respectively.
Interest costs capitalized during 1998, 1997 and 1996 were $454,000,
$463,000 and $442,000, respectively. Previously capitalized interest
costs charged to real estate cost of sales were $722,000, $918,000 and
$1,211,000 in 1998, 1997 and 1996, respectively.

The Classic
-----------

A subsidiary of the Company has been a 50% limited partner in a 300
unit congregate living facility in West Palm Beach, Florida, which was
completed in 1991. During 1998, this facility was sold to an unrelated
party, and the Company recognized a gain of approximately $3.0 million
upon the sale of this asset and distribution of cash to the Company.
This gain is included in "Interest and other operations" in the
accompanying consolidated statements of income.


26




(5) PROPERTY, PLANT AND EQUIPMENT:
------------------------------

Property, plant and equipment consists of:
April 30,
----------------------
1998 1997
--------- ---------
(Thousands)

Land, buildings and improvements $ 9,705 $ 11,461
Furniture and fixtures 11,594 11,914
Utility plant and equipment 8,645 7,506
Other 974 1,625
--------- ---------
30,918 32,506
Accumulated depreciation and
amortization (13,260) (13,532)
--------- ---------
$ 17,658 $ 18,974
========= =========

Depreciation charged to operations amounted to $1,940,000, $1,816,000
and $1,630,000 in 1998, 1997 and 1996, respectively.

(6) OTHER ASSETS:
-------------

Other assets are comprised of:
April 30,
------------------------
1998 1997
----------- -----------
(Thousands)

Prepaid expenses and other deferred
charges, net $ 7,053 $ 6,325
Purchased magazine distribution
contracts, net of accumulated
amortization of $2,033 and $1,605
in 1998 and 1997, respectively 2,246 2,674
Security deposits 2,962 2,480
Escrow monies and collateral deposits 833 930
Real estate advances and deposits 754 -
Other 1,625 1,650
--------- ---------
$ 15,473 $ 14,059
========= =========

Amortization related to deferred charges and distribution contracts was
$1,251,000, $913,000 and $679,000 for the years ended April 30, 1998,
1997 and 1996, respectively.

27




(7) DEBT FINANCING:

Debt financing consists of:
April 30,
----------------------
1998 1997
--------- ---------
(Thousands)
Notes payable -
Line-of-credit borrowings -
Real estate operations and other $ 24,659 $ 27,146
Magazine circulation operations 35,552 34,377
Mortgages and other notes payable 22,923 16,258
Fixed rate note - 564
Utility note payable 773 950
Collateralized mortgage obligations
(see Note 2) 341 529
--------- ---------
$ 84,248 $ 79,824
========= =========

Maturities of principal on notes payable at April 30, 1998 are as
follows (in thousands): 1999 - $28,511; 2000 - $9,735; 2001 - $40,431;
2002 - $3,090; 2003 - $133; 2004 and thereafter - $2,348.

Line-of-credit borrowings
-------------------------

The Company has several loan arrangements with various financial
institutions to support real estate operations. These loans have a
total maximum amount available of approximately $54.1
million of which borrowings of $24.7 million were outstanding
against collateral of an equal amount as of April 30, 1998. These borrowings,
which have maturities ranging from fiscal 1999 through fiscal 2002, bear
interest ranging from the prime rate (8.5% at April 30, 1998) plus .75% to 1.75%
(with a weighted average effective rate of interest of approximately 9.6% at
April 30, 1998), are collateralized by certain real estate assets and are
subject to certain financial performance and other covenants. The Company was
not in compliance with a performance covenant on one loan at April 30, 1998,
for which it has obtained a waiver. 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 $22.6 million of these lines-of-credit
were obtained.

At April 30, 1998, the Company had drawn $35.5 million against an
additional $37.0 million line-of-credit arrangement which is generally
restricted to magazine circulation operations. Borrowings under this
line-of-credit agreement bear interest at the prime rate plus .5% or,
at the Company's option, at LIBOR plus 2.75%, and are collateralized by
accounts receivable arising from magazine circulation operations. This
agreement also contains various financial performance and other
restrictive covenants which, among other things, limit the payment of
dividends, annual capital expenditures and loans from the magazine
circulation subsidiary to the Company. Borrowings pursuant to this
line-of-credit agreement are due August 31, 2000.

The Company anticipates renewing, extending or replacing certain of
these loan agreements as they become due in fiscal 1999.

Mortgages and other notes payable
---------------------------------

Mortgages and other notes payable had interest rates ranging from 6.4%
to 11.5% at April 30, 1998, and are primarily collateralized by
property, plant and equipment and certain land inventory. These
borrowings have maturities ranging from fiscal 1999 through fiscal 2013.


28




Utility note payable
--------------------

The Company has a note in the amount of $773,000 at April 30, 1998,
maturing November 1, 2001 with monthly installments of principal and
interest at 1.5% above the prime rate. This note is collateralized by
certain utility plant and equipment and other utility assets.

Collateralized mortgage obligations
-----------------------------------

Collateralized mortgage obligations (CMO's), with original principal
balances aggregating $13,750,000, were issued in fiscal year 1986
through 1988, through an unrelated financial intermediary. Interest
rates range from 8.0% to 13.9% per annum, with stated maturities,
assuming no prepayments, from January, 2015 to October, 2017. 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 2) of
the related mortgage loans.

(8) BENEFIT PLANS:
--------------

Stock option plans
------------------

Under the Company's 1992 Stock Option Plan, 311,750 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. The Non-Employee
Directors Option Plan has 42,000 shares reserved for issuance and
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 in one year
and expire five years after the date of grant. The 1982 Incentive
Option Plan expired during fiscal year 1996. A summary of activity in
the Company's stock option plans is as follows:

Year Ended April 30,
-------------------------------------
1998 1997 1996
----------- ----------- -----------
Common stock options
outstanding at beginning of
year 85,500 121,000 225,600

Granted at $5.19 to $6.59 per 42,500 3,500 3,000
share

Options exercised at $4.75 to
$5.88 per share - - (5,000)

Expired or cancelled (77,500) (39,000) (102,600)
----------- ----------- -----------
Common stock options
outstanding at end of year 50,500 85,500 121,000
=========== =========== ===========
Available for future grant at
year end 303,250 272,250 201,750
=========== =========== ===========

At April 30, 1998, options to purchase 40,000 shares under the 1992
Stock Option Plan and 10,500 shares under the Non-Employee Directors
Option Plan were outstanding at exercise prices ranging from $5.19 to
$8.88 per share, and 271,750 and 31,500 shares were available for
future grant, respectively. Outstanding options heretofore granted are
exercisable over a three to four year period beginning one year from
date of grant. As of April 30, 1998, 8,000 options were exercisable
under the Company's stock option plans.

Stock options granted have been issued at the fair market value of the
Company's stock at the date of grant. Accordingly, no compensation
expense has been recognized with respect to the stock option

29



plans. Further, the amount of additional compensation disclosable under the
disclosure-only provisions of SFAS No. 123 is immaterial for all
periods presented.

Savings plans
-------------

The Company has two savings plans to which the Company makes
contributions. The plans were amended during 1998 to provide for
standard contributions of 33.3% of eligible employees' defined
contributions up to a maximum of 2% of such employees' compensation.
Additional amounts may be contributed with the approval of the
Company's Board of Directors. The Company's contributions to the plans
amounted to approximately $268,000, $129,000 and $142,000, in 1998,
1997 and 1996, respectively.

Retirement plans
----------------

The Company has two retirement plans which cover substantially all
full-time employees. During fiscal 1998, the Company's pension plans
were amended to revise the form of benefit payment determination from
that of a defined benefit plan formula based upon length of service and
a percentage of qualifying compensation to one based upon a percentage
of the employee's annual salary. In 1998, 1997 and 1996, the Company
contributed $231,000, $1,190,000 and $1,077,000, 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 1998, 1997 and 1996 was comprised of the
following components:

Year Ended April 30,
------------------------------------
1998 1997 1996
--------- --------- ---------
(Thousands)
Service cost - benefits
earned during the period $ 994 $ 1,156 $ 1,045
Interest cost on projected
benefit obligation 1,716 1,720 1,593
Actual return on assets (4,820) (1,817) (2,792)
Net amortization and deferral 2,694 (187) 1,134
--------- --------- ---------
Net periodic pension cost $ 584 $ 872 $ 980
========= ========= =========

Assumptions used in the accounting were:

Year Ended April 30,
------------------------------------------
1998 1997 1996
------------- ------------ -------------

Discount rates 7.25% 8.00% 8.00%
Rates of increase in
compensation levels N/A 4.50-5.00% 4.50-5.00%
Expected long-term rate of
return on assets 8.00-9.00% 8.00-9.00% 8.00-9.00%


30





The following table sets forth the plans' funded status and amounts
recognized in the Company's consolidated balance sheets:

April 30,
--------------------
1998 1997
-------- --------
(Thousands)
Actuarial present value of benefit obligations:
Vested benefit obligation $ 21,688 $ 18,312
======== ========
Accumulated benefit obligation $ 22,471 $ 19,504
======== ========
Projected benefit obligation $ 22,471 $ 23,729
Assets at fair value 27,133 23,283
-------- --------
Excess of projected benefit obligation over
assets 4,662 (446)
Unrecognized net loss 14 1,744
Unrecognized prior service cost benefit (3,779) (48)
Unrecognized net transition liability 52 52
-------- --------
Prepaid pension cost $ 949 $ 1,302
======== ========

(9) INCOME TAXES:
-------------

The provision (benefit) for income taxes consists of the following:
Year Ended April 30,
-----------------------------------
1998 1997 1996
--------- --------- ---------
(Thousands)
Current:
Federal $ 6,925 $ 13,187 $ 2,414
State and local 1,094 1,954 123
--------- --------- ---------
8,019 15,141 2,537
--------- --------- ---------
Deferred:
Federal (2,177) (18,753) (582)
State and local (371) (1,950) (99)
--------- --------- ---------
(2,548) (20,703) (681)
--------- --------- ---------
Total provision (benefit) for income
taxes $ 5,471 $ (5,562) $ 1,856
========= ========= =========


31





The components of the net deferred income tax liability are as follows:

April 30,
------------------------
1998 1997
--------- ---------
(Thousands)
Deferred income tax assets-
State tax loss carryforwards $ 4,716 $ 4,061
Real estate inventory valuation 1,127 1,426
Interest payable on tax settlements 2,229 2,233
Real estate basis differences 508 531
Reserve for periodicals and paperbacks 596 (228)
Differences related to timing of
partnership income 871 (1,819)
--------- ---------
Total deferred income tax assets 10,047 6,204
--------- ---------

Deferred income tax liabilities-
Gain on partnership restructuring (473) (473)
Depreciable assets (2,563) (1,513)
Expenses capitalized for financial
reporting purposes, expensed for tax (2,518) (2,234)
Other (2,976) (3,998)
--------- ---------
Total deferred income tax liability (8,530) (8,218)
--------- ---------

Valuation allowance for realization of
state tax loss carryforwards (4,106) (3,123)
--------- ---------
Net deferred income tax liability $ (2,589) $ (5,137)
========= =========

The following table reconciles taxes computed at the U.S. federal
statutory income tax rate to the Company's actual tax provision
(benefit):

Year Ended April 30,
------------------------------------
1998 1997 1996
--------- --------- ---------
(Thousands)
Computed tax provision at
statutory rate $ 4,787 $ 585 $ 1,578
Increase (reduction) in tax
resulting from:
State income taxes, net of
federal income tax effect 809 117 269
Net reduction in deferred tax
liability as a result of IRS
settlement - (6,250) -
Other (125) (14) 9
--------- --------- ---------

Actual tax provision (benefit) $ 5,471 $ (5,562) $ 1,856
========= ========= =========

During 1997, the Company reached an agreement with the Internal Revenue
Service ("IRS") which resolved all outstanding issues resulting from
the IRS's audit of the years 1984 through 1989. As a result, the
Company paid an assessment of approximately $200,000 for federal taxes,
and anticipates no significant further payments for either state or
federal taxes (including interest) for those years. Furthermore, the
Company adjusted Deferred Income Taxes, pursuant to SFAS No. 109, to
reflect a reduction in taxes ultimately expected to be payable and a
reduction in federal income tax rates for deferred taxes established at
rates in effect prior to 1987. In addition, the Company determined the


32





amount of additional taxes that would be due pursuant to IRS
examinations for the years 1990 through 1995 in order to achieve a tax
treatment consistent with the 1997 agreement with the IRS with respect
to the years 1984 through 1989. Accordingly, in 1997 the Company
reclassified a portion of the deferred tax liability which had been
established in prior years with regard to the reserve for periodicals
and paperbacks in the amount of $13.9 million, by establishing an
equivalent liability for income taxes (including anticipated interest
thereon through the expected date of payment) which are expected to be
paid at varying times over the next several years.

(10) COMMITMENTS AND CONTINGENCIES:
------------------------------

Revenue agent review
--------------------

The IRS is in the process of reviewing the Company's tax returns for
the years 1990 through 1996. While the Company cannot be totally
certain of the results of these audits, it has made certain
reclassifications in 1997 between Deferred Income Taxes and Taxes
Payable, as discussed in Note 9, to reflect adjustments similar to
those agreed upon with the IRS in reaching agreement on the 1984
through 1989 tax returns with regard to the reserve for periodicals and
paperbacks.

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 1998,
1997 and 1996 was approximately $5,195,000, $5,215,000 and $5,195,000,
respectively.

The approximate minimum rental commitments for years subsequent to
April 30, 1998, are as follows (in thousands): 1999 - $4,147; 2000 -
$2,338; 2001 - $1,600; 2002 - $1,143; 2003 - $901; thereafter - $1,143;
and the total future minimum rental payments - $11,272.

Rio Rancho lot exchanges
------------------------

In connection with homesite sales at Rio Rancho, New Mexico, made prior
to 1977, 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.

(11) 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.

(12) FAIR VALUE OF FINANCIAL INSTRUMENTS:
------------------------------------

The estimated fair value of financial instruments is determined by
reference to various market data and other valuation techniques as
appropriate. The carrying amounts of cash and cash equivalents and
trade payables approximate fair value because of the short maturity of
these financial instruments. Debt that bears variable interest rates
indexed to prime or LIBOR also approximates fair value as it reprices
when market interest rates changes. The estimated fair value of the
Company's long-term, fixed-rate mortgage receivables is $7.4 million,
versus a carrying amount of $7.5 million, and $5.7 million versus $6.3
million, respectively, at April 30, 1998 and April 30, 1997. The
estimated fair value of the Company's long-term, fixed-rate notes
payable is $15.8 million, which equals the carrying amount as of April
30, 1998, and $8.0 million versus a carrying amount of $8.1 million as
of April 30, 1997.


33




(13) PROPOSED SPIN-OFF:
------------------

In May 1998, the Company filed a request for a ruling from the IRS in
order to enable it to spin-off its real estate operations to its
shareholders on a tax free basis. A favorable response from the IRS is
by no means certain, and there are a number of other conditions to the
implementation of the spin-off. If these prerequisites are met, the
Company anticipates requesting shareholder approval for a pro rata
distribution of the stock of AMREP Southwest Inc. to its shareholders
in the second half of fiscal 1999.

There is no effect on the Company's financial statements at this time.
If and when (i) a favorable response is received from the IRS; (ii)
the Company's Board of Directors approves submitting the matter to a
vote for shareholder approval; and (iii) it appears probable that
shareholders will approve the matter, the Company's financial
statements would be restated to present real estate operations as a
discontinued operations for all periods presented. There would be no
effect on reported net income.

(14) INFORMATION ABOUT THE COMPANY'S OPERATIONS IN DIFFERENT
INDUSTRY SEGMENTS:
-------------------------------------------------------

The Company reports information with respect to industry segments in
accordance with SFAS No. 14.

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 and related activities on
behalf of various publishers and other clients. Total revenue by
industry includes revenues from unaffiliated customers as reported in
the accompanying consolidated statements of income. 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.

34






The following schedules set forth summarized data relative to the
industry segments:




Real Magazine
Estate Circulation Other
Operations Operations Operations Corporate Eliminations Consolidated
---------- ---------- ---------- --------- ------------ ------------
1998 (Thousands):
Net revenues
from
unaffiliated
customers $ 113,472 $ 56,939 $ 957 $ - $ - $ 171,368
Intersegment
revenues - - 18 - (18) -
--------- --------- --------- -------- --------- ---------
Total revenue $ 113,472 $ 56,939 $ 975 $ - $ (18) $ 171,368
========= ========= ========= ======== ========= =========
Operating
income $ 14,189 $ 6,447 $ 160 $ - $ (18) $ 20,778
========= ========= ========= ======== =========
Corporate expenses (2,697)
Interest (4,404)
---------
Income before
provision for
income taxes $ 13,677
=========
Identifiable
assets at
April 30,
1998 $ 140,873 $ 82,321 $ 177 $ 6,397 $ - $ 229,768
========= ========= ========= ======== ========= =========
Identifiable
depreciation $ 597 $ 1,316 $ 3 $ 24 $ - $ 1,940
========= ========= ========= ======== ========= =========
Identifiable
capital
expenditures $ 1,254 $ 744 $ - $ - $ - $ 1,998
========= ========= ========= ======== ========= =========

1997 (Thousands):
Net revenues
from
unaffiliated
customers $ 91,250 $ 54,152 $ 987 $ - $ - $ 146,389
Intersegment
revenues - - 72 - (72) -
--------- --------- --------- --------- --------- ---------
Total revenue $ 91,250 $ 54,152 $ 1,059 $ - $ (72) $ 146,389
========= ========= ========= ========= ========= =========
Operating
income $ 4,548 $ 3,758 $ 133 $ - $ (72) $ 8,367
========= ========= ========= ========= =========
Corporate expenses (2,597)
Interest (4,050)
---------
Income before
provision for
income taxes $ 1,720
=========
Identifiable
assets at
April 30,
1997 $ 132,544 $ 71,384 $ 172 $ 1,211 $ - $ 205,311
========= ========= ========= ========= ========= =========
Identifiable
depreciation $ 741 $ 1,045 $ 3 $ 27 $ - $ 1,816
========= ========= ========= ========= ========= =========
Identifiable
capital
expenditures $ 1,730 $ 2,170 $ - $ - $ - $ 3,900
========= ========= ========= ========= ========= =========


35





Real Magazine
Estate Circulation Other
Operations Operations Operations Corporate Eliminations Consolidated
---------- ---------- ---------- --------- ------------ ------------
1996 (Thousands):
Net revenues
from
unaffiliated
customers $ 103,747 $ 57,149 $ 906 $ - $ - $ 161,802
Intersegment
revenues - - 72 - (72) -
--------- --------- --------- -------- --------- ---------
Total revenue $ 103,747 $ 57,149 $ 978 $ - $ (72) $ 161,802
========= ========= ========= ======== ========= =========
Operating
income $ 8,313 $ 4,635 $ 119 $ - $ (72) $ 12,995
========= ========= ========= ======== =========
Corporate expenses (4,429)
Interest (3,925)
---------
Income before
provision for
income taxes $ 4,641
=========
Identifiable
assets at
April 30,
1996 $ 121,646 $ 57,937 $ 342 $ 1,871 $ - $ 181,796
========= ========= ========= ======== ========= =========
Identifiable
depreciation $ 694 $ 890 $ 3 $ 43 $ - $ 1,630
========= ========= ========= ======== ========= =========
Identifiable
capital
expenditures $ 2,713 $ 2,624 $ - $ 21 $ - $ 5,358
========= ========= ========= ======== ========= =========



36





Selected Quarterly Financial Data (Unaudited)

(In thousands of dollars, except per share
amounts)
Quarter Ended
---------------------------------------------------
July 31, October 31, January 31, April 30,
1997 1997 1998 1998
--------- ----------- ----------- ---------
Revenues $ 37,795 $ 43,540 $ 46,849 $ 43,184

Gross Profit 7,086 10,845 13,591 8,671

Net Income $ 505 $ 2,539 $ 4,142 $ 1,020
========= ========= ========= =========
Earnings Per Share -

Basic and Diluted $ 0.07 $ 0.34 $ 0.56 $ 0.14
========= ========= ========= =========

Quarter Ended
---------------------------------------------------
July 31, October 31, January 31, April 30,
1996 1996 1997 1997
--------- ----------- ----------- ---------

Revenues $ 34,408 $ 33,230 $ 36,761 $ 41,990

Gross Profit (A) 6,388 6,468 6,880 6,634

Net Income (B) $ 403 $ 262 $ 267 $ 6,350
========= ========= ========= =========
Earnings Per Share -

Basic and Diluted $ 0.05 $ 0.04 $ 0.04 $ 0.86
========= ========= ========= =========

(A) As discussed in Note 1 of Notes to Consolidated Financial
Statements, certain amounts have been reclassified to conform with the
1998 presentation.

(B) The quarter ended April 30, 1997 reflects an adjustment to
Deferred Income Taxes for settlement of 1984 through 1989 tax
examinations (see Note 9).

37





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 "Common Stock Ownership of Certain Beneficial Owners
and Management", "Election of Directors", and "Executive
Compensation" in Registrant's definitive proxy statement for
the 1998 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,
1998 and 1997

Consolidated Statements of Operations for
the Three Years Ended April 30, 1998

Consolidated Statements of Shareholders'
Equity for the Three Years Ended April 30, 1998

Consolidated Statements of Cash Flows for
the Three Years Ended April 30, 1998

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

38




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, 1998,
Registrant filed no Current Report on Form 8-K.


39




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 27, 1998 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 /s/Nicholas G. Karabots
- --------------------------------- ------------------------------
Mohan Vachani Nicholas G. Karabots
Director, Senior Vice President, Director
Principal Financial Officer and Dated: July 27, 1998
Principal Accounting Officer *
Dated: July 27, 1998

/s/Jerome Belson /s/Albert V. Russo
- ---------------------------------- -------------------------------
Jerome Belson Albert V. Russo
Director Director
Dated: July 27, 1998 Dated: July 27, 1998

/s/Edward B. Cloues, II /s/Samuel N. Seidman
- ---------------------------------- -------------------------------
Edward B. Cloues, II Samuel N. Seidman
Director Director
Dated: July 27, 1998 Dated: July 27, 1998

/s/Daniel Friedman /s/James Wall
- ---------------------------------- -------------------------------
Daniel Friedman James Wall
Director Director
Dated: July 27, 1998 Dated: July 27, 1998




*Also acting as Principal Executive Officer in the absence of
a Chief Executive Officer, solely for the purpose of signing
this Annual Report.

40






AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Page 1 of 2)
-------------------------------------------------------------
(Thousands)

Additions
-----------------------
Charges
(Credits) Charged
Balance at to Costs (Credited) Balance
Beginning and to Other at End
of Period Expenses Accounts Deductions of Period
--------- -------- -------- ---------- ---------

FOR THE YEAR ENDED
APRIL 30, 1998:

Allowance for
doubtful
accounts
(included in
receivables -
real estate
operations on
the
consolidated
balance sheet) $ 690 $ 143 $ - $ 542(A) $ 291
-------- --------- ------ ----------- --------
Allowance for
estimated
returns and
doubtful
accounts
(included in
receivables -
magazine
circulation
operations on
the
consolidated
balance sheet) $ 53,322 $ 3,044 $ - $ 125(A) $ 56,241
-------- --------- ------ ----------- --------

Real estate
valuation
allowance $ 2,459 $ - $ - $ 579(B) $ 1,880
-------- --------- ------ ----------- --------

FOR THE YEAR ENDED
APRIL 30, 1997:

Allowance for
doubtful
accounts
(included in
receivables -
real estate
operations on
the
consolidated
balance sheet) $ 598 $ 135 $ - $ 43(A) $ 690
-------- --------- ------ ----------- --------
Allowance for
estimated
returns and
doubtful
accounts
(included in
receivables -
magazine
circulation
operations on
the
consolidated
balance sheet) $ 53,740 $ 706 $ - $ 1,124(A) $ 53,322
-------- --------- ------ ----------- --------

Real estate
valuation
allowance $ 2,580 $ - $ - $ 121(B) $ 2,459
-------- --------- ------ ----------- --------


41





AMREP CORPORATION AND SUBSIDIARIES
----------------------------------
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Page 2 of 2)
-------------------------------------------------------------
(Thousands)



Additions
-----------------------
Charges
(Credits) Charged
Balance at to Costs (Credited) Balance
Beginning and to Other at End
of Period Expenses Accounts Deductions of Period
--------- -------- -------- ---------- ---------

FOR THE YEAR ENDED
APRIL 30, 1996:

Allowance for
doubtful
accounts
(included in
receivables -
real estate
operations on
the
consolidated
balance sheet) $ 608 $ 24 $ - $ 34(A) $ 598
-------- --------- ------ ----------- --------
Allowance for
estimated
returns and
doubtful
accounts
(included in
receivables -
magazine
circulation
operations on
the
consolidated
balance sheet) $ 53,947 $ 189 $ - $ 396(A) $ 53,740
-------- --------- ------ ----------- --------

Real estate
valuation
allowance $ 2,580 $ - $ - $ - $ 2,580
-------- --------- ------ ----------- --------

NOTE: (A) Uncollectible accounts written off.
(B) Allowances utilized to reduce inventory valuation.


42






EXHIBIT INDEX



(3)(a)(i) Articles of
Incorporation, as amended,
filed herewith.


(3)(a)(ii) Certificate of Merger,
filed herewith.


(3) (b) By-Laws as restated
September 24, 1997 -
Incorporated by reference to
Exhibit 3 (c) to
Registrant's Quarterly Report
on Form 10-Q for the quarter
ended October 31, 1997.


(4) (a) Amended and Restated Loan
Agreement between American
National Bank and Trust
Company of Chicago and Kable
News Company, Inc. dated as
of October 6, 1995 -
Incorporated by reference to
Exhibit 4 to Registrant's
Quarterly Report on Form
10-Q for the quarter ended
October 31, 1995.


(4) (b) Amendment No. 1, dated
September 26, 1996, to the
Amended and Restated Loan
Agreement, between American
National Bank and Trust
Company of Chicago, and
Kable News Company, Inc. -
Incorporated by reference to
Exhibit 4 to Registrant's
Quarterly Report on Form
10-Q for the quarter ended
October 31, 1996.

(4) (c) Amendment No. 2, dated
December 13, 1996, to
Amended and Restated Loan
Agreement between American
National Bank and Trust
Company of Chicago and Kable
News Company, Inc. -
Incorporated by reference to
Exhibit 4 (a) to
Registrant's Quarterly Report
on Form 10-Q for the quarter
ended October 31, 1997.

43





(4) (d) Amendment No. 3, dated
September 18, 1997, to
Amended and Restated Loan
Agreement between American
National Bank and Trust
Company of Chicago and Kable
News Company, Inc. -
Incorporated by reference to
Exhibit 4 (b) to
Registrant's Quarterly Report
on Form 10-Q for the quarter
ended October 31, 1997.


(10) (a) 1992 Stock Option Plan -
Incorporated by reference to
Exhibit 10 (h) to
Registrant's Annual Report on
Form 10-K for the year ended
April 30, 1997.*


(10) (b) Non-Employee Directors
Option Plan, as amended -
Incorporated by reference to
Exhibit 10 (i) to
Registrant's Annual Report on
Form 10-K for the year ended
April 30, 1997.*


(21) Subsidiaries of Registrant,
filed herewith.


(23) Consent of Arthur Andersen
LLP, filed herewith.


(27) Financial Data Schedule



















___________________________

* Management contract or compensatory plan or arrangement in
which directors or officers participate.



44