AMREP CORP. — Interim / Quarterly Report 1994

Mar 17, 1994

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 1994 ------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ______ Commission File Number 1-4702 -------- AMREP Corporation - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Oklahoma 59-0936128 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10 Columbus Circle, New York, New York 10019 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212)541-7300 ---------------- 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 ------- ------- Number of Shares of Common Stock, par value $.10 per share, outstanding at March 14, 1994 - 7,297,625. FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES INDEX PART I PAGE NO. - ------ -------- Consolidated Financial Statements: Balance Sheets Janaury 31, 1994 (Unaudited) and April 30, 1993 (Audited) 1 Statements of Operations and Retained Earnings (Unaudited) Nine Months Ended January 31, 1994 and 1993 2 Three Months Ended Janaury 31, 1994 and 1993 3 Statements of Cash Flows (Unaudited) Nine Months Ended Janaury 31, 1994 and 1993 4-5 Notes to Consolidated Financial Statements 6 Management's Discussion and Analysis 7-8 PART II - ------- Other Information 9 Signatures 10 Exhibit Index 11 FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets January 31, 1994 and April 30, 1993 (Thousands, except par value and number of shares)

See notes to consolidated financial statements. -1- FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations and Retained Earnings (Unaudited) Nine Months Ended January 31, 1994 and 1993 (Thousands, except shares and per share amounts)

See notes to consolidated financial statements. -2- FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations and Retained Earnings (Unaudited) Three Months Ended January 31, 1994 and 1993 (Thousands, except shares and per share amounts)

See notes to consolidated financial statements. -3- FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES Statements of Cash Flows (Unaudited) Nine Months Ended January 31, 1994 and 1993 (Thousands)

-4- Statement of Cashflows January 31, 1994 Page Two

See notes to consolidated financial statements. -5- FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Nine Months Ended Janaury 31, 1994 and 1993 NOTE 1: The prior year financial statements have been reclassified to conform to the presentation used at April 30, 1993. NOTE 2: The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to reflect a fair presentation of the results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. -6- FORM 10-Q AMREP CORPORATION AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations January 31, 1994 FINANCIAL CONDITION The lenders under the line-of-credit arrangements for Real Estate Operations which totaled $5,750,000 at October 31, 1993, have increased their lines to $11,250,000. The "Rental and other real estate projects" and "Project financing" decreased from April 30, 1993, primarily due to the deconsolidation of The Classic at West Palm Beach as discussed in Results of Operations. RESULTS OF OPERATIONS The improvement in the results for the nine months and third quarter as compared to the similar periods last year reflects an increase in gross profit from bulk land sales of approximately $3,010,000 and $630,000, respectively; an increase in gross profit from housing sales of approximately $2,280,000 and $1,380,000, respectively; and an improvement in the results from magazine circulation operations of approximately $1,300,000 and $460,000, respectively. In addition, during the third quarter fiscal 1994 the debt of The Classic at West Palm Beach Limited Partnership ("The Classic") was restructured and in the restructuring the Company's subsidiary which had been the general partner became a limited partner. Accordingly, the Company deconsolidated The Classic's operations as of October 31, 1993, and the Company's interest in The Classic now is carried as an investment. As a result of the deconsolidation, the third quarter this year, as compared to the third quarter last year, reflects a reduction in the loss from rental projects from $479,000 last year to $164,000 this year. However, during the nine months this year the loss from rental operations increased to $1,763,000 compared to $1,421,000 last year, reflecting principally operations at The Classic during the first six months. The results last year benefited from the utilization of a loss reserve recorded in an earlier year, while the results in the second quarter this year reflect the establishment of an additional loss reserve since the Company will continue to fund The Classic's cash shortfall for a time. The improvements discussed above in the nine months and third quarter as compared to the similar periods last year -7- Management Discussion January 31, 1994 Page 2 were partially offset by: (1) An increase in indirect construction costs of approximately $1,070,000 and $500,000, respectively, related to increased construction activity at the Rio Rancho, Denver and New Jersey projects. Also, during the first six months last year certain improvement reserves which no longer were required were eliminated. (2) A $484,000 decrease in interest and other operating revenues in the nine months. This was due primarily to an approximate $240,000 decrease in interest from land sales receivables and to an approximate $200,000 gain from the sale of a commercial building in the first quarter last year. (3) A $369,000 and $136,000 increase respectively, in real estate commissions and selling due to increased housing sales. (4) An $864,000 and $404,000 increase respectively, in general and administrative expenses related to real estate operations and corporate. The number of housing units closed increased by 133 units, from 425 to 558, in the nine months fiscal 1994, and by 57 units, from 135 to 192, in the third quarter fiscal 1994, as compared to the similar periods last year. The increase in pretax income from magazine circulation operations in the nine months and third quarter as compared to the similar periods last year resulted from: (1) Increased newsstand pretax profit of approximately $1,030,000 and $490,000, respectively, due primarily to the acquisition of newsstand distribution contracts of Capital Distributing Company in August 1993. (2) Increased subscription fulfillment pretax profit in the nine months this year as compared to the similar period last year of approximately $270,000. There was, however, a slight decrease in the fulfillment pretax profit in the third quarter this year as compared to the similar period last year due primarily to increased payroll and other costs related to the fulfillment operations. The increase of $404,000 in general and administrative expenses related to real estate operations and corporate in the third quarter this year as compared to the similar period last year primarily reflects increases in payroll and benefits and legal expenses. The increase of $864,000 in the nine months this year as compared to the similar period last year primarily reflects the increases discussed above and in addition, the first quarter last year included a refund of general insurance premiums and other nonrecurring cost reductions. -8- PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 10(a). Employment Agreement dated as of October 1, 1993 between Registrant and Anthony B. Gliedman, Chief Executive Officer, Chairman and President of Registrant. 10(b). Employment Agreement dated as of October 1, 1993 between Registrant and Daniel Friedman, Senior Vice President of Registrant. 10(c). Employment Agreement dated as of October 1, 1993 between Registrant and James Wall, Senior Vice President of Registrant. 10(d). Employment Agreement dated as of October 1, 1993 between Registrant and Harvey W. Schultz, Senior Vice President of Registrant. 10(e). Employment Agreement dated as of October 1, 1993 between Registrant and Mohan Vachani, Senior Vice President-Chief Financial Officer of Registrant. 10(f). Employment Agreement dated as of October 1, 1993 between Registrant and Rudolph J. Skalka, Vice President-Finance of Registrant. (b) Reports on Form 8-K: No reports on Form 8-K were filed by Registrant during the quarter ended January 31, 1994. -9- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMREP CORPORATION (Registrant) Dated: March 14, 1994 By: /s/ Anthony B. Gliedman --------------------- ------------------------------------ Anthony B. Gliedman Chairman of the Board, Chief Executive Officer and President Dated: March 14, 1994 By: /s/ Rudolph J. Skalka --------------------- ------------------------------------ Rudolph J. Skalka Vice President, Finance and Principal Accounting Officer -10- EXHIBIT INDEX 10(a). Employment Agreement dated as of October 1, 1993 between Registrant and Anthony B. Gliedman, Chief Executive Officer, Chairman and President of Registrant. 10(b). Employment Agreement dated as of October 1, 1993 between Registrant and Daniel Friedman, Senior Vice President of Registrant. 10(c). Employment Agreement dated as of October 1, 1993 between Registrant and James Wall, Senior Vice President of Registrant. 10(d). Employment Agreement dated as of October 1, 1993 between Registrant and Harvey W. Schultz, Senior Vice President of Registrant. 10(e). Employment Agreement dated as of October 1, 1993 between Registrant and Mohan Vachani, Senior Vice President-Chief Financial Officer of Registrant. 10(f). Employment Agreement dated as of October 1, 1993 between Registrant and Rudolph J. Skalka, Vice President-Finance of Registrant. -11-