PRINCETON, N.J., March 7, 2011 /PRNewswire/ -- AMREP Corporation
(NYSE: AXR) today reported net income of $1,281,000, or $0.21 per share, for its fiscal 2011 third
quarter ended January 31, 2011
compared to a net loss of $721,000,
or $0.12 per share, for its fiscal
2010 third quarter ended January 31,
2010. For the first nine months of fiscal 2011, the
Company had net income of $1,514,000,
or $0.25 per share, compared to a net
loss of $2,762,000, or $0.46 per share, for the same period of fiscal
2010. Revenues were $23,846,000
and $74,749,000 for the third quarter
and first nine months of 2011 versus $28,916,000 and $93,706,000 for the same periods last year.
The 2011 third quarter results included a tax benefit of
$764,000, or approximately
$0.13 per share, from the recognition
of previously unrecognized tax benefits as compared to a similar
benefit of $1,148,000, or
approximately $0.19 per share, in the
third quarter of 2010. They also included pretax income of
$759,000, equivalent to approximately
$0.08 per share, from the favorable
settlement of a property tax appeal by the Company's AMREP
Southwest subsidiary. In addition, the Company benefitted from
reduced costs and expenses in its 2011 third quarter and nine month
results versus the same periods in 2010 as a result of the
completion at the end of the 2011 second quarter of the
consolidation of its subscription fulfillment business from three
locations into one.
Revenues from land sales at AMREP Southwest were $257,000 and $1,570,000 for the three and nine month periods
ended January 31, 2011 compared to
$479,000 and $3,634,000 for the same periods of the prior
year. Results for all periods were substantially lower than the
Company has historically experienced in its principal market of
Rio Rancho, New Mexico, due to a
severe decline in the real estate market in the greater
Albuquerque-metro and Rio Rancho areas that began late in fiscal
2008. The average gross profit percentage on land sales was 8% and
34% for the third quarter and first nine months of 2011 compared to
a negative 18% and a positive 39% for the same periods in 2010.
The gross loss for the third quarter of 2010 resulted from
the resale by AMREP Southwest of lots that had been repossessed by
deeds in lieu of foreclosure ("take-back lots"). When
repossessed, take-back lots are taken into inventory at fair market
value, which is supported by appraisals, at that time rather than
at original cost, which is usually much lower. Accordingly,
the profit margin on the resale of take-back lots, even when they
are resold at prices well above original cost, is lower than for
other sales and may be negative. Exclusive of take-back lot sales,
the gross profit margin was 14% for the third quarter of 2010
compared to 8% for the same period in 2011. The gross profit
percentage variance for both the three and nine month periods was
attributable to a change in the mix of areas from which undeveloped
lots were sold in each period and also the disproportionate effect
of indirect costs on the relatively low revenue base in all
periods. Revenues and related gross profits from land sales can
vary significantly from period to period as a result of many
factors, including the nature and timing of specific transactions,
and prior results are not necessarily a good indication of what may
occur in future periods.
Revenues from Media Services operations, which principally
include Subscription Fulfillment Services operations conducted by
the Company's Palm Coast Data subsidiary and Newsstand Distribution
and Product Services operations conducted by its Kable Media
Services subsidiary, decreased from $28,412,000 and $89,805,000 for the third quarter and first nine
months of 2010 to $23,570,000 and
$73,099,000 for the same periods in
2011. Magazine publishers are the principal customers of
these operations, and they have continued to be impacted by the
effects of the recent recession and also from increased competition
from new media sources. This has resulted in reduced subscription
and newsstand sales, which in turn has caused certain publishers to
close magazine titles or seek more favorable contract terms from
Palm Coast and Kable and their
competitors. As a consequence of these and other factors and
customer losses, revenues from Subscription Fulfillment Services
operations decreased from $23,114,000
and $72,471,000 for the third quarter
and first nine months of 2010 to $18,350,000 and $56,774,000 for the same periods of 2011, while
revenues from Newsstand Distribution Services operations decreased
from $3,141,000 and $9,941,000 for the third quarter and first nine
months of 2010 to $2,488,000 and
$8,488,000 for the same periods of
2011. Revenues from Kable's Product Services and Other business
segment increased from $2,158,000 and
$7,393,000 in the third quarter and
first nine months of 2010 to $2,732,000 and $7,837,000 in the same periods of 2011 due to
increases in specialty packaging and temporary staffing revenues.
Operating expenses for all Media Services businesses decreased by
$5,527,000 and $19,582,000 for the third quarter and first nine
months of 2011 compared to the same periods in 2010, primarily due
to lower payroll and benefits and other variable costs associated
with the decreased revenues as well as from efficiencies achieved
in the Company's consolidation of its Subscription Fulfillment
Services business from three locations in Colorado, Florida and Illinois into one existing location at
Palm Coast, Florida, which was
substantially completed as of October 31,
2010. The Subscription Fulfillment Services business
also incurred net restructuring costs related to this consolidation
project of only $72,000 and
$308,000 for the third quarter and
first nine months of 2011 versus $1,287,000 and $3,180,000 for the same periods of 2010.
AMREP Southwest has a loan with a bank that matured on
December 16, 2010. AMREP
Southwest has initiated discussions with the bank regarding renewal
of this arrangement, which had an outstanding principal balance of
$22,464,000 at January 31, 2011, but this facility has not been
renewed and there can be no assurance that it will be renewed.
AMREP Southwest does not have sufficient funds to satisfy
this obligation and, if it is unable to renew this loan facility,
it would be forced to seek either replacement financing, which
might not be available on satisfactory terms, or other sources of
capital, such as by selling assets or the Company issuing equity,
which may not be possible on acceptable terms.
AMREP Corporation's AMREP Southwest Inc. subsidiary is a major
landholder and leading developer of real estate in New Mexico, and its Media Services operations,
conducted by its Kable Media Services, Inc. and Palm Coast Data LLC
subsidiaries, distribute magazines to wholesalers and provide
subscription and product fulfillment and related services to
publishers and others.
The statements in this news release regarding the future
operations of the Company and the ability of its AMREP Southwest
Inc. subsidiary to obtain financing or other sources of capital are
forward-looking statements within the meaning of the federal
securities laws. These statements are subject to numerous
risks and uncertainties, many of which are beyond the control of
AMREP Corporation and that could cause actual results to differ
materially from such statements, including, without limitation, the
Company's ability to accurately estimate future cash flows and
predict when the economy will recover. Further information
about these and other relevant risks and uncertainties may be found
in the Company's Form 10-K and its other filings with the
Securities and Exchange Commission, all of which are available from
the Commission as well as from other sources. Recipients of
this news release are cautioned to consider these risks and
uncertainties and to not place undue reliance on the
forward-looking statements contained therein. AMREP
Corporation disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Attachment
1
AMREP
Corporation
and
Subsidiaries
Financial
Highlights
(Unaudited)
|
|
|
|
Three Months
Ended January 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Revenues
|
|
$
23,846,000
|
|
$ 28,916,000
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
1,281,000
|
|
$
(721,000)
|
|
|
|
|
|
|
|
Earnings (loss) per share
– Basic and Diluted
|
|
$
0.21
|
|
$
(0.12)
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding
|
|
5,996,000
|
|
5,996,000
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended January 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Revenues
|
|
$
74,749,000
|
|
$ 93,706,000
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
1,514,000
|
|
$ (2,762,000)
|
|
|
|
|
|
|
|
Earnings (loss) per share
– Basic and Diluted
|
|
$
0.25
|
|
$
(0.46)
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding
|
|
5,996,000
|
|
5,996,000
|
|
|
|
|
|
|
|
|
Attachment
2
The Company's land sales
in Rio Rancho, New Mexico were as follows (dollar amounts in
thousands):
|
|
|
|
|
|
2011
|
|
2010
|
|
|
Acres
Sold
|
|
Revenues
(in
000s)
|
|
Revenues
Per
Acre
(in
000s)
|
|
Acres
Sold
|
|
Revenues
(in
000s)
|
|
Revenues
Per
Acre
(in
000s)
|
|
Three months ended
January 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
0.8
|
|
$ 225
|
|
$
281
|
|
0.4
|
|
$
99
|
|
$
248
|
|
Commercial
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Total
Developed
|
0.8
|
|
225
|
|
281
|
|
0.4
|
|
99
|
|
248
|
|
Undeveloped
|
1.5
|
|
32
|
|
21
|
|
4.4
|
|
380
|
|
86
|
|
Total
|
2.3
|
|
$ 257
|
|
$
112
|
|
4.8
|
|
$ 479
|
|
$
100
|
|
Nine months
Ended January
31:
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
3.1
|
|
$ 1,031
|
|
$
333
|
|
5.6
|
|
$ 1,544
|
|
$
276
|
|
Commercial
|
-
|
|
35
|
|
-
|
|
1.7
|
|
895
|
|
526
|
|
Total
Developed
|
3.1
|
|
1,066
|
|
333
|
|
7.3
|
|
2,439
|
|
334
|
|
Undeveloped
|
13.2
|
|
504
|
|
38
|
|
30.4
|
|
1,195
|
|
39
|
|
Total
|
16.3
|
|
$ 1,570
|
|
$
96
|
|
37.7
|
|
$ 3,634
|
|
$
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company offers for sale developed and undeveloped land in
Rio Rancho from a number of
different projects, and selling prices may vary from project to
project and within projects depending on location, the stage of
development and other factors.
SOURCE AMREP Corporation