AMREP Corp. (AXR, Financial) filed Quarterly Report for the period ended 2010-07-31.
Amrep Corp. has a market cap of $72.5 million; its shares were traded at around $12.09 with and P/S ratio of 0.6. AXR is in the portfolios of Chuck Royce of Royce& Associates.
Revenues from Media Services decreased from $30,768,000 for the first quarter of 2010 to $24,236,000 for the same period in 2011. Magazine publishers, who are the principal customers of these operations, continued to suffer from low advertising revenues and reduced subscription and newsstand sales, which caused some publishers to close magazine titles or seek more favorable terms from Kable or its competitors. As a result of these factors as well as the effect of customer losses, revenues from Kable's Subscription Fulfillment Services operations decreased from $25,127,000 for the first quarter of 2010 to $18,852,000 for the same period of 2011. Revenues from Kable s Newsstand Distribution Services operations decreased from $3,205,000 for the first quarter 2010 to $3,114,000 for the same period of 2011 as a result of lower distribution volumes. Revenues from Kable s Product Services and Other business segment decreased from $2,436,000 for the first quarter of 2010 to $2,270,000 for the same period of 2011, primarily due to the loss of a customer and lower volumes. Offsetting these revenue declines, Kable s operating expenses decreased by $7,280,000, from $27,946,000 for the first quarter of 2010 (90.8% of Media Services revenues) to $20,666,000 for the first quarter of 2011 (85.3% of Media Services revenues), primarily attributable to (i) a $4,275,000 reduction in payroll and benefits costs associated with the decreased revenue as well as efficiencies related to the ongoing project to consolidate the Subscription Fulfillment Services business, which is discussed more fully below and
In 2008, the Company announced a project to consolidate its Subscription Fulfillment Services business operations from three locations in Colorado, Florida and Illinois into one existing location at Palm Coast, Florida, which is expected to streamline operations, improve service to clients and create cost efficiencies through reduced overhead costs and the elimination of operating redundancies. This project is expected to be completed by October 31, 2010. As of July 31, 2010, the Company had incurred approximately $6,400,000 for capital expenditures and $8,400,000 of non-recurring costs related to the consolidation project. The State of Florida and the City of Palm Coast agreed to provide incentives for the project, including cash and employee training grants and tax relief, which are largely contingent on job retention, job creation and capital investment. The Company recognized $34,000 and $60,000 of income for first quarters of 2011 and 2010 for certain incentives related to the consolidation project, which were netted against restructuring costs, principally for severance, of $343,000 and $888,000 for the same periods. As a result, the Company reported net charges to operations of $309,000 and $828,000 related to the consolidation project for the first quarters of 2011 and 2010. The items of income for incentives and of costs related to the consolidation project are included in Restructuring and fire recovery costs in the Company s consolidated statements of operations and retained earnings. As of July 31, 2010 and April 30, 2010, the Company had accruals for future payments related to the consolidation project of $853,000 and $1,982,000, principally for severance and facilities consolidation. For the first quarter of 2011, cash payments related to the project were $1,438,000 and there were no significant accrual reversals related to the consolidation project.
In December 2007, a warehouse leased by a Kable subsidiary in Oregon, Illinois and its contents were totally destroyed by fire. The warehouse was used principally to store back issues of magazines published by certain customers for whom the Company filled back-issue orders as part of its services. The Company was required to provide insurance for that property of certain of those customers. Through July 31, 2010, the Company s insurance carrier had paid $348,000 to customers for lost materials. The Company has also filed various claims with its insurance provider related to the fire and, through July 31, 2010, the Company had been reimbursed a total of $1,142,000 for property lost in the fire, other expenses of relocation and professional fees. There were no insurance reimbursements received during the quarter ended July 31, 2010. As a result of insurance reimbursements received during the quarter ended July 31, 2009, the Company recorded a net gain totaling $162,000 for that quarter. The Company had charges to operations that totaled $7,000 for the first quarter of 2011 related to fire recovery costs. The items of income and expense related to insurance proceeds and the fire recovery costs are included in Restructuring and fire recovery costs in the Company s consolidated statements of operations and retained earnings.
Real estate receivables increased from $1,195,000 at April 30, 2010 to $1,216,000 at July 31, 2010. A real estate receivable of approximately $901,000 was delinquent at July 31, 2010 and AMREP Southwest has sent a foreclosure notice to the buyer. Receivables from Media Services operations increased from $33,175,000 at April 30, 2010 to $35,018,000 at July 31, 2010, primarily due to the effect of higher quarter-end billings at July 31, 2010 compared to April 30, 2010.
On December 17, 2009, AMREP Southwest (the “Borrower”) entered into a Loan Agreement and a related Promissory Note with a bank (said Loan Agreement and Promissory Note, together, the “ASW Credit Facility”). The ASW Credit Facility provides for a non-revolving loan in the original principal amount of $22,500,000 due in a single payment on December 16, 2010, subject to mandatory prepayments from a portion of the cash the Borrower may receive from its real estate sales in excess of certain thresholds. The outstanding principal ($22,500,000 at July 31, 2010) of the ASW Credit Facility bears fluctuating interest at the annual rate of reserve adjusted 30-day LIBOR (0.31% at July 31, 2010) plus 3.5%, but not less than 5.0%, and the Borrower is required to maintain a cash reserve with the lender, initially $1,100,000 and always not less than $500,000, to fund the interest payments. At July 31, 2010, the interest rate was 5.0% and the cash reserve balance was $690,000. The ASW Credit Facility is secured by a mortgage on certain real property with a book value of $54,336,000 and requires that the appraised value of the collateral be at least 2.5 times the outstanding principal of the loan.
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Amrep Corp. has a market cap of $72.5 million; its shares were traded at around $12.09 with and P/S ratio of 0.6. AXR is in the portfolios of Chuck Royce of Royce& Associates.
Highlight of Business Operations:
For the first quarter of 2011, the Company had a net loss of $498,000, or $0.08 per share, compared to a net loss of $1,056,000, or $0.18 per share, in the first quarter of 2010. Revenues were $25,087,000 in the first quarter of 2011 compared to $32,457,000 for the same period last year.Revenues from Media Services decreased from $30,768,000 for the first quarter of 2010 to $24,236,000 for the same period in 2011. Magazine publishers, who are the principal customers of these operations, continued to suffer from low advertising revenues and reduced subscription and newsstand sales, which caused some publishers to close magazine titles or seek more favorable terms from Kable or its competitors. As a result of these factors as well as the effect of customer losses, revenues from Kable's Subscription Fulfillment Services operations decreased from $25,127,000 for the first quarter of 2010 to $18,852,000 for the same period of 2011. Revenues from Kable s Newsstand Distribution Services operations decreased from $3,205,000 for the first quarter 2010 to $3,114,000 for the same period of 2011 as a result of lower distribution volumes. Revenues from Kable s Product Services and Other business segment decreased from $2,436,000 for the first quarter of 2010 to $2,270,000 for the same period of 2011, primarily due to the loss of a customer and lower volumes. Offsetting these revenue declines, Kable s operating expenses decreased by $7,280,000, from $27,946,000 for the first quarter of 2010 (90.8% of Media Services revenues) to $20,666,000 for the first quarter of 2011 (85.3% of Media Services revenues), primarily attributable to (i) a $4,275,000 reduction in payroll and benefits costs associated with the decreased revenue as well as efficiencies related to the ongoing project to consolidate the Subscription Fulfillment Services business, which is discussed more fully below and
In 2008, the Company announced a project to consolidate its Subscription Fulfillment Services business operations from three locations in Colorado, Florida and Illinois into one existing location at Palm Coast, Florida, which is expected to streamline operations, improve service to clients and create cost efficiencies through reduced overhead costs and the elimination of operating redundancies. This project is expected to be completed by October 31, 2010. As of July 31, 2010, the Company had incurred approximately $6,400,000 for capital expenditures and $8,400,000 of non-recurring costs related to the consolidation project. The State of Florida and the City of Palm Coast agreed to provide incentives for the project, including cash and employee training grants and tax relief, which are largely contingent on job retention, job creation and capital investment. The Company recognized $34,000 and $60,000 of income for first quarters of 2011 and 2010 for certain incentives related to the consolidation project, which were netted against restructuring costs, principally for severance, of $343,000 and $888,000 for the same periods. As a result, the Company reported net charges to operations of $309,000 and $828,000 related to the consolidation project for the first quarters of 2011 and 2010. The items of income for incentives and of costs related to the consolidation project are included in Restructuring and fire recovery costs in the Company s consolidated statements of operations and retained earnings. As of July 31, 2010 and April 30, 2010, the Company had accruals for future payments related to the consolidation project of $853,000 and $1,982,000, principally for severance and facilities consolidation. For the first quarter of 2011, cash payments related to the project were $1,438,000 and there were no significant accrual reversals related to the consolidation project.
In December 2007, a warehouse leased by a Kable subsidiary in Oregon, Illinois and its contents were totally destroyed by fire. The warehouse was used principally to store back issues of magazines published by certain customers for whom the Company filled back-issue orders as part of its services. The Company was required to provide insurance for that property of certain of those customers. Through July 31, 2010, the Company s insurance carrier had paid $348,000 to customers for lost materials. The Company has also filed various claims with its insurance provider related to the fire and, through July 31, 2010, the Company had been reimbursed a total of $1,142,000 for property lost in the fire, other expenses of relocation and professional fees. There were no insurance reimbursements received during the quarter ended July 31, 2010. As a result of insurance reimbursements received during the quarter ended July 31, 2009, the Company recorded a net gain totaling $162,000 for that quarter. The Company had charges to operations that totaled $7,000 for the first quarter of 2011 related to fire recovery costs. The items of income and expense related to insurance proceeds and the fire recovery costs are included in Restructuring and fire recovery costs in the Company s consolidated statements of operations and retained earnings.
Real estate receivables increased from $1,195,000 at April 30, 2010 to $1,216,000 at July 31, 2010. A real estate receivable of approximately $901,000 was delinquent at July 31, 2010 and AMREP Southwest has sent a foreclosure notice to the buyer. Receivables from Media Services operations increased from $33,175,000 at April 30, 2010 to $35,018,000 at July 31, 2010, primarily due to the effect of higher quarter-end billings at July 31, 2010 compared to April 30, 2010.
On December 17, 2009, AMREP Southwest (the “Borrower”) entered into a Loan Agreement and a related Promissory Note with a bank (said Loan Agreement and Promissory Note, together, the “ASW Credit Facility”). The ASW Credit Facility provides for a non-revolving loan in the original principal amount of $22,500,000 due in a single payment on December 16, 2010, subject to mandatory prepayments from a portion of the cash the Borrower may receive from its real estate sales in excess of certain thresholds. The outstanding principal ($22,500,000 at July 31, 2010) of the ASW Credit Facility bears fluctuating interest at the annual rate of reserve adjusted 30-day LIBOR (0.31% at July 31, 2010) plus 3.5%, but not less than 5.0%, and the Borrower is required to maintain a cash reserve with the lender, initially $1,100,000 and always not less than $500,000, to fund the interest payments. At July 31, 2010, the interest rate was 5.0% and the cash reserve balance was $690,000. The ASW Credit Facility is secured by a mortgage on certain real property with a book value of $54,336,000 and requires that the appraised value of the collateral be at least 2.5 times the outstanding principal of the loan.
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