AMREP Corp. (AXR, Financial) filed Quarterly Report for the period ended 2009-01-31.
AMREP CORP.is a real estate developer and builder of housingnational distributor of magazines and a provider of subscriptionfulfillment services for publishers. It is the developer and majorbuilder of single-family homes at Rio Rancho New Mexico and morerecently has entered the Denver Colorado home-building market. AMREP Corp. has a market cap of $113.1 million; its shares were traded at around $18.86 with a P/E ratio of 16.3 and P/S ratio of 0.6. AMREP Corp. had an annual average earning growth of 20.5% over the past 10 years.
January 31:
Developed
Residential 1.5 $ 361 $ 241 - $ - $ -
Commercial - - - 25.0 5,731 229
- - - - - -
Total Developed 1.5 361 241 25.0 5,731 229
Undeveloped 2.5 160 64 24.3 571 24
- - - - - -
Total 4.0 $ 521 $ 130 49.3 $ 6,302 $ 128
- - - - - -
Nine months ended
January 31:
Developed
Residential 3.2 $ 789 $ 247 30.0 $ 9,468 $ 316
Commercial 1.0 126 126 38.8 8,651 223
- - - - - -
Total Developed 4.2 915 218 68.8 18,119 263
Undeveloped 134.4 5,679 42 326.5 9,494 29
- - - - - -
Total 138.6 $ 6,594 $ 48 395.3 $ 27,613 $ 70
- - - - - -
subscription and newsstand sales and increasing costs, contributed to the
decline in the revenues of Kable since publishing is the principal industry
which Kable serves. Revenues from Subscription Fulfillment Services operations
decreased from $32,645,000 and $92,111,000 for the three and nine month periods
of 2008 to $28,998,000 and $90,175,000 for the comparable periods in 2009,
primarily reflecting the net effect of the previously mentioned reduced and lost
business from certain customers that was offset in part by revenue gains from
new and existing clients. Revenues from Newsstand Distribution Services
operations were generally unchanged for the third quarter of 2009 compared to
the third quarter of 2008, totaling $2,923,000 this year compared to $2,944,000
for the same period in 2008. Newsstand Distribution Services revenues decreased
from $9,811,000 for the first nine months of 2008 to $9,374,000 for the same
period in 2009, primarily reflecting a softening of magazine newsstand demand.
Revenues from Product Fulfillment Services and other increased from $892,000 and
$2,449,000 for the three and nine month periods of the prior year to $3,130,000
and $4,779,000 for the comparable periods in the current year, primarily as a
result of the inclusion of the results of operations of the Company's product
repackaging business and temporary staffing services business from early
November 2008 when the Company purchased certain assets of companies that had
been in those businesses. Kable's operating expenses increased by $382,000 and
$1,087,000 for the third quarter and first nine months of 2009 compared to the
same periods in 2008, primarily attributable to higher consulting and computer
systems integration costs of the Subscription Fulfillment Services business,
which were partly offset by lower interest expense principally due to lower
interest rates in both periods of 2009.
In January 2008, the Company announced a project to unify its magazine
subscription, membership and direct mail fulfillment services from three
locations into one 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.
The Company is still evaluating various alternatives for this expansion, which
could require capital expenditures in the range of $15,000,000 to $20,000,000.
The project is scheduled to be implemented over a two-to-three year period, and
over that period may involve approximately $6,000,000 of non-recurring cash
costs for severance, training and transition, facility closings and equipment
relocation. The State of Florida and the City of Palm Coast have agreed to
provide incentives for the project, including cash and employee training grants
and tax relief, which could amount to as much as $8,000,000, largely contingent
on existing job retention, new job creation and capital investment. Previously
during fiscal 2008, the Company announced (i) one significant workforce
reduction in its Subscription Fulfillment Services business that occurred in the
third quarter of fiscal 2008, (ii) a plan to redistribute the work performed at
the Marion, Ohio facility of its Fulfillment Services business and the scheduled
closing of that facility that was substantially completed in August 2008, and
(iii) the consolidation of fulfillment operations customer call centers. During
the quarter ended January 31, 2009, the Company recognized $175,000 of income
for certain incentives related to the unification project, which are netted with
costs of $169,000. As a result, the Company reported a net gain of $6,000
related to the unification project in the third quarter of 2009 and incurred net
costs of $567,000 for the first nine months of 2009 compared to net costs of
$136,000 and $556,000 for the same periods of 2008, principally for severance
and consulting costs. The items of income related to incentives and costs
related to the unification project are included in Restructuring and fire
recovery costs in the Company's consolidated statements of operations and
retained earnings.
Real estate commissions and selling expenses decreased $221,000 and $393,000 for
the third quarter and nine month periods ended January 31, 2009 compared to the
same periods in the prior year, principally due to the reduced land sales. Other
operating expenses increased $770,000 and $379,000 for the three and nine month
periods ended January 31, 2009 compared to the same periods last year, primarily
due to a net favorable $558,000 adjustment to real estate tax expense in the
third quarter of 2008 resulting from the finalization of a property tax
valuation appeal by AMREP Southwest and a $184,000 adjustment to real estate tax
expense in 2009 as a result of receiving the final calendar year 2008 tax bills.
Notes payable $ 42,395 $ 27,029 $ 10,818 $ 321 $ 4,227
Operating leases and other 24,992 5,233 10,363 6,637 2,759
- - - - -
Total $ 67,387 $ 32,262 $ 21,181 $ 6,958 $ 6,986
= = = = =
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AMREP CORP.is a real estate developer and builder of housingnational distributor of magazines and a provider of subscriptionfulfillment services for publishers. It is the developer and majorbuilder of single-family homes at Rio Rancho New Mexico and morerecently has entered the Denver Colorado home-building market. AMREP Corp. has a market cap of $113.1 million; its shares were traded at around $18.86 with a P/E ratio of 16.3 and P/S ratio of 0.6. AMREP Corp. had an annual average earning growth of 20.5% over the past 10 years.
Highlight of Business Operations:
Three months endedJanuary 31:
Developed
Residential 1.5 $ 361 $ 241 - $ - $ -
Commercial - - - 25.0 5,731 229
- - - - - -
Total Developed 1.5 361 241 25.0 5,731 229
Undeveloped 2.5 160 64 24.3 571 24
- - - - - -
Total 4.0 $ 521 $ 130 49.3 $ 6,302 $ 128
- - - - - -
Nine months ended
January 31:
Developed
Residential 3.2 $ 789 $ 247 30.0 $ 9,468 $ 316
Commercial 1.0 126 126 38.8 8,651 223
- - - - - -
Total Developed 4.2 915 218 68.8 18,119 263
Undeveloped 134.4 5,679 42 326.5 9,494 29
- - - - - -
Total 138.6 $ 6,594 $ 48 395.3 $ 27,613 $ 70
- - - - - -
subscription and newsstand sales and increasing costs, contributed to the
decline in the revenues of Kable since publishing is the principal industry
which Kable serves. Revenues from Subscription Fulfillment Services operations
decreased from $32,645,000 and $92,111,000 for the three and nine month periods
of 2008 to $28,998,000 and $90,175,000 for the comparable periods in 2009,
primarily reflecting the net effect of the previously mentioned reduced and lost
business from certain customers that was offset in part by revenue gains from
new and existing clients. Revenues from Newsstand Distribution Services
operations were generally unchanged for the third quarter of 2009 compared to
the third quarter of 2008, totaling $2,923,000 this year compared to $2,944,000
for the same period in 2008. Newsstand Distribution Services revenues decreased
from $9,811,000 for the first nine months of 2008 to $9,374,000 for the same
period in 2009, primarily reflecting a softening of magazine newsstand demand.
Revenues from Product Fulfillment Services and other increased from $892,000 and
$2,449,000 for the three and nine month periods of the prior year to $3,130,000
and $4,779,000 for the comparable periods in the current year, primarily as a
result of the inclusion of the results of operations of the Company's product
repackaging business and temporary staffing services business from early
November 2008 when the Company purchased certain assets of companies that had
been in those businesses. Kable's operating expenses increased by $382,000 and
$1,087,000 for the third quarter and first nine months of 2009 compared to the
same periods in 2008, primarily attributable to higher consulting and computer
systems integration costs of the Subscription Fulfillment Services business,
which were partly offset by lower interest expense principally due to lower
interest rates in both periods of 2009.
In January 2008, the Company announced a project to unify its magazine
subscription, membership and direct mail fulfillment services from three
locations into one 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.
The Company is still evaluating various alternatives for this expansion, which
could require capital expenditures in the range of $15,000,000 to $20,000,000.
The project is scheduled to be implemented over a two-to-three year period, and
over that period may involve approximately $6,000,000 of non-recurring cash
costs for severance, training and transition, facility closings and equipment
relocation. The State of Florida and the City of Palm Coast have agreed to
provide incentives for the project, including cash and employee training grants
and tax relief, which could amount to as much as $8,000,000, largely contingent
on existing job retention, new job creation and capital investment. Previously
during fiscal 2008, the Company announced (i) one significant workforce
reduction in its Subscription Fulfillment Services business that occurred in the
third quarter of fiscal 2008, (ii) a plan to redistribute the work performed at
the Marion, Ohio facility of its Fulfillment Services business and the scheduled
closing of that facility that was substantially completed in August 2008, and
(iii) the consolidation of fulfillment operations customer call centers. During
the quarter ended January 31, 2009, the Company recognized $175,000 of income
for certain incentives related to the unification project, which are netted with
costs of $169,000. As a result, the Company reported a net gain of $6,000
related to the unification project in the third quarter of 2009 and incurred net
costs of $567,000 for the first nine months of 2009 compared to net costs of
$136,000 and $556,000 for the same periods of 2008, principally for severance
and consulting costs. The items of income related to incentives and costs
related to the unification project are included in Restructuring and fire
recovery costs in the Company's consolidated statements of operations and
retained earnings.
Real estate commissions and selling expenses decreased $221,000 and $393,000 for
the third quarter and nine month periods ended January 31, 2009 compared to the
same periods in the prior year, principally due to the reduced land sales. Other
operating expenses increased $770,000 and $379,000 for the three and nine month
periods ended January 31, 2009 compared to the same periods last year, primarily
due to a net favorable $558,000 adjustment to real estate tax expense in the
third quarter of 2008 resulting from the finalization of a property tax
valuation appeal by AMREP Southwest and a $184,000 adjustment to real estate tax
expense in 2009 as a result of receiving the final calendar year 2008 tax bills.
Notes payable $ 42,395 $ 27,029 $ 10,818 $ 321 $ 4,227
Operating leases and other 24,992 5,233 10,363 6,637 2,759
- - - - -
Total $ 67,387 $ 32,262 $ 21,181 $ 6,958 $ 6,986
= = = = =
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