AMREP Reports Fourth Quarter And Fiscal 2012 Results
PRINCETON, N.J., July 26, 2012 /PRNewswire/ — AMREP Corporation (NYSE: AXR) today reported a net loss of $1,143,000, or $0.19 per share, for its 2012 fiscal year ended April 30, 2012 compared to a 2011 net loss of $7,561,000, or $1.26 per share. The results for 2012 included a fourth quarter pre-tax, non-cash impairment charge of $570,000 ($359,000 after tax, or $0.06 per share) reflecting the write-down of certain real estate assets. The results for 2011 included a fourth quarter pre-tax, non-cash impairment charge of $10,720,000 reflecting the write-down of certain real estate assets ($6,827,000 before tax and $4,301,000, or $0.72 per share, after tax) and of all of the goodwill of the Company’s Newsstand Distribution Services business ($3,893,000 with no tax benefit, or $0.65 per share). Revenues for 2012 were $85,360,000 compared to $96,837,000 in the prior year.
For the fourth quarter of 2012, the net loss after the impairment charge was $1,631,000, or $0.27 per share, compared to a net loss after the impairment charges of $9,075,000, or $1.51 per share, in the same period of 2011. Fourth quarter 2012 revenues were $19,092,000 versus fourth quarter 2011 revenues of $22,088,000.
Excluding the impairment charges in both years, the net loss for the fourth quarter of 2012 was $1,272,000, or $0.21 per share, and for the full year of 2012 was $783,000, or $0.13 per share, compared to a net loss of $882,000, or $0.15 per share, in the fourth quarter of 2011, and net income of $632,000, or $0.11 per share, for the full year of 2011.
Revenues from Media Services operations, which include Subscription Fulfillment Services operations conducted by the Company’s Palm Coast Data subsidiary and Newsstand Distribution and Product Services and other operations conducted by its Kable Media Services subsidiary, decreased from $21,864,000 and $94,963,000 for the fourth quarter and full year of 2011 to $18,632,000 and $83,447,000 for the same periods in 2012. Magazine publishers, which are the principal customers of these operations, have continued to be negatively impacted by increased competition from new media distribution sources and also by the effects of the recent recession and the continued weak U.S. economy. The result has been a trend of reduced subscription and newsstand magazine sales, which has caused publishers to close some magazine titles and seek more favorable terms from Palm Coast and Kable and their competitors when contracts are up for bid or renewal. As a consequence of these and other factors, including customer losses, revenues from Subscription Fulfillment Services operations decreased from $16,844,000 and $73,618,000 for the fourth quarter and full year of 2011 to $13,455,000 and $62,230,000 for the same periods of 2012, while revenues from Newsstand Distribution Services operations decreased from $2,542,000 and $11,030,000 for the fourth quarter and full year of 2011 to $2,015,000 and $9,127,000 for the same periods of 2012. Revenues from Kable’s Product Services and Other businesses segment were $2,478,000 and $10,315,000 in the fourth quarter and full year of 2011 versus $3,162,000 and $12,090,000 in the same periods of 2012, with changes being primarily due to increases in temporary staffing revenues which were partially offset by declines in revenues from the Company’s specialty packaging business. The overall revenue decrease in Media Services operations was partially offset by decreases in Media Services operating and general and administrative expenses due to reduced payroll, benefits and other variable costs. Media Services operating expenses decreased from $18,516,000 (84.7% of related revenues) and $77,972,000 (82.1% of related revenues) in the fourth quarter and full year of 2011 to $16,743,000 (89.9% of related revenues) and $70,076,000 (84.0% of related revenues) for the same periods of 2012, while Media Services general and administrative expenses decreased from $2,496,000 (11.4% of related revenues) and $9,385,000 (9.9% of related revenues) in the fourth quarter and full year of 2011 to $2,133,000 (11.4% of related revenues) and $8,783,000 (10.5% of related revenues) for the same periods of 2012.
Revenues from land sales at the Company’s AMREP Southwest subsidiary increased from $210,000 and $1,780,000 in the fourth quarter and full year of 2011 to $454,000 and $1,889,000 for the comparable periods of 2012. 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 trend of declining permits for new home construction in Rio Rancho also continued, with 15% fewer single-family residential building permits issued during fiscal 2012 than in fiscal 2011. Faced with these adverse conditions, many builders have slowed the pace of building on developed lots previously purchased from the Company in Rio Rancho and delayed or cancelled the purchase of additional developed lots. These factors have also contributed to a steep decline in the Company’s sale of undeveloped land to both builders and investors.
In Rio Rancho, the Company offers for sale both developed and undeveloped lots to national, regional and local home builders, commercial and industrial property developers and others. The average selling price of land sold by the Company in Rio Rancho was $5,000 and $18,000 per acre for the fourth quarter and full year of 2012 compared to $40,000 and $81,000 per acre for the same periods of 2011. The average gross profit percentage on land sales was approximately 52% and 67% for the three and twelve month periods in 2012 compared to approximately 64% and 37% for the same periods of 2011. All these selling price and gross profit percentage variances reflected differences in the mix of properties sold in each period. For example, the sale of undeveloped land in the fourth quarter of 2012 consisted of land sold to a quasi-governmental agency under threat of condemnation for use as part of a flood plain, with a selling price of only $5,000 per acre. As a result of these and other factors, including the nature and timing of specific transactions, revenues, average selling prices and related average gross profits from land sales can vary significantly from period to period and prior results are not necessarily a good indication of what may occur in future periods. In addition, as noted above, AMREP Southwest recorded impairment charges in 2012 and 2011 due to current appraisals of a portion of its real estate that in each year showed a deterioration in fair market value from the prior year.
The effective rate of the Company’s tax benefit was 34.6% and 43.9% for the fourth quarter and full year 2012 compared to 24.0% and 29.8% for the same periods in 2011. The difference between the statutory tax rate and the effective rate of the tax benefit in the fourth quarter and full year periods was primarily due to (i) permanent items, the most significant being the fourth quarter 2011 impairment charge of $3,893,000 associated with non-tax deductible goodwill, and (ii) a reduction of liabilities of $382,000 and $764,000 in the third quarters of 2012 and 2011 related to unrecognized tax benefits due to the expiration of the statute of limitations on certain prior year tax benefits.
For more detail regarding the impairment charges taken by the Company in 2012 and 2011 and for additional information regarding the Company’s financial results, please refer to the Company’s Annual Report on Form 10-K filed today with the Securities and Exchange Commission.
AMREP Corporation’s Media Services business, conducted by its Kable Media Services, Inc. and Palm Coast Data LLC subsidiaries, distributes magazines to wholesalers and provides subscription and product fulfillment and related services to publishers and others, and its AMREP Southwest Inc. subsidiary is a major landholder and leading developer of real estate in New Mexico.
Two Schedules Follow
Schedule 1 AMREP CORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS Three Months Ended April 30, ---------------------------- 2012 2011 ---- ---- Revenues $19,092,000 $22,088,000 Net income (loss) $(1,631,000) $(9,075,000) ----------- ----------- Earnings (loss) per share - Basic and Diluted $(0.27) $(1.51) ------ ------ Weighted average number of common shares outstanding 5,996,000 5,996,000 --------- ---------
Twelve Months Ended April 30, -------------------------- 2012 2011 ---- ---- Revenues $85,360,000 $96,837,000 Net income (loss) $(1,143,000) $(7,561,000) Earnings (loss) per share - Basic and Diluted $(0.19) $(1.26) Weighted average number of common shares outstanding 5,996,000 5,996,000 --------- --------- Results include fourth quarter after-tax, non-cash impairment charges of $359,000 (equivalent to $0.06 per share) in 2012 and $8,194,000 (equivalent to $1.37 per share) in 2011.
Schedule 2 The Company's land sales in Rio Rancho, New Mexico were as follows (dollar amounts in thousands): 2012 2011 ---- ---- Acres Sold Revenues per Acre Acres Sold Revenues per Acre Revenues Revenues Three months ended April 30: Developed Residential - $ - $ - - $ - $ - Commercial - - - - - - --- --- --- --- --- --- Total Developed - - - - - - Undeveloped 84 454 5 5 210 40 --- --- --- --- --- --- Total 84 $454 $5 5 $210 $40 --- ---- --- --- ---- --- Twelve months ended April 30: Developed Residential - $ - $ - 3 $1,031 $344 Commercial 4 748 178 - 35 - --- --- Total Developed 4 748 178 3 1,066 344 Undeveloped 100 1,141 11 19 714 38 --- ----- --- --- --- --- Total 104 $1,889 $18 22 $1,780 $81 --- ------ --- --- ------ --- The sale of undeveloped land in the fourth quarter of 2012 consisted of land sold to a quasi-governmental agency under threat of condemnation for its use as part of a flood plain, and the nature of the land and resulting average selling price are not believed to be representative of the Company's inventory and investment properties.
SOURCE AMREP Corporation