UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact Name of Registrant as Specified in its Charter)
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State or Other Jurisdiction of Incorporation or Organization | I.R.S. Employer Identification No. | |
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Address of Principal Executive Offices | Zip Code |
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Registrant’s Telephone Number, Including Area Code |
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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 (the “Exchange Act”) 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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
Smaller reporting company | |
Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Number of Shares of Common Stock, par value $.10 per share, outstanding at March 9, 2023 –
AMREP CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AMREP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
January 31, | April 30, | |||||
2023 | 2022 | |||||
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ASSETS |
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Cash and cash equivalents | $ | | $ | | ||
Real estate inventory |
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Investment assets |
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Other assets |
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Deferred income taxes, net | | | ||||
Prepaid pension costs |
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TOTAL ASSETS | $ | | $ | | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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LIABILITIES: |
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Accounts payable and accrued expenses | $ | | $ | | ||
Notes payable |
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Taxes payable, net |
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TOTAL LIABILITIES |
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SHAREHOLDERS' EQUITY: |
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Common stock, $ |
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Capital contributed in excess of par value |
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Retained earnings |
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Accumulated other comprehensive loss, net |
| ( |
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TOTAL SHAREHOLDERS’ EQUITY |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | | $ | |
The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these unaudited condensed consolidated financial statements.
2
AMREP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three and Nine Months ended January 31, 2023 and 2022
(Amounts in thousands, except per share amounts)
Three Months ended | Nine Months ended | |||||||||||
January 31, | January 31, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
REVENUES: |
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Land sale revenues | $ | | $ | | $ | | $ | | ||||
Home sale revenues | | | | | ||||||||
Building sales and other revenues |
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Total revenues |
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COSTS AND EXPENSES: |
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Land sale cost of revenues, net |
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Home sale cost of revenues | | | | | ||||||||
Building sales and other cost of revenues |
| — |
| — |
| — |
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General and administrative expenses |
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Operations | | | | | ||||||||
Pension settlement | | — | | — | ||||||||
Total costs and expenses |
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Operating (loss) income | ( | | | | ||||||||
Interest income, net |
| — |
| — |
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Other income |
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| — |
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Income before income taxes | | | | | ||||||||
(Benefit) provision for income taxes | ( | | ( | | ||||||||
Net income | $ | | $ | | $ | | $ | | ||||
Basic earnings per share | $ | | $ | | $ | | $ | | ||||
Diluted earnings per share | $ | | $ | | $ | | $ | | ||||
Weighted average number of common shares outstanding – basic |
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Weighted average number of common shares outstanding – diluted |
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The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these unaudited condensed consolidated financial statements.
3
AMREP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three and Nine Months ended January 31, 2023 and 2022
(Amounts in thousands)
Three Months ended | Nine Months ended | |||||||||||
January 31, | January 31, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
Net income | $ | | $ | | $ | | $ | | ||||
Other comprehensive income, net of tax: |
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Pension settlement expense | | — | | — | ||||||||
Income tax effect | ( | — | ( | — | ||||||||
Pension settlement expense, net of tax | | — | | — | ||||||||
Decrease in pension liability |
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Income tax effect | ( | ( | ( | ( | ||||||||
Decrease in pension liability, net of tax | | | | | ||||||||
Other comprehensive income |
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Total comprehensive income | $ | | $ | | $ | | $ | |
The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these unaudited condensed consolidated financial statements.
4
AMREP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
Three and Nine Months ended January 31, 2023 and 2022
(Amounts in thousands)
Capital | Accumulated | ||||||||||||||||
Contributed | Other | ||||||||||||||||
Common Stock | in Excess of | Retained | Comprehensive | ||||||||||||||
| Shares |
| Amount |
| Par Value |
| Earnings |
| Loss |
| Total | ||||||
Balance, November 1, 2022 | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Compensation related to issuance of option to purchase common stock | — | — | | — | — | | |||||||||||
Issuance of deferred common share units | — | — | | — | — | | |||||||||||
Net income | — | — | — | | — | | |||||||||||
Other comprehensive income | — | — | — | — | | | |||||||||||
Balance, January 31, 2023 | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Balance, November 1, 2021 | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Reclassification of common stock settled from deferred common share units | — | | ( | — | — | — | |||||||||||
Compensation related to issuance of option to purchase common stock | — | — | | — | — | | |||||||||||
Issuance of deferred common share units | — | — | | — | — | | |||||||||||
Net income | — | — | — | | — | | |||||||||||
Other comprehensive income | — | — | — | — | | | |||||||||||
Balance, January 31, 2022 | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Balance, May 1, 2022 |
| | $ | | $ | | $ | | $ | ( | $ | | |||||
Compensation related to issuance of option to purchase common stock | — | — | | — | — | | |||||||||||
Issuance of deferred common share units | — | — | | — | — | | |||||||||||
Issuance of restricted common stock | | | | — | — | | |||||||||||
Net income | — | — | — | | — | | |||||||||||
Other comprehensive income |
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| — |
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Balance, January 31, 2023 |
| | $ | | $ | | $ | | $ | ( | $ | | |||||
Balance, May 1, 2021 | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Reclassification of common stock settled from deferred common share units | — | | ( | — | — | — | |||||||||||
Compensation related to issuance of option to purchase common stock | — | — | | — | — | | |||||||||||
Issuance of deferred common share units | — | — | | — | — | | |||||||||||
Issuance of restricted common stock | | | | — | — | | |||||||||||
Net income | — | — | — | | — | | |||||||||||
Other comprehensive income | — | — | — | — | | | |||||||||||
Balance, January 31, 2022 |
| | $ | | $ | | $ | | $ | ( | $ | |
The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these unaudited condensed consolidated financial statements.
5
AMREP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months ended January 31, 2023 and 2022
(Amounts in thousands)
Nine Months ended January 31, | ||||||
| 2023 |
| 2022 | |||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
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Depreciation |
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Amortization of debt issuance costs |
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Non-cash credits and charges: |
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Share-based compensation |
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Deferred income tax provision |
| ( |
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Net periodic pension cost |
| ( |
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Pension settlement expense | | — | ||||
Gain on debt forgiveness | — | ( | ||||
Changes in assets and liabilities: |
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Real estate inventory and investment assets |
| ( |
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Other assets |
| ( |
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Accounts payable and accrued expenses |
| ( |
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Taxes payable, net |
| ( |
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Net cash (used in) provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Proceeds from corporate-owned life insurance policy |
| — |
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Capital expenditures of property and equipment |
| ( |
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Net cash (used in) provided by investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from debt financing |
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Principal debt payments |
| ( |
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Payments for debt issuance costs |
| — |
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Net cash (used in) provided by financing activities |
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(Decrease) increase in cash and cash equivalents |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period | $ | | $ | | ||
SUPPLEMENTAL CASH FLOW INFORMATION: |
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Income taxes refunded, net | $ | — | $ | | ||
Interest paid | $ | | $ | — |
The accompanying notes to unaudited condensed consolidated financial statements are an integral part of these unaudited condensed consolidated financial statements.
6
AMREP CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Three and Nine Months Ended January 31, 2023 and 2022
(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL REPORTING POLICIES
The accompanying unaudited condensed consolidated financial statements have been prepared by AMREP Corporation (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information, and do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The Company, through its subsidiaries, is primarily engaged in two business segments: land development and homebuilding. The Company has no foreign sales or activities outside the United States. Unless the context otherwise indicates, all references to the Company in this quarterly report on Form 10-Q include the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, considered necessary to reflect a fair statement of the results for the interim periods presented. The results of operations for such interim periods are not necessarily indicative of what may occur in future periods. Unless the context otherwise indicates, all references to 2023 and 2022 are to the fiscal years ending April 30, 2023 and 2022.
The unaudited condensed consolidated financial statements herein should be read in conjunction with the Company’s annual report on Form 10-K for the year ended April 30, 2022, which was filed with the SEC on July 21, 2022 (the “2022 Form 10-K”). To better align with industry practice, the Company reclassified public improvement district reimbursements, private infrastructure covenant reimbursements and a portion of miscellaneous other revenues representing payment for impact fee credits within building sales and other revenues in the Company’s quarterly report on Form 10-Q for the quarter ended January 31, 2022 as a reduction to land sale cost of revenues in these unaudited condensed consolidated financial statements to conform to the current period presentation with no effect on net income or shareholders’ equity.
Summary of Significant Accounting Policies
The significant accounting policies used in preparing these unaudited condensed consolidated financial statements are consistent with the accounting policies described in the 2022 Form 10-K, except as follows:
● | Land sale cost of revenues, net includes all direct acquisition costs and other costs specifically identified with the property, including pre-acquisition costs and capitalized real estate taxes and interest, and an allocation of certain common development costs associated with the entire project. Common development costs include the installation of utilities and roads, and may be based upon estimates of cost to complete. The allocation of costs is based on the estimated relative sales value of the individual parcels of land being sold to the total expected sales value for the unsold parcels of land in the applicable portion of the subdivision. Estimates and cost allocations are reviewed on a regular basis until a project is substantially completed, and are revised and reallocated as necessary on the basis of current estimates. Amounts received from public improvement districts, private infrastructure covenants and payments for impact fee credits reduce the amount of land sale cost of revenues. |
● | The Company offers homeowners a comprehensive third-party warranty on each home. Homes are generally covered by a ten-year warranty for qualified and defined structural defects, one year for defects and products used, and two years for electrical, plumbing, heating, ventilation and air conditioning parts and labor. Estimates of the Company’s exposure to warranty claims are included within accrued expenses at the time home sale revenues are recognized. |
New Accounting Pronouncements
There are no new accounting standards or updates to be adopted that the Company currently believes might have a significant impact on its unaudited condensed consolidated financial statements.
7
(2) REAL ESTATE INVENTORY
Real estate inventory consists of (in thousands):
January 31, | April 30, | |||||
| 2023 |
| 2022 | |||
Land held for development or sale in New Mexico | $ | | $ | | ||
Land held for development or sale in Colorado |
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Homebuilding model inventory | | | ||||
Homebuilding construction in process | ||||||
$ | $ |
(3) INVESTMENT ASSETS
Investment assets consist of (in thousands):
| January 31, |
| April 30, | |||
2023 | 2022 | |||||
Land held for long-term investment | $ | | $ | | ||
Owned real estate leased or intended to be leased |
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| — | ||
$ | | $ | |
Land held for long-term investment represents property located in areas that are not planned to be developed in the near term and that has not been offered for sale in the normal course of business.
Owned real estate leased or intended to be leased represents homes and buildings leased or intended to be leased to third parties. As of January 31, 2023, four homes are leased to residential tenants and two buildings under construction have been leased to commercial tenants.
(4) OTHER ASSETS
Other assets consist of (in thousands):
| January 31, |
| April 30, | |||
2023 | 2022 | |||||
Prepaid expenses | $ | | $ | | ||
Miscellaneous assets | | | ||||
Property | | | ||||
Equipment | | | ||||
Less accumulated depreciation | ( | ( | ||||
Property and equipment, net | | | ||||
$ | | $ | |
Prepaid expenses as of January 31, 2023 primarily consist of a land development cash collateralized performance guaranty, stock compensation, insurance and real estate taxes. Prepaid expenses as of April 30, 2022 primarily consist of insurance, stock compensation, real estate taxes and utility deposits. Amortized lease cost for right-of-use assets associated with the leases of office facilities was $
8
(5) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of (in thousands):
| January 31, |
| April 30, | |||
2023 | 2022 | |||||
Land development and homebuilding operations | ||||||
Accrued expenses | $ | | $ | | ||
Trade payables |
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Customer deposits | | | ||||
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Corporate operations | | | ||||
$ | | $ | |
(6) NOTES PAYABLE
The following tables present information on the Company’s notes payable during the nine months ended January 31, 2023 (dollars in thousands):
| Principal Amount |
| |||||||||
Available for | Outstanding | ||||||||||
New Borrowings | Principal Amount | ||||||||||
January 31, | January 31, | April 30, | |||||||||
Loan Identifier | Lender | 2023 | 2023 |
| 2022 | ||||||
Revolving Line of Credit | BOKF |
| $ | |
| $ | |
| $ | | |
La Mirada | BOKF |
| |
| |
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Equipment Financing | DC | | | | |||||||
| $ | | $ | |
(data as of January 31, 2023) |
|
| Mortgaged Property |
| |||
Loan Identifier | Interest Rate | Book Value | Scheduled Maturity | ||||
Revolving Line of Credit |
| | % | $ | | August 2025 | |
La Mirada |
| | % |
| | June 2024 | |
Equipment Financing |
| | % |
| | June 2028 |
(data for periods ended January 31, 2023) | Principal Repayments | Capitalized Interest and Fees | ||||||||||
Loan Identifier |
| Three Months |
| Nine Months |
| Three Months |
| Nine Months | ||||
Revolving Line of Credit |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
La Mirada |
| — |
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Equipment Financing |
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| — |
| — | ||||
$ | | $ | | $ | | $ | |
As of January 31, 2023, the Company was in compliance with the financial covenants contained in the loan documentation for the then outstanding notes payable. Except as described below, refer to Note 6 to the consolidated financial statements contained in the 2022 Form 10-K for additional detail about each of the above notes payable.
Revolving Line of Credit. Refer to Note 6 to the consolidated financial statements contained in the 2022 Form 10-K for detail regarding the Loan Agreement (the “Loan Agreement”) entered into between BOKF, NA dba Bank of Albuquerque (“BOKF”) and AMREP Southwest Inc. (“ASW”), a subsidiary of AMREP Corporation, in which BOKF agrees to lend up to $
9
Equipment Financing. In June 2022, Rioscapes LLC (“Rioscapes”), a subsidiary of the Company, entered into a Loan Contract-Security Agreement with Deere & Company (“DC”). The loan is secured by a security interest in certain construction equipment. DC lent $
As of January 31, 2023, the Company had (a) a letter of credit outstanding under its Revolving Line of Credit in the principal amount of $
The following table summarizes the notes payable scheduled minimum principal repayments subsequent to January 31, 2023 (in thousands):
Fiscal Year |
| Scheduled Payments | |
2023 | $ | | |
2024 |
| | |
2025 |
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Thereafter |
| | |
Total | $ | |
(7) REVENUES
Land sale revenues. Substantially all of the land sale revenues were received from
Building sales and other revenues. Building sales and other revenues consist of (in thousands):
Three Months | Nine Months | |||||||||||
ended January 31, | ended January 31, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
Sale of building | $ | — | $ | — | $ | — | $ | | ||||
Oil and gas royalties | | | | | ||||||||
Miscellaneous other revenues |
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$ | | $ | | $ | | $ | |
Refer to Note 7 to the consolidated financial statements contained in the 2022 Form 10-K for additional detail about the categories of building sales and other revenues.
The Company owned a
10
Miscellaneous other revenues for the three and nine months ended January 31, 2023 primarily consist of extension fees for purchase contracts and residential rental revenues. Miscellaneous other revenues for the three and nine months ended January 31, 2022 primarily consist of rent received from a tenant at a building in Palm Coast, Florida and tenants at a shopping center in Albuquerque, New Mexico, a non-refundable option payment and proceeds from the sale of equipment.
Major customers:
● | There were |
● | There were |
● | There were |
● | There were |
(8) COST OF REVENUES
Land sale cost of revenues, net consist of (in thousands):
| Three Months ended |
| Nine Months ended | |||||||||
January 31, | January 31, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
Land sale cost of revenues | $ | | $ | | $ | | $ | | ||||
Less: |
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Public improvement district reimbursements |
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Private infrastructure covenant reimbursements |
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Payments for impact fee credits |
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Land sale cost of revenues, net | $ | | $ | | $ | | $ | |
Building sales and other cost of revenues during the nine months ended January 31, 2022 consist of the sale of a
(9) GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist of (in thousands):
Three Months ended January 31, | Nine Months ended January 31, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
Operations | ||||||||||||
Land development | $ | | $ | | $ | | $ | | ||||
Homebuilding |
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Corporate |
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Pension settlement | | | | — | ||||||||
$ | | $ | | $ | | $ | |
11
(10) BENEFIT PLANS
Pension plan
Refer to Note 11 to the consolidated financial statements contained in the 2022 Form 10-K for detail regarding the Company’s defined benefit pension plan. The Company recognizes the known changes in the funded status of the pension plan in the period in which the changes occur through other comprehensive income, net of the related income tax effect. The Company recorded, net of tax, other comprehensive income of $
Equity compensation plan
Refer to Note 11 to the consolidated financial statements contained in the 2022 Form 10-K for detail regarding the AMREP Corporation 2016 Equity Compensation Plan (the “Equity Plan”), including restricted common stock and an option to purchase shares of common stock granted thereunder. The summary of the restricted share award activity during the nine months ended January 31, 2023 presented below represents the maximum number of shares that could become vested after these dates:
| ||
Number of | ||
Restricted share awards | Shares | |
Non-vested as of April 30, 2022 |
| |
Granted during the nine months ended January 31, 2023 |
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Vested during the nine months ended January 31, 2023 |
| ( |
Forfeited during the nine months ended January 31, 2023 |
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Non-vested as of January 31, 2023 |
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The Company recognized non-cash compensation expense related to the vesting of restricted shares of common stock net of forfeitures of $
In November 2021, the Company granted Christopher V. Vitale, the President and Chief Executive Officer of the Company, an option to purchase
Director compensation non-cash expense, which is recognized for the expected annual grant of deferred common share units to non-employee members of the Company’s Board of Directors ratably over the director’s service in office during the calendar year, was $
(11) OTHER INCOME
Other income during the three and nine months ended January 31, 2023 consists of $
12
income for the three months ended January 31, 2022. Other income during the nine months ended January 31, 2022 consists of $
(12) INCOME TAXES
Palm Coast Data Holdco, Inc., a subsidiary of the Company, had previously been the owner of the Company’s fulfillment services business. During the three months ended January 31, 2023, the Company converted Palm Coast Data Holdco, Inc. to a limited liability company and made an election to treat the limited liability company as a disregarded entity for U.S. federal income tax purposes. This resulted in a worthless stock deduction for tax purposes. As a result of the worthless stock deduction, the Company incurred an operating tax loss of $
The Company did not provide a valuation allowance against deferred tax assets, net with respect to the worthless stock deduction due to the Company’s belief that it is more likely than not based upon the available evidence that such deferred tax assets will be realized. In making this determination, the Company projected its future earnings (including currently unrealized gains on real estate inventory) for the future recoverability of such deferred tax assets. While the Company believes that it has utilized a reasonable method to make this valuation allowance determination, should factors and conditions differ materially from those used by the Company in making such determination (including if the Company does not generate sufficient future taxable income to fully utilize the tax benefit of the tax loss included in deferred income taxes, net), the actual realization of deferred tax assets could differ materially from the reported amounts.
This tax loss may be subject to audit and possible adjustment by the U.S. Internal Revenue Service (“IRS”), which could result in a reversal of none, part or all of the income tax benefit or could result in a benefit higher than the amount recorded. If the IRS rejects or reduces the amount of the income tax benefit related to the worthless stock deduction, the Company may have to pay additional cash income taxes, which could adversely affect the Company’s results of operations, financial condition and cash flows. The Company cannot guarantee what the ultimate outcome or amount of the tax benefit the Company will receive, if any. Under federal income tax law, net operating losses have an unlimited carryforward period and the deductibility of such federal net operating losses is limited to 80% of taxable income in any year during the carryforward period.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, the Company’s ability to utilize net operating loss carryforwards or other tax attributes in any taxable year may be limited if the Company experiences an “ownership change.” A Section 382 “ownership change” generally occurs if one or more shareholders or groups of shareholders who own at least 5% of the Company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws in the United States. It is possible that any future ownership changes could have a material effect on the use of the Company’s net operating loss carryforwards or other tax attributes.
(13) RISKS AND UNCERTAINTIES
During the three and nine months ended January 31, 2023, the Company has experienced supply chain constraints, increases in the prices of building materials, shortages of skilled labor and delays in municipal approvals and inspections in both the land development business segment and homebuilding business segment, which have caused delays in construction and the realization of revenues and increases in cost of revenues. In addition, in response to inflation, the Federal Reserve increased benchmark interest rates during 2023 and has signaled it expects additional future interest rate increases, which has resulted in a significant increase in mortgage interest rates during 2023, impacting home affordability and consumer sentiment and tempering demand for new homes and finished residential lots. The rising cost of housing due to increases in average sales prices in recent years and the recent increases in mortgage interest rates, coupled with general inflation in the U.S. economy and other macroeconomic factors, have placed additional pressure on overall housing affordability and have caused many potential home buyers to pause and reconsider their housing choices. Given the affordability challenges described above and the resulting impact on demand, the Company has increased sales incentives on certain homes classified as homebuilding model inventory or homebuilding construction in process, opportunistically leased completed homes and slowed the pace of housing starts and land development projects.
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(14) INFORMATION ABOUT THE COMPANY’S OPERATIONS IN DIFFERENT INDUSTRY SEGMENTS
The following tables set forth summarized data relative to the industry segments in which the Company operated for the periods indicated (in thousands):
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Development | Homebuilding | Corporate | Consolidated | |||||||||
Three months ended January 31, 2023 (a) |
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Revenues | $ | | $ | | $ | | $ | | ||||
Net income |