Palm Coast Data parent Amrep Corp. last week reported a modest profit of $233,000 for the six months ending on Oct. 31, a sharp reversal from the $2 million loss in the same period the previous year. But revenue at the company continues to plummet. In the three months ending Oct. 31, revenue fell 20 percent, from $32.3 million in the same period last year to $25.8 million this year. In the six months ending Oct. 31, revenue fell $13.9 million, or 21.4 percent–from $64.8 million in the same period last year to $50.9 million this year.
Much of that drop was led by Palm Coast Data itself, which is now by far the largest operation in the Amrep portfolio. And Amrep’s most immediate headache isn’t its falling revenue, but a $22.5 million loan by one of its subsidiary that’s due to be repaid, in one lump sum, on Dec. 16. The company prepared investors in its financial reports for the possibility that it would not be able to repay the loan short of refinancing the agreement or selling assets. As of Dec. 9, when it last referred to the loan in its latest financial report, no refinancing had occurred.
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Amrep has three subsidiaries: a land-sale company in New Mexico called Rio Rancho, which once dominated the company’s portfolio (Rio Rancho is like Palm Coast: a company town developed in the middle of nowhere with real estate sales as its driving force), a newsstand distribution service, and Palm Coast Data, a subscription fulfillment service. The newsstand and Palm Coast Data operations are under the banner of a subsidiary company called Kable Media Services.
The subscription service generated revenue of $6 million in the first six months of the new fiscal year, down from $6.8 million last year.
At Palm Coast Data, revenue declined $10.9 million in the six months ending Oct. 31, a 22 percent decline from the same period last year (from $49.36 million to $38.42 million). In the last three months, which is technically the second quarter of 2011 in the company’s books, revenue fell from $30.6 million in the comparable period last year to $25.3 million this year, or $5.3 million (a 17 percent decline).
But operating expenses fell significantly, too, in Kable’s operations, “primarily,” the company reported, “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” in Palm Coast. That operation was completed Oct. 31. Those operating expenses decreased substantially–by $14 million in the six months to Oct. 31, according to the company. Much of that decrease was made possible by layoffs.
The Rio Rancho part of Amrep’s operations, meanwhile, generated revenue of just $1.3 million in the first six months of the current fiscal year, down from $3.15 million in the same period last year.
By the end of April, Amrep reports, the company had spent $14 million toward its consolidation of facilities in Colorado and Illinois with the Palm Coast facility, now its only subscription fulfillment facility. Of that, $6.3 million was for capital costs, and $8 million for other one-time costs.
The company cashed in on $548,000 in local and state government incentives when it consolidated its operations in Palm Coast, which offset some of its losses due to restructuring those two years. The company still reported a net charge of $7.4 million in 2009 and 2010 due to the consolidation. The losses may not be over. “In June 2009, the company received $3 million pursuant to an agreement with the state of Florida,” the company’s annual report states, ” as part of the incentives made available to the company in connection with the consolidation project. The award agreement requires the company to achieve certain objectives in terms of job retention, job creation and capital investment through December 21, 2011.” Palm Coast Data, in sum, is required to have some 1,700 jobs locally to qualify for those incentives. It has between 1,100 and 1,200.
“If the objectives are not met,” the report continues, “the company may need to return a portion, or all, of the $3 million.” Palm Coast Data is, for now, assuming that the objectives won’t be met, as there is no mention in the report of the company’s ability or forecast to hire 500 or 600 more employees locally: “Accordingly, the $3 million has been recorded as a long-term liability until the company is irrevocably entitled to retain the award, at which time the award will be amortized into income over the life of the assets acquired with the grant monies received.”
The company still expects to spend $300,000 on severance costs in 2011. Amrep is also facing another potential financial hit this week. The company’s New Mexico subsidiary, Amrep reports, has a loan agreement with a bank that matures on December 16. The subsidiary, according to the company, “is in discussions with the bank regarding renewal of this arrangement, but there can be no assurance that this facility can be renewed on acceptable terms. If AMREP Southwest is unable to renew this facility, it would not have sufficient funds to satisfy its obligation to the bank, and the company would be forced to seek either replacement financing or other sources of capital, such as by selling assets or issuing equity, which replacement financing or other sources of capital might not be available on acceptable terms.”
As of April 30, the outstanding principal of the loan in question is $22.5 million, according to the company’s latest annual report. That full amount is due in one lump sum on Thursday (Dec. 16). The collateral on that loan is “a mortgage on certain real property.”
The company doesn’t clarify what that replacement financing might amount to, though at this point its biggest assets, other than real estate in New Mexico, are in Palm Coast.
Kable also has a revolving loan of $20 million. That loan doesn’t mature until May 2013.
Palm Coast Pioneers says
We really miss the multi purpose office building which was Federally Ordered as part of the $30,000,000.00 Federal Trade Commissions’ REDRESS C-2854 for us.
Does anyone know if this building in Pine Lakes Industrial Park would have been adequate, even if only for starters, to house that ‘Bakery Business’ that was spoken of earlier?
Thank you.
Barney Smythe says
PC taxpayers, can you bend over and grab your ankles?? Looks like you got it again from those running the city!!
ann says
THE BIG WIGS AT PALM COAST DATA NOW WHAT IS OING TO HAPPEN TO THOSE WHO ARE STILL WORKING FOR YOU. HAVE YOU EVER THOUGHT OF THOSE WHO HAVE FAMILIES AND NEED THERE JOBS NO YOU HAVE NOT …WHY DONT YOU PEOPLE TAKE A CUT IN YOUR PAY TO SAVE SOMEONE ELSES JOB HAVE YOU THOUGHTOF DOING THAT….CAN YOU LIVE ON $ 7.82 AN HOUR ONLY $ .47 MORE THAN MIN WAGE IS THAT WHAT YOU PAY THESE HARD WORKING PEOPLE CAN YOU SURIVE ON THAT KIND OF WAGE GET REAL…. YOU PEOPLE ARE VERY UNFAIR AND UNREAL. YOU HAVE PEOPLE WHO WORK HARD THERE AND YOU CAN’T EVEN PAY THEM A DECENT WAGE FOR GOD SAKE HOW CAN YOU PEOPLE SLEEP AT NIGHT.
newfloridian29 says
Well, here is some information for you. It has been brought to some peoples attention that departments are now asking emplyees to give up time unpaid. Now some departments actually have to leave an hour early everyday, they claim for the next two weeks. And if Colorado and Illinois are no longer and everything transferred to Palm Coast Data, why does Palm Coast Data still pay some of their “executives” who work remotely from Colorado, who get paid i am sure decent salaries. So instead of hiring local residents, or moving people up within the company, they are paying these ex colorado employees and illinois salaries to do these jobs. Not to mention the amount of consultants they still have that are from Colorado, and yet people are having to give up an hour a day to cut costs, to avoid layoffs. Now does that seem fair. I would also say if you looked into the CEO’s background, you would find that he drove a company into bankrupcy, by paying consultants and expanding exective postitions, among other things. Look at Palm Coast Data’s shifts in managment, and outsourced salaries to ex Colorado employees and ask why is that allowed, especially when you have a contract to increase jobs. Well i would think if anyone is really interested in looking at the future of palm coast data, they need to look internally and look at the spending that has taken place since the new ceo took office.
Well... says
Since we are all part of the rumor-mill and not the fact-mill, I heard the people that have been asked to give up time is because the person in charge of that department ran it into the red so far this is the only way they can break even. I also heard that PCD was put up for sale, that there is a five-year plan and many other rumors…perhaps if the people in charge communicated and provided facts, the paranoia would be less or at least justified.
happygolucky53 says
I agree “Well”.. But as long as there is news about palm coast data in the paper people will find a way to add to the fire to make them look bad. I have personally heard the majority of the things posted here, if they are true, who knows. But its terrible employees of a company think so poorly about it. That should be an eye opener for the company to say the least.
audrapcd says
no everything that is said about pcd is sooo true, no bull when it comes to the work and they layoffs
The band plays on. says
Yesterday and today PCD has laid off over 20 people – The total is going to be around 32. I wonder if that will be tomorrow?
enough already says
I would like to know when these “so called” city, county and state officials are going to step up and address what’s going on there. Apparently they don’t care as long as they can sit in their offices and make their big salaries while the working class gets screwed as usual. They are no better than all of the executives at PCD who talk the talk but can’t walk the walk. What’s it going to take before someone realizes that the group that is “running” PCD into the ground could care less because they don’t live here and once the company goes bankrupt, and it will since they are the same group that put DIMAC under years ago, they will just go back to being consultants going on to their next prey while this city and county take a major hit with unemployment, more foreclosures and no one who cares. The common man would go to jail for grand theft, scamming and so forth. These people don’t even get a slap on the hand, make huge salaries with bonuses and if they do leave get large golden umbrella packages. I personally don’t know how John Meneough and Company can even look at themselves in a mirror any longer.
whyohwhy says
Anyone that works for PCD needs to Google the name Nicholas Karabots- he is the primary share holder of Amrep and therefore of PCD. He has 70 titles at the company and has decided not to renew his contract and has also decided to sell most of his shares in the company. It has been rumored for months that he is tired of the losses that the migration has caused and the issues Kappa has had with fulfill,ment of its own titles on the PCD fulfillment system. It looks like the writing is on the wall and PCD may be sold or worse go into bankruptcy again. The consolidation was a failure. The reason so many former Kable management is still on the payroll is that kable was a profitable company that had never been in bankruptcy. PCD is now trying to become more like the company they consumed. It is sad for all of the people that have lost jobs and those in the Flagler community that were counting on new jobs.
PalmCoastSucks says
As per usual another business with ego’s at the helm !! The ego’s, ego’s have trickled down into management, to supervisor’s, and some of the lowly “average” pay check to pay check workers thinking they are better than some of the other workers. To many managers, to many supervisors, and re-structuring for a company that seems to be stuck in the past, and needs modernizing. Base level staff are on stupid hourly wages which are far less than even someone who works at McDonalds or Burger King. There seems to be no offers of in house promotion, regardless of how long you have worked for PCD. I have spoken to several people from PCD and they have all told me that the harder you work the worse you are treated. Everyone needs a job, AND I will not be submitting an application to PCD any time soon from what I have heard from people who work there. All the stories I have heard might not be true, BUT when you hear the same ones from several different PCD sources then you begin to think that the PCD ship is not steady, and sinking. I would encourage the PCD employees to jump ship ASAP. Ex-staff have opened their mouths, and indeed those who thought there jobs where safe have now gone, thinking their ego’s would see them through without getting touched. I now wonder those who thought they where top pickings who got layed off are tooting their own horns now? Take those poles out of your backsides, and know that the ego’s at the top own PCD, and your ego is not as important as you thought.
Palm Coast is sure not going to be at a loss if it loses Palm Coast Data, and I would hope they put a shopping mall in it’s place, and give us Palm Coast residents something other than mechanics, restaurants,super markets, CVS’s, and Walgreens. Please could we have a bus service also.
There where to many cooks in the kitchen, and their ego’s, and the people with their noses up their butts have been cut, and money gave the God’s that be a reason to walk them up the PCD plank.
Who next will be in the firing line? Just make sure if you are a decent, honest, hard working person get out now, and work somewhere where hasn’t got sharks, and vultures lurking.
The part of Palm Coast where PCD site is the most boring part of Palm Coast indeed, the old cinema still sit there with nobody looking likely to use it, and a sports center, or decent shopping mall that betters the in Daytona would be a great addition to Palm Coast, and the side of Palm Coast which really has nothing to offer, not even a park for kids to play in.
If PCD goes under, demolish the building, build a sports center, mall, and park, and bring Palm Coast out of the 1970’s, and into the 2000’s. Also the drainage system sucks, what so called city would let water sit there to water grass like that? I smells like rotten eggs, and the worst smelling water is up near Target which almost made me throw up. These retention ponds are not good. Bring in a proper drainage system with grates in the road for the water to go some where instead of those swails or ditches with drain pipes that get blocked and make Palm Coast stink like a pig farm. No wonder nobody knows or wants to know about Palm Coast, and PCD was put here because I would assume like Illinois no other place in the United States wanted it here for its nasty ways of dealing with staff, and its uselessness as a business. They are losing contracts left, right, and center, and the base staff are paying for it. The bigw wigs are the ones not doing their jobs properly by holding onto contracts, and the near minimum wage staff are paying for it with no real pay rises, and if there are it is only a few cents raise. PCD employees who survived the layoff so fare, please look for new jobs now. Even if it is at Burger King or McDonalds. Making burgers is not an ideal job, but making an extra $2.00 an hour must be much better for your bank accounts right now.
Phil Berkley says
I have knonw,John Menough since the early 70’s. I am not sure what the situation is now. But from the day I became friends with the man he has always been strait in business and friendship..
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