BENEFIT PLANS:

12 Months Ended

Apr. 30, 2015

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

(13) BENEFIT PLANS:

Pension plan

The Company has a defined benefit pension plan for which accumulated benefits were frozen and future service credits were curtailed as of March 1, 2004. Due to the closing of certain facilities in 2011 in connection with the consolidation of the Company’s Fulfillment Services business and the associated work force reduction in 2011, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the regulations thereunder, gave the Pension Benefit Guaranty Corporation (the “PBGC”) the right to require the Company to accelerate the funding of approximately $11,688,000 of accrued pension-related obligations to the Company’s defined benefit pension plan.  In August 2012, the Company and the PBGC reached an initial agreement with respect to this funding obligation, and as a result, the Company made a $3,000,000 cash contribution to the pension plan on August 16, 2012, thereby leaving a remaining accelerated funding liability of $8,688,000.

On August 30, 2013, the Company entered into a settlement agreement with the PBGC. In the settlement agreement, the PBGC agreed to forbear from asserting certain rights to obtain payment of the remaining $8,688,000 accelerated funding liability granted to it by ERISA, and the Company agreed (a) to pay $3,243,000 of the accelerated funding liability as a cash contribution to its pension plan, which payment was made on September 4, 2013, and (b) to provide first lien mortgages on certain real property with an aggregate appraised value of $10,039,000 in favor of the PBGC to secure the remaining unpaid amount of the accelerated funding liability. The total book value of the real property subject to the mortgages was approximately $8,192,000 as of April 30, 2015. In addition, the PBGC agreed to credit $426,000 of contributions made by the Company to the pension plan in excess of the 2012 minimum funding requirements towards the accelerated funding liability, so that, after this credit and the $3,243,000 payment referred to above, the remaining accelerated funding liability was $5,019,000.

On an annual basis, the Company is required to provide updated appraisals on each mortgaged property and, if the appraised value of the mortgaged properties is less than two times the amount of the accelerated funding liability then outstanding, the Company is required to make a payment to its pension plan in an amount equal to one-half of the amount of the shortfall. The mortgages in favor of the PBGC will be discharged following the termination date of the settlement agreement. In connection with the settlement agreement, the Company made certain representations and warranties and is required to comply with various covenants, reporting requirements and other requirements, including making all required minimum funding contributions to its pension plan. Any failure by the Company to comply with its obligations under the settlement agreement may result in an event of default, which would permit the PBGC to repossess, sell or foreclose on the properties that have been mortgaged in favor of the PBGC; however, if the Company complies with the terms of the settlement agreement, including making all future required minimum funding contributions to its pension plan and any payments required due to any shortfall in the appraised value of real property covered by the mortgages described above, the Company will not be required to make any further cash payments to its pension plan with respect to the remaining accelerated funding liability.

The settlement agreement is scheduled to terminate on the earlier of the date the accelerated funding liability has been paid in full or on August 30, 2018. Effective on the termination date of the settlement agreement, the PBGC will be deemed to have released and discharged the Company and any other members of its controlled group from any claims in connection with such members’ liability or obligations with respect to the accelerated funding liability. The settlement agreement does not address any future events that may accelerate any other accrued pension plan obligations. The Company may become subject to additional acceleration of its remaining accrued obligations to the pension plan if the Company closes other facilities and further reduces its work force of active pension plan participants. Any such acceleration could negatively impact the Company’s limited financial resources and could have a material adverse effect on the Company’s financial condition.

Net periodic pension cost for 2015 and 2014 was comprised of the following components (in thousands):

	Year Ended April 30,
	2015		2014
Interest cost on projected benefit obligation	$	1,370	$	1,294
Expected return on assets		(2,230)		(2,075)
Plan expenses		247		234
Recognized net actuarial loss		1,257		1,662
Settlement (gain) loss		1,067		-
Total cost recognized in pretax income		1,711		1,115
Cost (gain) recognized in pretax other comprehensive income		2,674		(3,853)
Net periodic pension cost (income)	$	4,385	$	(2,738)

The defined benefit pension plan was amended in November 2014 to provide for a window for lump sum distributions. As a result of the amendment and the subsequent election by plan participants, the defined benefit pension plan made settlement payments that totaled $2,317,000 and this amount is included in benefits paid in the tables below. This lump sum window required settlement accounting treatment under ASC 715-30 and increased pension costs by approximately $1,067,000.

The Company became aware of the additional non-cash pension expense of $1,067,000 for 2015 upon receipt of the annual “FASB ASC Subtopic Report 715-20 Disclosure Report” in June 2015. This additional expense resulted from the accelerated recognition of deferred actuarial losses due to a settlement of plan liabilities. This was triggered by the lump-sum payments made to plan participants in excess of the plan’s service and interest costs during 2015. The Company determined, in consultation with its actuary, approximately $863,000 ($543,000 after tax) of this additional expense was attributable to the third quarter of 2015, and should have been recorded in the third quarter under generally accepted accounting principles. The following table presents the effect on the third quarter and year-to-date financial data as if the additional pension expense had been reported in the proper period (in thousands, except per share amounts):

	January 31, 2015
	Three Months Ended				Nine Months Ended
	As Reported		Revised		As Reported		Revised
Income (loss) from continuing operations	$	201	$	(230)	$	(532)	$	(963)
Income (loss) from discontinued operations		33		(79)		7,284		7,172
Net income (loss)	$	234	$	(309)	$	6,752	$	6,209
Earnings (loss) per share –continuing operations - basic and diluted	$	0.03	$	(0.03)	$	(0.07)	$	(0.12)
Earnings (loss) per share – discontinued operations - basic and diluted	$	0.00	$	(0.01)	$	0.92	$	0.91
Earnings (loss) per share – basic and diluted	$	0.03	$	(0.04)	$	0.85	$	0.78

The effect on the January 31, 2015 balance sheet of this matter would result in a reduction of retained earnings and an increase to accumulated comprehensive loss of $543,000, resulting in no change to net shareholders’ equity. Future presentation of third quarter and year-to-date 2015 will reflect the revisions above.

The estimated net loss, transition obligation and prior service cost for the pension plan that will be amortized from accumulated other comprehensive income into net periodic pension cost over the next fiscal year are $1,534,000, $0 and $0. Assumptions used in determining net periodic pension cost and the benefit obligation were:

	Year Ended April 30,
	2015
Discount rate used to determine net periodic pension cost		3.90	%	3.47	%
Discount rate used to determine pension benefit obligation		3.48	%	3.90	%
Expected long-term rate of return on assets on assets		8.00	%	8.00	%

The following table sets forth changes in the pension plan’s benefit obligation and assets, and summarizes components of amounts recognized in the Company’s consolidated balance sheet (in thousands):

	April 30,
	2015		2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	36,469	$	38,582
Interest cost		1,370		1,294
Actuarial (gain) loss		5,098		(1,009)
Benefits paid		(4,634)		(2,398)
Benefit obligation at end of year	$	38,303	$	36,469
Change in plan assets:
Fair value of plan assets at beginning of year	$	29,120	$	24,777
Company contributions		475		3,718
Actual return on plan assets		2,334		3,268
Benefits paid		(4,634)		(2,398)
Plan expenses		(251)		(245)
Fair value of plan assets at end of year	$	27,044	$	29,120
Funded (underfunded) status:	$	(11,259)	$	(7,349)
Recognition of underfunded status:
Accrued pension cost	$	(11,259)	$	(7,349)

The funded status of the pension plan is equal to the net liability recognized in the consolidated balance sheet. The following table summarizes the amounts recorded in accumulated other comprehensive loss, which have not yet been recognized as a component of net periodic pension costs (in thousands):

	Year Ended April 30,
	2015		2014
Pre-tax accumulated comprehensive loss	$	17,627	$	14,953

The following table summarizes the changes in accumulated other comprehensive loss related to the pension plan for the years ended April 30, 2015 and 2014 (in thousands):

	Pension Benefits
	Pre-tax		Net of Tax
Accumulated comprehensive loss, May 1, 2013	$	18,806	$	11,564
Net actuarial gain		(2,191)		(1,359)
Amortization of net loss		(1,662)		(1,030)
Accumulated comprehensive loss, April 30, 2014		14,953		9,175
Net actuarial loss		4,998		3,099
Recognition of settlement loss		(1,067)		(662)
Amortization of net loss		(1,257)		(779)
Accumulated comprehensive loss, April 30, 2015	$	17,627	$	10,833

The Company recorded, net of tax, other comprehensive loss of $1,658,000 in 2015 and other comprehensive income of $2,389,000 in 2014 to account for the net effect of changes to the unfunded portion of pension liability.

The average asset allocation for the pension plan by asset category was as follows:

	April 30,
	2015			2014
Equity securities		69	%		65	%
Fixed income securities		29			27
Other (principally cash and cash equivalents)		2			8
Total		100	%		100	%

The investment mix between equity securities and fixed income securities is based upon seeking to achieve a desired return by balancing more volatile equity securities and less volatile fixed income securities. Pension plan assets are invested in portfolios of diversified public-market equity securities and fixed income securities. The pension plan holds no securities of the Company. Investment allocations are made across a range of markets, industry sectors, market capitalization sizes and, in the case of fixed income securities, maturities and credit quality. The Company has established long-term target allocations of approximately 50-80% for equity securities, 20-50% for fixed income securities and 0-30% for other.

The expected return on assets for the pension plan is based on management’s expectation of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns for the asset classes in which the pension plan is invested, as well as current economic and market conditions. The Company is currently using an 8.0% assumed rate of return for purposes of the expected return rate on assets for the development of net periodic pension costs for the pension plan.

The Company funds the pension plan in compliance with IRS funding requirements. The Company’s contributions to the pension plan totaled $475,000 and $3,718,000 in 2015 and 2014. The 2014 contributions included a payment made to the PBGC of $3,243,000 as part of the settlement agreement discussed above. The Company is not required and does not expect to make contributions to the pension plan in fiscal year 2016.

The amount of future annual benefit payments is expected to be between $2,598,000 and $2,791,000 in fiscal years 2016 through 2020, and an aggregate of approximately $12,000,000 is expected to be paid in the fiscal five-year period 2021 through 2025.

The Company has adopted the disclosure requirements in ASC 715, which requires additional fair value disclosures consistent with those required by ASC 820. The following is a description of the valuation methodologies used for pension plan assets measured at fair value: Common stock – valued at the closing price reported on a listed stock exchange; Corporate bonds, debentures and government agency securities – valued using pricing models, quoted prices of securities with similar characteristics or discounted cash flow; and U.S. Treasury securities – valued at the closing price reported in the active market in which the security is traded.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following tables set forth by level within the fair value hierarchy the pension plan’s assets at fair value as of April 30, 2015 and 2014 (in thousands):

2015:

	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	675	$	675	$	-	$	-
Investments at fair value:
Equity securities		18,634		18,634		-		-
Corporate bonds and debentures		7,735		-		7,735		-
Total assets at fair value	$	27,044	$	19,309	$	7,735	$	-

2014:

	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	2,466	$	2,466	$	-	$	-
Investments at fair value:
Equity securities		18,844		18,844		-		-
Corporate bonds and debentures		7,810		-		7,810		-
Total assets at fair value	$	29,120	$	21,310	$	7,810	$	-

Savings and salary deferral plans

The Company has a Savings and Salary Deferral Plan, commonly referred to as a 401(k) plan, in which participating employees contribute salary deductions. The Company may make discretionary matching contributions to the 401(k) plan, subject to the approval of the Company’s Board of Directors. The Company did not provide matching contributions to the 401(k) plan in 2015 and 2014.

Equity compensation plan

In 2006, the Board of Directors of the Company adopted and the shareholders approved the AMREP Corporation 2006 Equity Compensation Plan (the “Equity Plan”) that provides for the issuance of up to 400,000 shares of common stock of the Company to employees of the Company and its subsidiaries and non-employee members of the Board of Directors of the Company pursuant to incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, stock units and other stock-based awards. As of April 30, 2015, 36,000 shares were issued and outstanding under the Equity Plan, leaving 364,000 shares available for future issuance. The Equity Plan is administered by the Board of Directors and its Compensation and Human Resources Committee.

Shares of restricted common stock that are issued under the Equity Plan (“restricted shares”) are considered to be issued and outstanding as of the grant date and have the same dividend and voting rights as other common stock. Compensation expense related to the restricted shares is recognized over the vesting period of each grant based on the fair value of the shares as of the date of grant. The fair value of each grant of restricted shares is determined based on the trading price of the Company’s common stock on the date of such grant, and this amount will be charged to expense over the vesting term of the grant.

A summary of the 2014 and 2015 restricted share award activity presented below represents the maximum number of shares that could be vested:

			Weighted Average
	Number of		Grant Date
Restricted time-based share awards	Shares		Fair Value
Non-vested at April 30, 2013		-	$	-
Granted during 2014		24,000		6.96
Vested during 2014		-		-
Forfeited during 2014		-		-
Non-vested at April 30, 2014		24,000		6.96
Granted during 2015		12,000		6.90
Vested during 2015		(8,000)		6.80
Forfeited during 2015		-		-
Non-vested at April 30, 2015		28,000	$	6.98

For 2015 and 2014, the Company recognized $122,000 and $47,000 of compensation expense related to all shares of common stock issued under the Equity Plan. As of April 30, 2015, there was $81,000 of total unrecognized compensation expense related to shares of common stock issued under the Equity Plan, which is expected to be recognized over the remaining vesting term not to exceed three years.