U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________________ to ______________
Commission file number 0-9352
Gibbs Construction, Inc.
(Exact name of small business issuer as specified in its charter)
Texas 75-2095676
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1855 Wall Street, Garland, TX 75041
(Address of principal executive offices) (Zip Code)
(214) 278-3433
(Registrant's telephone number)
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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. Yes X
No ____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 4,000,000
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1996 1995
CURRENT ASSETS
Cash $ 73,573 $ 64,183
Temporary Investments 24,183 24,183
Accounts Receivable
Trade 3,540,570 3,439,389
Costs and Estimated Earnings in
Excess of Billings on Uncompleted
Contracts 476,591 294,472
Inventories 109,104 -
Prepaid Expenses 42,302 33,942
Deferred Tax Asset 447,518 -
TOTAL CURRENT ASSETS 4,713,841 3,856,169
LAND, BUILDINGS AND EQUIPMENT 9,776,619 7,229,232
Less Accumulated Depreciation (474,025) (279,630)
NET LAND, BUILDINGS AND EQUIPMENT 9,302,594 6,949,602
OTHER ASSETS
Other Assets 54,200 49,689
Deferred Registration Costs - 366,810
Receivables From Affiliates and Employees 186,271 193,839
TOTAL OTHER ASSETS 240,471 610,338
TOTAL ASSETS $14,256,906 $11,416,109
(Continued)
F-1
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
1996 1995
CURRENT LIABILITIES
Cash Overdraft $ 227,772 $ -
Notes Payable 150,000 150,000
Current Installments of Long-Term Debt 99,551 122,081
Current Capital Lease Obligations 268,129 138,616
Accounts Payable 4,566 407 5,260,692
Accrued Expenses 1,622,547 1,630,723
Billings in Excess of Costs and Estimated
Earnings on Uncompleted Contracts 706,240 414,621
Distributions Payable to Stockholders 956,000 -
TOTAL CURRENT LIABILITIES 8,596,646 7,716,733
LONG-TERM DEBT - Excluding Current Installments 348,722 351,935
CAPITAL LEASE OBLIGATIONS - Excluding Current
Obligations 1,064,620 593,122
DEFERRED INCOME TAXES 36,592 -
TOTAL LIABILITIES 10,046,580 8,661,790
STOCKHOLDERS' EQUITY
Common Stock of $.01 Par Value.
Authorized 7,500,000 Shares; Issued and
Outstanding 4,000,000 and 3,000,000
Shares, respectively 40,000 30,000
Paid-In-Capital 4,782,431 -
Retained Earnings (Deficit) (612,105) 2,724,319
TOTAL STOCKHOLDERS' EQUITY 4,210,326 2,754,319
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $14,256,906 $11,416,109
The accompanying note is an integral part
of these consolidated financial statements
F-2
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31,
1996 1995
CONSTRUCTION REVENUES $6,804,744 $5,287,565
COST OF CONSTRUCTION 6,493,759 (4,873,930)
NET CONSTRUCTION REVENUES 310,985 413,635
BRONCO BOWL REVENUES 908,602 -
BRONCO BOWL OPERATING EXPENSES 1,855,824 66,902
NET BRONCO BOWL EXPENSES (947,222) (66,902)
GROSS PROFIT (LOSS) (636,237) 346,733
GENERAL AND ADMINISTRATIVE EXPENSES 557,481 168,433
INCOME (LOSS) BEFORE OTHER INCOME (EXPENSE) (1,193,718) 178,300
OTHER INCOME (EXPENSE)
(Loss) on Disposal of Equipment - (10,125)
(Loss) on Temporary Investments Transactions - (39,238)
Interest Income - 1,200
Interest Expense, net of capitalized interest
of $36,635 and $31,643 at March 31, 1996
and 1995, respectively (33,533) -
Other -
300
INCOME (LOSS) BEFORE INCOME TAXES (1,227,251) 130,437
INCOME TAX BENEFIT 402,171 -
NET INCOME (LOSS) $(825,080) $ 130,437
The accompanying note is an integral part
of these consolidated financial statements
(Continued)
F-3
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Continued)
For the Three Months Ended
March 31,
1996 1995
(LOSS) PER SHARE $(.21) $ -
WEIGHTED AVERAGE NUMBER OF SHARES 4,000,000
-
PRO FORMA DATA
Historical Income Before Income Taxes $ - $130,437
Pro Forma Provision for Income Taxes - (44,350)
Pro Forma Net Income $ - $86,087
Pro Forma Net Income Per Common Share $ - $.03
Weighted Average Number of Common
Shares Outstanding - 3,000,000
The accompanying note is an integral part
of these consolidated financial statements
F-4
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock Retained
Number Paid-In Earnings
of Shares Amount Capital (Deficit) Total
BALANCE,
DECEMBER 31, 1994 3,000,000 $30,000 $ - $ 639,156 $ 669,156
1995 Net Income - - - 2,413,335 2,413,335
Distributions - - - (328,172) (328,172)
BALANCE,
DECEMBER 31, 1995 3,000,000 30,000 - 2,724,319 2,754,319
Sale of Common Shares -
January, 1996 1,000,000 10,000 3,712,500 - 3,722,500
Registration Costs, net of
applicable tax effe - - (326,151) - (326,151)
"S" Corporation
Status Termination - - 1,396,082 (2,511,344) (1,115,262)
1996 Net Loss - - - (825,080) (825,080)
BALANCE,
MARCH 31, 1995 4,000,000 $40,000 $4,782,431 $(612,105) $4,210,326
The accompanying note is an integral part
of these consolidated financial statements
F-5
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
1996 1995
CASH FLOW FROM OPERATING ACTIVITIES
Net (Loss) Income $ (825,080) $130,437
Adjustments to Reconcile Net Income to Net Cash
From Operating Activities
Depreciation 194,395 24,848
Loss on Disposal of Equipment - 10,125
(Gain) Loss on Temporary Investments Transactions -
39,238
Deferred Taxes (402,171) -
Changes in Current Assets and Liabilities
(Increase) Decrease in Accounts Receivable (101,181) 353,839
(Increase) Decrease in Billings Related to Cost
and Earnings on Uncompleted Contracts 109,500 (254,212)
(Increase) in Inventories (109,104) -
(Increase) Decrease in Prepaid Expenses (8,360) (470)
Increase in Accounts Payable (694,285) (280,382)
Increase in Accrued Expenses (8,176) 73,047
Purchase of Temporary Investments - (594,307)
Proceeds From Sale of Temporary Investments - 240,219
Change in Temporary Investment Margin Loans - 232,652
NET CASH FLOW PROVIDED (USED) BY
OPERATING ACTIVITIES (1,844,462) (24,966)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Equipment (105,134) (6,118)
Bronco Bowl Renovations (1,807,628) (101,671)
Proceeds from Sale of Equipment - 5,810
Decrease in Other Assets 3,057 8,391
NET CASH FLOW (USED) IN INVESTING
ACTIVITIES (1,909,705) (93,588)
CASH FLOW FROM FINANCING ACTIVITIES
Deferred Registration Costs (127,358) -
Proceeds from Note Borrowings - 68,000
Repayments of Note Borrowings (25,743) (10,926)
Repayments of Capital Lease Obligations (33,614) -
Distributions to Stockholders - (35,833)
Sale of Common Stock 3,722,500 -
NET CASH FLOW PROVIDED BY
FINANCING ACTIVITIES 3,535,785 21,241
The accompanying note is an integral part
of these consolidated financial statements
F-6
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
Three Months Ended
March 31,
1996 1995
NET (DECREASE) IN CASH $(218,382) $(97,313)
CASH AT THE BEGINNING OF THE PERIOD 64,183 118,292
CASH AT THE END OF THE PERIOD $(154,199) $ 20,979
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash Paid During the Year For:
Interest Expense $70,168 $ 25,079
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Increase in Receivables From Affiliates and Employees $ 1,115,262 $
-
Termination of "S" Corporation Status (1,115,262) -
Increase in Capital Lease Obligations 634,625 -
Assets Purchased through Capital Lease (634,625) -
Reduction in Deferred Registration Costs 326,151 -
Registration Costs Offset Against
Paid-in-Capital (326,151) -
Transfer of Retained Earnings to
Paid-in-Capital 1,396,082 -
Increase in Paid-in-Capital (1,396,082) -
$ - $ -
The accompanying note is an integral part
of these consolidated financial statements
F-7
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principals for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulations S-X. They do not include all information and
notes required by generally accepted accounting principals for complete
financial statements. However, except as disclosed, there has been no
material change in the information disclosed in the notes to consolidated
financial statements included in the Annual Report on Form 10-K of Gibbs
Construction, Inc. for the year ended December 31, 1995. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 1996, are not necessarily
indicative of the results that may be expected for the year ending December
31, 1996.
F-8<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Revenues from the construction business for the quarter ended March 31, 1996,
were $6,804,744, an increase of $1,517,179 or approximately 29% over
$5,287,565 in construction revenues for the quarter ended March 31, 1995, with
gross margins in the construction business declining in the 1996 quarter to
4.6% from 7.8% in the comparable quarter of 1995. The margins in construction
revenues declined principally because the Company has expanded its bidding and
construction support staff in anticipation of growth in the construction
business. Nonetheless, the Company had five jobs with one customer whose
margins were less than that the Company normally receives.
The Company's General and Administrative Expenses increased approximately 230%
or $389,048, to $557,481 in the quarter ended March 31, 1996, from $168,433 in
the quarter ended March 31, 1995. The largest factor causing a rise in the
Company's general and administrative costs is due to a charge of approximately
$212,000 relating to an uncollected receivable that was created in the first
quarter of 1996. The Company plans to collect this receivable in the second or
third quarter of 1996. A portion of this increase is also attributable to a
planned increase in staff necessary to support planned growth in the
construction business. In addition General and Administrative Expenses
increased because of the expense of being a public company.
The Company incurred a net loss of $825,080 and a pretax loss of $1,227,251
for the quarter ended March 31, 1996, compared to a profit of $130,437 in the
comparable 1995 quarter. The Bronco Bowl had an operating loss of $947,222
for the quarter ended March 31, 1996. In addition to the increased General
and Administrative Expense referred to above and the decrease in gross
margins, the net loss is principally attributable to the large operating loss
from the Bronco Bowl.
Liquidity and Capital Resources
The Company closed its public offering in January of 1996. The costs of
opening the Bronco Bowl and its operational losses absorbed the liquidity
derived from that offering. Since the end of the first quarter of 1996 the
operational losses of the Bronco Bowl have diminished although they remain
significant and constitute a large cash drain on the Company's liquidity. At
the end of April of 1996, the Company borrowed $1,000,000 for one year with
such loan being secured by all of the assets of the Bronco Bowl.
The Company is taking several steps to support its ongoing operations. As of
May 1, 1996, the Company had contracts for more than $20,000,000 in
construction contracts. Management of the Company believes that these
contracts will provide significant liquidity to the Company's operations. In
addition the Company is seeking to privately place a portion of its Common
Stock to provide liquidity while the Company completes its construction
contracts. The Company has also determined to restrict the operations of the
Bronco Bowl, reviewing the times of operation and whether to restrict
opertions to special events. The reduction in operations at the Bronco Bowl
would represent a return of focus to the Company's core business.
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Material Events
The Company closed its public offering in January of 1996. The costs of
opening the Bronco Bowl and its operational losses absorbed the liquidity
derived from that offering. Since the end of the first quarter of 1996 the
operational losses of the Bronco Bowl have diminished although they remain
significant and constitute a large cash drain on the Company's liquidity. At
the end of April of 1996, the Company borrowed $1,000,000 for one year with
such loan being secured by all of the assets of the Bronco Bowl.
The Company is taking several steps to support its ongoing operations. As of
May 1, 1996, the Company had contracts for more than $20,000,000 in
construction contracts. Management of the Company believes that these
contracts will provide significant liquidity to the Company's operations. In
addition the Company is seeking to privately place a portion of its Common
Stock to provide liquidity while the Company completes its construction
contracts. The Company has also determined to restrict the operations of the
Bronco Bowl, reviewing the times of operation and whether to restrict
operations to special events. The reduction in operations at the Bronco Bowl
would represent a return of focus to the Company's core business.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Gibbs Construction, Inc.
May 17, 1996 /s/ Danny R. Gibbs
Danny R. Gibbs, President and
Principal Financial Officer
