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 September 30, 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 Identification No.)
incorporation or organization)
1855 Wall Street, Garland, TX 75041
(Address of principal executive offices) (Zip Code)
(972) 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
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
CURRENT ASSETS
<S> <C> <C>
Cash $ 600,234 $ 64,183
Temporary Investments 24,183 24,183
Accounts Receivable
Trade 7,917,948 3,439,389
Costs and Estimated Earnings in Excess of
Billings on Uncompleted Contracts 1,073,642 294,472
Prepaid Expenses 19,377 33,942
------------ ------------
TOTAL CURRENT ASSETS 9,635,384 3,856,169
----------- ---------
LAND, BUILDINGS AND EQUIPMENT 1,070,743 891,919
Less Accumulated Depreciation (382,553) (279,630)
NET LAND, BUILDINGS AND EQUIPMENT 688,190 612,289
------------ -----------
OTHER ASSETS
Other Assets 2,453 49,689
Deferred Registration Costs - 366,810
Receivables From Affiliates and Employees 272,608 193,839
Deferred Tax Asset 2,094,755 -
----------- --------------
TOTAL OTHER ASSETS 2,369,816 610,338
----------- ------------
NET ASSETS OF DISCONTINUED
OPERATIONS - 5,605,575
-------------- -------------
TOTAL ASSETS $12,693,390 $10,684,371
=========== ===========
</TABLE>
(Continued)
F-1
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
CURRENT LIABILITIES
<S> <C> <C>
Cash Overdraft $ 345,920 $ -
Notes Payable 163,620 150,000
Current Installments of Long-Term Debt 326,984 122,081
Accounts Payable 7,114,241 5,260,692
Accrued Expenses 934,656 1,630,723
Billings in Excess of Costs and Estimated Earnings
on Uncompleted Contracts 1,304,229 414,621
Distributions Payable to Stockholders 784,000 -
------------- ---------------
TOTAL CURRENT LIABILITIES 10,973,650 7,578,117
LONG-TERM DEBT - Excluding Current Installments 636,824 351,935
------------- ------------
TOTAL LIABILITIES 11,610,474 7,930,052
------------ ------------
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 4,904,374 -
Retained (Deficit) Earnings (3,861,458) 2,724,319
------------- ------------
TOTAL STOCKHOLDERS' EQUITY 1,082,916 2,754,319
------------- ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 12,693,390 $ 10,684,371
============ ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
F-2
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS AND OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Sept 30, Nine Months Ended Sept 30,
------------------------------ ---------------------------
1996 1995 1996 1995
------------ ------------ ------------- --------
<S> <C> <C> <C> <C>
CONSTRUCTION REVENUES $16,078,943 $ 10,002,025 $31,906,010 $24,755,223
COST OF CONSTRUCTION 14,484,985 9,034,810 29,586,836 22,521,681
----------- ---------- ---------- -----------
GROSS PROFIT 1,593,958 967,215 2,319,174 2,233,542
GENERAL AND ADMINISTRATIVE
EXPENSES 341,046 271,815 1,256,435 638,906
----------- ----------- --------- ------------
INCOME (LOSS) BEFORE OTHER
INCOME (EXPENSE) 1,252,912 695,400 1,062,739 1,594,636
OTHER INCOME (EXPENSE)
(Loss) on Disposal of Equipment (1,557) - (1,557) (10,248)
Gain on Temporary Investments Transactions - 318,357 - 483,149
Interest Income - 1,188 5,000 4,888
Interest Expense (49,718) 13,682 (77,345) -
Other - 78 - 216
--------------- ---------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 1,201,637 1,028,705 988,837 2,072,641
INCOME TAX (EXPENSE) BENEFIT (413,948) - (344,000) -
------------ -------------- ----------- ---------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 787,689 1,028,705 644,837 2,072,641
------------ ----------- ----------- ------------
DISCONTINUED OPERATIONS
(Loss) From Operations Of
Discontinued Subsidiary (61,587) (146,281) (1,236,167) (274,040)
(Loss) On Disposal of Subsidiary - - (3,483,103) -
--------------- -------------- ---------- ---------------
NET (LOSS) INCOME $ 726,102 $ 882,424 $(4,074,433) $ 1,798,601
============ =========== =========== ============
INCOME (LOSS) PER SHARE
Continued Operations $ .20 $ - $ .16 $ -
Discontinued Operations (.02) - (1.18) -
--------------- -------------- ------------ --------------
$ .18 $ - $ (1.02) $ -
============== ============== ============ ==============
</TABLE>
(Continued)
F-3
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS AND OPERATIONS
(Continued)
<TABLE>
<CAPTION>
Three Months Ended Sept 30, Nine Months Ended Sept, 30
--------------------------- --------------------------
1996 1995 1996 1995
----------- ---------- ---------- --------
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE NUMBER OF SHARES 4,000,000 3,000,000 4,000,000 3,000,000
========= ========== ========= ===========
PRO FORMA DATA
Historical Income Before Income Taxes $ 882,424 $ 1,798,601
Pro Forma Provision for Income Taxes (393,200) (704,700)
---------- ----------
Pro Forma Net Income $ 489,224 $1,093,901
========= ----------
Pro Forma Net Income (Loss) From
Continued Operations $ 585,769 $ 1,274,767
Discontinued Operations (96,545) (180,866)
---------- -----------
$ 489,224 $1,093,901
========= ==========
Pro Forma Income (Loss) Per Common Share
Continued Operations $ .19 $ .42
Discontinued Operations (.03) (.06)
----------- ------------
$ .16 $ .36
=========== ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
F-4
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
--------------------- Retained
Number Paid-In Earnings
of Shares Amount Capital (Deficit) Total
--------- -------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C>
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 effect - - (326,151) - (326,151)
"S" Corporation Status Termination - - 1,518,025 (2,511,344) (993,319)
1996 Net Loss - - - (4,074,433) (4,074,433)
-------------- ---------- ------------- ----------- ----------
BALANCE, SEPTEMBER 30, 1996 4,000,000 $40,000 $4,904,374 $(3,861,458) $1,082,916
========== ======= ========== =========== ==========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
F-5
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended Sept 30, Nine Months Ended Sept 30,
--------------------------- ---------------------------
1996 1995 1996 1995
---------- ------------ ----------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
<S> <C> <C> <C> <C>
Net (Loss) Income $726,102 $882,424 $(4,074,433) $1,798,601
Adjustments to Reconcile Net (Loss) Income
to Net Cash From Operating Activities
Loss on Sale of Discontinued Operations - - 3,483,103 -
Depreciation 36,530 27,877 479,447 78,963
Loss on Disposal of Equipment 1,557 - 1,557 10,248
(Gain) on Temporary
Investments Transactions - (318,357) - (483,149)
Deferred Taxes 382,948 - (292,000) -
Changes in Current Assets and Liabilities
(Increase) in Accounts Receivable (1,686,583) (1,796,601) (4,478,559) (2,242,938)
(Increase) Decrease in Billings Related to
Cost and Earnings on Uncompleted Contracts (978,586) (4,576) 110,438 (910,587)
(Increase) Decrease in Inventories 75,528 - (8,259) -
(Increase) in Prepaid Expenses (13,889) - (72,910) (470)
Increase in Accounts Payable 1,528,434 816,526 1,853,549 2,942,010
(Decrease) Increase in Accrued Expenses (23,942) 65,291 (82,050) 232,108
Purchase of Temporary Investments - (1,805,492) - (3,419,871)
Proceeds From Sale of Temporary Investments - 3,326,280 3,882,380
Change in Temporary Investment Margin Loans - - - -
--------------- -------------- ----------- ----------
NET CASH FLOW (USED) PROVIDED
BY OPERATING ACTIVITIES 48,099 1,193,372 (3,080,117) 1,887,295
------------- --------- ---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Equipment (20,011) - (169,604) (128,434)
Bronco Bowl Renovations - (1,165,635) (1,983,864) (1,273,067)
Proceeds from Sale of Equipment 3,500 3,500 8,311
Proceeds from Sale of Discontinued Subsidiary 712,456 - 712,456 -
(Increase) in Other Assets (7,580) 35,016 (83,279) (15,387)
------------- ----------- ----------- -----------
NET CASH FLOW (USED) PROVIDED
IN INVESTING ACTIVITIES 688,365 (1,130,619) (1,520,791) (1,408,577)
------------ ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
F-6
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
<TABLE>
<CAPTION>
Three Months Ended Sept 30, Nine Months Ended Sept 30,
--------------------------- --------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES
<S> <C> <C> <C> <C>
Deferred Registration Costs $ - $(93,235) $(127,358) $(135,285)
Proceeds from Notes Borrowings - 80,623 1,368,234 198,529
Repayments of Notes Borrowings (95,300) (18,359) (168,996) (77,148)
Repayments of Capital Lease Obligations - - (3,341) -
Distributions to Stockholders - 128,311 (193,347)
Sale of Common Stock - - 3,722,500 -
----------- ----------- --------- ------------
NET CASH FLOW PROVIDED (USED) BY
FINANCING ACTIVITIES (95,300) 97,340 4,791,039 (207,251)
----------- -------- --------- --------
NET INCREASE (DECREASE) IN CASH 641,164 160,093 190,131 271,467
CASH AT THE BEGINNING OF
THE PERIOD (386,850) 229,666 64,183 118,292
------------ --------------- --------- --------
CASH AT THE END OF THE PERIOD $ 254,314 $389,759 $254,314 $389,759
============ ======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash Paid During the Year For:
Interest Expense $ 49,713 $ 13,682 $199,212 $ 40,063
============= ======== ======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING
ACTIVITIES:
Termination of "S" Corporation Status
Increase in Payable to Stockholders
and Affiliates $ - $ - $ 993,319 $ -
Transfer of Retained Earnings to
Paid-in-Capital - - 1,518,025 -
Reduction in Retained Earnings - - (2,511,344) -
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) -
-------------- ----------- ----------- -----------
$ - $ - $ - $ -
============== =========== ============== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
F-7
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 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 nine
month period ended September 30, 1996, are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996.
F-8
<PAGE>
Item 2. Managment's Discussion and Analysis or Plan of Operation
Nine months ended September 30, 1996 compared to Nine months ended September 30,
1995.
The Company had income from continuing operations of $644,837 for the nine
month period ended September 30, 1996 compared to $2,072,641, or pro forma net
income of $1,093,901, for the nine month period ended September 30, 1995. In the
earlier year, the Company was taxed as a Subchapter S corporation and pro forma
net income assumes a charge for taxes that did not, in fact, occur. The nine
month period for 1995 includes a $483,149 gain on temporary investments, and the
third quarter for the same year includes a gain on temporary investments of
$318,357.
For the nine month period ended September 30, 1996, revenues from the
Company's construction business were $31,906,010, an increase of 28.9% from the
$24,755,223 for the same period in the previous year. Gross profits were
$2,319,435 and $2,233,542 for the 1996 and 1995 nine month periods,
respectively. While gross profit increased $85,632 or 3.8% in the later period,
gross profit margins for the 1996 period were 7.3% compared to 9.0% in the
earlier period. However, gross profit margins for the three month period ended
September 30, 1996, were 9.9% reflecting management's focus on its core business
after the decision to sell the Bronco Bowl which sale closed in the third
quarter of 1996.
The Company's liquidity improved during the third quarter of 1996 $1,338,266
or a working capital ratio of 0.88 at September 30, 1996, compared to a working
capital ratio of 0.66 at June 30, 1996.
The improvement that occurred in the third quarter of 1996 reflects the
Company's profitability and the disposal of the Bronco Bowl which stopped the
drain of financial resources for that endeavor.
<PAGE>
PART II - OTHER INFORMATION
Item 7. Exhibits and Reports on Form 8-K
Exhibit 27
<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.
November 1, 1996 /s/ Danny R. Gibbs
------------------
Danny R. Gibbs, President and
Principal Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 600234
<SECURITIES> 24183
<RECEIVABLES> 7917948
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9635384
<PP&E> 1070743
<DEPRECIATION> 382553
<TOTAL-ASSETS> 12693390
<CURRENT-LIABILITIES> 10793650
<BONDS> 636824
0
0
<COMMON> 1082916
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12693390
<SALES> 31906010
<TOTAL-REVENUES> 29586836
<CGS> 29586836
<TOTAL-COSTS> 30924059
<OTHER-EXPENSES> 918837
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 77345
<INCOME-PRETAX> 988837
<INCOME-TAX> 344000
<INCOME-CONTINUING> 644837
<DISCONTINUED> 4719270
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4074433)
<EPS-PRIMARY> (1.02)
<EPS-DILUTED> (1.02)
</TABLE>
