UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 50549
Form 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended: June 30, 1996
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 (I.R.S. Employer Identification Number)
incorporation or organization)
1855 Wall Street, Garland, Texas 75044 75044
- --------------------------------------------------------------------------------
(Address of principal executive offices) Zip Code)
(214) 278-3433
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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 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. [ X ] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 4,000,000
<PAGE>
Item 1. Financial Statements
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
CURRENT ASSETS
<S> <C> <C>
Cash $ 5,386 $ 64,183
Temporary Investments 24,183 24,183
Accounts Receivable
Trade 6,231,365 3,439,389
Costs and Estimated Earnings in Excess of
Billings on Uncompleted Contracts 825,070 294,472
Inventories, at cost, (principally first-in, first-out) 75,528 -
Prepaid Expenses 5,488 33,942
------------------- ------------
TOTAL CURRENT ASSETS 7,167,020 3,856,169
------------------ ----------
LAND, BUILDINGS AND EQUIPMENT 1,060,821 891,919
Less Accumulated Depreciation (351,055) (279,630)
------------ -----------
NET LAND, BUILDINGS AND EQUIPMENT 709,766 612,289
------------ -----------
OTHER ASSETS
Other Assets 2,453 49,689
Deferred Registration Costs - 366,810
Receivables From Affiliates and Employees 265,028 193,839
Deferred Tax Asset 2,477,703 -
----------- -------------
TOTAL OTHER ASSETS 2,745,184 610,338
------------ -----------
NET ASSETS OF DISCONTINUED
OPERATIONS 712,456 5,605,575
------------ -------------
TOTAL ASSETS
$11,334,426 $10,684,371
</TABLE>
(Continued)
F-1
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
CURRENT LIABILITIES
<S> <C> <C>
Cash Overdraft $ 392,236 $ -
Notess Payable 164,253 150,000
Current Installments of Long-Term Debt 89,652 122,081
Accounts Payable 5,585,807 5,260,692
Accrued Expenses 1,562,715 1,630,723
Billings in Excess of Costs and Estimated Earnings
on Uncompleted Contracts 2,034,243 414,621
Distributions Payable to Stockholders 956,000 -
------------ ---------------
TOTAL CURRENT LIABILITIES 10,784,906 7,578,117
LONG-TERM DEBT - Excluding Current Installments 314,649 351,935
------------ ------------
TOTAL LIABILITIES 11,099,555 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 4,782,431 -
Retained (Deficit) Earnings (4,587,560) 2,724,319
---------- ------------
TOTAL STOCKHOLDERS' EQUITY 234,871 2,754,319
----------- ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $11,334,426 $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 June 30, Six Months Ended June 30,
------------------------------ --------------------------
1996 1995 1996 1995
----------------- ------------ ------------- --------
<S> <C> <C> <C> <C>
CONSTRUCTION REVENUES $9,022,323 $9,465,633 $15,827,067 $14,753,198
COST OF CONSTRUCTION 8,608,092 8,612,942 15,101,851 13,486,871
---------- ---------- ----------- -----------
GROSS PROFIT 414,231 852,691 725,216 1,266,327
----------- ----------- ------------ ------------
GENERAL AND ADMINISTRATIVE
EXPENSES 357,908 198,657 915,389 367,091
----------- ----------- ------------ ------------
INCOME (LOSS) BEFORE OTHER
INCOME (EXPENSE) 56,323 654,034 (190,173) 899,236
OTHER INCOME (EXPENSE)
(Loss) on Disposal of Equipment - (123) - (10,248)
Gain on Temporary Investments Transactions - 204,030 - 164,792
Interest Income 5,000 2,500 5,000 3,700
Interest Expense (30,272) (13,682) (27,627) (13,682)
Other - (163) - 138
-------------- ------------ --------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES 31,051 846,596 (212,800) 1,043,936
INCOME TAX (EXPENSE) BENEFIT (11,763) - 69,948 -
------------ -------------- ------------ ---------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 19,288 846,596 (142,852) 1,043,936
----------- ----------- ------------ ------------
DISCONTINUED OPERATIONS
(Loss) From Operations Of
Discontinued Subsidiary (525,536) (60,857) (1,174,580) (127,759)
(Loss) On Disposal of Subsidiary (3,483,103) - (3,483,103) -
---------- -------------- ----------- ---------------
NET (LOSS) INCOME $(3,989,351) $ 785,739 $(4,800,535) $ 916,177
=========== =========== =========== ============
INCOME (LOSS) PER SHARE
Continued Operations $ .00 $ - $ (.04) $ -
Discontinued Operations (.99) - (1.16) -
------------ -------------- ------------- ---------------
$ (.99) $ - $ (1.20) $ -
============ ============== ============= ===============
</TABLE>
(Continued)
F-3
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS AND OPERATIONS
(Continued)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 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 $ - $ 785,739 $ - $ 916,177
Pro Forma Provision for Income Taxes - (267,151) - (311,500)
-------------- ---------- ------------- ----------
Pro Forma Net Income $ - $ 518,588 $ - $ 604,677
============== ========= ============= ==========
Pro Forma Net Income (Loss) From
Continued Operations $ - $ 558,753 $ - $ 688,998
Discontinued Operations - (40,166) - (84,321)
-------------- ---------- ------------- -----------
$ $ 518,588 $ - $ 604,677
============== ========= ============= ==========
Pro Forma Income (Loss) Per Common Share
Continued Operations $ - $ .18 $ - $ .23
Discontinued Operations - (.01) - (.03)
-------------- ----------- ------------- ------------
$ - $ .17 $ - $ .20
============== =========== ============= ============
</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 - - 1,396,082 (2,511,344) (1,115,262)
1996 Net Loss - - - (4,800,535) (4,800,535)
-------------- ---------- ------------- ----------- -----------
BALANCE, JUNE 30, 1996 4,000,000 $40,000 $ 4,782,431 $(4,587,560) $ 234,871
========== ======= =========== ============ ===========
</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 June 30, Six Months Ended June 30,
--------------------------- --------------------------
1996 1995 1996 1995
---------------- ------------- ------------ -------
CASH FLOW FROM FINANCING ACTIVITIES
<S> <C> <C> <C> <C>
Net (Loss) Income $(3,989,351) $785,739 $(4,800,535) $916,177
Adjustments to Reconcile Net (Loss) Income
to Net Cash From Operating Activities
Loss from Discontinued Operations 4,657,683 - 4,657,683 -
Depreciation 248,522 26,238 442,917 51,086
Loss on Disposal of Equipment - 123 - 10,248
(Gain) on Temporary
Investments Transactions - (204,030) - (164,792)
Deferred Taxes (2,052,881) - (2,468,948) -
Changes in Current Assets and Liabilities
(Increase) in Accounts Receivable (2,690,795) (800,176) (2,791,976) (446,337)
(Increase) Decrease in Billings Related to
Cost and Earnings on Uncompleted Contracts 979,524 (651,799) 1,089,024 (906,011)
(Increase) Decrease in Inventories 25,318 - (83,786) -
(Increase) in Prepaid Expenses (50,661) - (59,021) (470)
Increase in Accounts Payable 926,364 2,173,214 232,078 2,125,484
(Decrease) Increase in Accrued Expenses (49,932) 93,770 (58,108) 166,817
Purchase of Temporary Investments - (985,017) - (1,614,379)
Proceeds From Sale of Temporary Investments - 280,826 - 556,100
Change in Temporary Investment Margin Loans - - - -
--------------- ------------ -------------- -----------
NET CASH FLOW (USED) PROVIDED
BY OPERATING ACTIVITIES (1,996,209) 718,888 (3,840,672) 693,923
----------- -------- ----------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Equipment (220,695) (128,076) (2,133,457) (210,945)
Proceeds from Sale of Equipment - 2,500 - 8,311
Proceeds from Sale of Discontinued Subsidiary 712,456 - 712,456 -
(Increase) in Other Assets (78,757) (58,794) (75,699) (41,056)
----------- -------- ------------ --------
NET CASH FLOW (USED) IN
INVESTING ACTIVITIES 413,004 (184,370) (1,496,700) (243,690)
---------- --------- ----------- --------
</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 June 30, Six Months Ended June 30,
--------------------------- -------------------------
1996 1995 1996 1995
----------------- ------------ ------------ -------
CASH FLOW FROM FINANCING ACTIVITIES
<S> <C> <C> <C> <C>
Deferred Registration Costs $ - $(42,050) $ (127,358) $(42,050)
Proceeds from Notes Borrowings 1,368,234 49,906 1,368,234 117,906
Repayments of Notes Borrowings (47,953) (47,863) (73,696) (58,789)
Repayments of Capital Lease Obligations 30,273 - (3,341) -
Distributions to Stockholders - (285,824) - (355,926)
Sale of Common Stock - - 3,722,500 -
------------- ----------- ----------- -----------
NET CASH FLOW PROVIDED (USED) BY
FINANCING ACTIVITIES 1,350,554 (325,831) 4,886,339 (338,859)
---------- -------- ----------- --------
NET INCREASE (DECREASE) IN CASH (232,651) 208,687 (451,033) 111,374
---------- -------- ------------ --------
CASH AT THE BEGINNING OF
THE PERIOD (154,199) 20,979 64,183 118,292
---------- -------- ------------ --------
CASH AT THE END OF THE PERIOD $ (386,850) $229,666 $ (386,850) $229,666
============= ======== =========== ========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash Paid During the Year For:
Interest Expense $ 53,504 $ 1,037 $ 149,494 $ 26,116
============== ========= =========== ========
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 -
Interest in Paid-in-Capital - - (1,396,082) -
------------- ----------- ---------- -----------
$ - $ - $ - $ -
============= =========== ============== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
F-7
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 notess
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 notess 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 six
month period ended June 30, 1996, are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996.
Note 2: DISCONTINUED OPERATIONS
In July, 1996, Gibbs Construction, Inc. sold its subsidiary, Bronco Bowl
Holding, Inc., to a third party resulting in a loss on sale of subsidiary of
$5,277,103 before income tax benefit of $1,794,000. Loss from operations on
the discontinued subsidiary aggregated $1,779,580 before income tax benefit
of $605,000.
F-8
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
During the six month period ended June 30, 1996, the Company incurred a net loss
from continuing operations of $142,852 compared to a profit from continuing
operations of $688,996 for the same period in 1995. Revenues for the 1996
period increased approximately 7% to $15,827,067 from $14,753,198. Gross margins
in the later period, however, declined to 4.6% from 8.6% such that gross profit
in the later period declined to $725,216 from $1,266,327. The margins in the
later period declined principally because the Company has expanded its bidding
and construction support staff in anticipation of growth in the construction
business. Also, the Company has experienced some decline in margins on some of
the Company's work. Although there can be no assurance, the Company anticipates
that the second half of the 1996 fiscal year will reflect this increased bidding
and construction support staff in revenue growth.
General and administrative expenses increased approximately 250% in the 1996 six
month period, to $915,389 from $367,091. The largest portion of this increase
represents a $212,000 charge incurred in the first quarter of 1996 in an
uncollected receivable. In addition, professional fees have increased due to the
Company being publicly held and the Company's expenditures relating to acquiring
additional financing. General and administrative expenses in the second quarter
of 1996 were $357,908 compared to $198,657 in the same period of 1995, an
increase of approximately 80%.
The Company sold the Bronco Bowl in the second quarter of 1996, incurring a loss
of $3,483,103 on the sale of the asset. In addition, the Company incurred a loss
of $525,536 in operations of the Bronco Bowl in the same quarter. These amounts
were partially offset by income from continuing operations of $33,184 in the
second quarter, such income deriving from proportionate reductions in general
and administrative expenses in the second quarter.
Liquidity and capital resources
The financial demands of the Bronco Bowl essentially ended with its sale. The
Company will realize, net of sales costs, approximately $712,000 from its sale.
Because of the Bronco Bowl's operations, the Company's financial position has
been significantly weakened. The Company continues to seek outside financing
based upon its belief that the Company's core construction business is sound and
growing although the financial pressures created by the Bronco Bowl operations
are great and the consequences of those operations continue to create pressures
on the Company's vitality.
The Company is seeking to increase its gross profit margins and believes that
the efforts expended in the first half of 1996 will produce increased revenues
in the second half of 1996. The financial pressures on the Company, however,
inhibit the Company's ability to fully exploit the opportunities that are
presented to the Company because the Company sometimes lacks the financial
resources required to start projects. Although there can be no assurance
otherwise, the Company expects these pressures to gradually abate over the next
several months.
<PAGE>
PART II OTHER INFORMATION
Item 5. Other Information
In July of 1996, the Company closed on the sale of the Bronco Bowl. The Company
sold the Bronco Bowl for $3,500,000 and recognized a loss on the sale of
$3,483,455 in the second quarter of 1996. The sale price includes assumption by
the buyer of $1,350,000 of debt and $1,300,000 in operating leases. The Company
will receive approximately $712,000 cash from the sale after additional closing
costs are deducted. The last payment to the Company from the sale is due on
August 15, 1996.
Item 6. Exhibitsand Reports on Form 8-K
(a) Exhibit 27
<PAGE>
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.
Date: August 14, 1996 /s/Danny R. Gibbs
---------------------------------------------
Danny R. Gibbs, President and Chief Financial
Officer
---------------------------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 5,386
<SECURITIES> 24,183
<RECEIVABLES> 7,056,435
<ALLOWANCES> 0
<INVENTORY> 75,528
<CURRENT-ASSETS> 7,167,020
<PP&E> 1,060,821
<DEPRECIATION> 351,055
<TOTAL-ASSETS> 11,334,426
<CURRENT-LIABILITIES> 10,784,906
<BONDS> 314,649
0
0
<COMMON> 234,871
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,334,426
<SALES> 15,827,067
<TOTAL-REVENUES> 15,827,067
<CGS> 15,101,851
<TOTAL-COSTS> 16,017,240
<OTHER-EXPENSES> 22,627
<LOSS-PROVISION> 212,800
<INTEREST-EXPENSE> 27,627
<INCOME-PRETAX> (212,800)
<INCOME-TAX> 69,948
<INCOME-CONTINUING> (142,852)
<DISCONTINUED> 4,657,683
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,800,525)
<EPS-PRIMARY> (1.20)
<EPS-DILUTED> (1.20)
</TABLE>
