U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] 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)
(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>
June 30, December 31,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 181,299 $ 124,565
Temporary Investments 105,998 1,503
Accounts Receivable
Trade 4,958,141 8,596,282
Costs and Estimated Earnings in Excess of
Billings on Uncompleted Contracts 621,977 976,681
Prepaid Expenses 19,376 19,376
Deferred Tax Asset 510,000 510,000
----------- -----------
TOTAL CURRENT ASSETS 6,396,791 10,228,407
---------- ----------
LAND, BUILDINGS AND EQUIPMENT 1,100,523 1,084,380
Less Accumulated Depreciation (456,935) (387,744)
----------- ----------
NET LAND, BUILDINGS AND EQUIPMENT 643,588 696,636
----------- -----------
OTHER ASSETS
Other Assets 2,454 2,454
Receivables From Affiliates and Employees 198,217 232,789
Deferred Tax Asset 1,587,240 1,572,740
---------- -----------
TOTAL OTHER ASSETS 1,787,911 1,807,983
---------- -----------
TOTAL ASSETS
$8,828,290 $12,733,026
========== ===========
</TABLE>
(Continued)
F-1
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ -------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Notes Payable $ 240,000 $ 150,000
Current Installments of Long-Term Debt 347,016 374,443
Accounts Payable 4,501,249 8,047,940
Accrued Expenses 281,366 347,749
Billings in Excess of Costs and Estimated Earnings
on Uncompleted Contracts 952,355 1,142,164
---------- ------------
TOTAL CURRENT LIABILITIES 6,321,986 10,062,296
OTHER LONG-TERM LIABILITIES 776,055 778,055
LONG-TERM DEBT - Excluding Current Installments 428,934 563,254
---------- -------------
TOTAL LIABILITIES 7,526,975 11,403,605
---------- ------------
STOCKHOLDERS' EQUITY
Common Stock of $.01 Par Value. Authorized 7,500,000
Shares; Issued and Outstanding 4,000,000 Shares 40,000 40,000
Paid-In-Capital 4,907,272 4,907,272
Retained (Deficit) (3,645,957) (3,617,851)
---------- ------------
TOTAL STOCKHOLDERS' EQUITY 1,301,315 1,329,421
---------- ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $8,828,290 $12,733,026
========== ===========
</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
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------------
1997 1996 1997 1996
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
CONSTRUCTION REVENUES $ 9,373,868 $ 9,022,323 $ 18,067,786 $ 15,827,067
COST OF CONSTRUCTION 8,912,538 8,608,092 17,394,372 15,101,851
---------- ----------- ----------- -----------
GROSS PROFIT 461,330 414,231 673,414 725,216
---------- ----------- ----------- -----------
GENERAL AND ADMINISTRATIVE
EXPENSES 349,841 357,908 677,256 915,389
---------- ----------- ----------- -----------
INCOME (LOSS) BEFORE OTHER
INCOME (EXPENSE) 111,489 56,323 (3,842) (190,173)
OTHER INCOME (EXPENSE)
Gain on Disposal of Equipment 9,140 - 9,140 -
(Loss) on Temporary Investments Transactions - - (540) -
Interest Income - 5,000 64 5,000
Interest Expense (29,130) (30,272) (54,585) (27,627)
Other 889 - 7,157 -
---------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAXES 92,388 31,051 (42,606) (212,800)
INCOME TAX (EXPENSE) BENEFIT (31,400) (11,763) 14,500 69,948
---------- ----------- ----------- -----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS 60,988 19,288 (28,106) (142,852)
---------- ----------- ----------- -----------
DISCONTINUED OPERATIONS
(Loss) From Operations Of
Discontinued Subsidiary - (525,536) - (1,174,580)
(Loss) On Disposal of Subsidiary - (3,483,103) - (3,483,103)
---------- ----------- ----------- -----------
NET INCOME (LOSS) $ 60,988 $ (3,989,351) $ (28,106) $ (4,800,535)
=========== =========== =========== ===========
INCOME (LOSS) PER SHARE
Continued Operations $ .01 $ .00 $ (.01) $ (.04)
Discontinued Operations - (.99) - (1.16)
----------- ----------- ----------- -----------
$ .01 $ (.99) $ (.01) $ (1.20)
=========== =========== =========== ===========
WEIGHTED AVERAGE
NUMBER OF SHARES 4,000,000 4,000,000 4,000,000 4,000,000
========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
F-3
<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, 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 - - (358,948) - (358,948)
"S" Corporation Status Termination - - 1,553,720 (2,219,336) (665,616)
1996 Net Loss - - - (4,122,834) (4,122,834)
--------- ------- ----------- ----------- ----------
BALANCE, DECEMBER 31, 1996 4,000,000 40,000 4,907,272 (3,617,851) 1,329,421
1997 Net Loss (Unaudited) - - - (28,106) (28,106)
--------- -------- ----------- ----------- ----------
BALANCE, JUNE 30, 1997
(Unaudited) 4,000,000 $40,000 $4,907,272 $(3,645,957) $1,301,315
========= ======= =========== =========== ==========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
F-4
<PAGE>
GIBBS CONSTRUCTION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended
--------------------------- ---------------------------
1997 1996 1997 1996
---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income (Loss) $ 60,988 $(3,989,351) $ (28,106) $(4,800,535)
Adjustments to Reconcile Net Income (Loss)
to Net Cash From Operating Activities
Loss from Discontinued Operations - 4,657,683 - 4,657,683
Depreciation 38,321 248,522 74,320 442,917
(Gain) on Disposal of Equipment (9,140) - (9,140) -
Loss on Temporary
Investments Transactions - - 540 -
Deferred Taxes 31,400 (2,052,881) (14,500) (2,468,948)
Changes in Current Assets and Liabilities
Decrease (Increase) in Accounts Receivable 13,889 (2,690,795) 3,672,713 (2,791,976)
Decrease in Billings Related to Cost and
Earnings on Uncompleted Contracts 140,290 979,524 164,895 1,089,024
(Increase) Decrease in Inventories - 25,318 - (83,786)
(Increase) in Prepaid Expenses - (50,661) - (59,021)
Increase (Decrease) in Accounts Payable 104,177 926,364 (3,546,691) 232,078
(Decrease) Increase in Accrued Expenses (35,131) (49,932) (66,383) (58,108)
Purchase of Temporary Investments (105,035) - (105,035) -
---------- ------------ ---------- -----------
NET CASH FLOW PROVIDED (USED)
BY OPERATING ACTIVITIES 239,759 (1,996,209) 142,613 (3,840,672)
---------- ------------ ---------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Equipment (34,276) (220,695) (43,068) (2,133,457)
Proceeds from Disposal of Equipment 30,936 - 30,936 -
Proceeds from Sale of Discontinued Subsidiary - 712,456 - 712,456
(Increase) in Other Assets - (78,757) - (75,699)
---------- ----------- ---------- -----------
NET CASH FLOW (USED) IN
INVESTING ACTIVITIES (3,340) 413,004 (12,132) (1,496,700)
---------- ----------- ---------- -----------
</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
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended
--------------------------- -----------------------------
1997 1996 1997 1996
------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES
Deferred Registration Costs $ - $ - $ - $ (127,358)
Proceeds from Notes Borrowings 97,277 1,368,234 167,277 1,368,234
Repayments of Notes Borrowings (124,210) (47,953) (239,024) (73,696)
Repayments of Capital Lease Obligations - 30,273 - (3,341)
Changes in Stockholder Receivables (2,000) - (2,000) -
Sale of Common Stock - - - 3,722,500
------------- ------------ ----------- ------------
NET CASH FLOW PROVIDED (USED)
BY FINANCING ACTIVITIES (28,933) 1,350,554 (73,747) 4,886,339
------------- ------------ ----------- ------------
NET INCREASE (DECREASE) IN CASH 207,486 (232,651) 56,734 (451,033)
------------- ------------ ----------- ------------
CASH AT THE BEGINNING OF
THE PERIOD (26,187) (154,199) 124,565 64,183
------------- ------------ ----------- ------------
CASH AT THE END OF THE PERIOD $181,299 $ (386,850) $ 181,299 $ (386,850)
============= ============ =========== ============
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash Paid During the Year For:
Interest Expense $ 24,640 $ 53,504 $ 54,585 $ 149,494
============= ============ =========== ============
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, 1997 AND 1996
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, 1996. 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, 1997, are not necessarily indicative of the
results that may be expected for the year ending December 31, 1997.
F-8
<PAGE>
Item 2. Management's Discussion and Analysis of Operations.
Revenues for the six months ended June 30, 1997, were $18,067,786, a 14%
increase over the $15,827,067 in the comparable period of 1996. This increase
reflects the registrant's additional client base, an expansion begun several
months earlier. Although revenues increased for the 1997 period compared to the
1996 period, gross margins declined to 3.7% in the 1997 period from 4.6% in the
1996 period. The decline in gross margins in 1997 principally reflects low
margins or losses on several jobs for one client on whose contracts the
registrant subsequently ceased bidding. The registrant's gross margins,
accordingly, increased in the second quarter of 1997 to 4.9% from 2.4% in the
first quarter of 1997. The second quarter's results of operations reflect some
jobs completed for this client early in the second quarter of 1997.
The registrant's general and administrative expenses have been between $316,000
and $350,000 for each of the last five quarters. For the six months ended June
30,1997, general and administrative costs were $677,256 compared to $915,389 for
the same period in 1996. The higher general and administrative costs in the
earlier period reflect the administrative expenses of the operation of the
Bronco Bowl that were incurred in early 1996.
The improved margins in the second quarter of 1997 resulted in net profits of
approximately $61,000 for that quarter, offsetting the losses in the first
quarter of 1997. Accordingly, the company lost approximately $28,000 for the six
months ended June 30, 1997. This loss compares to a loss from continuing
operations of $142,852 for the six months ended June 30, 1996. The earlier
period's general and administrative costs offset its higher margins causing the
loss for the 1996 six month period to be greater than that in the same period in
the 1997 period.
Liquidity and capital resources
The registrant's working capital position improved significantly in the second
quarter of 1997 such that current assets now exceed current liabilities. This
improvement was aided by a reclassification of a payable to officers to other
long-term liabilities from a current liability, but this reclassification was
only part of the improvement which derives improved operations.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
On Monday, June 16, 1997, the registrant held its annual meeting of
stockholders. The following four individuals were nominated as directors with
the indicated results of the meeting:
DIRECTOR FOR AGAINST
Danny R. Gibbs 3,926,437 46,100
Tony G. Gibbs 3,926,437 46,100
Dennis T. Mitchell 3,926,437 46,100
Elliott R. Simon 3,926,437 46,100
In addition, the stockholders ratified the appointment of Killman, Murrel & Co.
as the Company's auditors for the fiscal year ending December 31, 1997. The vote
was as follows:
FOR AGAINST ABSTAIN
3,895,937 30,600 46,000
<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.
August 12, 1997 /s/ Danny R. Gibbs
------------------
Danny R. Gibbs, President and
Principal Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 181,299
<SECURITIES> 105,998
<RECEIVABLES> 4,958,141
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,396,791
<PP&E> 643,588
<DEPRECIATION> 74,320
<TOTAL-ASSETS> 8,828,290
<CURRENT-LIABILITIES> 6,321,986
<BONDS> 0
0
0
<COMMON> 40,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,828,290
<SALES> 18,067,786
<TOTAL-REVENUES> 18,067,786
<CGS> 17,394,372
<TOTAL-COSTS> 18,071,628
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54,585
<INCOME-PRETAX> (42,606)
<INCOME-TAX> (14,500)
<INCOME-CONTINUING> (28,106)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28,106)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> 0
</TABLE>
