SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended April 30, 1996
Commission file number 0-10146
ABRAMS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-0522129
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
5775-A Glenridge Drive, N.E., Suite 202, Atlanta, GA 30328
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (404) 256-9785
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange on
Title of each class: which registered:
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $1.00 Par Value Per Share
(Title of Class)
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.
YES [CHECK MARK] NO _____
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained to the best of the Registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.
[CHECK MARK]
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY
NONAFFILIATES OF THE REGISTRANT AS OF JUNE 30, 1996, WAS $5,219,630.
SEE PART III. THE NUMBER OF SHARES OF COMMON STOCK OF THE REGISTRANT
OUTSTANDING AS OF JUNE 30, 1996, WAS 2,970,856.
DOCUMENTS INCORPORATED BY REFERENCE
THE INFORMATION CALLED FOR BY PART III (ITEMS 10, 11, AND 12)
IS INCORPORATED HEREIN BY REFERENCE TO THE REGISTRANT'S DEFINITIVE
PROXY STATEMENT FOR THE 1996 ANNUAL MEETING OF SHAREHOLDERS WHICH IS
TO BE FILED PURSUANT TO REGULATION 14A.
<PAGE>5 ABRAMS INDUSTRIES, INC.
PART I
ITEM 1. BUSINESS.
Abrams Industries, Inc. engages in (i) construction of retail
and commercial projects; (ii) manufacturing store fixtures and display
units for retail outlets; and (iii) developing income-producing
properties for investment or sale, and providing management services
for such properties.
The Company was organized under Delaware law in 1960 to
succeed to the business of A. R. Abrams, Inc., which was founded in
1925 by Alfred R. Abrams as a sole proprietorship. In 1984, the
Company changed its state of incorporation to Georgia. As used herein,
the term "Company" refers to Abrams Industries, Inc. and its
subsidiaries and predecessors, unless the context indicates otherwise.
Financial information by industry segment is set forth in Note
10 to the Consolidated Financial Statements of the Company.
CONSTRUCTION SEGMENT
The Company, through its wholly owned subsidiary, Abrams
Construction, Inc., has engaged in the construction business since
1925. Although the Company does work throughout much of the United
States, it concentrates its activities principally in the South.
Construction activities consist primarily of new construction of,
expansion of, and remodeling of retail store buildings, warehouses,
banks, and shopping centers.
Construction contracts are obtained by competitive bid and by
negotiation. Generally, purchasing of materials and services for the
Company's construction operations is done on a project-by-project
basis.
MANUFACTURING SEGMENT
The Company, through its wholly owned subsidiary, Abrams
Fixture Corporation, has engaged in manufacturing and selling store
fixtures since 1946, and has been designing and producing
point-of-purchase and other displays since 1975. The Company engineers
and fabricates displays, check-out counters, cabinets, tables and
other store fixtures of wood, metal and plastic laminate for sale
primarily to several of the larger national retail store chains.
Substantially all the store fixtures are fabricated to meet the
customer's requirements for type, size, shape and color and are
generally produced against specific orders.
Abrams Fixture Corporation also produces both standardized and
custom-designed point-of-purchase display units which are sold to
carpet and wallcovering manufacturers, distributors, and retailers.
The Company maintains raw material inventories of items such
as lumber, plywood, metals, particle board, laminates, and hardware.
In the opinion of management, the raw materials and supplies utilized
by this Segment of the Company are available from numerous sources.
REAL ESTATE SEGMENT
The Company, through its wholly owned subsidiary, Abrams
Properties, Inc., has engaged in real estate development activities
since 1960. These activities involve primarily the development and
management of shopping centers in the Southeast and Midwest.
Development activities include selection of target markets; evaluation
and acquisition of potential sites; marketing to prospective tenants;
negotiation of anchor tenant leases; arranging construction and
long-term financing; contracting for design and construction; managing
of construction; marketing of completed projects to potential
investors; and managing completed projects held for sale and
investment. From 1973 through 1992, the principal tenant of these
developed shopping centers was Kmart Corporation. The Company develops
properties for sale to others, for fees and for its own investment
purposes.
The Company developed and currently owns and manages 12
shopping centers which are held as long-term investments and were
developed by the Company for that purpose. See "ITEM 2. PROPERTIES --
Owned Shopping Centers." The Company is also lessee and manager of 10
Company-developed shopping centers which were sold and leased back by
the Company. See "ITEM 2. PROPERTIES -- Leaseback Shopping Centers."
EMPLOYEES AND EMPLOYEE RELATIONS
At April 30, 1996, the Company employed 138 salaried
employees, which included administrative, professional, and executive
personnel, 6 hourly paid foremen, and 100 hourly employees.
The hourly employees at Abrams Fixture Corporation are
represented by one union. In June 1996, the Company and the union
signed a three year agreement concerning wages and benefits. The
Company has no other union agreements. On its construction jobs, the
Company utilizes local labor whenever practicable, paying the
prevailing wage scale. The Company believes that its relations with
its employees are good.
<PAGE>ABRAMS INDUSTRIES, INC. 6
SEASONAL NATURE OF BUSINESS
The Company's business has historically been moderately
seasonal, with the highest revenues generally occurring in the second
and fourth quarters of the Company's fiscal year. This seasonal nature
resulted primarily from the businesses of the Construction Segment and
the Manufacturing Segment, which, in addition to weather factors, are
affected by customers' desires generally to build or remodel retail
outlets so that work will be completed by the spring or fall. More
recently, these factors have been less significant and seasonality has
been less apparent. The business of the Real Estate Segment is
generally less seasonal.
COMPETITION
The businesses of the Company are highly competitive. In its
construction work and store fixture and display manufacturing
business, the Company competes with a large number of national and
local construction companies and fixture manufacturers and suppliers,
many of which have greater financial resources than the Company. The
Company also competes with smaller specialized companies. The real
estate development area is also extremely competitive, with numerous
companies competing for available financing, sites, tenants and
purchasers.
PRINCIPAL CUSTOMERS
During 1996, the Company derived approximately 48%
($64,445,000) of its consolidated revenues from direct transactions
with The Home Depot, Inc. These revenues resulted from construction
activities and sales of manufactured store fixtures. The Company also
derived approximately 18% ($23,801,000) of its consolidated revenues
from construction and real estate development activities for Baby
Superstore, Inc. See Note 10 to the Consolidated Financial Statements
of the Company. No other single customer accounted for 10% or more of
the Company's consolidated revenues during the year.
BACKLOG
The following table indicates the backlog of contracts and
orders by industry segment:
April 30, April 30,
1996 1995
Construction $18,772,000 $34,284,000
Manufacturing 6,445,000 7,300,000
Real Estate 10,901,000 10,083,000
Total Backlog $36,118,000 $51,667,000
The Company estimates that most of the backlog at April 30,
1996 will be completed prior to April 30, 1997. No assurance can be
given as to future backlog levels or whether the Company will realize
earnings from the revenues resulting from the backlog at April 30,
1996.
REGULATION
The Company is subject to the authority of various state and
local regulatory agencies concerned with the licensing of contractors,
but it has experienced no material difficulty in complying with such
requirements. The Company is also subject to local zoning regulations
and building codes in performing its construction and real estate
activities. Management believes that it is in substantial compliance
with all such governmental regulations. Management believes that
compliance with federal, state and local provisions which have been
enacted or adopted for regulating the discharge of materials into the
environment does not have a material effect upon the capital
expenditures, earnings and competitive position of the Company.
<PAGE>7 ABRAMS INDUSTRIES, INC.
EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of the Company are as follows:
<TABLE>
Name and Age Position(s) with the Company Officer Since
<S> <C> <C>
Edward M. Abrams (69) Chairman of the Board of Directors and
Chief Executive Officer since August 1995.
Prior to that he served as President and
Treasurer of the Company. 1953
Joseph H. Rubin (53) Director, President, Chief Operating Officer and
Chief Financial Officer since August 1995. Prior
to that he served as Executive Vice President,
Secretary and Chief Financial Officer of the Company. 1979
Bernard W. Abrams (71) Director, Chairman of the Executive Committee since
August 1995. Prior to that he served as Chairman
of the Board of Directors and Chief Executive Officer
of the Company. 1952
Alan R. Abrams (41) Director, President of Abrams Properties, Inc.
since 1994. Prior to that he served as Vice
President of Abrams Properties, Inc. 1988
B. Michael Merritt (46) President, Abrams Construction, Inc. since
May 1995. Prior to that he served as Executive
Vice President of Abrams Construction, Inc. 1986
Richard V. Priegel (43) President, Abrams Fixture Corporation 1981
</TABLE>
Executive Officers of the Company are elected by the Board of
Directors of the Company or the Board of Directors of the respective
subsidiary to serve at the pleasure of the Board. Bernard W. Abrams
and Edward M. Abrams are brothers. Alan R. Abrams and J. Andrew
Abrams, who serve on the Board of Directors of the Company, are sons
of Edward M. Abrams and nephews of Bernard W. Abrams. There are no
other family relationships between any Executive Officer or Director
and any other Executive Officer or Director of the Company.
ITEM 2. PROPERTIES.
The Company leases executive offices containing approximately
23,000 square feet in the Lakeside Office Park, 5775-A Glenridge
Drive, in suburban Atlanta, Georgia. These offices are also used by
the Company's Real Estate Segment and Construction Segment.
The primary Manufacturing Segment facility contains
approximately 255,000 square feet and is used for wood manufacturing
and warehousing. There is a separate metal fabrication and warehousing
facility, containing approximately 104,000 square feet. Both of these
facilities, located near downtown Atlanta, are owned by the Company.
The Company also owns, or has an interest in, the following
properties:
OWNED SHOPPING CENTERS
The Company, through its Real Estate Segment, owns 12 shopping
centers which it developed. Except for the centers in Oakwood and
Newnan, Georgia, Englewood and North Fort Myers, Florida, and Jackson,
Michigan, all are leased exclusively to Kmart. Anchor lease terms for
the centers not leased exclusively to Kmart are shown in the table
below.
<TABLE>
Lease Options
Anchor Square Expiration To
Location Tenants Footage Date Renew
<S> <C> <C> <C> <C>
Oakwood, GA A & P 44,664 2013 4 for 5 years each
Newnan, GA Goody's 24,986 1997 2 for 5 years each
Kmart 82,779 2017 10 for 5 years each
Kroger 49,319 2012 6 for 5 years each
Englewood, FL Beall's 31,255 2006 4 for 5 years each
Kmart 86,479 2015 10 for 5 years each
Publix 48,555 2010 4 for 5 years each
Walgreens (1) 13,500 2040 None
North Fort Myers, FL AMC (2) 54,666 2016 4 for 5 years each
Beall's 35,600 2009 9 for 5 years each
Food Lion 33,000 2013 4 for 5 years each
Jo-Ann Fabrics 16,000 2003 3 for 5 years each
Kmart 107,806 2018 10 for 5 years each
Jackson, MI Big Lots (3) 21,022 1997 None
Kroger (2) 63,024 2021 6 for 5 years each
</TABLE>
(1) Tenant may terminate its lease with six months notice at
five year intervals beginning in 2010.
(2) Opened May 1996.
(3) Tenant may terminate at any time with six months notice.
<PAGE>ABRAMS INDUSTRIES, INC. 8
In the shopping centers leased solely to Kmart, the leases
expire from 1999 to 2017 and contain 8 to 10 five-year renewal
options. With the exception of the Big Lots lease in Jackson,
Michigan, and the Kmart leases in Columbus and Warner Robins, Georgia;
Niles, Michigan; and Shawnee, Oklahoma; all of the anchor tenant
leases provide for contingent rentals if sales exceed specified
amounts. Most major tenants have rights to offset those contingent
rentals against certain annual operating expenses paid by them. In
1996, the Company received $103,851 in contingent rentals, net of
offsets, which amounts are included in the aggregate rentals set forth
below.
Typically, tenants are responsible for their pro rata share of
ad valorem taxes, insurance and common area maintenance (subject to
the right of offset discussed above). With the exception of the
centers in Morton, Illinois; Warner Robins and Columbus, Georgia;
Niles, Michigan; and Shawnee, Oklahoma, where Kmart has complete
maintenance responsibility, the Company has responsibility for
structural and roof maintenance of the buildings. The Company also has
responsibility for parking lots and driveways, except routine upkeep,
which is the responsibility of the tenants.
The following chart provides relevant information relating to
the owned shopping centers:
<TABLE>
Principal
Amount of
Leasable Annual Mortgage Debt
Square Rental Cash Mortgage Outstanding
Feet In Year Income: Flow: Payments: As Of April 30,
Location Acres Building(s) Completed 1996 1996 (1) 1996 (2) 1996 (3)
<S> <C> <C> <C> <C> <C> <C> <C>
1100 W. Argyle Street 11.4 105,046 1972 (4) $ 163,008 $ 159,519 $ 130,860 $ 1,409,528
Jackson, MI
2707 S. 11th Street 11.7 105,155 1974, 1993 288,814 285,914 261,648 2,484,315
Niles, MI
100 Virginia Avenue 9.7 84,686 1974, 1991 225,523 224,086 162,408 801,032
Tifton, GA
44-56 Bullsboro Drive 16.3 174,059 1974, 1987 857,225 827,868 668,016 5,706,748
Newnan, GA 1989
2063 Watson Boulevard 12.1 104,224 1975 354,000 351,213 330,037 2,589,487
Warner Robins, GA
2323-2327 N. Harrison 8.0 83,552 1979, 1991 385,893 382,566 358,988 2,841,882
Shawnee, OK
315 Deo Drive 7.1 68,337 1979 240,363 237,846 207,287 1,420,000
Newark, OH
1075 W. Jackson Street 7.3 92,120 1980, 1992 478,283 444,573 406,644 3,412,657
Morton, IL (5)
2500 Airport Thruway 8.0 87,543 1980, 1988 441,286 399,796 393,056 3,157,857
Columbus, GA (5)
3715 Mundy Mill Road 10.0 71,514 1988 714,047 706,715 482,290 4,623,609
Oakwood, GA
1500 Placida Road 28.7 213,739 1990 1,559,242 1,463,840 1,352,167 13,085,375
Englewood, FL
15201 N. Cleveland Ave. 72.3 293,662 1993, 1996 1,512,757 1,288,494 1,129,925 10,241,423
North Fort Myers, FL
</TABLE>
(1) Annual cash flow is defined as net operating income before
depreciation, amortization of loan and lease costs, interest and
principal payments on mortgage notes and bonds payable.
(2) Includes principal and interest, but excludes mortgage
refinancings and costs associated therewith.
(3) Exculpatory provisions limit the Company's liability to
the respective mortgaged properties, except for the North Fort Myers,
Florida, and Jackson, Michigan, loans which have been guaranteed by
Abrams Properties, Inc. See Notes 6 and 7 to the Consolidated
Financial Statements of the Company.
(4) Recently redeveloped as a multi-tenant shopping center
with an outlot.
(5) Land is leased, not owned. The Columbus, Georgia, center
is owned by Abrams/Columbus Limited Partnership, in which Abrams
Properties, Inc., serves as general partner and owns an 80% interest.
<PAGE>9 ABRAMS INDUSTRIES, INC.
LEASEBACK SHOPPING CENTERS
The Company, through its Real Estate Segment, is lessee of 10
shopping centers which it developed, sold and leased back
under leases expiring from years 2001 to 2014. The 10 centers are
subleased by the Company to Kmart Corporation for periods
corresponding to the Company's leases. The Kmart subleases provide for
contingent rentals if sales exceed specified amounts, and contain 10
five-year renewal options, except Jacksonville, Florida, which has
eight five-year renewal options. The Company's leases with the fee
owners contain renewal options coextensive with Kmart's renewal
options. Kmart is responsible for insurance and ad valorem
taxes, but has the right to offset against contingent rentals any such
taxes paid in excess of specified amounts. In 1996, the Company
received $67,271 in contingent rentals, net of offsets, which amounts
are included in the aggregate annual rentals set forth below. The
Company has responsibility for structural and roof maintenance of the
buildings. The Company also has responsibility for parking lots and
driveways, except routine upkeep, which is the responsibility of the
tenant, Kmart. The Company's leases contain exculpatory provisions
which limit the Company's liability to its interest in the
respective subleases.
The following chart provides certain information relating to
the leaseback shopping centers:
<TABLE>
Square Rental Rent
Feet In Year Income: Expense:
Location Acres Building(s) Completed 1996 1996
<S> <C> <C> <C> <C> <C>
Bayonet Point, FL 10.8 109,340 1976 $359,626 $269,568
Orange Park, FL 9.4 84,180 1976 264,000 226,796
Rock Island, IL 9.8 84,180 1976 297,600 268,786
Davenport, IA 10.0 84,180 1977 272,953 208,056
Minneapolis, MN 7.1 84,180 1978 342,920 230,570
West St. Paul, MN 10.0 84,180 1978 298,465 229,630
Ft. Smith, AR 9.2 106,141 1979 255,350 223,195
Jacksonville, FL 11.6 97,032 1979 303,419 258,858
Louisville, KY 9.3 72,897 1979 290,000 251,279
Richfield, MN 5.7 74,217 1979 300,274 241,904
</TABLE>
LAND HELD FOR INVESTMENT
The Company, through its Real Estate Segment, owns or has an
interest in the following undeveloped land held for investment:
<TABLE>
Year Intended
Location Acres Acquired Use (1)
<S> <C> <C> <C>
W. Argyle Street 0.9 1972 (2) One outlot or retail shops
Jackson, MI
2707 S. 11th Street 2.9 1973 Retail shops
Niles, MI
Kimberly Road & Fairmont Street 6.0 1977 Outlot, plus food store and/or retail shops
Davenport, IA
Dixie Highway 4.7 1979 Food store and/or retail shops
Louisville, KY
West 15th Street 1.4 1979 Two outlots (3)
Washington, NC
Mundy Mill Road 7.7 1987 Five outlots
Oakwood, GA
Placida Road 0.7 1989 One outlot
Englewood, FL
North Cleveland Avenue 13.6 1993 Seven outlots and anchor tenant pads
North Fort Myers, FL
</TABLE>
(1) "Outlot" as used herein refers to a small parcel of land
reserved from the original shopping center parcel and is generally
sold for, leased for, or developed as, a fast-food operation, bank or
similar use.
(2) Originally part of Kmart lease. Re-developed into separate
outlot in 1996.
(3) Leased under leases terminating in years 2005 and 2010
with a right to extend for three additional five-year periods. Both
outlots are sub-leased for terms coextensive with the Company's lease.
<PAGE>ABRAMS INDUSTRIES, INC. 10
There is no mortgage debt on any of the properties, except for
the North Fort Myers, Florida retail shop land. See Note 7 to the
Consolidated Financial Statements of the Company. The Company will
either develop the properties described on the previous page or will
hold them for sale to others.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to, nor is any of its property the
subject of, any material pending legal proceedings, other than
ordinary routine proceedings incidental to the business of the
Company. To the knowledge of the management of the Company, there are
no material legal proceedings contemplated or threatened against it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS.
COMMON STOCK DATA
<TABLE>
DIVIDENDS PAID
CLOSING MARKET PRICES PER SHARE
FISCAL FISCAL FISCAL FISCAL
1996 1995 1996 1995
HIGH LOW HIGH LOW
TRADE TRADE TRADE TRADE
<S> <C> <C> <C> <C> <C> <C>
First Quarter $5.375 $4.000 $6.250 $5.50 $.030 $.030
Second Quarter 4.875 4.375 6.375 4.50 .030 .030
Third Quarter 5.125 4.375 5.250 4.50 .030 .030
Fourth Quarter 4.750 3.625 5.000 4.00 .015 .030
</TABLE>
The common stock of Abrams Industries, Inc. is traded
over-the-counter in the NASDAQ/National Market System (Symbol: ABRI).
The approximate number of holders of common stock was 560 (including
shareholders of record and shares held in street name) at May 31,
1996.
<PAGE>11 ABRAMS INDUSTRIES, INC.
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth selected financial data for the
Company and should be read in conjunction with the consolidated
financial statements and notes thereto.
<TABLE>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Consolidated Revenues $134,299,240 $122,608,682 $123,602,954 $82,878,911 $83,818,090
Net Earnings (Loss) $ (304,188) $ (331,019) $ 1,359,408 $ 1,710,381 $ 1,021,303
Net Earnings (Loss) Per Share* $ (.10) $ (.11) $ .46 $ .57 $ .34
Shares Outstanding at Year-End 2,970,856 2,993,540 2,993,540 2,977,540 2,977,540
Cash Dividends Paid Per Share $ .105 $ .12 $ .11 $ .11 $ .20
Shareholders' Equity $ 20,152,376 $ 20,872,035 $ 21,562,279 $20,484,880 $19,102,028
Shareholders' Equity Per Share* $ 6.78 $ 6.97 $ 7.20 $ 6.84 $ 6.38
Working Capital $ 10,417,697 $ 11,447,872 $ 9,445,073 $ 8,030,898 $ 2,783,427
Depreciation and Amortization
Expense $ 3,242,738 $ 3,078,878 $ 2,787,078 $ 2,162,472 $ 2,106,703
Total Assets $ 90,635,098 $ 88,576,745 $ 92,732,567 $90,537,249 $78,260,810
Income-Producing Property Under
Development, Income-Producing
Properties and Property, Plant
and Equipment, net $ 54,493,842 $ 55,065,157 $ 56,787,858 $64,340,348 $52,976,540
Long-Term Debt $ 51,202,536 $ 51,580,229 $ 52,637,298 $55,197,178 $41,513,804
Return on Average Shareholders'
Equity (1.5%) (1.6%) 6.5% 8.6% 5.4%
Return on Total Assets (.3%) (.4%) 1.5% 1.9% 1.3%
</TABLE>
<TABLE>
1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C>
Consolidated Revenues $78,020,796 $54,887,568 $50,331,871 $51,032,736 $46,773,124 $45,962,053
Net Earnings (Loss) $ 1,027,373 $ 1,534,063 $ 1,435,567 $ 1,082,883 $ 969,326 $ 582,741
Net Earnings (Loss) Per Share* $ .34 $ .51 $ .48 $ .36 $ .33 $ . 20
Shares Outstanding at Year-End 2,977,540 2,994,039 2,978,039 1,787,000 1,787,000 1,782,452
Cash Dividends Paid Per Share $ .20 $ .20 $ .18 $ .14 $ .14 $ .14
Shareholders' Equity $18,676,233 $18,304,102 $17,310,146 $16,402,538 $15,748,535 $15,192,735
Shareholders' Equity Per Share* $ 6.24 $ 6.11 $ 5.78 $ 5.48 $ 5.26 $ 5.08
Working Capital $ 3,140,650 $21,575,826 $18,830,026 $12,955,259 $ 9,089,467 $11,092,309
Depreciation and Amortization
Expense $ 1,938,687 $ 1,707,985 $ 1,668,105 $ 1,491,401 $ 1,364,970 $ 1,210,321
Total Assets $76,606,498 $64,047,108 $56,318,968 $51,178,946 $44,957,055 $43,361,213
Income-Producing Property Under
Development, Income-Producing
Properties and Property, Plant
and Equipment, net $49,999,625 $22,797,353 $24,088,285 $21,069,833 $17,058,000 $17,208,946
Long-Term Debt $39,104,720 $29,955,918 $30,071,322 $23,337,984 $19,387,624 $20,226,001
Return on Average Shareholders'
Equity 5.6% 8.6% 8.5% 6.7% 6.3% 3.9%
Return on Total Assets 1.3% 2.4% 2.5% 2.1% 2.2% 1.3%
</TABLE>
*Adjusted to reflect stock dividends and stock splits.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR FISCAL YEARS ENDED APRIL 30, 1996, 1995
AND 1994.
RESULTS OF OPERATIONS
REVENUES
Revenues for 1996 were $134,299,240, compared to $122,608,682
and $123,602,954 for 1995 and 1994, respectively. This represents an
increase in REVENUES of 10% and 9% from those of 1995 and 1994,
respectively. Revenues include Interest income of $462,858, $406,302
and $307,220 for 1996, 1995 and 1994, respectively, and Other income
of $173,577, $53,495 and $145,410 for 1996, 1995 and 1994,
respectively. The figures in Chart A below do not include Interest
income, Other income or Intersegment revenues. When more than one
segment is involved, REVENUES are reported by the segment that sells
the product or service to an unaffiliated purchaser.
REVENUE SUMMARY BY SEGMENT
(Dollars in Thousands)
CHART A
<TABLE>
Years Ended Increase Years Ended Increase
April 30, (Decrease) April 30, (Decrease)
1996 1995 Amount Percent 1996 1994 Amount Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Construction (1) $107,495 $ 94,040 $13,455 14 $107,495 $ 86,774 $20,721 24
Manufacturing (2) 14,999 16,348 (1,349) (8) 14,999 19,530 (4,531) (23)
Real Estate (3) 11,169 11,761 (592) (5) 11,169 16,846 (5,677) (34)
Total $133,663 $122,149 $11,514 9 $133,663 $123,150 $10,513 9
</TABLE>
ABRAMS INDUSTRIES, INC. 12
<PAGE>
NOTES:
(1) The growth in revenues in 1996 from those in 1995 and 1994
is the result of increased levels of activity in the construction of
new buildings and expansions of others for existing and new customers.
The amounts reported exclude $792,000 in 1996, $-0- in 1995, and
$1,020,000 in 1994 related to construction work at a shopping center
developed by the Real Estate Segment.
(2) The decrease in revenues in 1996 from those in 1995 and
1994 is attributable to some customers either delaying, cutting-back
or canceling fixturing programs.
(3) Rental revenues for 1996 were $11,169,000, compared to
$11,131,000 in 1995 and $10,435,000 in 1994. Revenues from sales of
real estate amounted to $-0- in 1996, $630,000 in 1995, and $6,411,000
in 1994.
COSTS: APPLICABLE TO SEGMENT REVENUES
As a percentage of total Segment REVENUES (See Chart A), the
applicable total Segment COSTS (See Chart B) of $119,775,802 for 1996,
$108,102,114 for 1995 and $105,259,598 for 1994 were 90%, 89% and 85%,
respectively.
13 ABRAMS INDUSTRIES, INC.
<PAGE>
COSTS APPLICABLE TO REVENUES SUMMARY BY SEGMENT
(Dollars in Thousands)
CHART B
<TABLE>
Percent of
Segment Revenues
Years Ended For Years Ended
April 30, April 30,
1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Construction (1) $101,894 $ 88,847 $ 81,902 95 94 94
Manufacturing (2) 11,587 12,896 12,773 77 79 65
Real Estate (3) 6,295 6,359 10,585 56 54 63
Total $119,776 $108,102 $105,260 90 89 85
</TABLE>
NOTES:
(1) The increase in the percentage of Construction Costs
Applicable to REVENUES in 1996 as compared to 1995 and 1994 is
attributable to an intensely competitive environment.
(2) The decrease in the percentage of Manufacturing Costs
Applicable to REVENUES in 1996 as compared to 1995 is attributable to
an increase in aged inventory reserves in 1995 of approximately
$288,000. There was no such similar increase in 1996. The increase in
the percentage of Manufacturing Costs Applicable to REVENUES in 1996
as compared to 1994 is attributable to the product mix of fixtures
sold and the under-absorption of plant overhead.
(3) The increase in the percentage of Real Estate Costs
Applicable to REVENUES in 1996 as compared to 1995 is primarily
attributable to increased shopping center repairs and maintenance
expenses. The decrease in both the dollar and percentage of Real
Estate Costs Applicable to REVENUES in 1996 as compared to 1994 is
primarily attributable to the cost of real estate sold that amounted
to $-0- in 1996 and $5,249,000 in 1994.
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES BY SEGMENT
For the years 1996, 1995 and 1994, Selling, Shipping, General
and Administrative Expenses (See Chart C) were $10,273,008,
$10,207,016 and $11,509,660, respectively. As a percentage of
Consolidated Revenues, these expenses were 8% for 1996 and 1995, and
9% for 1994. In reviewing Chart C, the reader should recognize that
the volume of revenues usually affects these amounts and percentages.
The percentages in Chart C are based on expenses as they relate to
segment revenues in Chart A, except that Parent expenses and total
expenses relate to Consolidated Revenues.
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES BY SEGMENT
(Dollars in Thousands)
CHART C
<TABLE>
Percent of
Segment Revenues
Years Ended For Years Ended
April 30, April 30,
1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Construction (1) $ 2,952 $ 2,727 $ 2,637 3 3 3
Manufacturing (2) 3,454 3,824 5,004 23 23 26
Real Estate (3) 1,628 1,629 1,873 15 14 11
Parent (4) 2,239 2,027 1,996 2 2 2
Total $10,273 $10,207 $11,510 8 8 9
</TABLE>
NOTES:
(1) On a dollar basis comparison, the higher Selling,
Shipping, General and Administrative Expenses in 1996 as compared to
1995 and 1994, stemmed from increased Segment profits which, in turn,
increased incentive-based compensation expenses.
(2) On a dollar basis comparison, Selling, Shipping, General
and Administrative Expenses were lower in 1996 as compared to 1995,
primarily because of the following: (a) $119,000 -- decreased doubtful
account reserves and (b) $167,000 -- decreased personnel costs. On
both a dollar and percentage basis comparison, the Selling, Shipping,
General and Administrative Expenses were lower in 1996 as compared to
1994, because of approximately $1,300,000 decrease in incentive-based
compensation expenses.
ABRAMS INDUSTRIES, INC. 14
<PAGE>
(3) On a dollar basis comparison, the Selling, Shipping,
General and Administrative Expenses were lower in 1996 as compared to
1994 because of decreased incentive-based compensation expenses
($129,000 less than 1994) and decreased shopping center opening
expenses ($67,000 less than 1994).
(4) On a dollar basis comparison, the Selling, Shipping,
General and Administrative Expenses were higher in 1996 as compared to
1995, because of the following increases: (a) personnel costs --
$158,000; (b) computer expenses -- $31,000; and (c) business
development expenses -- $24,000. On a dollar basis comparison, the
Selling, Shipping, General and Administrative Expenses were higher in
1996 as compared to 1994, because of increased personnel costs.
INTEREST COSTS
The majority of interest costs expensed of $4,717,618,
$4,806,571 and $4,598,288 in 1996, 1995 and 1994, respectively, are
related to the ownership of shopping centers and utilization of lines
of credit. Interest costs of $70,000, $-0- and $536,000 relating to
properties under development in 1996, 1995 and 1994, respectively,
were capitalized.
LIQUIDITY AND CAPITAL RESOURCES
Except for certain real estate construction loans and
occasional short-term operating loans, the Company normally has been
able to finance its working capital needs through funds generated
internally. If adequate funds are not generated through normal
operations, the Company has available bank lines of credit. The
Company has also developed relationships with various banks which
management believes could be sources for other short-term and
long-term financing, if required. Working capital decreased to
$10,417,697 at the end of 1996, as compared to $11,447,872 and
$9,445,073 of working capital at the end of 1995 and 1994,
respectively. Operating activities provided cash of $362,810.
Investing activities used cash of $2,363,431 primarily for
purchasing new equipment and computers to increase productivity.
Financing activities used cash of $817,629 primarily for debt
repayment.
In April 1992, the Company secured a construction loan for the
North Fort Myers development from SunTrust Bank, Atlanta. The loan was
amended in April 1994, September 1995, and March 1996. The term of the
construction financing is five years, and the loan may be extended for
one additional year upon the satisfaction of certain conditions. The
maximum amount to be funded will be determined by a formula based on
future development. The Company entered into an interest rate swap
agreement with SunTrust Bank, Atlanta effective January 4, 1994, and
which terminates July 1, 1997. The notional amount reduces monthly
from approximately $9.8 million at April 30, 1996, to $9.5 million
prior to expiration of the agreement. The agreement effectively
sets a cap and floor interest rate of 8% and 6%, respectively, on most
of the construction loan, which had an outstanding balance of
$10,241,423 at April 30, 1996, and carries a floating interest rate of
prime plus 3/8%. The Company expects the counterparty to the agreement
to abide by the terms of the agreement. A determination is made each
reporting period whether amounts are receivable from or payable to the
counterparty under the agreement and such accrual is made in the
Company's financial statements.
Pursuant to a lease agreement entered into in 1996, the
Company is obligated to pay the lessee a construction allowance
estimated at $3,700,000 toward the cost of constructing a new building
to be owned by the Company and leased to the lessee. The construction
allowance is due upon the Company's receipt of certain documents
confirming the completion of the building in accordance with the lease
terms. As of April 30, 1996, the Company has not paid or accrued any
amount related to the construction allowance. The building was
completed and occupied in May 1996 and management anticipates that the
construction allowance will become due during fiscal year 1997. The
construction allowance will be funded by additional proceeds under the
construction mortgage loan, described in the previous paragraph.
In December 1995, the Company secured a construction mortgage
loan for the Jackson, Michigan development from SunTrust Bank,
Atlanta. The term of the construction financing is one year, and the
loan may be extended for one additional year upon satisfaction of
certain conditions. The maximum amount to be funded is $2,100,000
subject to meeting certain leasing requirements.
At April 30, 1996, the Company and its subsidiaries had bank
lines of credit of $9,500,000, of which none was outstanding.
EFFECTS OF INFLATION ON REVENUES AND OPERATING PROFITS
The effects of inflation upon the Company's operating results
are varied. Inflation in the current year has been modest and has had
minimal effect on the Company. The Construction Segment subcontracts
most of its work at fixed prices, which normally will help that
segment to protect its profit margin percentage.
During the prior year, the Manufacturing Segment experienced
increased costs, especially in the area of wood and wood products.
During the current year, raw material prices were stable.
In the Real Estate Segment, the majority of leases are
long-term (over 20 years) with fixed rents except for contingent rent
provisions by which the Company may earn additional rent as a result
of increases in tenants' sales. The contingent rent provisions,
however, permit the ten-
15 ABRAMS INDUSTRIES, INC.
<PAGE>
ant in most cases to offset against contingent rents any increases in
ad valorem taxes over a specified amount. If inflation were to rise,
ad valorem taxes would probably increase which, in turn, would cause a
decrease in the contingent rents. Furthermore, the Company has certain
repair obligations and the costs of repairs increase with inflation.
Inflation causes a rise in interest rates, which has a
positive effect on investment income, but has a negative effect on
profit margins because of the increased costs of production. Overall,
inflation will tend to limit the Company's markets and, in turn, will
reduce revenues as well as operating profits.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent Auditors' Report 17
Consolidated Balance Sheets - April 30, 1996 and 1995 18
Consolidated Statements of Operations --
For the years ended April 30, 1996, 1995 and 1994 19
Consolidated Statements of Shareholders' Equity --
For the years ended April 30, 1996, 1995 and 1994 20
Consolidated Statements of Cash Flows --
For the years ended April 30, 1996, 1995 and 1994 21
Notes to Consolidated Financial Statements --
April 30, 1996, 1995 and 1994 22-30
Schedules:
NUMBER DESCRIPTION
II Valuation and Qualifying Accounts 31
III Real Estate and Accumulated Depreciation 32-33
ABRAMS INDUSTRIES, INC. 16
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Abrams Industries, Inc.
We have audited the consolidated financial statements of
Abrams Industries, Inc. and subsidiaries as listed in the accompanying
index. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedules as
listed in the accompanying index. These consolidated financial
statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these consolidated financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Abrams Industries, Inc. and subsidiaries as of April 30,
1996 and 1995, and the results of their operations and cash flows for
each of the years in the three-year period ended April 30, 1996, in
conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a
whole, present fairly, in all material respects, the information set
forth therein.
/s/KPMG Peat Marwick LLP
June 7, 1996
Atlanta, Georgia
17 ABRAMS INDUSTRIES, INC.
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
April 30,
1996 1995
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 5,452,453 $ 8,270,703
Receivables -
Trade notes and accounts, net 1,684,916 2,281,440
Contracts, net, including retained amounts of
$3,364,896 in 1996 and $3,054,467 in 1995 14,389,915 8,401,281
Inventories, net (note 2) 1,676,541 2,655,906
Costs and earnings in excess of billings (note 3) 2,858,389 1,568,845
Deferred income taxes (note 8) 999,100 1,212,791
Other 384,292 388,079
Total current assets 27,445,606 24,779,045
INCOME-PRODUCING PROPERTIES, net (notes 4, 6 and 7) 50,661,940 50,784,045
PROPERTY, PLANT AND EQUIPMENT, NET (notes 5 and 7) 3,831,902 4,281,112
OTHER ASSETS:
Land held for investment 4,980,903 4,950,293
Notes receivable 624,017 783,293
Cash surrender value of life insurance on officers, net 947,134 889,712
Deferred loan costs, net 914,153 1,128,040
Other 1,229,443 981,205
$90,635,098 $88,576,745
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade and subcontractors payables, including
retained amounts of $1,892,870 in 1996 and
$1,249,840 in 1995 $11,246,736 $ 7,859,614
Billings in excess of costs and earnings (note 3) 781,818 500,468
Accrued cash and deferred profit-sharing (note 9) 1,617,932 1,493,481
Accrued expenses 1,895,766 1,967,488
Current maturities of long-term debt (notes 6 and 7) 1,485,657 1,510,122
Total current liabilities 17,027,909 13,331,173
DEFERRED INCOME TAXES (note 8) 1,713,014 2,207,525
OTHER LIABILITIES 539,263 585,783
MORTGAGE NOTES AND BONDS PAYABLE,
less current maturities (note 6) 39,102,270 40,518,332
OTHER LONG-TERM DEBT, less current
maturities (note 7) 12,100,266 11,061,897
Total liabilities 70,482,722 67,704,710
COMMITMENTS AND CONTINGENCIES (notes 6, 7 and 11)
SHAREHOLDERS' EQUITY (note 9):
Common stock, $1 par value; authorized
5,000,000 shares; 3,010,039 issued
and 2,970,856 outstanding in 1996
and 2,993,540 outstanding in 1995 3,010,039 3,010,039
Additional paid-in capital 2,012,190 2,012,190
Retained earnings 15,289,448 15,906,239
Total paid-in capital and retained earnings 20,311,677 20,928,468
Less cost of treasury stock (39,183 shares in 1996
and 16,499 shares in 1995) 159,301 56,433
Total shareholders' equity 20,152,376 20,872,035
$90,635,098 $88,576,745
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
ABRAMS INDUSTRIES, INC. 18
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended April 30,
1996 1995 1994
<S> <C> <C> <C>
REVENUES
Construction $107,494,271 $94,039,455 $ 86,773,819
Manufacturing 14,999,240 16,348,294 19,530,240
Rental income 11,169,294 11,131,136 10,435,407
Real estate sales -- 630,000 6,410,858
Interest 462,858 406,302 307,220
Other 173,577 53,495 145,410
134,299,240 122,608,682 123,602,954
COSTS AND EXPENSES
Applicable to revenues -
Construction 101,893,350 88,847,494 81,901,979
Manufacturing 11,587,307 12,895,856 12,772,836
Rental property operating expenses,
exclusive of interest 6,295,145 6,046,094 5,335,651
Cost of real estate sold -- 312,670 5,249,132
119,775,802 108,102,114 105,259,598
Selling, shipping, general and administrative 10,273,008 10,207,016 11,509,660
Interest costs incurred, less interest capitalized of $70,000
$0, and $536,000 in 1996, 1995 and 1994, respectively 4,717,618 4,806,571 4,598,288
134,766,428 123,115,701 121,367,546
EARNINGS (LOSS) BEFORE INCOME TAXES (467,188) (507,019) 2,235,408
INCOME TAXES (note 8)
Current 117,820 (103,490) 1,033,846
Deferred (280,820) (72,510) (157,846)
(163,000) (176,000) 876,000
NET EARNINGS (LOSS) $ (304,188) $ (331,019) $ 1,359,408
NET EARNINGS (LOSS) PER SHARE, based on weighted average
outstanding shares of 2,977,163, 2,993,540, and 2,981,762
in 1996, 1995, and 1994, respectively $ (.10) $ (.11) $ .46
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
19 ABRAMS INDUSTRIES, INC.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Additional
Common Stock Paid-In Retained Treasury
Shares Amount Capital Earnings Stock Total
<S> <C> <C> <C> <C> <C> <C>
BALANCES at April 30, 1993 2,994,039 $2,994,039 $1,982,190 $15,565,084 $ (56,433) $20,484,880
Net earnings -- -- -- 1,359,408 -- 1,359,408
Cash dividends declared -
$.11 per share -- -- -- (328,009) -- (328,009)
Proceeds from exercise of
stock options 16,000 16,000 30,000 -- -- 46,000
BALANCES at April 30, 1994 3,010,039 3,010,039 2,012,190 16,596,483 (56,433) 21,562,279
Net loss -- -- -- (331,019) -- (331,019)
Cash dividends declared -
$.12 per share -- -- -- (359,225) -- (359,225)
BALANCES at April 30, 1995 3,010,039 3,010,039 2,012,190 15,906,239 (56,433) 20,872,035
Net loss -- -- -- (304,188) -- (304,188)
Cash dividends declared -
$.105 per share -- -- -- (312,603) -- (312,603)
Purchase of 22,684 shares
of treasury stock -- -- -- -- (102,868) (102,868)
BALANCES at April 30, 1996 3,010,039 $3,010,039 $2,012,190 $15,289,448 $ (159,301) $20,152,376
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
ABRAMS INDUSTRIES, INC. 20
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended April 30,
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (304,188) $ (331,019) $ 1,359,408
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 3,242,738 3,078,878 2,787,078
Deferred tax benefit (280,820) (72,510) (157,846)
Gain on sales of real estate -- (317,330) (1,161,726)
Decrease (increase) in assets:
Receivables (5,392,110) 3,367,446 (4,101,502)
Inventories 979,365 (293,675) (139,250)
Costs and earnings in excess of billings (1,289,544) (79,501) (789,048)
Other current assets 3,787 (15,440) 51,065
Other assets (271,099) 506,692 (1,581,143)
Increase (decrease) in liabilities:
Accounts payable 3,387,122 (508,760) 1,717,055
Accrued cash and deferred profit-sharing 124,451 (1,208,632) 969,465
Billings in excess of costs and earnings 281,350 (199,090) (242,358)
Accrued expenses (71,722) (86,987) 268,279
Other liabilities (46,520) 60,019 73,461
Income taxes payable -- (765,265) 469,956
Net cash provided by (used in) operating activities 362,810 3,134,826 (477,106)
Cash flows from investing activities:
Proceeds from sales of real estate -- 630,000 6,410,858
Additions to properties, property, plant and equipment, net (2,363,431) (1,114,794) (2,696,947)
Net cash provided by (used in) investing activities (2,363,431) (484,794) 3,713,911
Cash flows from financing activities:
Debt proceeds 6,419,282 5,951,000 10,512,657
Debt repayments (6,821,440) (7,093,519) (12,516,829)
Additions to deferred loan costs -- (4,773) (727,697)
Cash dividends (312,603) (359,225) (328,009)
Repurchases of common stock (102,868) -- --
Proceeds from exercise of stock options -- -- 46,000
Net cash used in financing activities (817,629) (1,506,517) (3,013,878)
Net increase (decrease) in cash and cash equivalents (2,818,250) 1,143,515 222,927
Cash and cash equivalents at beginning of year 8,270,703 7,127,188 6,904,261
Cash and cash equivalents at end of year $ 5,452,453 $ 8,270,703 $ 7,127,188
Supplemental schedule of cash flow information:
Interest paid, net of amounts capitalized $ 4,699,374 $ 4,756,176 $ 4,922,260
Income taxes paid, net of refunds $ 107,653 $ 696,712 $ 734,663
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
21 ABRAMS INDUSTRIES, INC.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1996, 1995 AND 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of
Abrams Industries, Inc., its wholly owned subsidiaries and its
80% investment in Abrams-Columbus Limited Partnership (Company).
All significant intercompany balances, transactions and profits
have been eliminated in consolidation. Revenues and costs are
reported by the segment which sells the product or service to an
unaffiliated purchaser.
(B) CASH EQUIVALENTS
Cash equivalents of $4,365,006 and $7,913,434 at April 30, 1996
and 1995, respectively, consist of money market funds and other
financial instruments. For purposes of the statements of cash
flows, the Company considers all highly liquid debt instruments
with original maturities of three months or less to be cash
equivalents.
(C) CAPITALIZATION POLICIES
The Company capitalizes interest and other carrying costs on
development properties and income-producing properties while they
are under construction or development. Costs of planning,
development and construction are also capitalized.
Capitalization of interest and other carrying costs is
discontinued when a project is substantially completed or if
active development ceases.
(D) DEVELOPMENT AND INVESTMENT PROPERTIES
Development and investment properties are carried at the lower
of cost or estimated net realizable value. Management monitors
each property on a periodic basis. Valuation allowances for
estimated losses on development and investment properties are
provided when a significant and permanent decline in value
occurs.
(E) INCOME RECOGNITION
Construction revenues and costs are reported on the
percentage-of-completion method, using costs incurred to date in
relation to estimated total costs of the contracts to measure the
stage of completion. The cumulative effects of changes in
estimated total contract costs and revenues are recorded in the
period in which the facts requiring the revisions become known.
At the time it is determined that a contract will result in a
loss, the entire estimated loss is recorded.
Revenues from the sales of real estate are recognized at the
time of closing. When a portion or unit of a development property
is sold, a proportionate share of the projected total cost of the
development is charged to cost of sales. Costs of sales related
to real estate are based on the specific property sold.
(F) INVENTORIES
Inventories are valued at the lower of cost (first-in,
first-out method) or market. To reflect the inventory at the
lower of cost or market, valuation reserves are established.
Management periodically evaluates the adequacy of reserves based
on aging, sales and other relevant factors.
(G) INCOME-PRODUCING PROPERTIES AND PROPERTY, PLANT AND EQUIPMENT
Income-producing properties and property, plant and equipment
are recorded at cost and are depreciated and amortized for
financial reporting purposes using the straight-line method over
the estimated useful lives of the assets. Significant additions
which extend asset lives are capitalized. Normal maintenance and
repair costs are expensed as incurred.
ABRAMS INDUSTRIES, INC. 22
<PAGE>
(H) INCOME TAXES
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date.
(I) RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock-Based Compensation" was
issued. SFAS No. 123 encourages companies to adopt a fair
value-based method of accounting for stock-based compensation
plans. The Company plans to adopt the standard in fiscal year
1997 on a disclosure-only basis. As required by SFAS No. 123, pro
forma disclosures in the Company's fiscal year 1997 financial
statements will include the effects of awards granted in both
fiscal years 1996 and 1997 in the respective years' financial
statements.
In March 1995, SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of" was
issued. SFAS No. 121 is effective for fiscal years beginning
January 1, 1996. SFAS No. 121 establishes accounting standards
for the impairment of long-lived assets, certain identifiable
intangibles and goodwill related to those assets to be held and
used, and for long-lived assets and certain identifiable
intangibles to be disposed of. The Company does not believe the
adoption of SFAS No. 121 will have a material impact on the
Company's financial condition or results of operations.
(J) EARNINGS PER SHARE
Earnings per share are computed by dividing net earnings by the
weighted average number of shares of common stock outstanding
during the year. Shares issuable in connection with the Company's
stock plans are not included in average outstanding shares. No
material dilution in earnings per share would result if all the
options were exercised.
(K) USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires the Company to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
(L) FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments," requires disclosure about fair value for all
financial instruments.
Management believes that the carrying amounts of cash and cash
equivalents, receivables, other assets, accounts payable and
accrued expenses and current portions of debt instruments are
reasonable approximations of their fair value because of the
short maturity of these instruments.
The fair value of the Company's noncurrent portions of debt
instruments is estimated by discounting the future cash flows of
each instrument at rates currently offered to the Company for
similar debt instruments of comparable maturities by the
Company's bankers. Based on this valuation methodology,
management believes that the carrying amount of the noncurrent
portions of debt instruments is a reasonable estimation of its
fair value.
(M) RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 and 1994
consolidated financial statements to conform with classifications
adopted in 1996.
23 ABRAMS INDUSTRIES, INC.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(2) INVENTORIES
The classes of inventory at April 30 were:
<TABLE>
1996 1995
<S> <C> <C>
Finished goods $1,355,296 $1,790,849
Work in progress 73,029 552,803
Raw materials 248,216 312,254
$1,676,541 $2,655,906
</TABLE>
(3) CONTRACTS IN PROGRESS
Assets and liabilities related to contracts in progress are
included in current assets and current liabilities as they will be
liquidated in the normal course of contract completion, although this
may require more than one year. Amounts billed and costs recognized on
contracts in progress at April 30 were:
<TABLE>
1996 1995
<S> <C> <C>
Costs and earnings in excess of billings:
Accumulated costs and earnings $25,901,915 $17,337,720
Amounts billed 23,043,526 15,768,875
$ 2,858,389 $ 1,568,845
Billings in excess of costs and earnings:
Amounts billed $29,022,583 $24,873,830
Accumulated costs and earnings 28,240,765 24,373,362
$ 781,818 $ 500,468
</TABLE>
(4) INCOME-PRODUCING PROPERTIES
Substantially all income-producing properties are pledged as
collateral against mortgage notes and bonds payable. Income-
producing properties and their estimated useful lives at April 30
were:
<TABLE>
Estimated useful lives 1996 1995
<S> <C> <C> <C>
Land $14,832,628 $14,832,628
Buildings and
improvements 23-31.5 years 55,937,446 53,984,904
70,770,074 68,817,532
Less - Accumulated
depreciation
and amortization 20,108,134 18,033,487
$50,661,940 $50,784,045
</TABLE>
ABRAMS INDUSTRIES, INC. 24
<PAGE>
(5) PROPERTY, PLANT AND EQUIPMENT
The major components of property, plant and equipment and
their estimated useful lives at April 30 were:
<TABLE>
Estimated useful lives 1996 1995
<S> <C> <C> <C>
Land $ 529,224 $ 529,224
Buildings and
improvements 3-31.5 years 4,817,330 4,805,509
Machinery and
equipment 3-10 years 4,949,832 5,542,580
10,296,386 10,877,313
Less - Accumulated
depreciation 6,464,484 6,596,201
$ 3,831,902 $4,281,112
</TABLE>
(6) MORTGAGE NOTES AND BONDS PAYABLE AND LEASES
The Company owns 12 shopping centers which are pledged as
collateral on related mortgage notes, bonds payable and construction
mortgage loans (note 7). It is also lessee of 10 shopping centers
under sale/leaseback arrangements expiring from 2001 to 2014. Each
debt instrument and sale/leaseback arrangement contains an exculpatory
provision which limits the Company's liability to its interest in the
mortgaged property or lease, except for two construction mortgage
loans which have been guaranteed by a subsidiary of the Company (note
7).
Both types of centers are primarily leased to the Kmart
Corporation. The owned centers are leased for periods expiring from
1997 to 2040 and the leased centers for periods corresponding to the
leaseback period. All leases are operating leases. The leases
typically require that the tenant make fixed rental payments over a
23-25 year period and provide for renewal options and for contingent
rentals if the tenants' sales volumes exceed predetermined amounts. In
some cases, the leases provide that the tenant bear the cost of
insurance, repairs, maintenance and taxes. Base rental revenue
received from owned centers in 1996, 1995 and 1994 was approximately
$7,116,000, $7,261,000 and $6,891,000, respectively. Base rental
revenue received from sale/leaseback centers in 1996, 1995 and 1994
was approximately $2,917,000 in each year. Contingent rentals received
on all centers in 1996, 1995, and 1994 were approximately $171,000,
$103,000 and $94,000, respectively.
Approximate future minimum annual rentals to be received on
all centers are:
<TABLE>
Owned Leaseback
Years Ending April 30, Rental Receipts
<S> <C> <C>
1997 $ 7,411,000 $ 2,917,000
1998 7,242,000 2,917,000
1999 6,958,000 2,917,000
2000 6,680,000 2,917,000
2001 6,472,000 2,850,000
2002 and thereafter 86,593,000 5,732,000
$121,356,000 $20,250,000
</TABLE>
25 ABRAMS INDUSTRIES, INC.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(CONTINUED)
Pertinent information on future payments on mortgage notes and
bonds on ten of the owned centers and approximate minimum rentals to
be paid on all leaseback centers are as follows:
<TABLE>
Owned Centers
Mortgage Payments Leaseback Centers
Years Ending April 30, Principal Interest Rental Payments
<S> <C> <C> <C>
1997 $ 1,021,000 $ 3,602,000 $ 2,405,000
1998 1,115,000 3,511,000 2,405,000
1999 1,215,000 3,411,000 2,405,000
2000 1,315,000 3,302,000 2,405,000
2001 1,439,000 3,183,000 2,405,000
2002 and thereafter 34,018,000 14,742,000 5,015,000
$40,123,000 $31,751,000 $17,040,000
</TABLE>
The notes and bonds are due at various dates between April 25,
2002 and April 1, 2017, and bear interest at rates ranging from 7.3%
to 10%, with a weighted average rate of 8.9% at April 30, 1996.
(7) OTHER LONG-TERM DEBT AND CREDIT FACILITIES
<TABLE>
Other long-term debt at April 30 was:
1996 1995
<S> <C> <C>
79% of prime rate (6.52% at April 30, 1996), industrial development
bond payable in quarterly installments of $57,143 principal plus
interest, final payment due March 1, 2000; secured by real property $ 914,280 $ 1,142,852
Prime rate plus 3/8% (8.625% at April 30, 1996), construction mortgage
loan; monthly principal and interest payments of $87,729 required
with principal due May 28, 1997, with an option for a one year
extension; secured by income-producing property and assignment
of leases and rents; guaranteed by a subsidiary of the Company 9,691,669 9,915,245
Prime rate plus 3/8% (8.625% at April 30, 1996), amendment to the
construction mortgage loan shown above which permits borrowings
of up to $4,942,419; monthly interest payments required until 6 months
after construction has been completed (construction was completed
May 1996); monthly principal and interest payments of $42,134 required
beginning December 1996, with principal due May 28, 1997, with an
option for a one year extension; secured by income-producing properties
and assignment of leases and rents; guaranteed by a subsidiary of the
Company 549,754 --
Prime rate (8.25% at April 30, 1996), construction mortgage loan which
permits borrowings of up to $2,100,000; monthly interest payments
required beginning January 1, 1996 with principal due December 15,
1996, with an option for a one year extension; secured by income-
producing property and assignment of leases and rents; guaranteed by
a subsidiary of the Company 1,409,528 --
Prime rate (8.25% at April 30,1996), $3,000,000 unsecured bank line of
credit; quarterly interest payments required with principal due
October 31, 1996 -- 361,000
Total other long-term debt 12,565,231 11,419,097
Less - current maturities 464,965 357,200
Total other long-term debt, excluding current maturities $12,100,266 $11,061,897
</TABLE>
ABRAMS INDUSTRIES, INC. 26
<PAGE>
The aggregate maturities of other long-term debt are as
follows:
<TABLE>
Years Ending April 30, Amount
<S> <C>
1997 $ 464,965
1998 11,643,129
1999 228,572
2000 228,565
$12,565,231
</TABLE>
At April 30, 1996, the Company classified $1,409,528 of
borrowings under the construction loan as long-term. The Company has
both the intent and ability to extend or refinance this note on a
long-term basis.
The Company entered into an interest rate swap agreement with
the lender on the prime rate plus 3/8% construction mortgage loan, as
shown above, effective January 4, 1994, and which terminates July 1,
1997. The notional amount reduces monthly from approximately $9.8
million at April 30, 1996, to $9.5 million prior to expiration of the
agreement. The agreement effectively sets a cap and floor interest
rate of 8% and 6%, respectively.
At April 30, 1996, the Company had available bank lines of
credit of $9,500,000, of which none was outstanding. These lines of
credit which expire during fiscal years 1997 and 1998 bear interest at
the prime rate (8.25% at April 30, 1996) and have a 3/8% commitment
fee on the unused portion.
(8) INCOME TAXES
<TABLE>
Income tax expense (benefit) consists of:
Current Deferred Total
<S> <C> <C> <C>
Year ended April 30, 1996:
U.S. federal $ 104,271 $(248,526) $(144,255)
State and local 13,549 (32,294) (18,745)
$ 117,820 $(280,820) $(163,000)
Year ended April 30, 1995:
U.S. federal $ (98,786) $ (58,681) $(157,467)
State and local (4,704) (13,829) (18,533)
$ (103,490) $ (72,510) $(176,000)
Year ended April 30, 1994:
U.S. federal $ 925,020 $(141,231) $ 783,789
State and local 108,826 (16,615) 92,211
$1,033,846 $(157,846) $ 876,000
</TABLE>
Income tax expense (benefit) was $(163,000), $(176,000), and
$876,000 for the years ended April 30, 1996, 1995, and 1994,
respectively, and differed from the amounts computed by applying the
U.S. federal income tax rate of 34 percent to pretax income from
continuing operations as a result of the following:
<TABLE>
1996 1995 1994
<S> <C> <C> <C>
Computed "expected" tax expense (benefit) $(158,802) $(172,386) $760,039
Increase in income taxes resulting from:
State and local income taxes, net
of federal income tax benefit (12,372) (12,232) 60,859
Other, net 8,174 8,618 55,102
$(163,000) $(176,000) $876,000
</TABLE>
27 ABRAMS INDUSTRIES, INC.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities at April 30, 1996 and 1995 are presented below:
<TABLE>
1996 1995
<S> <C> <C>
Deferred tax assets:
Inventories, primarily because
of additional costs capitalized
for tax purposes and the
allowance for decline in
net realizable value $ 409,745 $ 447,373
Accrued directors' fees not
deductible for tax purposes 183,266 158,063
Compensated absences,
not deductible for
tax purposes 137,058 108,040
Other accrued expenses not deductible
for tax purposes 339,027 400,121
Other 402,952 318,488
Total gross deferred tax assets 1,472,048 1,432,085
Deferred tax liabilities:
Properties, plant and equipment,
principally because of
differences in depreciation
and capitalized interest 1,902,417 2,208,442
Profit related to installment sale 180,007 204,159
Other 103,538 14,218
Total gross deferred tax liabilities 2,185,962 2,426,819
Net deferred tax liability $ 713,914 $ 994,734
</TABLE>
The valuation allowance was $0 at April 30, 1996 and 1995.
(9) STOCK OPTION PLAN AND DEFERRED PROFIT-SHARING PLAN
In 1986, the Company adopted a Key Employee Incentive Stock
Option Plan which provides that stock options may be awarded to
officers and key employees with exercise prices no less than the fair
market value of the common stock at the date of grant. Information
relating to the Company's stock option plan, as adjusted for stock
dividends, is summarized as follows:
<TABLE>
1996 1995 1994
<S> <C> <C> <C>
Options outstanding
at beginning of year 24,332 24,332 40,332
Options granted -- -- 6,666
Options canceled (6,666) -- (6,666)
Options exercised -- -- (16,000)
Options outstanding
at end of year 17,666 24,332 24,332
Option prices per share:
Options granted during
the year -- -- $ 4.6875
Options canceled $ 3.75 $ -- $ 4.6875
Options exercised $ -- $ -- $ 2.875
Options outstanding
end of year $2.875-4.50 $2.875-4.50 $2.875-4.50
</TABLE>
ABRAMS INDUSTRIES, INC. 28
<PAGE>
At April 30, 1996, there were 78,002 shares available for
options which may be granted pursuant to the Key Employee Incentive
Stock Option Plan.
The Company has a deferred Profit-Sharing Plan ("Plan") which
covers substantially all of its employees. Funded employer
contributions to the Plan for 1996, 1995 and 1994 were approximately
$502,000, $571,000 and $985,000, respectively. The net assets in the
Plan, which is administered by an independent trustee, were
approximately $14,122,000 at April 30, 1996 and $11,600,000 at April
30, 1995.
(10) SEGMENT REPORTING
The Company operates in three industry segments: Construction,
Manufacturing and Real Estate.
The construction segment provides construction services
primarily for the retail sector. The manufacturing segment produces
store fixtures for retail outlets, display fixtures for point-of-sale
merchandising and other products. The real estate segment develops
retail income-producing properties for sale or for investment. The
Company provides property management for some of the properties after
development.
Total revenue by industry segment includes both revenues from
unaffiliated customers, as reported in the Company's consolidated
statements of operations, and intersegment revenues, which are
generally at prices negotiated between segments.
Identifiable assets are those that are used in the Company's
operations in each segment including receivables due from other
segments. The parent company's identifiable assets are primarily cash
and cash equivalents, cash surrender value of life insurance, and
receivables and notes receivable due from subsidiaries.
The Company had revenues from The Home Depot, Inc., primarily
representing revenues in the construction segment, aggregating 48%,
43%, and 53% of consolidated revenues in 1996, 1995 and 1994,
respectively. Revenues from Baby Superstore, Inc., primarily
representing revenues in the construction segment, constituted 18% and
16% of consolidated revenues in 1996 and 1995, respectively. The three
segments had revenues from Kmart Corporation aggregating 11% and 15%,
of consolidated revenues in 1995 and 1994, respectively. Also, in
1994, revenues from Service Merchandise, Inc. constituted 10% of
consolidated revenues.
Operating earnings (loss) is total revenue less operating
expenses. In computing operating earnings (loss) of segments,
allocated parent expenses and income taxes have not been deducted.
29 ABRAMS INDUSTRIES, INC.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<PAGE>
<TABLE>
Construction Manufacturing Real Estate Parent Eliminations Consolidated
1996
<S> <C> <C> <C> <C> <C> <C>
Revenues from unaffiliated
customers $107,494,271 $14,999,240 $11,169,294 $ -- $ $133,662,805
Interest and other income 150,851 9,118 304,121 349,039 (176,694) 636,435
Intersegment revenue 792,213 -- -- 523,040 (1,315,253) --
Total Revenue $108,437,335 $15,008,358 $11,473,415 $ 872,079 $ (1,491,947) $134,299,240
Operating earnings (loss) $ 2,806,030 $ (160,226) $(1,261,552) $(1,428,578) $ (422,862) $
(467,188)
Identifiable assets $ 19,083,228 $ 7,717,186 $61,428,250 $ 7,464,995 $ (5,058,561) $ 90,635,098
Depreciation $ 198,390 $ 583,038 $ 2,188,748 $ 23,444 $ (84,756) $ 2,908,864
Capital expenditures $ 172,112 $ 94,498 $ 2,024,365 $ 72,456 $ -- $ 2,363,431
1995
Revenues from unaffiliated
customers $ 94,039,455 $16,348,294 $11,761,136 $ -- $ -- $122,148,885
Interest and other income 89,340 8,245 221,394 316,732 (175,914) 459,797
Intersegment revenue -- -- -- 558,040 (558,040) --
Total Revenue $ 94,128,795 $16,356,539 $11,982,530 $ 874,772 $ (733,954) $122,608,682
Operating earnings (loss) $ 2,550,806 $ (478,235) $ (900,864) $(1,228,482) $ (450,244) $
(507,019)
Identifiable assets $ 14,188,426 $ 9,385,838 $62,444,725 $ 7,616,258 $ (5,058,502) $ 88,576,745
Depreciation $ 160,916 $ 528,328 $ 2,184,539 $ 16,777 $ (84,756) $ 2,805,804
Capital expenditures $ 196,801 $ 773,348 $ 140,890 $ 3,755 $ -- $ 1,114,794
1994
Revenues from unaffiliated
customers $ 86,773,819 $19,530,240 $16,846,265 $ -- $ -- $123,150,324
Interest and other income 85,884 24,618 265,095 275,448 (198,415) 452,630
Intersegment revenue 1,019,898 -- 12,193 1,273,040 (2,305,131) --
Total Revenue $ 87,879,601 $19,554,858 $17,123,553 $ 1,548,488 $ (2,503,546) $123,602,954
Operating earnings (loss) $ 2,535,597 $ 1,680,087 $ (66,350) $ (519,260) $ (1,394,666) $ 2,235,408
Identifiable assets $ 14,503,124 $10,858,140 $64,670,299 $ 7,364,713 $ (4,663,709) $ 92,732,567
Depreciation $ 117,448 $ 443,758 $ 2,022,860 $ 20,451 $ (81,505) $ 2,523,012
Capital expenditures $ 230,030 $ 426,446 $ 2,248,230 $ 25,524 $ (233,283) $ 2,696,947
</TABLE>
(11) COMMITMENT
Pursuant to a lease agreement entered into in 1996, the
Company is obligated to pay the lessee a construction allowance
estimated at $3,700,000 toward the cost of constructing a new building
to be owned by the Company and leased to the lessee. The construction
allowance is due upon the Company's receipt of certain documents
confirming the completion of the building in accordance with the lease
terms. As of April 30, 1996, the Company has not paid or accrued any
amount related to the construction allowance. The building was
completed and occupied in May 1996 and management anticipates that the
construction allowance will become due during fiscal year 1997. The
construction allowance will be funded by additional proceeds under a
construction mortgage loan (note 7).
ABRAMS INDUSTRIES, INC. 30
<PAGE>
<TABLE>
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
Additions
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
Description of Year Expenses Accounts Deductions of Year
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Year ended
April 30, 1996 $100,189 $ 107,837 $ -- $ 150,485(1) $ 57,541
Year ended
April 30, 1995 $ 41,041 $ 63,559 $ -- $ 4,411(1) $100,189
Year ended
April 30, 1994 $ 80,934 $ 254,061 $ -- $ 293,954(1) $ 41,041
INVENTORY RESERVES
Year ended
April 30, 1996 $773,455 $ 160,000 $ -- $ 175,559(2) $757,896
Year ended
April 30, 1995 $485,859 $ 287,596 $ -- $ -- $773,455
Year ended
April 30, 1994 $675,000 $1,040,384 $ -- $1,229,525(2) $485,859
PROPERTY VALUATION RESERVE
Year ended
April 30, 1996 $ -- $ -- $ -- $ -- $ --
Year ended
April 30, 1995 $ -- $ -- $ -- $ -- $ --
Year ended
April 30, 1994 $399,807 $ 102,453 $ -- $ 502,260(3) $ --
</TABLE>
(1) Allowance for doubtful accounts deductions resulted from the
subsequent writeoff and/or recovery of the related receivable.
(2) Inventory reserve deductions resulted from the subsequent sale
and/or writeoff of the related inventory.
(3) Land reserve deductions resulted from the subsequent sale of the
related land.
31 ABRAMS INDUSTRIES, INC.
<PAGE>
<TABLE>
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
APRIL 30, 1996
Costs
Capitalized
Subsequent
Initial Cost to Company to Acquisition
Building
and
Description Encumbrances Land Improvements Improvements Land
<S> <C> <C> <C> <C> <C>
INCOME-PRODUCING PROPERTIES:
Kmart - Jackson, Michigan $1,409,528 $ 401,195 $1,788,183 $ 874,342 $ 401,195
Kmart - Niles, Michigan 2,484,315 191,674 1,616,099 107,431 191,674
Kmart - Tifton, Georgia 801,032 132,894 1,418,266 127,677 132,894
Shopping Center - Newnan, GA 5,706,748 696,829 5,291,120 254,258 696,829
Kmart - Warner Robins, Georgia 2,589,487 249,994 1,916,557 94,418 249,994
Kmart - Shawnee, Oklahoma 2,841,882 407,063 1,667,091 1,342,757 407,063
Kmart - Newark, Ohio 1,420,000 153,900 2,296,100 -- 153,900
Kmart - Morton, Illinois 3,412,657 18,005 2,767,765 -- 18,005
Kmart - Columbus, Georgia 3,157,857 11,710 2,356,920 10,078 11,710
Shopping Center - Oakwood, GA 4,623,609 556,416 3,568,163 54,334 556,416
Shopping Center - Englewood, FL 13,085,375 6,072,805 8,823,506 (117,774) 6,072,805
Shopping Center - N Ft. Myers, FL 10,241,423 5,940,143 11,290,778 780,669 5,940,143
Leaseback Shopping Center - Davenport, IA -- -- 2,150 176,261 --
Leaseback Shopping Center - Rock Island, IL -- -- 142,986 -- --
Leaseback Shopping Center - Jacksonville, FL -- -- 42,151 -- --
Leaseback Shopping Center - Orange Park, FL -- -- 127,486 -- --
Leaseback Shopping Center - W. St. Paul, MN -- -- -- 43,231 --
51,773,913 14,832,628 45,115,321 3,747,682 14,832,628
LAND HELD FOR INVESTMENT:
Davenport, Iowa -- 183,572 -- -- 183,572
Louisville, Kentucky -- 80,011 -- -- 80,011
Oakwood, Georgia -- 245,112 -- 509,112 754,224
Englewood, Florida -- 504,032 -- -- 504,032
North Fort Myers, Florida -- 3,740,043 -- (280,979) 3,459,064
-- 4,752,770 -- 228,133 4,980,903
$51,773,913 $19,585,398 $45,115,321 $3,975,815 $19,813,531
</TABLE>
<TABLE>
Life on
Which
Depre-
Gross Amounts at Which ciation
Carried at Close of Year In Latest
Building Capi- Net Date Earnings
and talized Accumulated Date of Ac- Statement
Improvements Interest Total (1) Depreciation Construction quired Computed
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME-PRODUCING PROPERTIES:
Kmart - Jackson, Michigan $ 2,662,525 $ 85,095 $3,148,815 $ 1,820,841 1972, 1996 -- 23 years
Kmart - Niles, Michigan 1,723,530 75,466 1,990,670 1,480,192 1974, 1993 -- 25 years
Kmart - Tifton, Georgia 1,545,943 88,237 1,767,074 1,327,884 1974, 1991 -- 25 years
Shopping Center - Newnan, GA 5,545,378 311,528 6,553,735 2,528,337 1974,1987,1989 -- 31.5 years
Kmart - Warner Robins, Georgia 2,010,975 76,618 2,337,587 1,760,440 1975 -- 25 years
Kmart - Shawnee, Oklahoma 3,009,848 -- 3,416,911 1,314,086 1979,1991 -- 25 years
Kmart - Newark, Ohio 2,296,100 -- 2,450,000 1,515,081 1979 -- 25 years
Kmart - Morton, Illinois 2,767,765 -- 2,785,770 1,771,408 1980,1992 -- 25 years
Kmart - Columbus, Georgia 2,366,998 238,970 2,617,678 1,619,296 1980, 1988 -- 25 years
Shopping Center - Oakwood, GA 3,622,497 384,700 4,563,613 1,245,154 1988 -- 31.5 years
Shopping Center - Englewood, FL 8,705,732 1,346,273 16,124,810 1,961,018 1990 -- 31.5 years
Shopping Center - N Ft. Myers, FL 12,071,447 4,467,556 22,479,146 1,668,496 1993,1996 -- 31.5 years
Leaseback Shopping Center -
Davenport, IA 178,411 -- 178,411 14,868 1995 -- 39 years
Leaseback Shopping Center -
Rock Island, IL 142,986 -- 142,986 40,638 1994 -- 8 years
Leaseback Shopping Center -
Jacksonville, FL 42,151 -- 42,151 5,901 1994 -- 25 years
Leaseback Shopping Center -
Orange Park, FL 127,486 -- 127,486 29,540 1995 -- 7 years
Leaseback Shopping Center -
W. St. Paul, MN 43,231 -- 43,231 4,954 1996 -- 8 years
48,863,003 7,074,443 70,770,074 20,108,134
LAND HELD FOR INVESTMENT:
Davenport, Iowa -- -- 183,572 -- -- 1977 --
Louisville, Kentucky -- -- 80,011 -- -- 1979 --
Oakwood, Georgia -- -- 754,224 -- -- 1987 --
Englewood, Florida -- -- 504,032 -- -- 1989 --
North Fort Myers, Florida -- -- 3,459,064 -- -- 1993 --
-- -- 4,980,903 --
$48,863,003 $7,074,443 $75,750,977 $20,108,134
</TABLE>
NOTE: Reconciliations of total real estate carrying value and
accumulated depreciation for the three years ended April 30, 1996
are as follows:
<TABLE>
Real Estate Accumulated Depreciation
1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR $73,767,825 $73,927,553 $77,344,688 $18,033,487 $15,950,677 $14,043,121
ADDITIONS DURING YEAR
Additions 1,983,152(4) 182,539 1,831,997(2) -- -- --
Depreciation -- -- -- 2,074,647 2,082,810 1,907,556
1,983,152 182,539 1,831,997 2,074,647 2,082,810 1,907,556
DEDUCTIONS DURING YEAR
Carrying value of real estate
sold and retirements -- 342,267(3) 5,249,132(3) -- -- --
Valuation reserve on
unimproved land -- -- -- -- -- --
-- 342,267 5,249,132 -- -- --
BALANCE AT CLOSE OF YEAR $75,750,977 $73,767,825 $73,927,553 $20,108,134 $18,033,487 $15,950,677
</TABLE>
NOTES:
(1) The aggregated cost for land and building and improvements for
federal income tax purposes at April 30, 1996 is $70,956,913.
(2) Primarily represent additions to a shopping center developed in
North Fort Myers, Florida.
(3) Primarily represents sales of land held for investment in North
Fort Myers, Florida; Atlanta, Georgia; and Gwinnett County,
Georgia.
(4) Primarily represents additions to a shopping center development
in North Fort Myers, Florida and a Kroger in Jackson, Michigan.
ABRAMS INDUSTRIES, INC. 32
33 ABRAMS INDUSTRIES, INC.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT AUDITORS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEMS 10-13.
The information contained under the headings "Nomination and
Election of Directors," "Principal Holders of the Company's
Securities" and "Compensation of Executive Officers and Directors" in
the Company's definitive proxy materials for its 1996 Annual Meeting
of Shareholders, filed with the Securities and Exchange Commission
contemporaneously herewith, is incorporated herein by reference.
For purposes of determining the aggregate market value of the
Company's voting stock held by nonaffiliates, shares held directly or
indirectly by all Directors and Executive Officers of the Company have
been excluded. The exclusion of such shares is not intended to, and
shall not, constitute a determination as to which persons or entities
may be "affiliates" of the Company as defined by the Securities and
Exchange Commission.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.
(a) The following documents are filed as part of this Annual
Report on Form 10-K:
1. Financial Statements:
Independent Auditors' Report
Consolidated Balance Sheets at April 30, 1996 and 1995
Consolidated Statements of Operations for the Years Ended
April 30, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity for the
Years Ended April 30, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the Years Ended
April 30, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
2. Financial Statement Schedules:
Schedule II -- Valuation and Qualifying Accounts
Schedule III -- Real Estate and Accumulated Depreciation
3. Exhibits:
Exhibit No.
3a. Articles of Incorporation (1)
3b. By-Laws (1)
10a. Project Financing Agreement by and among Development
Authority of Fulton County, Abrams Fixture Corporation,
and SunTrust Bank, dated as of June 3, 1985(2)
10b. Abrams Industries, Inc. 1986 Key Employee Incentive
Stock Option Plan(3), as amended by Amendment No. 1 to
Abrams Industries, Inc. 1986 Key Employee Stock Option
Plan, dated May 24, 1988#
10c. Directors' Deferred Compensation Plan (4)#
10d. Edward M. Abrams Split Dollar Life Insurance Agreements
dated July 29, 1991(5)#
10e. Joseph H. Rubin Split Dollar Life Insurance Agreement
dated August 27, 1991(5)#
10f. Bernard W. Abrams Split Dollar Life Insurance Agreement
dated July 16, 1993(6)#
10g. Bernard W. Abrams Employment Agreement dated August 23,
1995 (7)#
13. Annual Report to Shareholders for the fiscal year ended
April 30, 1996
21. List of the Company's Subsidiaries
27. Financial Data Schedules
99. Proxy Statement for 1996 Annual Meeting of Shareholders
Explanation of Exhibits
(1) These exhibits are incorporated by reference to
the Company's Form 10-K for the year ended April
30, 1985.
(2) This exhibit is incorporated by reference to the
Company's Form 10-Q for the quarter ended July 31,
1985.
(3) This exhibit is incorporated by reference to the
Company's Form 10-K for the year ended April 30,
1986.
(4) This exhibit is incorporated by reference to the
Company's Form 10-K for the year ended April 30,
1991.
(5) These exhibits are incorporated by reference to
the Company's Form 10-K for the year ended April
30, 1993.
(6) This exhibit is incorporated by reference to the
Company's Form 10-K for the year ended April 30,
1994.
(7) This exhibit is incorporated by reference to the
Company's Form 10-Q for the period ended October
31, 1995.
# Management compensatory plans or arrangement.
(b) Reports on Form 8-K: None filed during the fourth
quarter of fiscal 1996.
(c) The Company hereby files as exhibits to this Annual
Report on Form 10-K the exhibits set forth in Item
14(a)3 hereof.
(d) The Company hereby files as financial statement
schedules to this Annual Report on Form 10-K the
financial statement schedules set forth in Item 14(a)2
hereof.
ABRAMS INDUSTRIES, INC. 34
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ABRAMS INDUSTRIES, INC.
Dated: July 16, 1996 By: /s/ Edward M. Abrams
Edward M. Abrams
Chairman of the Board of
Directors and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Dated: July 16, 1996 /s/ Edward M. Abrams
Edward M. Abrams
Chairman of the Board of
Directors and Chief Executive
Officer
Dated: July 16, 1996 /s/ Joseph H. Rubin
Joseph H. Rubin
Director, President, Chief
Operating Officer, Chief
Financial Officer, and
Chief Accounting Officer
Dated: July 16, 1996 /s/ Bernard W. Abrams
Bernard W. Abrams
Director, Chairman of the
Executive Committee
Dated: July 16, 1996 /s/ Alan R. Abrams
Alan R. Abrams
Director
Dated: July 16, 1996 /s/ J. Andrew Abrams
J. Andrew Abrams
Director
Dated: July 16, 1996 /s/ Richard H. Danielson
Richard H. Danielson
Director
Dated: July 16, 1996 /s/ Paula Lawton Bevington
Paula Lawton Bevington
Director
Dated: July 16, 1996 /s/ Donald W. MacLeod
Donald W. MacLeod
Director
Dated: July 16, 1996 /s/ L. Anthony Montag
L. Anthony Montag
Director
Dated: July 16, 1996 /s/ Felker W. Ward, Jr.
Felker W. Ward, Jr.
Director
35 ABRAMS INDUSTRIES, INC.
<PAGE>
FOUNDER
Alfred R. Abrams
(1899-1979)
BOARD OF DIRECTORS
* Edward M. Abrams (E)
Chairman of the Board and Chief
Executive Officer
Abrams Industries, Inc.
* Bernard W. Abrams (E)
Chairman of the Executive Committee
Abrams Industries, Inc.
Alan R. Abrams (E)
President
Abrams Properties, Inc.
J. Andrew Abrams (E)
Vice President
Abrams Fixture Corporation
Paula Lawton Bevington (C)
Chairman
Servidyne Systems, Inc.
Richard H. Danielson (A)(C)
Retired Regional Vice President
Amoco Oil Company
Donald W. MacLeod (A)(C)
Chairman of the Board and Chief
Executive Officer
IRT Property Company
L. Anthony Montag (C)
Sole Proprietor
A. Montag & Associates
* Joseph H. Rubin (E)
President and Chief Operating Officer
Abrams Industries, Inc.
Felker W. Ward, Jr. (A)(C)
President
Ward & Associates, Inc.
Committees:
E-Executive
A-Audit
C-Compensation
*Executive Officer
OFFICERS OF ABRAMS
INDUSTRIES, INC.
AND SUBSIDIARIES
Alan R. Abrams
Bernard W. Abrams
Edward M. Abrams
J. Andrew Abrams
Gerald T. Anderson II
Jack T. Cothran
Steven J. Curvino
Timothy D. Farrell
Janis H. Fowler
Melinda S. Garrett
Joyce L. Hubbard
Douglas S. McKenzie
B. Michael Merritt
Richard V. Priegel
Joseph H. Rubin
Wyona L. Stephens
Thomas F. Stock
CONSTRUCTION SEGMENT
ABRAMS CONSTRUCTION, INC.
5775-A Glenridge Dr., NE
Suite 200
Atlanta, Georgia 30328
(404) 256-4150
MANUFACTURING SEGMENT
ABRAMS FIXTURE CORPORATION
362 Jones Avenue, NW
Atlanta, Georgia 30314
(404) 681-1820
REAL ESTATE SEGMENT
ABRAMS PROPERTIES, INC.
5775-A Glenridge Dr., NE
Suite 203
Atlanta, Georgia 30328
(404) 252-8220
ABRAMS INDUSTRIES, INC. 36
[COVER]Entering Our 72nd Year
[INSIDE FRONT COVER]
SUMMARY FINANCIAL DATA*
<TABLE>
% %
1996 1995 CHANGE 1995 1994 CHANGE
<S> <C> <C> <C> <C> <C> <C>
Revenues $134,299,240 $122,608,682 +10 $122,608,682 $123,602,954 -1
Net Earnings (Loss) $ (304,188) $ (331,019) +8 $ (331,019) $ 1,359,408 N/A
Net Earnings (Loss) per Share $ (.10) $ (.11) +9 $ (.11) $ .46 N/A
Cash Dividends per Share $ .105 $ .12 -13 $ .12 $ .11 +9
Shareholders' Equity $ 20,152,376 $ 20,872,035 -3 $ 20,872,035 $ 21,562,279 -3
Return on Average
Shareholders' Equity (1.5%) (1.6%) +6 (1.6%) 6.5% N/A
Return on Total Assets (.3%) (.4%) +25 (.4%) 1.5% N/A
</TABLE>
*For complete 11 year review, see Selected Financial Data, pages 12
and 13.
CONTENTS
SUMMARY FINANCIAL DATA IFC
LETTER TO SHAREHOLDERS 1-4
FORM 10-K 5-35
DIRECTORS, OFFICERS, AND DIRECTORY 36
ABRAMS PHILOSOPHY,
ANNUAL MEETING
AND OTHER INFORMATION IBC
Percentage of revenues by segment:
[GRAPHIC HERE -- TYPE THAT FOLLOWS APPEARS IN SOLID BLACK BOXS WITH
TYPE REVERSED]9% Real Estate
80% Construction
11% Manufacturing
BUSINESS DESCRIPTION
Abrams Industries, Inc. (the "Company") consists of three industry
segments (Construction, Manufacturing, and Real Estate) which work
individually for the betterment of the whole. The business of the
Company, therefore, is the business of its segments.
<PAGE>
[A graphic effect here: Annual Report (type); 4 boxes with 1996 - one
box each; Abrams Industries Inc.(type) down right side]
Dear Shareholders: Now that our 71st year has come to a close, we look
back upon it with mixed emotions. While we are disappointed with the
financial results, we are, at the same time, enthusiastic and
optimistic about the future. [box] The format of this letter is going
to be slightly different from those of previous years. We will begin
with the comparison of financial results between this year and last
year. We then move into a discussion of the various segments of our
business and conclude with an outlook on the future.
FINANCIAL
For the year ended April 30, 1996, revenues were
$134,299,240 compared to $122,608,682 last year, an increase of 10%.
We improved our results this year, but still sustained a net loss of
$304,188 or $.10 per share compared to last year's net loss of
$331,019 or $.11 per share. The per share figures are based on
weighted average shares outstanding of 2,977,163 during 1996 and
2,993,540 during 1995. The current loss is attributable to the
following factors: 1. REDUCED SALES OF STORE FIXTURES,
ALONG WITH RELATED UNDERABSORPTION OF PLANT OVERHEAD.
2. NO SALES OF REAL ESTATE. [box] In last year's annual report, we
noted that the Board of Directors had authorized the Company to
repurchase up to 200,000 shares of its Common Stock during the fiscal
year ending April 30, 1996. We did in fact repurchase 22,684 shares at
varying prices. [box] Finally, on May 22, 1996, your Board of
Directors approved a quarterly cash dividend of $.015 per share, the
Company's 68th consecutive quarterly dividend. The record date
was June 7, 1996, and the payment date was June 19, 1996.
<PAGE>1 ABRAMS INDUSTRIES, INC.
Construction
SEGMENT REPORTS
Construction began in 1925. Abrams Construction, Inc.'s projects
include retail stores, shopping centers, financial institutions,
distribution centers, manufacturing facilities, office buildings, and
other types of commercial construction.
[BOX] Revenues, as well as operating earnings, continue to grow at an
extremely satisfying pace. Revenues were $108,437,335 this year
compared to $94,128,795 last year, an increase of 15%. In a highly
competitive market, our operating earnings grew by a healthy 10%, to
$2,806,030 from $2,550,806. We completed over 130 construction
projects in 22 states with major retailers continuing to be our focus.
[BOX] While we know we have stated this before, it definitely
bears repeating. The reason we have been successful has been the
untiring effort and dedication of all our people to produce the
customer's product in the most efficient manner and in the shortest
possible time. Of this we are truly proud.
TOTAL OPERATING
REVENUES EARNINGS
1996 $108,437,335 $2,806,030
1995 94,128,795 2,550,806
1994 87,879,601 2,535,597
1993 65,040,184 2,012,578
1992 54,499,229 1,711,050
NOTE: TOTAL REVENUES AND OPERATING EARNINGS INCLUDE
REVENUES GENERATED FROM INTERCOMPANY SOURCES OF $792,000, $0, AND
$1,020,000 IN 1996, 1995, AND 1994, RESPECTIVELY. IN COMPUTING
OPERATING EARNINGS, ALLOCATED PARENT EXPENSES AND INCOME TAXES HAVE
NOT BEEN CONSIDERED. (FOR ADDITIONAL INFORMATION, SEE NOTE 10 TO
CONSOLIDATED FINANCIAL STATEMENTS HEREIN.).
Manufacturing
Manufacturing began in 1946. Abrams Fixture Corporation produces store
fixtures for some of the nation's leading retailers and also designs,
produces and markets a wide variety of displays for home-decorative
products.
[BOX] During 1996, the decision was made that we must "build our
business to our customers," not "build our customers to our business".
To accomplish this, we began the meticulous and tedious process of
"re-engineering" our company. Our people were told that nothing was
sacred -- if it needed to be changed, it would be changed. The first
phase, pre-production re-engineering, was implemented in late January
1996. Pre-production includes all those activities from initial
customer contact through the time the order is placed on the plant
floor for production. [BOX] As a result of the re-engineering
process, we have radically changed both the means and methods by which
we operate our manufacturing business. Improved financial results can
already be seen --
<PAGE>ABRAMS INDUSTRIES, INC. 2
we were profitable in the fourth quarter of 1996. The second phase,
production re-engineering (the activities involving manufacturing
through shipment of the product), has begun with recommendations to be
evaluated and implemented this summer. The last phase, post-production
re-engineering (the activities of evaluation, analysis and customer
feedback), is scheduled to begin late this summer. [BOX]
Additionally, through our re-engineering efforts we have closed one
warehouse and one manufacturing facility. We anticipate a savings
from these closings which should become apparent during 1997. [BOX]
Lastly, we purchased additional equipment to help us become more
efficient and competitive, and began the installation of a new
computerized information system. These expenditures should reap future
profits.
OPERATING
TOTAL EARNINGS
REVENUES (LOSS)
1996 $15,008,358 $ (160,226)
1995 16,356,539 (478,235)
1994 19,554,858 1,680,087
1993 16,530,893 1,297,374
1992 16,394,595 1,826,429
NOTE: IN COMPUTING OPERATING EARNINGS (LOSS), ALLOCATED
PARENT EXPENSES AND INCOME TAXES HAVE NOT BEEN CONSIDERED. (FOR
ADDITIONAL INFORMATION, SEE NOTE 10 TO CONSOLIDATED FINANCIAL
STATEMENTS HEREIN.)
Real Estate
Real Estate began in 1960. Abrams Properties, Inc. develops, owns and
manages shopping centers. The company currently manages 22 shopping
centers in 10 states. {BOX] We re-developed our former Kmart location
in [BOX] Jackson, Michigan. This new 105,000 square foot Merchants
Crossing Shopping Center anchored by Kroger and Big Lots opened in May
1996. We are currently in the process of leasing the remaining 21,000
square feet of this center and marketing a newly created outparcel.
This investment made over 23 years ago has been enhanced by converting
it into a retail center which is well positioned for the coming
years. [BOX] Recently completed was a 67,000 square foot expansion to
our Merchants Crossing Shopping Center in North Fort Myers, Florida,
bringing the total gross leasable area to approximately 294,000 square
feet. This expansion includes a state-of-the-art 16-plex AMC Cinema
which opened in May 1996. Leasing is now underway in the newly
constructed 12,000 square feet of shop space immediately adjacent to
the theater. As of the writing of this letter, approximately 6,000
square feet of this space has either been leased or is in lease
negotiations. [BOX] We are re-developing the seven acres of Land
Held for Investment adjacent to our Merchants Crossing Shopping Center
in Oakwood, Georgia. The site has been subdivided into five commercial
<PAGE>3 ABRAMS INDUSTRIES, INC.
outlots. We are pleased to report that in May 1996, Jameson Inns
closed on the purchase of the first of these outlots. [BOX] At
Merchants Crossing in Englewood, Florida, we recently executed a
contract to sell our last outparcel. [BOX] Funds from operations
in the current year decreased from those of last year primarily
because of (1) lost rental revenue during the re-development of the
Jackson, Michigan, center and (2) maintenance and re-tenanting costs.
In future years, funds from operations should benefit from the new
rental revenues generated at our Merchants Crossing Shopping Center in
Jackson, Michigan and from the expansion of our Merchants Crossing
Shopping Center in North Fort Myers, Florida. [BOX] Backlog (one
year's identifiable revenues) was $10,901,000 at April 30, 1996,
compared to $10,083,000 at April 30, 1995. Our retail portfolio of
approximately 2,300,000 square feet of company developed retail
centers was 99% leased at year end.
<TABLE>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
TOTAL REVENUES $11,473,415 $11,982,530 $17,123,553 $11,449,654 $ 9,834,192
FUNDS FROM OPERATIONS $ 816,516 $ 937,554 $ 376,253 $ (46,481) $ 70,933
Adjustment for Capitalized Construction
Interest which Reduced Gross Interest Exp. 69,513 -- 380,846 1,609,768 1,202,243
Gains on Real Estate Sales -- 317,330 1,173,919 190,386 17,520
Real Estate Depreciation (2,147,581) (2,155,748) (1,997,368) (1,517,394) (1,355,948)
OPERATING EARNINGS (LOSS) $(1,261,552) $ (900,864) $ (66,350) $ 236,279 $ (65,252)
</TABLE>
NOTE: FUNDS FROM OPERATIONS ARE DEFINED AS EARNINGS
(LOSS) BEFORE CAPITALIZED CONSTRUCTION INTEREST, GAINS ON REAL ESTATE
SALES AND REAL ESTATE DEPRECIATION. IN COMPUTING OPERATING EARNINGS
(LOSS), INTERCOMPANY INTEREST HAS BEEN CONSIDERED, BUT ALLOCATED
PARENT EXPENSES AND INCOME TAXES HAVE NOT. (FOR ADDITIONAL
INFORMATION, SEE NOTE 10 TO CONSOLIDATED FINANCIAL STATEMENTS HEREIN.)
OUTLOOK
Our construction business is strong and we see
every reason for this strength to continue, in spite of an extremely
competitive environment. We serve many of the large retailers and are
constantly seeking new customers. Our reputation has been a tremendous
asset. [BOX] Our manufacturing business has begun a rebirth. New
methods, new means, new equipment and new attitudes are already making
their presence felt. We are excited about what we see in our future.
[BOX] We are encouraged by our continuing progress in our real estate
business as we constantly look for new retail development and
renovation opportunities both inside and outside our portfolio. We are
also actively marketing several of our properties with the goal of
re-developing our equity investment into a more diverse asset mix. n
We enter our 72nd year with enthusiasm and optimism.
Sincerely,
/s/Edward M. Abrams Edward. M. Abrams
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
/s/Joseph H. Rubin Joseph H. Rubin
PRESIDENT AND CHIEF OPERATING
OFFICER
/s/Bernard W. Abrams Bernard W. Abrams
CHAIRMAN OF THE EXECUTIVE
COMMITTEE
<PAGE>ABRAMS INDUSTRIES, INC. 4
{INSIDE BACK COVER]
ABRAMS PHILOSOPHY
Make a profit so that the Company will remain financially
sound.
Help to develop the people in our organization to achieve
their maximum potential in a climate that creates good working
conditions, mutual trust and happiness.
Encourage our people to practice thrift, to take an active
interest in their church or synagogue, community projects and
government and to be good citizens.
Manufacture products and provide services of the highest
quality, so that we may merit the respect, confidence and loyalty of
our customers.
Be a source of strength to our customers and suppliers,
conducting all of our transactions with them with fairness.
Plan and carry out all of our activities so that the Company
can expand its leadership and be regarded as a model in industry.
ANNUAL MEETING
INFORMATION
The Annual Meeting of Shareholders
of Abrams Industries, Inc. will be held at 4:00 p.m. on Wednesday,
August 21, 1996, at the Corporate Headquarters, 5775-A Glenridge
Drive, N.E., Suite 202, Atlanta, Georgia 30328.
Transfer Agent:
SunTrust Bank, Atlanta
Post Office Box 4625
Atlanta, Georgia 30302
[BACK COVER -- TYPE THAT FOLLOWS IN SOLID BLACK BOX WITH TYPE
REVERSED]
ABRAMS INDUSTRIES, INC.
CORPORATE HEADQUARTERS
5775-A GLENRIDGE DRIVE, NE
SUITE 202
ATLANTA, GEORGIA 30328
(404) 256-9785
FAX (404) 252-7481
ABRAMS INDUSTRIES, INC.
Subsidiaries
Abrams Construction, Inc.
Abrams Fixture Corporation
Abrams Properties, Inc.
Merchants Corssing of Englewood, Inc.
Merchants Crossing of North Fort Myers, Inc.
Merchants Crossing of Jackson, Inc.
Merchants Crossing, Inc.
South Elmec, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> APR-30-1996
<EXCHANGE-RATE> 1
<CASH> 5,452,453
<SECURITIES> 0
<RECEIVABLES> 16,132,372
<ALLOWANCES> 57,541
<INVENTORY> 1,676,541
<CURRENT-ASSETS> 27,445,606
<PP&E> 81,066,460
<DEPRECIATION> 26,572,618
<TOTAL-ASSETS> 90,635,098
<CURRENT-LIABILITIES> 17,027,909
<BONDS> 51,202,536
0
0
<COMMON> 2,970,856
<OTHER-SE> 17,181,520
<TOTAL-LIABILITY-AND-EQUITY> 90,635,098
<SALES> 133,662,805
<TOTAL-REVENUES> 134,299,240
<CGS> 119,775,802
<TOTAL-COSTS> 119,775,802
<OTHER-EXPENSES> 10,315,656
<LOSS-PROVISION> (42,648)
<INTEREST-EXPENSE> 4,717,618
<INCOME-PRETAX> (467,188)
<INCOME-TAX> (163,000)
<INCOME-CONTINUING> (304,188)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (304,188)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> 0
</TABLE>
ABRAMS INDUSTRIES, INC.
ATLANTA, GEORGIA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 21, 1996
The annual meeting of shareholders of ABRAMS INDUSTRIES, INC. (the
"Company") will be held on Wednesday, August 21, 1996, at 4:00 P.M., Atlanta
time, in the Board Room of the Company, 5775-A Glenridge Drive, NE, Suite
202, Atlanta, Georgia, for the purpose of considering and voting upon the
following:
(1) The election of ten Directors to constitute the Board of
Directors until the next annual meeting and until their successors are
elected and qualified.
(2) Such other matters as may properly come before the
meeting or any and all adjournments thereof.
The Board of Directors has fixed the close of business on July 15,
1996, as the record date for the determination of the shareholders who will
be entitled to notice of, and to vote at, this meeting or any and all
adjournments thereof.
BY ORDER OF THE BOARD OF
DIRECTORS
Joseph H. Rubin
PRESIDENT
ATLANTA, GEORGIA
JULY 19, 1996
IMPORTANT - YOUR PROXY IS ENCLOSED.
PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY PROMPTLY.
NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES IN THE ACCOMPANYING ENVELOPE.
<PAGE>
<PAGE>
ABRAMS INDUSTRIES, INC.
EXECUTIVE OFFICES
5775-A GLENRIDGE DRIVE, NE
SUITE 202
ATLANTA, GEORGIA 30328
PROXY STATEMENT
The following information is furnished in connection with the
solicitation of proxies by the Board of Directors of the Company for the
annual meeting of shareholders to be held on Wednesday, August 21, 1996,
at 4:00 P.M., Atlanta time, in the Board Room of the Company, at the
above address. A copy of the Company's annual report for the fiscal year
ended April 30, 1996, and a proxy for use at the meeting are enclosed with
this proxy statement. This proxy statement and the enclosed proxy were
first mailed to shareholders on or about July 19, 1996.
GENERAL INFORMATION
Any proxy given pursuant to this solicitation may be revoked,
without compliance with any other formalities, by any shareholder who attends
the meeting and gives oral notice of his or her election to vote in person.
In addition, any proxy given pursuant to this solicitation may be revoked
prior to the meeting by delivering to the President of the Company a notice
of revocation or a duly executed proxy for the same shares bearing a later
date. All proxies of shareholders solicited by the Company which are
properly executed and received by the President of the Company prior to the
meeting, and which are not revoked, will be voted at the meeting. The shares
represented by such proxies will be voted in accordance with the instructions
thereon, and unless specifically instructed to vote otherwise, the
individuals named in the enclosed proxy will vote to elect all the nominees
as set forth in this proxy statement. Abstentions and broker non-votes will
be included in determining whether a quorum is present at the Annual Meeting,
but will otherwise have no effect on the election of the nominees for
Director. A system administered by the Company's transfer agent will
tabulate the votes cast.
The cost of soliciting proxies is paid by the Company. Copies of
solicitation material may be furnished to banks, brokerage houses and other
custodians, nominees and fiduciaries for forwarding to beneficial owners of
shares of the Company's common stock, $1.00 par value per share (the "Common
Stock"), and normal handling charges may be paid for such forwarding service.
In addition to soliciting by mail, Directors and regular employees of the
Company, at no additional compensation, may assist in soliciting proxies by
telephone or telegraph.
As of July 15, 1996, the record date for the annual meeting, there
were 2,970,856 shares of Common Stock outstanding and entitled to vote. The
holders of Common Stock, the only class of voting stock of the Company
outstanding, are entitled to one vote per share.
NOMINATION AND ELECTION OF DIRECTORS
The Board of Directors recommends the election of the ten (10)
nominees listed on pages 2 and 3 to constitute the entire Board to hold
office until the next annual meeting of shareholders and until their
1
<PAGE>
successors are elected and qualified. If, at the time of the
annual meeting, any of such nominees should be unable to serve, the persons
named in the proxy will vote for such substitutes or vote to reduce the
number of Directors for the ensuing year as management recommends.
Management has no reason to believe that any substitute nominee or nominees
or reduction in the number of Directors for the ensuing year will be
required. The affirmative vote of a plurality of the votes cast is required
to elect the nominees.
All of the nominees are now Directors of the Company and have
served continuously since their first election. The following information
relating to: (1) age as of August 21, 1996; (2) directorships in other
publicly-held companies; (3) positions with the Company; (4) principal
employment; and (5) Common Stock owned beneficially as of June 30, 1996, has
been furnished by the respective nominees. Except as otherwise indicated,
each nominee has been or was engaged in his present or last principal employme
nt, in the same or a similar position, for more than five years.
<TABLE>
<CAPTION>
=====================================================================================================
SHARES OF COMMON
STOCK OWNED
INFORMATION ABOUT NOMINEES BENEFICIALLY
NAME FOR DIRECTOR (PERCENT OF CLASS)
- - ----------------------------- -------------------------------------------- ------------------
<S> <S> <C>
Alan R. Abrams A Director of the Company since 1992, he has 148,238 <F1>
been President of Abrams Properties, Inc. (4.99)
since September 1994. Prior to that he served
as Vice President of Abrams Properties, Inc.
Mr. Abrams is 41.
Bernard W. Abrams A Director of the Company since 1952, he 612,208 <F2>
has been Chairman of the Executive (20.61)
Committee since August 1995. Prior to that
he served as Chairman of the Board of
Directors and Chief Executive Officer.
Mr. Abrams is 71.
Edward M. Abrams A Director of the Company since 1953, he 608,900 <F3>
has been Chairman of the Board of (20.50)
Directors and Chief Executive Officer since
August 1995. Prior to that he served as
President and Chief Operating Officer of
the Company. Mr. Abrams is 69.
J. Andrew Abrams A Director of the Company since 1992, he 135,535 <F4>
has been a Vice President of Abrams Fixture (4.56)
Corporation since September 1994. Prior to
that he served as Vice President of Abrams
Properties, Inc. Mr. Abrams is 36.
Paula Lawton Bevington A Director of the Company since 1992, 200*
she is Chairman of Servidyne Systems, Inc.
(mechanical engineering services company).
Ms. Bevington is 58.
Richard H. Danielson A Director of the Company since 1978, he 1,661*
retired in 1982 as Regional Vice President
of Amoco Oil Company. Mr. Danielson is 75.
2<PAGE>
Donald W. MacLeod A Director of the Company since 1984, he 2,500*
is Chairman of the Board and Chief
Executive Officer of IRT Property Company
(a real estate investment trust). Mr. MacLeod
is 71.
L. Anthony Montag A Director of the Company since 1969, he 5,461* <F5>
is the owner of A. Montag & Associates
(investment counselors). Mr. Montag is 62.
Joseph H. Rubin A Director of the Company since 1983, 17,988* <F6>
he has been President, Chief Operating Officer
and Chief Financial Officer of the Company
since August 1995. Prior to that he served
as Executive Vice President and Secretary
of the Company. Mr. Rubin is 53.
Felker W. Ward, Jr. A Director of the Company since 1992, 2,000*
he is President of Ward and Associates, Inc.
(investment bankers). He is a Director of
Atlanta Gas Light Company. Mr. Ward is 63.
*Owns less than 1% of outstanding shares.
===========================================================================================================
<FN>
<F1> Includes 14,132 shares owned by Mr. Abrams as custodian for his minor
children, 100 shares owned by his wife and 58,145 shares with respect to
which Mr. Abrams holds a power of attorney for his sister.
<F2> Does not include 144,817 shares (4.87% of the outstanding shares) owned
by trusts established by the parents of Bernard W. Abrams, and under which
Bernard W. Abrams and his children are beneficiaries. Both trusts are
administered by an independent trustee who holds the power to vote and
dispose of the shares.
<F3> Includes 12,389 shares owned jointly with Mr. Abrams' wife and 16,109
shares owned by Mrs. Abrams. Does not include 144,817 shares (4.87% of the
outstanding shares) owned by trusts established by the parents of Edward M.
Abrams and under which Edward M. Abrams and his children are beneficiaries.
Both trusts are administered by an independent trustee who holds the power to
vote and dispose of the shares.
<F4> Includes 58,145 shares with respect to which Mr. Abrams holds a power of
attorney for his sister.
<F5> Shares are owned by a partnership of which Mr. Montag is the managing
partner and in which he has a substantial beneficial interest.
<F6> Includes 12,166 shares owned jointly with Mr. Rubin's wife, 4,000 shares
which may be acquired under presently exercisable stock options and 1,822
shares owned by Mrs. Rubin.
</FN>
</TABLE>
Bernard W. Abrams and Edward M. Abrams are brothers. Alan R.
Abrams and J. Andrew Abrams are sons of Edward M. Abrams and nephews of
Bernard W. Abrams. There are no other family relationships between any
Director or Executive Officer and any other Director or Executive Officer of
the Company.
3
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings and the Audit Committee
held one meeting during the year ended April 30, 1996. All of the Directors
attended at least 75% of the aggregate of such meetings and the meetings of
each committee of the Board on which they serve, with the exceptions of
Donald W. MacLeod and L. Anthony Montag who attended 60% of the aggregate of
such meetings.
The Board has a standing Executive Committee consisting of Bernard
W. Abrams, Edward M. Abrams, Alan R. Abrams, J. Andrew Abrams and Joseph H.
Rubin. This committee is empowered to take actions that do not require the
approval of the full Board of Directors. All actions of the Executive
Committee are subsequently reviewed and approved by the full Board of
Directors. No fees are paid for service on this Committee.
The Board has a standing Audit Committee currently consisting of
Richard H. Danielson, Donald W. MacLeod and Felker W. Ward, Jr. This
committee is authorized to review the scope and results of audits and
recommendations made relating to internal controls by the external and
internal auditors; appraise the independence of, and recommend the
appointment of the external auditors; and review the adequacy of the
Company's financial controls. The Audit Committee held one meeting during
the year ended April 30, 1996.
The Board formed a Compensation Committee on May 22, 1996. The
committee currently consists of Paula Lawton Bevington, Richard H. Danielson,
Donald W. MacLeod, L. Anthony Montag and Felker W. Ward, Jr. This committee
is authorized to review and approve the compensation of the Company's
Executive Officers.
The Company does not have a Nominating Committee.
PRINCIPAL HOLDERS OF THE COMPANY'S SECURITIES
AND HOLDINGS BY EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth as of June 30, 1996, the beneficial
ownership of the Common Stock by each "person" (as that term is defined by
the Securities and Exchange Commission) who owns of record, or is known by
management to own beneficially, more than 5% of the outstanding shares of
such stock, by all Executive Officers of the Company who are not Directors,
and by all Executive Officers and Directors of the Company as a group.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------
SHARES OF PERCENTAGE OF
COMMON STOCK OWNED OUTSTANDING
NAME AND ADDRESS BENEFICIALLY SHARES
- - ---------------------- ------------------ -------------
<S> <C> <C>
Bernard W. Abrams 612,208 <F1> 20.61
Post Office Box 76600
Atlanta, Georgia 30358
Edward M. Abrams 608,900 <F2> 20.50
Post Office Box 76600
Atlanta, Georgia 30358
B. Michael Merritt - -
Post Office Box 76600
Atlanta, Georgia 30358
4<PAGE>
Richard V. Priegel l3,933 <F3> *
Post Office Box 76600
Atlanta, Georgia 30358
All Executive Officers 1,548,624 <F4> 52.13
and Directors as a group
*Less than 1%
- - ----------------------------------------------------------------------------------------------------------------
<FN>
<F1> Does not include 144,817 shares (4.87% of the outstanding shares) owned
by trusts established by the parents of Bernard W. Abrams, and under which
Bernard W. Abrams and his children are beneficiaries. Both trusts are
administered by an independent trustee who holds the power to vote and
dispose of the shares.
<F2> Includes 12,389 shares owned jointly with Mr. Abrams' wife and 16,109
shares owned by Mrs. Abrams. Does not include 144,817 shares (4.87% of the
outstanding shares) owned by trusts established by the parents of Edward M.
Abrams, and under which Edward M. Abrams and his children are beneficiaries.
Both trusts are administered by an independent trustee who holds the power to
vote and dispose of the shares.
<F3> Includes 13,666 shares which may be acquired under presently exercisable
stock options.
<F4> Includes 17,666 shares which may be acquired under presently exercisable
stock options.
</FN>
</TABLE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth all cash compensation paid by the
Company and its subsidiaries (for the purposes of this section collectively
referred to as the "Company") to the Chief Executive Officer ("CEO") and the
five other Executive Officers for services rendered in all capacities during
the Company's last three fiscal years:
<TABLE>
<CAPTION>
Annual Compensation Other
--------------------- Annual All Other
Name and Fiscal Salary Bonus Compensation Compensation
Principal Position Year ($) ($) <F1> ($) <F2> ($)
------------------ ------ -------- -------- ------------ ------------
<S> <C> <C> <C> <S> <C>
Edward M. Abrams 1996 341,744 76,555 -- 33,759 <F3>
Chairman of the Board of Directors 1995 341,744 73,693 -- 32,161
and Chief Executive Officer 1994 298,090 51,270 -- 44,436
Joseph H. Rubin 1996 251,836 51,611 -- 31,347 <F4>
Director, President, Chief Operating 1995 251,836 47,233 -- 30,459
Officer and Chief Financial Officer 1994 208,078 32,908 -- 42,509
Bernard W. Abrams 1996 246,334 79,416 -- 16,959 <F5>
Director, Chairman of the Executive 1995 341,744 73,693 -- 33,614
Committee 1994 298,090 51,270 -- 45,816
Alan R. Abrams 1996 123,614 16,164 -- 17,886 <F6>
Director, President, 1995 105,000 26,307 -- 16,324
Abrams Properties, Inc. 1994 100,000 22,909 -- 22,545
B. Michael Merritt 1996 108,925 119,958 -- 15,925 <F7>
President, Abrams Construction, 1995 103,980 107,913 -- 15,845
Inc. 1994 101,880 91,105 -- 14,824
5<PAGE>
Richard V. Priegel 1996 117,988 6,269 -- --
President, Abrams Fixture 1995 117,988 6,269 -- 1,378
Corporation 1994 112,372 87,635 -- 14,134
<FN>
<F1> Includes cash bonuses, cash profit-sharing (both accrued and deferred,
during the applicable fiscal year, at the election of the Executive Officer),
and special incentive payments.
<F2> Perquisites and other benefits paid by the Company on behalf of the
Executive Officers do not meet the SEC threshold for disclosure.
<F3> Includes benefits derived from Company paid premiums on split dollar life
insurance policies of $4,101, amounts credited to Mr. Abrams' account in the
Company's Deferred Profit-Sharing Plan of $18,258, and directors fees of
$11,400.
<F4> Includes amounts credited to Mr. Rubin's account in the Company's
Employee's Deferred Compensation Plan of $1,606, benefits derived from
Company paid premiums on a split dollar life insurance policy of $83, amounts
credited to Mr. Rubin's account in the Company's Deferred Profit-Sharing Plan
of $18,258, and directors fees of $11,400.
<F5> Includes benefits derived from Company paid premiums on a split dollar
life insurance policy of $5,559, and directors fees of $11,400.
<F6> Includes amounts credited to Mr. Abrams' account in the Company's
Deferred Profit-Sharing Plan of $6,486, and directors fees of $11,400.
<F7> The amount credited to Mr. Merritt's account in the Company's Deferred
Profit-Sharing Plan.
</FN>
</TABLE>
The Company entered into an employment agreement with Mr. Bernard
W. Abrams effective August 23, 1995, when Mr. Abrams ceased to be Chairman of
the Board of Directors and Chief Executive Officer. This agreement, which
provides that Mr. Abrams will serve initially as Chairman of the Executive
Committee, continues for a ten-year term or until Mr. Abrams' death or
disability, if earlier, and provides for an initial annual salary of $200,000
with annual increases of 5%. Mr. Abrams is also entitled to participate in
other employee benefit plans generally provided by the Company.
6<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows for the Company's CEO and other Executive
Officers named in the Summary Compensation Table shown on the previous page,
the number of shares covered by both exercisable and non-exercisable stock
options as of April 30, 1996, and the values for "in-the-money" options,
based on the positive spread between the exercise price of any such existing
stock options and the fiscal year-end price of the Company's Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SHARES OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
EXERCISE REALIZED AT APRIL 30, 1996 APRIL 30, 1996
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <S> <S> <C> <S> <C> <C>
Edward M. Abrams -- -- -- -- $ -- $ --
Joseph H. Rubin -- -- 4,000 -- 3,500 --
Bernard W. Abrams -- -- -- -- -- --
Alan R. Abrams -- -- -- -- -- --
B. Michael Merritt -- -- -- -- -- --
Richard V. Priegel -- -- 13,666 -- 6,125 --
</TABLE>
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The objectives of the Company's compensation program are to enhance
the profitability of the Company, and thus shareholder value, by aligning
compensation with business goals and performance and attracting, retaining
and rewarding Executive Officers who contribute to the long-term success of
the Company. In furtherance of these goals, the Company's compensation
program for Executive Officers includes base salary, annual bonus and, in
some cases, stock option incentives. In addition, at the discretion of the
Board of Directors, selected Executive Officers may participate in the Senior
Management Deferral Plan, which is designed to permit eligible employees to
defer a portion of their incentive compensation. No Executive Officer who is
also a Director participated in deliberations concerning his own salary.
SALARY. The Board of Directors of the Company or the Board of
Directors of a subsidiary company, as the case may be, determines the base
salary for the Executive Officers, including the CEO, based upon the
financial performance (including profitability and/or revenues) of the
Company or subsidiary, as the case may be, and upon the individual's level
of responsibility, time with the Company, contribution and performance.
Evaluation of these factors is subjective, and no fixed, relative weights
are assigned to the criteria considered. The beginning point for determining
the salary is the base salary the Executive Officer received in the prior
fiscal year. Neither the CEO nor the President received a salary increase
for fiscal 1996.
BONUS. The majority of the Bonuses and All Other Compensation
reported in the Summary Compensation Table was paid pursuant to the Company's
profit-sharing plan. In general, all employees meeting certain service
requirements are eligible to participate in this plan. The aggregate
contribution of the Company is set annually by the Board of Directors and
then allocated based on the eligible compensation of participants. Year-end
cash bonuses are also based on each employee's salary. As a result,
profit-sharing plan allocations are based on the same factors as are the
salaries of the Executive Officers.
7
<PAGE>
The Board of Directors of the Company or the Board of Directors of
a subsidiary company, as the case may be, also determines the amount of an
annual cash bonus, separate from the profit-sharing plan, for certain of the
Executive Officers. These bonuses are based upon the financial performance
(including profitability and/or revenues) of the Company or subsidiary, as
the case may be, and upon the individual's level of responsibility, time with
the Company, contribution and performance. During the most recently
completed fiscal year, neither the CEO nor the President received any such
annual cash bonus.
STOCK OPTIONS. The Company also maintains a stock option plan to
provide additional incentives to certain employees to maximize shareholder
values. Options granted pursuant to this plan utilize vesting periods to
encourage key employees to continue in the employ of the Company. The
Company has granted options from time to time to a limited number of
employees, including grants prior to fiscal 1996 to two of the executive
officers other than the CEO. During fiscal 1996, the Company did not grant
any options to the CEO or any Executive Officer named in the Summary
Compensation Table.
The Company does not anticipate that the law that serves to cap
executive compensation that is deductible by the Company at $1,000,000 will
have any impact on the compensation policies of the Company.
The tables included in the proxy statement and accompanying
narrative and footnotes, reflect the decisions covered by the above
discussion. The foregoing report has been furnished by the members of the
Board of Directors:
Bernard W. Abrams Richard H. Danielson
Edward M. Abrams Donald W. MacLeod
Alan R. Abrams L. Anthony Montag
J. Andrew Abrams Joseph H. Rubin
Paula Lawton Bevington Felker W. Ward, Jr.
DIRECTORS COMPENSATION
Each Director is paid a retainer of $550 per month and a fee of
$1,200 per Board of Directors meeting attended. In addition, Directors who
are members of the Audit Committee, but who are not Officers of the Company,
are paid a fee of $600 for each Audit Committee meeting attended.
DIRECTORS' DEFERRED COMPENSATION PLAN. The Company maintains a
Directors' Deferred Compensation Plan (the "Deferred Compensation Plan")
under which members of the Board of Directors of the Company may elect to
defer to a future date receipt of all or any part of their compensation
as Directors and/or as members of a committee of the Board. For purposes
of the Deferred Compensation Plan, "compensation" means the retainer fees
and meeting fees payable to such Directors by the Company in their
capacities as Directors or as members of the Audit Committee of the
Board of Directors.
The Deferred Compensation Plan is administered by the Executive
Committee of the Board of Directors. A committee member may not participate
in any decision relating in any way to his individual rights or obligations
as a participant under the Deferred Compensation Plan.
8
<PAGE>
The Company will make payments of deferred compensation and the
earnings on such deferred compensation under the Deferred Compensation Plan
at the time specified by each participant in a lump sum or, at the sole
discretion of the participant, in no more than five equal annual
installments. For the year ended April 30, 1996, five members of the Board
of Directors (including three Executive Officers who are also Directors)
participated in the Deferred Compensation Plan.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ON
$100 INVESTMENT AMONG ABRAMS INDUSTRIES, INC.,
NASDAQ STOCK MARKET (U.S. COMPANIES) AND
NASDAQ NON-FINANCIAL STOCKS
ASSUMING REINVESTMENT OF DIVIDENDS
Set forth below is a line graph comparing, for the five-year period
ending April 30, 1996, the cumulative total shareholder return (stock price
increase plus dividends, divided by beginning stock price) on the Company's
common stock with that of (i) all U.S. companies quoted on NASDAQ and (ii)
all non-financial companies quoted on NASDAQ. The stock price performance
shown on the graph below is not necessarily indicative of future price
performance.
<TABLE>
<CAPTION>
04/30/91 04/30/92 04/30/93 04/30/94 04/30/95 04/30/96
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Abrams Industries, Inc. $100.00 $138.87 $163.97 $210.71 $166.41 $137.94
NASDAQ Stock Market (US Companies) $100.00 $121.23 $139.39 $155.07 $180.35 $257.11
NASDAQ Non-Financial Stocks $100.00 $117.40 $129.36 $144.64 $166.41 $235.68
</TABLE>
BOARD INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended April 30, 1996, the Board of Directors
of the Company and of each subsidiary determined the annual compensation
payable to its respective Executive Officers. The following directors of the
Company served as officers or employees of the Company or one of its
subsidiaries during the last fiscal year or prior thereto: Messrs. Bernard
W. Abrams, Edward M. Abrams, Alan R. Abrams, J. Andrew Abrams and Joseph H.
Rubin.
INFORMATION CONCERNING THE COMPANY'S INDEPENDENT AUDITORS
KPMG Peat Marwick LLP were the independent public accountants for
the Company during the year ended April 30, 1996. Representatives of KPMG
Peat Marwick LLP are expected to be present at the shareholders' meeting and
will have the opportunity to make a statement if they desire to do so and to
respond to appropriate questions. The Board of Directors has not selected
auditors for the present fiscal year because the matter has not yet been
considered.
SHAREHOLDERS PROPOSALS
In accordance with the provisions of Rule 14a-8(a)(3)(i) of the
Securities and Exchange Commission, proposals of shareholders intended to be
presented at the Company's 1997 annual meeting of shareholders must be
received by the Company at its executive offices on or before March 21, 1997,
in order to be eligible for inclusion in the Company's proxy statement and
form of proxy for that meeting.
9<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters to be brought
before the annual meeting. However, if other matters should come before the
annual meeting, it is the intention of each person named in the proxy to vote
the proxy in accordance with his judgment of what is in the best interest of
the Company.
BY ORDER OF THE BOARD OF DIRECTORS
Joseph H. Rubin
PRESIDENT
ATLANTA, GEORGIA
JULY 19, 1996
<PAGE>
ABRAMS INDUSTRIES, INC.
This Proxy is Solicited by the Board of Directors
for the Annual Meeting of Shareholders
to be held on August 21, 1996
The undersigned shareholder of Abrams Industries, Inc.
hereby constitutes and appoints Edward M. Abrams and Joseph H.
Rubin, and either of them, the true and lawful attorneys and
proxies of the undersigned, with full power of substitution and
appointment, for and in the name, place and stead of the
undersigned to act and to vote all of the undersigned's shares of
Common Stock of Abrams Industries, Inc. at the Annual Meeting of
Shareholders to be held in Atlanta, Georgia, on Wednesday, the
21st day of August 1996, at 4:00 P.M., and at any and all
adjournments thereof as follows:
It is understood that this Proxy confers discretionary
authority in respect to matters not known to or determined by the
undersigned at the time of mailing of notice of the meeting.
The Board of Directors favors a vote "FOR" the election of
the persons named in the Proxy Statement, and unless instructions
to the contrary are indicated in the space provided, this Proxy
will be so voted.
(Continued on the reverse side)<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL THE NOMINEES.
1. ELECTION OF DIRECTORS
NOMINEES: BERNARD W. ABRAMS; EDWARD M. ABRAMS; ALAN R.
ABRAMS; J. ANDREW ABRAMS; PAULA LAWTON BEVINGTON; RICHARD H.
DANIELSON; DONALD W. MACLEOD; L. ANTHONY MONTAG; JOSEPH H. RUBIN;
AND FELKER W. WARD
/ / FOR all nominees listed (except as marked to the
contrary below.)
/ / WITHHOLD AUTHORITY to vote for all nominees
listed.
(INSTRUCTION: To withhold authority to vote for any individual
nominee write that nominee's name in the space provided below.)
- - -----------------------------------------------------------------
2. For the transaction of such other business as may lawfully
come before the meeting; hereby revoking any proxies as to
said shares heretofore given by the undersigned and
ratifying and confirming all that said attorneys and proxies
may lawfully do by virtue hereof.
The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders dated July 19, 1996, and the
Proxy Statement furnished herewith.
Dated and signed: ---------------------------, 1996
------------------------------------------------------------
Signature
------------------------------------------------------------
Signature if shares held jointly
(Signature should agree with name hereon. Executors,
administrators, trustees, guardians and attorneys should so
indicate when signing. For joint accounts each owner should
sign. Corporations should sign full corporate name by duly
authorized officer.)
This proxy is revocable at or at any time prior to the
meeting. Please sign and return this Proxy in the
accompanying prepaid envelope.
