<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended Commission File No.
October 31, 1996 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 Identification No.)
incorporation or organization)
5775-A Glenridge Drive, N.E., Suite 202, Atlanta, Georgia 30328
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(404) 256-9785
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
---------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
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 and
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 X No
--- ---
The number of shares of $1.00 par value Common Stock of the Registrant
outstanding as of November 15, 1996 was 2,970,856.<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ABRAMS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
October 31, 1996 April 30, 1996
---------------- --------------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $4,388,300 $ 5,452,453
Receivables (note 2) 16,633,299 16,132,372
Less: Allowance for doubtful accounts (35,896) (57,541)
Inventories, net (note 3) 1,869,754 1,676,541
Costs and earnings in excess of billings 3,274,898 2,858,389
Deferred income taxes 999,100 999,100
Other 973,594 862,384
------------- -----------
Total current assets 28,103,049 27,923,698
------------- -----------
INCOME-PRODUCING PROPERTIES, net 53,746,763 50,661,940
PROPERTY, PLANT AND EQUIPMENT, net 3,716,284 3,831,902
OTHER ASSETS
Land held for sale (note 4) 5,014,435 4,980,903
Notes receivable 571,583 624,017
Cash surrender value of life insurance on officers, net 948,482 947,134
Deferred loan costs, net 845,412 914,153
Other 1,800,768 1,229,443
------------- -----------
$94,746,776 $91,113,190
============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Trade and subcontractors payables $10,755,134 $11,246,736
Billings in excess of costs and earnings 1,651,975 781,818
Accrued expenses 3,171,269 3,991,790
Current maturities of long-term debt 1,466,638 1,485,657
------------- -----------
Total current liabilities 17,045,016 17,506,001
------------- -----------
DEFERRED INCOME TAXES 1,713,014 1,713,014
OTHER LIABILITIES 4,411,983 539,263
MORTGAGE NOTES AND BONDS PAYABLE, less current maturities 38,615,532 39,102,270
OTHER LONG-TERM DEBT, less current maturities 12,758,275 12,100,266
------------- -----------
Total liabilities 74,543,820 70,960,814
------------- -----------
SHAREHOLDERS' EQUITY
Common stock, $1 par value; authorized 5,000,000 shares;
3,010,039 issued and 2,970,856 outstanding in 1997 and 1996 3,010,039 3,010,039
Additional paid-in capital 2,012,190 2,012,190
Retained earnings 15,340,028 15,289,448
------------- -----------
Total paid-in capital and retained earnings 20,362,257 20,311,677
Less cost of treasury stock 159,301 159,301
------------- -----------
Total shareholders' equity 20,202,956 20,152,376
------------- -----------
$94,746,776 $91,113,190
============= ===========
</TABLE>
See accompanying notes to consolidated financial statements.<PAGE>
ABRAMS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
SECOND QUARTER ENDED SIX MONTHS ENDED
OCTOBER 31, OCTOBER 31,
--------------------------- ----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Construction $24,639,225 $28,529,987 $46,186,104 $55,395,518
Manufacturing 3,065,328 3,841,411 6,626,640 8,867,425
Real estate 2,713,933 2,742,252 5,904,718 5,496,468
----------- ----------- ----------- ----------
30,418,486 35,113,650 58,717,462 69,759,411
Less: Intersegment eliminations (15,187) (73,827) (344,780) (73,827)
----------- ----------- ----------- ----------
30,403,299 35,039,823 58,372,682 69,685,584
Interest 104,860 114,661 219,627 249,885
Other (3,439) 13,974 31,981 24,713
----------- ----------- ----------- ----------
30,504,720 35,168,458 58,624,290 69,960,182
----------- ----------- ----------- ----------
COSTS AND EXPENSES
Applicable to REVENUES--
Construction 23,289,167 27,222,520 43,650,425 53,018,850
Manufacturing 2,070,192 3,052,715 4,497,368 6,882,124
Real estate, exclusive of interest 1,578,032 1,603,817 3,460,933 3,055,697
----------- ----------- ----------- ----------
26,937,391 31,879,052 51,608,726 62,956,671
Less: Intersegment eliminations (13,995) (73,164) (339,145) (73,164)
----------- ----------- ----------- ----------
26,923,396 31,805,888 51,269,581 62,883,507
----------- ----------- ----------- ----------
Selling, shipping, general and administrative
Construction 595,487 619,680 1,189,139 1,161,075
Manufacturing 864,345 903,159 1,747,847 1,901,753
Real estate 357,290 356,339 761,729 761,799
Parent 531,822 560,850 1,077,321 1,092,158
----------- ----------- ----------- ----------
2,348,944 2,440,028 4,776,036 4,916,785
----------- ----------- ----------- ----------
Interest costs incurred, less interest capitalized 1,178,119 1,205,122 2,352,985 2,422,316
----------- ----------- ----------- ----------
30,450,459 35,451,038 58,398,602 70,222,608
----------- ----------- ----------- ----------
EARNINGS (LOSS) BEFORE INCOME TAXES 54,261 (282,580) 225,688 (262,426)
INCOME TAX EXPENSE (BENEFIT) 21,000 (103,000) 86,000 (95,000)
----------- ----------- ----------- ----------
NET EARNINGS (LOSS) $33,261 $(179,580) $139,688 $(167,426)
=========== =========== =========== ==========
NET EARNINGS (LOSS) PER SHARE $ 0.01 $ (.06) $ .05 $ (.06)
=========== =========== ============ ==========
DIVIDENDS PER SHARE $ .015 $ .03 $ .03 $ .06
=========== =========== ============ ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 2,970,856 2,974,030 2,970,856 2,983,470
=========== =========== ============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ABRAMS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
(CAPTION)
SIX MONTHS ENDED OCTOBER 31,
----------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities
Net earnings (loss) $ 139,688 $ (167,426)
Adjustments to reconcile net earnings (loss) to net cash
used in operating activities
Depreciation and amortization 1,716,402 1,652,660
Gain on sale of real estate (85,914) -
Decrease (increase) in assets
Receivables (522,572) (8,070,985)
Inventories (193,213) 539,753
Costs and earnings in excess of billings (416,509) (184,570)
Other current assets (111,210) (80,274)
Other assets (665,229) 81,716
Increase (decrease) in liabilities
Accounts payable (491,602) 5,194,321
Billings in excess of costs and earnings 870,157 1,388,989
Accrued expenses (820,521) (1,283,212)
Other liabilities 170,681 36,759
--------- ----------
Net cash used in operating activities (409,842) (892,269)
--------- ----------
Cash flows from investing activities
Proceeds from sale of real estate 256,000 -
Additions to properties, property, plant and
equipment, net (973,455) (651,868)
--------- ----------
Net cash used in investing activities (717,455) (651,868)
--------- ----------
Cash flows from financing activities
Debt proceeds 862,937 4,856,000
Debt repayments (710,685) (5,627,767)
Cash dividends (89,108) (178,972)
Repurchases of common stock - (102,868)
--------- ----------
Net cash provided by (used in) financing activities 63,144 (1,053,607)
--------- ----------
Net decrease in cash and cash equivalents (1,064,153) (2,597,744)
Cash and cash equivalents at beginning of period 5,452,453 8,270,703
--------- ----------
Cash and cash equivalents at end of period $4,388,300 $5,672,959
========= =========
Supplemental schedule of cash flow information
Interest paid, net of amounts capitalized $2,457,791 $2,549,250
========= =========
Income taxes paid, net of refunds $ 166,002 $ 208,402
========= =========
Supplemental schedule of non-cash investing activities
Accrual of construction allowance payable $3,702,039 $ -
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.<PAGE>
ABRAMS INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996 AND APRIL 30, 1996
(UNAUDITED)
NOTE 1. UNAUDITED STATEMENTS
- -----------------------------
The accompanying unaudited consolidated financial statements
have been prepared by the Company in accordance with generally
accepted accounting principles, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements have been condensed or omitted pursuant to
such rules and regulations, although management believes that
the disclosures are adequate to make the information presented
not misleading. In the opinion of management, the accompanying
financial statements contain all adjustments, which consist
solely of normal recurring accruals, necessary for a fair
statement of the results for the interim periods presented.
These financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included
in the Company's Annual Report to Shareholders for the year ended
April 30, 1996. Results of operations for interim periods are
not necessarily indicative of annual results.
NOTE 2. RECEIVABLES
- --------------------
All contract and trade receivables are expected to be
collected within one year.
NOTE 3. INVENTORIES
- --------------------
The classes of inventory are as follows:
<TABLE>
<CAPTION>
October 31, 1996 April 30, 1996
---------------- --------------
<S> <C> <C>
Finished goods $ 945,606 $1,355,296
Work in process 359,704 73,029
Raw materials 564,444 248,216
--------- ---------
$1,869,754 $1,676,541
========= =========
</TABLE>
NOTE 4. LAND HELD FOR SALE
- ---------------------------
Land held for sale is carried at the lower of cost or fair value less
cost to sell. Land held for sale includes all direct costs of land and
land development, including interest, and other carrying costs incurred
during the development period, less amounts charged to cost of sales.
Land and land development costs (including estimated costs to complete)
are allocated to individual lots sold based on relative sales values.
NOTE 5. RECLASSIFICATIONS
- --------------------------
Certain reclassifications have been made to the fiscal 1996
consolidated financial statements to conform with classifications adopted
in fiscal 1997.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS.
---------------------
Changes in CONSOLIDATED BALANCE SHEETS between April 30, 1996, and
- ------------------------------------------------------------------
October 31, 1996.
- ----------------
Billings in excess of costs and earnings increased by $870,157 and
Accounts receivable increased by $522,572 because of the timing
of the submission of invoices for construction work performed.
Accrued expenses decreased by $820,521 because of the payment of
year-end accruals. Other liabilities increased by $3,872,720
primarily because of the accrual of a construction allowance
payable to AMC Cinema for a 16 screen theatre which is owned by
the Company and leased to AMC. This building was completed and
occupied in May 1996. Income-producing properties increased by
an almost similar amount.
Results of operations of second quarter and first six months of
- ---------------------------------------------------------------
fiscal 1997 compared to second quarter and first six months of
- --------------------------------------------------------------
fiscal 1996.
- -----------
REVENUES
For the second quarter 1997, Consolidated REVENUES, including
Interest income and Other income, were $30,504,720, compared to
$35,168,458 for the second quarter 1996. Interest income was
$104,860 for the second quarter 1997, compared to $114,661 for
the second quarter 1996.
For the first six months 1997, Consolidated REVENUES,
including Interest income and Other income were $58,624,290,
compared to $69,960,182 for the first six months 1996. Interest
income was $219,627 for the first six months 1997, compared to
$249,885 for the first six months 1996.
The figures in Chart A are before Intersegment eliminations
and do not include Interest income or Other income.
<TABLE>
<CAPTION>
CHART A
REVENUE SUMMARY BY SEGMENT
(In Thousands, Except Percentages)
Second Quarter Ended Six Months Ended
October 31, Amount Percent October 31, Amount Percent
------------------- Increase Increase ------------------ Increase Increase
1996 1995 (Decrease) (Decrease) 1996 1995 (Decrease) (Decrease)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Construction <F1> $24,639 $28,530 $(3,891) (14) $46,186 $55,396 $ (9,210) (17)
Manufacturing <F2> 3,065 3,842 (777) (20) 6,626 8,867 (2,241) (25)
Real Estate <F3> 2,714 2,742 (28) (1) 5,905 5,496 409 7
-----------------------------------------------------------------------------------------------
$30,418 $35,114 $(4,696) (13) $58,717 $69,759 $(11,042) (16)
================================================================================================
<PAGE>
NOTES TO CHART A
<FN>
<F1> REVENUES for the second quarter and first six months 1997 were lower
than those of the second quarter and first six months 1996 primarily
because of decreased sales to one of the Company's customers.
<F2> REVENUES for the second quarter and first six months 1997 were lower
than those of the second quarter and first six months 1996 because of the
Company's continuing "re-engineering" efforts which emphasize a reduction
in volume to more efficiently control the costs of production. When revenues
increase, the Company feels that because of its "re-engineering" efforts,
costs will continue to be controlled.
<F3> REVENUES for the first six months 1997 were higher than those of the
first six months 1996 because of a land sale. There was no land sale
during the first six months 1996.
</FN>
</TABLE>
The following table shows the backlog of contracts and orders by
segment:
<TABLE>
<CAPTION>
October 31,
---------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Construction $34,890,000 $26,433,000
Manufacturing 15,400,000 5,182,000
Real Estate 20,132,000 10,333,000
----------- -----------
Total Backlog $70,422,000 $41,948,000
=========== ===========
</TABLE>
COSTS AND EXPENSES: Applicable to REVENUES
As a percentage of Segment REVENUES (See Chart A) for the second
quarter 1997 and 1996, the applicable COSTS AND EXPENSES (See Chart B)
were 89% and 91%, respectively. As a percentage of Segment REVENUES (See
Chart A) for the first six months 1997 and 1996, the applicable COSTS AND
EXPENSES (See Chart B) were 88% and 90%, respectively. The figures in
Chart B are prior to Intersegment eliminations.
<TABLE>
<CAPTION>
CHART B
COSTS AND EXPENSES APPLICABLE TO REVENUES SUMMARY BY SEGMENT
(In Thousands, Except Percentages)
Percent of Segment Revenues Percent of Segment Revenues
Second Quarter Ended For Second Quarter Ended Six Months Ended For Six Months Ended
October 31, October 31, October 31, October 31,
------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Construction $23,289 $27,222 95 95 $43,651 $53,019 95 96
Manufacturing <F1> 2,070 3,053 68 80 4,497 6,882 68 78
Real Estate <F2> 1,578 1,604 58 58 3,461 3,056 59 56
------- ------- -- -- ------- ------- -- --
$26,937 $31,879 89 91 $51,609 $62,957 88 90
NOTES TO CHART B
<FN>
<F1> The decrease in the dollar amount and percentage of COSTS AND
EXPENSES: Applicable to REVENUES for the second quarter and first six
months 1997 compared to the second quarter and first six months 1996 is
attributable to "re-engineering" efforts which are emphasizing control of
costs.
<F2> The increase in both the dollar amount (approximately $405,000) and
percentage of COSTS AND EXPENSES: Applicable to REVENUES for the first
six months 1997 compared to the first six months 1996 is attributable to
the following: (a) cost of land sold -- $170,000; (b) expenses associated
with the transfer of a sale-leaseback property to the fee owner --
$98,000; (c) shopping center operating expenses -- $76,000; and (d)
shopping center depreciation expenses -- $64,000.
</FN>
</TABLE>
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES
For the second quarter 1997 and for the second quarter 1996, Selling,
shipping, general and administrative expenses were $2,348,944 and
$2,440,028, respectively. As a percentage of Consolidated REVENUES,
these expenses were 8% and 7%, respectively. For the first six months
1997 and for the first six months 1996, Selling, shipping, general and
administrative expenses were $4,776,036 and $4,916,785, respectively. As
a percentage of Consolidated REVENUES these expenses were 8% and 7%,
respectively. In reviewing Chart C, the reader should recognize that the
volume of revenues generally will affect the amounts and percentages.
The percentages in Chart C are based upon expenses as they relate to
Segment REVENUES (Chart A) prior to Intersegment eliminations, except
that Parent and Total expenses relate to Consolidated REVENUES.
<TABLE>
<CAPTION>
CHART C
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES BY SEGMENT
(In Thousands, Except Percentages)
Percent of Segment Revenues Percent of Segment Revenues
Second Quarter Ended For Second Quarter Ended Six Months Ended For Six Months Ended
October 31, October 31, October 31, October 31,
-----------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Construction $ 596 $ 620 2 2 $1,189 $1,161 3 2
Manufacturing <F1> 864 903 28 24 1,748 1,902 26 21
Real Estate 357 356 13 13 762 762 13 14
Parent 532 561 2 2 1,077 1,092 2 2
------------------------------------------------------------------------------------------------------
$ 2,349 $ 2,440 8 7 $4,776 $4,917 8 7
======================================================================================================
NOTES TO CHART C
<FN>
<F1> On a dollar basis, Selling, shipping, general and administrative
expenses were lower for the first six months 1997 compared to the first
six months 1996 because of decreased personnel costs -- $136,000 and
decreased interest expense -- $46,000.
</FN>
</TABLE>
Interest rate swap agreement.
- -----------------------------
The Company entered into an interest rate swap agreement with
SunTrust Bank, Atlanta, effective January 4, 1994, which terminates July
1, 1997. The notional amount reduces monthly from approximately $9.6
million at October 31, 1996, to $9.5 million prior to expiration of the
agreement. The agreement effectively caps and sets a floor interest rate
of 8% and 6%, respectively, on a construction loan which had an
outstanding balance of $10,602,398 at October 31, 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.
Liquidity and capital resources.
- --------------------------------
Between April 30, 1996, and October 31, 1996, working capital
increased by $640,336. Operating activities used cash of $409,842.
Investing activities used cash of $717,455 primarily for the completion
of the AMC Cinema and shops at the Merchants Crossing Shopping Center in
N. Ft. Myers, Florida. Financing activities provided cash of $63,144
from debt proceeds that were used to fund the Company's real estate
development activities. At October 31, 1996, the Company and its
subsidiaries had available unsecured committed lines of credit totaling
$8,000,000, against which none was outstanding.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
At the Annual Meeting (held on August 21, 1996), the shareholders
voted upon and approved the Board's nominees for directors. The voting
was as follows:
<TABLE>
<CAPTION>
DIRECTORS VOTES FOR VOTES WITHHELD
<S> <C> <C>
Bernard W. Abrams 2,724,503 66,065
Edward M. Abrams 2,724,503 66,065
Alan R. Abrams 2,724,503 66,065
J. Andrew Abrams 2,724,503 66,065
Paula Lawton Bevington 2,724,503 66,065
Richard H. Danielson 2,724,503 66,065
Donald W. MacLeod 2,710,963 79,605
Anthony Montag 2,710,943 79,605
Joseph H. Rubin 2,724,503 66,065
Felker W. Ward, Jr. 2,724,503 66,065
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------
(a) Exhibit 27 - Financial Data Schedule (for SEC use only)
(b) The Registrant has not filed any reports on form 8-K during the
quarter ended October 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
-----------------------
(Registrant)
Date: November 20, 1996 /s/ Edward M. Abrams
Edward M. Abrams
Chairman of The Board and
Chief Executive Officer
/s/ Joseph H. Rubin
Date: November 20, 1996 Joseph H. Rubin
President, Chief Operating
Officer, Chief Financial Officer
and Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000001923
<NAME> ABRAMS INDUSTRIES INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 4,388,300
<SECURITIES> 0
<RECEIVABLES> 17,204,882
<ALLOWANCES> 35,896
<INVENTORY> 1,869,754
<CURRENT-ASSETS> 28,103,049
<PP&E> 86,118,165
<DEPRECIATION> 28,655,118
<TOTAL-ASSETS> 94,746,776
<CURRENT-LIABILITIES> 17,045,016
<BONDS> 51,373,807
0
0
<COMMON> 3,010,039
<OTHER-SE> 17,192,917
<TOTAL-LIABILITY-AND-EQUITY> 94,746,776
<SALES> 58,372,682
<TOTAL-REVENUES> 58,624,290
<CGS> 51,269,581
<TOTAL-COSTS> 51,269,581
<OTHER-EXPENSES> 4,797,681
<LOSS-PROVISION> (21,645)
<INTEREST-EXPENSE> 2,352,985
<INCOME-PRETAX> 225,688
<INCOME-TAX> 86,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 139,688
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
