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.
July 31, 1997 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)
1945 The Exchange, Suite 300, Atlanta, Georgia 30339
(Address of principal executive offices) (Zip Code)
(770) 953-0304
(Registrant's telephone number, including area code)
5775-A Glenridge Drive, N.E., Suite 202, Atlanta, Georgia 30328
(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 August 15, 1997 was 2,942,356.<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
<TABLE>
<CAPTION>
ABRAMS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
July 31, 1997 April 30, 1997
------------- --------------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 5,848,296 $ 7,611,051
Receivables (note 2) 22,839,696 18,980,745
Less: Allowance for doubtful accounts (12,693) (65,584)
Inventories, net (note 3) 1,578,279 1,557,964
Costs and earnings in excess of billings 5,961,714 2,785,340
Property held for sale (note 4) 6,516,737 6,577,973
Deferred income taxes 682,321 682,321
Other 951,637 467,733
---------- ----------
Total current assets 44,365,987 38,597,543
---------- ----------
INCOME-PRODUCING PROPERTIES, net 42,546,723 43,324,407
PROPERTY, PLANT AND EQUIPMENT, net 1,643,238 1,703,948
LAND HELD FOR FUTURE DEVELOPMENT OR SALE 3,889,361 3,889,361
OTHER ASSETS
Notes receivable 499,114 515,832
Cash surrender value of life insurance on officers, net 1,042,480 1,021,481
Deferred loan costs, net 591,359 531,812
Other 2,172,098 1,915,054
---------- ----------
$96,750,360 $91,499,438
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade and subcontractors payables $18,569,992 $10,385,079
Billings in excess of costs and earnings 1,912,309 1,148,665
Accrued expenses 2,585,358 5,881,257
Deferred income 550,935 687,252
Current maturities of long-term debt (note 4) 7,854,049 7,420,171
---------- ----------
Total current liabilities 31,472,643 25,522,424
---------- ----------
DEFERRED INCOME TAXES 1,884,453 1,884,453
OTHER LIABILITIES 1,041,522 848,462
MORTGAGE NOTES AND BONDS PAYABLE, less current maturities 24,196,800 24,919,282
OTHER LONG-TERM DEBT, less current maturities 16,123,390 16,199,603
---------- ----------
Total liabilities 74,718,808 69,374,224
---------- ----------
<PAGE>
SHAREHOLDERS' EQUITY
Common stock, $1 par value; authorized 5,000,000 shares;
3,014,039 issued in 1998 and 3,010,039 issued in 1997 and
2,942,356 outstanding in 1998 and 2,938,356 outstanding in 1997 3,014,039 3,010,039
Additional paid-in capital 2,019,690 2,012,190
Retained earnings 17,368,374 17,473,536
---------- ----------
22,402,103 22,495,765
Less cost of treasury stock 370,551 370,551
---------- ----------
Total shareholders' equity 22,031,552 22,125,214
---------- ----------
$96,750,360 $91,499,438
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ABRAMS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST QUARTER ENDED JULY 31,
-----------------------------------------
1997 1996
----------- -----------
<S> <C> <C>
REVENUES
Construction $38,397,378 $21,546,879
Manufacturing 3,316,333 3,561,312
Real estate 3,415,816 3,190,785
---------- ----------
45,129,527 28,298,976
Less: Intersegment eliminations - (329,593)
---------- ----------
45,129,527 27,969,383
Interest 118,693 114,767
Other 11,099 35,420
---------- ----------
45,259,319 28,119,570
---------- ----------
COSTS AND EXPENSES
Applicable to REVENUES--
Construction 36,938,279 20,361,258
Manufacturing 2,514,231 2,427,176
Real estate, exclusive of interest 1,779,414 1,882,901
---------- ----------
41,231,924 24,671,335
Less: Intersegment eliminations - (325,150)
---------- ----------
41,231,924 24,346,185
---------- ----------
Selling, shipping, general and administrative
Construction 699,308 593,652
Manufacturing 978,480 883,502
Real estate 532,954 404,439
Parent 553,535 545,499
---------- ----------
2,764,277 2,427,092
---------- ----------
Interest costs incurred, less interest capitalized 1,091,323 1,174,866
---------- ----------
45,087,524 27,948,143
---------- ----------
EARNINGS BEFORE INCOME TAXES 171,795 171,427
INCOME TAX EXPENSE 71,000 65,000
---------- ----------
NET EARNINGS $ 100,795 $ 106,427
========== ==========
NET EARNINGS PER SHARE $ .03 $ .040
========== ==========
DIVIDENDS PER SHARE $ .07 $ .015
========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 2,940,445 2,970,856
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ABRAMS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST QUARTER ENDED JULY 31,
----------------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 100,795 $ 106,427
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities
Depreciation and amortization 703,304 830,310
Gain on sale of real estate (360,604) (94,753)
Decrease (increase) in assets
Receivables (3,911,842) 1,745,960
Inventories (20,315) 369,833
Costs and earnings in excess of billings (3,176,374) 214,577
Other current assets (422,668) (243,307)
Other assets (278,243) (26,560)
Increase (decrease) in liabilities
Accounts payable 8,184,913 (2,389,139)
Billings in excess of costs and earnings 763,644 637,727
Accrued expenses (3,295,899) (1,311,298)
Deferred income (136,317) -
Other liabilities 193,060 192,155
---------- ----------
Net cash provided by (used in) operating activities (1,656,546) 31,932
---------- ----------
Cash flows from investing activities
Proceeds from sale of real estate 770,000 256,000
Additions to properties, property, plant and
equipment, net (228,195) (1,036,539)
---------- ----------
Net cash provided by (used in) investing activities 541,805 (780,539)
---------- ----------
Cash flows from financing activities
Debt proceeds - 571,646
Debt repayments (364,817) (372,276)
Additions to deferred loan costs (88,740) -
Cash dividends (205,957) (44,555)
Exercise of stock options 11,500 -
---------- ----------
Net cash provided by (used in) financing activities (648,014) 154,815
---------- ----------
Net decrease in cash and cash equivalents (1,762,755) (593,792)
Cash and cash equivalents at beginning of period 7,611,051 5,452,453
---------- ----------
Cash and cash equivalents at end of period $ 5,848,296 $ 4,858,661
========== ==========
Supplemental disclosure of non-cash investing and
financing activities
Accrual of construction allowance payable $ - $ 3,702,039
========== ==========
Supplemental schedule of cash flow information
Interest paid, net of amounts capitalized $ 1,093,232 $ 1,227,568
========== ==========
Income taxes paid, net of refunds $ 470,642 $ 80,291
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ABRAMS INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1997 AND APRIL 30, 1997
(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, 1997. 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:
July 31, 1997 April 30, 1997
------------- --------------
Finished goods $ 990,993 $ 939,784
Work in process 127,902 110,119
Raw materials 459,384 508,061
---------- ---------
$ 1,578,279 $ 1,557,964
========== =========
NOTE 4. PROPERTY HELD FOR SALE
- ------------------------------
Property held for sale at July 31, 1997 was the same as that reported
at April 30, 1997 with the following exceptions: (1) the Company has
entered into a contract to sell a property in Tifton, Georgia that is
tenanted by Kmart Corporation and (2) the Company sold an outparcel
located in North Fort Myers, Florida. The Tifton, Georgia contract is for
$1,688,000, which includes an assumption by the purchaser of the balance
of the mortgage outstanding on the date of closing. The mortgage balance
at July 31, 1997 was $684,635. The North Fort Myers outparcel was sold
for $770,000 cash in May, 1997. The sale resulted in a gain of $360,604.
The Company's shopping center in Oakwood, Georgia, which was included in
Property held for sale at July 31, 1997, closed in August, 1997. The
contract price was $1,607,751 in cash plus assumption by the purchaser of
the mortgage which had a balance of $4,458,107 at July 31, 1997. The
<PAGE>
Company's property in Newark, Ohio, tenanted by Kmart corporation, which
was included in Property held for sale at July 31, 1997, also closed in
August, 1997. The contract amount was $225,000 in cash plus assumption
by the purchaser of the mortgage which had a balance of $1,265,000 as of
July 31, 1997. Both properties were sold at a gain. The Company expects
to sell another outparcel in North Fort Myers, Florida and is marketing
for sale its primary manufacturing facility in Atlanta, Georgia. Management
intends to move the manufacturing segment into a new facility. Each of
the remaining properties is expected to be sold at a gain during fiscal
1998. The carrying amounts of these properties have been classified as
Property held for sale in the accompanying July 31, 1997 consolidated
balance sheet. The mortgage balances associated with these properties
are included in Current maturities of long-term debt.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS.
- ----------------------
Changes in CONSOLIDATED BALANCE SHEETS between April 30, 1997, and
- ------------------------------------------------------------------
July 31, 1997.
- --------------
Accounts receivable increased by $3,911,842, Cost and earnings in
excess of billings increased by $3,176,374, Accounts payable increased by
$8,184,913 and Billings in excess of costs and earnings increased by
$763,644, because of the timing of the submission and payment of invoices
for construction work performed. Accrued expenses decreased by
$3,295,899 because of the payment of year-end accruals.
Results of operations of first quarter of fiscal 1998 compared to first
- -----------------------------------------------------------------------
quarter of fiscal 1997.
- -----------------------
REVENUES
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
First Quarter Ended
Amount Percent
July 31, Increase Increase
------------------------------- (Decrease) (Decrease)
1997 1996 ---------------------------
----------- ----------
<S> <C> <C> <C> <C>
Construction <F1> $38,397,378 $21,546,879 $16,850,499 78
Manufacturing 3,316,333 3,561,312 (244,979) (7)
Real Estate <F2> 3,415,816 3,190,785 225,031 7
-------------------------------------------------------------
$45,129,527 $28,298,976 $16,830,551 59
=============================================================
<PAGE>
NOTES TO CHART A
----------------
<FN>
<F1> REVENUES for the first quarter 1998 were higher than those of the
first quarter 1997 primarily because of increased sales to one of the
Company's customers.
<F2> REVENUES for the first quarter 1998 were higher than those of the
first quarter 1997 because of a land sale -- $770,000 this year versus
$256,000 last year. This increase was partially offset by decreased
rental income -- $257,000 which was a result of the sale of three Kmarts
last year.
</FN>
</TABLE>
The following table indicates the backlog of contracts, orders and
expected rentals for the next twelve months by industry segment:
July 31,
-----------------------------
1997 1996
----------- -----------
Construction $41,039,000 $35,622,000
Manufacturing 8,405,000 5,029,000
Real Estate 18,400,000 10,867,000
---------- ----------
Total Backlog $67,844,000 $51,518,000
========== ==========
COSTS AND EXPENSES: Applicable to REVENUES
As a percentage of Segment REVENUES (See Chart A) for the first
quarter 1998 and 1997, the applicable COSTS AND EXPENSES (See Chart B)
were 91% and 87%, respectively. The figures in Chart B are prior to
Intersegment eliminations.
<TABLE>
<CAPTION>
CHART B
COSTS AND EXPENSES APPLICABLE TO REVENUES SUMMARY BY SEGMENT
Percent of Segment Revenues
First Quarter Ended For First Quarter Ended
July 31, July 31,
--------------------------------------------------------------
1997 1996 1997 1996
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Construction <F1> $36,938,279 $20,361,258 96 94
Manufacturing <F2> 2,514,231 2,427,176 76 68
Real Estate <F3> 1,779,414 1,882,901 52 59
---------------------------------------------------------
$41,231,924 $24,671,335 91 87
=========================================================
NOTES TO CHART B
----------------
<FN>
<F1> The increase in the dollar amount and percentage of COSTS AND EXPENSES
Applicable to REVENUES for the first quarter 1998 compared to the first
quarter 1997 is attributable to the following: (a) inclement weather
which resulted in increased costs to complete jobs; (b) some increased
<PAGE>
material and subcontractor costs; and (c) increased competition for the
construction of new buildings which resulted in lower gross profit
margins.
<F2> The increase in the dollar amount and percentage of COSTS AND EXPENSES
Applicable to REVENUES for the first quarter 1998 compared to the first
quarter 1997 is attributable to the product mix of fixtures sold and the
cost of the installation of fixtures. The installation of fixtures is a
new line of business for the Company and does not command as high of a
gross profit margin as that in the manufacturing of fixtures.
<F3> The decrease in both the dollar amount and percentage of COSTS AND
EXPENSES Applicable to REVENUES for the first quarter 1998 compared to
the first quarter 1997 is attributable to decreased: (a) operating
expenses of the three Kmarts that were sold last year -- $72,000; (b)
expenses incurred in 1997 associated with the assignment of a sale
leaseback property to the fee owner -- $172,000; and (c) shopping center
operating expenses in 1997 -- $68,000. These decreases were partially
offset by the cost of land sold -- $409,000 this year versus $161,000
last year.
</FN>
</TABLE>
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES
For the first quarter 1998 and for the first quarter 1997, Selling,
shipping, general and administrative expenses were $2,764,277 and
$2,427,092, respectively. As a percentage of Consolidated REVENUES,
these expenses were 6% and 9%, 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
Percent of Segment Revenues
First Quarter Ended For First Quarter Ended
July 31, July 31,
--------------------------------------------------------------
1997 1996 1997 1996
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Construction <F1> $ 699,308 $ 593,652 2 3
Manufacturing <F2> 978,480 883,502 30 25
Real Estate <F3> 532,954 404,439 16 13
Parent 553,535 545,499 1 2
---------------------------------------------------------------
$2,764,277 $2,427,092 6 9
===============================================================
NOTES TO CHART C
----------------
<FN>
<F1> On a dollar basis, Selling, shipping, general and administrative
expenses were higher for the first quarter 1998 compared to the first
quarter 1997 because of increased: (a) promotional and competitive
bidding expenses -- $49,000; (b) incentive compensation expenses --
$39,000; and (c) health insurance costs -- $27,000.
<F2> On a dollar and percentage basis, Selling, shipping, general and
administrative expenses were higher for the first quarter 1998 compared
to the first quarter 1997 primarily because of increased personnel and
benefit costs.
<F3>On a dollar and percentage basis, Selling, shipping, general and
administrative expenses were higher for the first quarter 1998 compared
to the first quarter 1997 because of increased: (a) personnel costs --
$70,000; (b) accounting expenses -- $28,000; and (c) incentive compensation
expenses -- $25,000.
</FN>
</TABLE>
Liquidity and capital resources.
- --------------------------------
Between April 30, 1997, and July 31, 1997, working capital decreased
by $181,775. Operating activities used cash of $1,656,546. Investing
activities provided cash of $770,000 from the proceeds of the sale of an
outparcel in North Fort Myers, Florida. However, this was partially
offset by $228,195 for additions to properties, property, plant and
equipment. Financing activities used cash of $648,014 primarily to repay
loans on the Company's mortgaged real estate and to pay cash dividends.
At July 31, 1997, the Company and its subsidiaries had available
unsecured committed lines of credit totaling $9,000,000, against which
none was outstanding.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibit 27 - Financial Data Schedule (for SEC use)
(b) The Registrant has not filed any reports on form 8-K during the
quarter ended July 31, 1997.
<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: September 4, 1997 /s/ Joseph H. Rubin
Joseph H. Rubin
Chief Executive Officer
/s/ Melinda S. Garrett
Date: September 4, 1997 Melinda S. Garrett
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000001923
<NAME> ABRAMS INDUSTRIES, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> JUL-31-1997
<CASH> 5,848,296
<SECURITIES> 0
<RECEIVABLES> 22,839,696
<ALLOWANCES> 12,693
<INVENTORY> 1,578,279
<CURRENT-ASSETS> 44,365,987
<PP&E> 64,625,516
<DEPRECIATION> 20,435,555
<TOTAL-ASSETS> 96,750,360
<CURRENT-LIABILITIES> 31,472,643
<BONDS> 40,320,190
0
0
<COMMON> 3,014,039
<OTHER-SE> 19,017,513
<TOTAL-LIABILITY-AND-EQUITY> 96,750,360
<SALES> 45,129,527
<TOTAL-REVENUES> 45,259,319
<CGS> 41,231,924
<TOTAL-COSTS> 41,231,924
<OTHER-EXPENSES> 2,817,168
<LOSS-PROVISION> (52,891)
<INTEREST-EXPENSE> 1,091,323
<INCOME-PRETAX> 171,795
<INCOME-TAX> 71,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 100,795
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
