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, 1997
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 /x/ 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. /x/
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES
OF THE REGISTRANT AS OF JUNE 24, 1997, WAS $11,460.563. SEE PART III. THE
NUMBER OF SHARES OF COMMON STOCK OF THE REGISTRANT OUTSTANDING AS OF JUNE 24,
1997, WAS 2,942,356.
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 1997 Annual Meeting of Shareholders which is to be filed
pursuant to Regulation 14A.
<PAGE>
PART I
ITEM 1. BUSINESS.
Abrams Industries, Inc. engages in (i) construction of retail and
commercial projects; (ii) manufacturing store fixtures, bank fixtures and
display units for retail outlets; and (iii) asset management of
income-producing properties, including acquisition, development, investment,
management and sale.
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 from Delaware 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 11 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, expansion 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. The Company also produces custom-designed
point-of-purchase display units which are sold to carpet and wallcovering
manufacturers, distributors and retailers.
In 1997, the Company began manufacturing and installing custom
designed bank fixtures, including structural wall and ceiling components for
branch banks in supermarkets throughout the United States.
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 and asset management activities
since 1960. These activities have involved primarily the development and
management of shopping centers in the Southeast and Midwest. Selection of
target markets; evaluation and acquisition of sites; marketing to prospective
tenants; negotiation of tenant leases; securing construction and permanent
financing; contracting for design and construction; management of
construction; expansion, renovation and re-tenanting of properties;
maintenance of buildings and grounds of owned and leased properties and
marketing and sale of properties to investors are all part of the Company's
asset management and development activities. The Company will also invest in
existing income-producing properties, including office and retail, as the
opportunity for diversification of the Company's assets arises.
The Company developed and currently owns and manages nine shopping
centers, seven of which are held as long-term investments. See "ITEM 2.
PROPERTIES - Owned Shopping Centers". The Company is also lessee and manager
of nine Company-developed shopping centers which were sold and leased back by
the Company. See "ITEM 2. PROPERTIES - Leaseback Shopping Centers". Kmart
Corporation is an anchor tenant in most of the Company's shopping centers.
EMPLOYEES AND EMPLOYEE RELATIONS
At April 30, 1997, the Company employed 143 salaried employees and
124 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>
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 not 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 fiscal 1997, the Company derived approximately 51%
($69,483,000) of its consolidated revenues from direct transactions with The
Home Depot, Inc. These revenues resulted principally from construction
activities and sales of manufactured store fixtures. See Note 11 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, orders and
expected rentals for the next twelve months by industry segment:
<TABLE>
<CAPTION>
April 30, April 30,
1997 1996
---------------------------------------------------------------------------------
<S> <C> <C>
Construction $40,862,000 $18,772,000
Manufacturing 8,632,000 6,445,000
Real Estate 11,677,000 10,901,000
---------------------------------------------------------------------------------
Total Backlog $61,171,000 $36,118,000
---------------------------------------------------------------------------------
</TABLE>
The Company estimates that most of the backlog at April 30, 1997 will
be completed prior to April 30, 1998. 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, 1997.
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>
EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of the Company are as follows:
<TABLE>
<CAPTION>
Name and Age Position(s) with the Company Officer Since
- ------------ ---------------------------- -------------
<S> <S> <C>
Edward M. Abrams (70) Chairman of the Board of Directors and 1953
Chief Executive Officer since August 1995.
Prior to that he served as President and
Treasurer of the Company.
Joseph H. Rubin (54) Director, President and Chief Operating Officer 1979
since August 1995. Prior to that he served
as Executive Vice President, Secretary and
Chief Financial Officer of the Company.
Bernard W. Abrams (72) Director and Chairman of the Executive Committee since 1952
August 1995. Prior to that he served as Chairman
of the Board of Directors and Chief Executive Officer.
Alan R. Abrams (42) Director, President of Abrams Properties, Inc. 1988
since July 1994. Prior to that he served as
Vice President of Abrams Properties, Inc.
B. Michael Merritt (47) President, Abrams Construction, Inc. since 1986
May 1995. Prior to that he served as Executive
Vice President of Abrams Construction, Inc.
Richard V. Priegel (44) President, Abrams Fixture Corporation. 1981
Melinda S. Garrett (41) Chief Financial Officer since February 1997. 1990
She has served as Treasurer of Abrams Properties,
Inc. since 1990 and has served as Vice President of
Abrams Properties, Inc. since 1993.
</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 18,000
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 Company will be relocating from these
offices to another location in suburban Atlanta in August 1997.
The primary Manufacturing Segment facility, which is currently for
sale, contains approximately 255,000 square feet and is used for wood store
fixture 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.
During the coming fiscal year, the Company anticipates the Manufacturing
Segment will be relocating its wood manufacturing and warehousing and metal
fabrication facilities to a single facility in suburban Atlanta.
The Company also owns, or has an interest in, the following
properties as of April 30, 1997:
<PAGE>
OWNED SHOPPING CENTERS
The Company, through its Real Estate Segment, owns nine shopping
centers which it developed. Four of the centers are leased exclusively to
Kmart. Anchor lease terms for the centers not leased exclusively to Kmart are
shown in the table below.
<TABLE>
<CAPTION>
Lease Options
Anchor Square Expiration To
Location Tenant 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 None
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 13,500 2040 <F1> None
- -------------------------------------------------------------------------------------------------------------------------------
North Fort Myers, FL AMC 54,805 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 26,022 2007 2 for 5 years each
Kroger 63,024 2021 6 for 5 years each
<FN>
<F1> Tenant may terminate its lease with six months notice at five
year intervals beginning in 2010.
</FN>
</TABLE>
In the shopping centers leased solely to Kmart, the leases expire
from 1999 to 2016 and contain eight to ten five-year renewal options. With
the exception of the Kmart lease in Columbus, Georgia, all of the anchor
tenant and most of the small shop 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 1997, the Company received $120,157 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, and Columbus, Georgia, where Kmart has complete maintenance
responsibility, the Company has responsibility for structural and roof
maintenance of the Kmart buildings. The Company also has responsibility for
the Kmart parking lots and driveways, except routine upkeep, which is the resp
onsibility of the tenants.
The following chart provides relevant information relating to the
owned shopping centers:
<TABLE>
<CAPTION>
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 1997 1997 <F1> 1997 <F2> 1997<F3>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1100 W. Argyle Street 10.5 110,046 1972, 1997 $ 519,465 $ 226,925 $ 144,643 $ 2,100,000
Jackson, MI
100 Virginia Avenue 9.7 84,686 1974, 1991 226,261 216,773 162,408 701,965
Tifton, GA
44-56 Bullsboro Drive 16.3 174,059 1974, 1987 826,476 829,632 668,016 5,590,015
Newnan, GA 1989
- -----------------------------------------------------------------------------------------------------------------------------------
315 Deo Drive 7.1 68,337 1979 240,500 239,019 204,792 1,310,000
Newark, OH <F4>
- -----------------------------------------------------------------------------------------------------------------------------------
1075 W. Jackson Street 7.3 92,120 1980, 1992 479,460 440,069 405,912 3,317,726
Morton, IL <F5>
- -----------------------------------------------------------------------------------------------------------------------------------
2500 Airport Thruway 8.0 87,543 1980, 1988 441,286 400,706 392,031 2,988,181
Columbus, GA <F5>
- -----------------------------------------------------------------------------------------------------------------------------------
3715 Mundy Mill Road 10.0 71,514 1988 714,536 679,160 465,646 4,501,067
Oakwood, GA
- -----------------------------------------------------------------------------------------------------------------------------------
1500 Placida Road 28.7 213,739 1990 1,585,907 1,573,921 1,352,167 12,969,345
Englewood, FL
- -----------------------------------------------------------------------------------------------------------------------------------
15201 N. Cleveland 72.3 293,801 1993, 1996 1,977,515 1,658,986 1,230,997 14,375,049
North Fort Myers, FL
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
<FN>
<F1>Annual cash flow is defined as net operating income before the
following: depreciation, amortization of loan and lease costs, interest and
principal payments on mortgage notes and bonds payable.
<F2>Includes principal and interest, but excludes mortgage
refinancings, if any, and costs associated therewith.
<F3>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 7 and 8 to the Consolidated Financial Statements
of the Company.
<F4>Property is currently under contract to be sold.
<F5>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.
</FN>
</TABLE>
LEASEBACK SHOPPING CENTERS
The Company, through its Real Estate Segment, is lessee of nine
shopping centers which it developed, sold and leased back under leases
expiring from years 2001 to 2014. The nine centers are subleased by the
Company to Kmart Corporation for periods corresponding to the Company's
leases. Effective July 30, 1996, the Company assigned its interest in the
Rock Island, Illinois, Kmart Shopping Center to the Lessor. The Company has
no further responsibilities or obligation in regard to this center. The Kmart
subleases provide for contingent rentals if sales exceed specified amounts,
and contain ten 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 1997, the Company received $43,922 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 drivew
ays, 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>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Square Rental Rent
Feet In Year Income: Expense:
Location Acres Building(s) Completed 1997 1997
<S> <C> <C> <C> <C> <C>
Bayonet Point, FL 10.8 109,340 1976 $328,551 $269,568
Orange Park, FL 9.4 84,180 1976 264,000 226,796
Davenport, IA 10.0 84,180 1977 280,679 209,988
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>
<PAGE>
LAND HELD FOR FUTURE DEVELOPMENT OR SALE
The Company, through its Real Estate Segment, owns or has an interest
in the following undeveloped land held for future development or sale:
<TABLE>
<CAPTION>
Year Intended
Location Acres Acquired Use <F1>
<S> <C> <C> <S>
W. Argyle Street 0.9 1972 <F2> One outlot or retail shops
Jackson, 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 <F3>
Washington, NC
Mundy Mill Road 4.8 1987 Retail shops and/or four outlots
Oakwood, GA
North Cleveland Avenue 13.6 1993 Seven outlots and retail shops <F4>
North Fort Myers, FL
<PAGE>
<FN>
<F1> "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.
<F2> Originally part of Jackson, Michigan shopping center. Redeveloped
into separate outlot in 1996.
<F3> 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.
<F4> One outlot of approximately 1.21 acres was sold in May 1997.
</FN>
</TABLE>
There is no mortgage debt on any of the above properties, except for
the North Fort Myers, Florida retail shop land. See Note 8 to the Consolidated
Financial Statements of the Company. The Company will either develop the
properties described above 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.
<TABLE>
<CAPTION>
Common Stock Data
DIVIDENDS PAID
CLOSING MARKET PRICES PER SHARE
------------------------------------------------------------------------------------------------
FISCAL FISCAL FISCAL FISCAL
1997 1996 1997 1996
------------------------------------------------------------------------------------------------
HIGH LOW HIGH LOW
TRADE TRADE TRADE TRADE
<S> <C> <C> <C> <C> <C> <C>
First Quarter $4.125 $3.250 $5.375 $4.000 $.015 $.030
Second Quarter 4.625 3.438 4.875 4.375 .015 .030
Third Quarter 5.250 4.250 5.125 4.375 .020 .030
Fourth Quarter 5.500 4.750 4.750 3.625 .020 .015
</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 500 (including shareholders
of record and shares held in street name) at May 31, 1997.
<PAGE>
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>
<CAPTION>
1997 1996 1995 1994 1993
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consolidated Revenues $136,123,601 $ 134,299,240 $ 122,608,682 $ 123,602,954 $ 82,878,911
Net Earnings (Loss) $ 2,391,398 $ (304,188) $ (331,019) $ 1,359,408 $ 1,710,381
Net Earnings (Loss) Per Share* $ .81 $ (.10) $ (.11) $ .46 $ .57
Shares Outstanding at Year-End 2,938,356 2,970,856 2,993,540 2,993,540 2,977,540
Cash Dividends Paid Per Share $ .07 $ .105 $ .12 $ .11 $ .11
Shareholders' Equity $ 22,125,214 $ 20,152,376 $ 20,872,035 $ 21,562,279 $ 20,484,880
Shareholders' Equity Per Share* $ 7.53 $ 6.78 $ 6.97 $ 7.20 $ 6.84
Working Capital $ 13,075,119 $ 10,417,697 $ 11,447,872 $ 9,445,073 $ 8,030,898
Depreciation and Amortization Expense $ 3,401,334 $ 3,242,738 $ 3,078,878 $ 2,787,078 $ 2,162,472
Total Assets $ 91,499,438 $ 90,635,098 $ 88,576,745 $ 92,732,567 $ 90,537,249
Income-Producing Property Under
Development, Income-Producing
Properties and Property, Plant and
Equipment, net $45,028,355 $ 54,493,842 $ 55,065,157 $ 56,787,858 $ 64,340,348
Long-Term Debt $41,118,885 $ 51,202,536 $ 51,580,229 $ 52,637,298 $ 55,197,178
Return on Average Shareholders' Equity 11.3% (1.5%) (1.6%) 6.5% 8.6%
Return on Total Assets 2.6% (.3%) (.4%) 1.5% 1.9%
<CAPTION>
1992 1991 1990 1989 1988 1987
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Revenues $ 83,818,090 $78,020,796 $54,887,568 $50,331,871 $51,032,736 $46,773,124
Net Earnings (Loss) $ 1,021,303 $ 1,027,373 $ 1,534,063 $ 1,435,567 $ 1,082,883 $ 969,326
Net Earnings (Loss) Per Share* $ .34 $ .34 $ .51 $ .48 $ .36 $ .33
Shares Outstanding at Year-End 2,977,540 2,977,540 2,994,039 2,978,039 1,787,000 1,787,000
Cash Dividends Paid Per Share $ .20 $ .20 $ .20 $ .18 $ .14 $ .14
Shareholders' Equity $ 19,102,028 $ 8,676,233 $18,304,102 $17,310,146 $16,402,538 $15,748,535
Shareholders' Equity Per Share* $ 6.38 $ 6.24 $ 6.11 $ 5.78 $ 5.48 $ 5.26
Working Capital $ 2,783,427 $ 3,140,650 $21,575,826 $18,830,026 $12,955,259 $ 9,089,467
Depreciation and Amortization Expense $ 2,106,703 $ 1,938,687 $ 1,707,985 $ 1,668,105 $ 1,491,401 $ 1,364,970
Total Assets $ 78,260,810 $76,606,498 $64,047,108 $56,318,968 $51,178,946 $44,957,055
Income-Producing Property Under
Development, Income-Producing
Properties and Property, Plant and
Equipment, net $ 52,976,540 $49,999,625 $22,797,353 $24,088,285 $21,069,833 $17,058,000
Long-Term Debt $ 41,513,804 $39,104,720 $29,955,918 $30,071,322 $23,337,984 $19,387,624
Return on Average Shareholders' Equity 5.4% 5.6% 8.6% 8.5% 6.7% 6.3%
Return on Total Assets 1.3% 1.3% 2.4% 2.5% 2.1% 2.2%
</TABLE>
*Adjusted to reflect stock dividends and stock splits.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION FOR FISCAL YEARS ENDED APRIL 30, 1997, 1996 AND
1995.
RESULTS OF OPERATIONS
REVENUES
Revenues for 1997 were $136,123,601, compared to $134,299,240 and
$122,608,682 for 1996 and 1995, respectively. This represents an increase in
Revenues of 1% and 11% from those of 1996 and 1995, respectively. Revenues
include Interest income of $452,992, $462,858 and $406,302 for 1997, 1996 and
1995, respectively, and Other income of $46,262, $173,577 and $53,495 for
1997, 1996 and 1995, 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>
<CAPTION>
Years Ended Increase Years Ended Increase
April 30, (Decrease) April 30, (Decrease)
1997 1996 Amount Percent 1997 1995 Amount Percent
------------------------ ------------------- --------------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Construction <F1> $97,977 $107,495 $(9,518) (9) $ 97,977 $ 94,040 $ 3,937 4
Manufacturing <F2> 16,662 14,999 1,663 11 16,662 16,348 314 2
Real Estate <F3> 20,985 11,169 9,816 88 20,985 11,761 9,224 78
Total $135,624 $133,663 $ 1,961 1 $135,624 $122,149 $13,475 11
NOTES:
<FN>
<F1>The decrease in 1997 from those in 1996 is attributable to
decreased sales to one of the Company's customers. The amounts reported
exclude $345,000 in 1997, $792,000 in 1996, and $-0- in 1995 related to
construction work at two shopping centers developed by the Real Estate
Segment. <PAGE>
<F2> The increase in 1997 from those in 1996 is attributable to sales
to a newly acquired customer.
<F3> Rental revenues for 1997 were $11,771,000, compared to
$11,169,000 in 1996 and $11,131,000 in 1995. Revenues from sales of real
estate amounted to $9,215,000 in 1997, $-0- in 1996, and $630,000 in 1995.
The 1997 real estate sales include freestanding Kmarts in Niles, Michigan,
Shawnee, Oklahoma, and Warner Robins, Georgia. Additionally, two outparcels
were sold. The 1995 real estate sale consisted of one outparcel.
</FN>
</TABLE>
COSTS: APPLICABLE TO SEGMENT REVENUES
As a percentage of total Segment Revenues (See Chart A), the
applicable total Segment Costs (See Chart B) of $115,412,086 for 1997,
$119,775,802 for 1996, and $108,102,114 for 1995 were 85%, 90% and 89%,
respectively.
COSTS: APPLICABLE TO REVENUES SUMMARY BY SEGMENT
(Dollars in Thousands)
CHART B
<TABLE>
<CAPTION>
Percent of
Segment Revenues
Years Ended For Years Ended
April 30, April 30,
-------------------------------------- ---------------------------------------
1997 1996 1995 1997 1996 1995
-------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Construction $91,638 $101,894 $88,847 94 95 94
Manufacturing <F1> 10,412 11,587 12,896 62 77 79
Real Estate <F2> 13,362 6,295 6,359 64 56 54
--------------------------------------
Total $115,412 $119,776 $108,102 85 90 89
======================================
NOTES:
<FN>
<F1> The decrease in the dollar amount and percentage in 1997 as
compared to 1996 and 1995 is attributable to "re-engineering" efforts that
are emphasizing control of costs. In 1997 as compared to 1996, labor and
benefit costs decreased $510,000,
<PAGE>
equipment maintenance costs decreased $110,000 and inventory reserves
decreased $383,000. In 1997 as compared to 1995, changes in the product mix
manufactured resulted in decreased costs of $1,120,000, labor and benefit
costs decreased $638,000, manufacturing and warehousing rent decreased
$234,000 and equipment maintenance costs decreased $169,000.
<F2> The increase in the dollar amount and percentage in 1997 as
compared to 1996 and 1995 is attributable to the cost of real estate sold
that amounted to $4,086,000 in 1997, $-0- in 1996 and $313,000 in 1995. It is
also attributable to the establishment in 1997 of a provision for impairment
loss of $2,750,000 to reduce the net carrying value of the North Fort Myers,
Florida shopping center to estimated fair value. See Note 5 to the
Consolidated Financial Statements for further discussion. There was no such
provision for impairment loss in 1996 and 1995.
</FN>
</TABLE>
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES
For the years 1997, 1996 and 1995, Selling, shipping, general and
administrative expenses (See Chart C) were $12,084,015, $10,273,008 and
$10,207,016, respectively. As a percentage of Consolidated Revenues, these
expenses were 9% for 1997, and 8% for 1996 and 1995. In reviewing Chart C,
the reader should recognize that the volume of revenues generally will affect
these amounts and percentages. The percentages in Chart C are based on
expenses as they relate to segment revenues in Chart A, with the exception
that Parent expenses and total expenses relate to Consolidated Revenues.
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES SUMMARY BY SEGMENT
(Dollars in Thousands)
CHART C
<TABLE>
<CAPTION>
Percent of
Segment Revenues
Years Ended For Years Ended
April 30, April 30,
----------------------------------------- -----------------------------------
1997 1996 1995 1997 1996 1995
----------------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Construction $3,386 $2,952 $2,727 3 3 3
Manufacturing <F1> 4,470 3,454 3,824 27 23 23
Real Estate <F2> 1,905 1,628 1,629 9 15 14
Parent 2,323 2,239 2,027 2 2 2
------------------------------------------
Total $12,084 $10,273 $10,207 9 8 8
==========================================
NOTES:
<FN>
<F1> On a dollar and percentage basis comparison, the higher expenses
in 1997 as compared to 1996 and 1995 stemmed from increased Segment profits
which, in turn, increased incentive-based compensation expenses.
<F2> The decrease in the percentage of expenses in 1997 as compared to
1996 and 1995 is a result of an increase in revenues from sales of real
estate in 1997. See Note 3 to Chart A. On a dollar basis comparison, the
higher expenses in 1997 as compared to 1996 and 1995 are attributable to
increased incentive-based compensation expenses ($250,000 and $205,000
increase from 1996 and 1995, respectively) and increased personnel costs
($42,000 and $126,000 increase from 1996 and 1995, respectively).
</FN>
</TABLE>
<PAGE>
INTEREST COSTS
The majority of interest costs expensed of $4,779,102, $4,717,618 and
$4,806,571 in 1997, 1996 and 1995, respectively, are related to debt on owned
shopping centers and utilization of lines of credit. Interest costs of
$25,000, $70,000 and $-0- relating to properties under development in 1997,
1996 and 1995, respectively, were capitalized.
FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION
Income-producing property decreased in fiscal year ending April 30,
1997, in part as a result of the sale on April 28, 1997 of freestanding
Kmarts in Niles, Michigan, Shawnee, Oklahoma, and Warner Robins, Georgia for
$725,000 in cash plus the assumption of $7,723,758 in mortgage notes on the
properties. These sales transactions have been structured as tax-deferred,
like-kind exchanges pursuant to Internal Revenue Code Section 1031, which
allows a deferral of the tax gain if the Company utilizes the proceeds of the
sale to purchase other real estate within 180 days of the sale. The Company
has recognized a pre-tax gain on sales of $5,048,293 for financial statement
purposes. Management expects to comply with the provisions of Internal
Revenue Code Section 1031 and thus fully defer the tax gain on these sales.
Two parcels of Land held for future development or sale were also sold. There
was no debt on the land sold.<PAGE>
As of April 30, 1997, the Company had under contract to sell one
outparcel of land in North Fort Myers, Florida and a freestanding Kmart in
Newark, Ohio. It is the Company's plan to also sell an additional outparcel
of land in North Fort Myers, Florida, a shopping center in Oakwood, Georgia
and the Company's wood store fixture manufacturing and warehouse facility in
Atlanta, Georgia during the next fiscal year. These properties have been
reclassified as current assets under Property held for sale. The outparcels
were previously classified as Land held for future development or sale and
the Kmart and shopping center were previously classified as Income-producing
properties. The manufacturing and warehouse facility was previously reported
as Property, plant and equipment. The Mortgage debt associated with the
Kmart, the shopping center and the Company's manufacturing and warehouse
facility has been reclassified as short-term. There is no debt on the
outparcels. See Note 4 to the Consolidated Financial Statements for further
information.
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 increased to $13,075,119 at
the end of 1997, from $10,417,697 and $11,447,872 at the end of 1996 and
1995, respectively. Operating activities provided cash of $3,357,869.
Investing activities used cash of $4,331,762 primarily for expansion of
Income-producing properties. Financing activities provided cash of $3,132,491
that was subsequently used for expansion of Income-producing properties.
In April 1992, the Company secured a construction loan for the North
Fort Myers, Florida development from SunTrust Bank, Atlanta. The loan was
amended in April 1994, September 1995 and March 1996. The primary term of the
construction financing was five years, and the loan has been extended to May
1998, in accordance with the loan agreement. 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 effective
January 4, 1994, which terminated July 1, 1997. The notional amount reduced
monthly to $9.5 million prior to expiration of the agreement. The agreement
effectively set a cap and floor on the interest rate of 8% and 6%,
respectively, on most of the construction loan, which had an outstanding
balance of $14,375,049 at April 30, 1997, and carried a floating interest
rate of prime plus 3/8%. A determination was made each reporting period
whether amounts were receivable from or payable to the counterparty under the
agreement and such accrual was made in the Company's financial statements.
In December 1995, the Company secured a construction mortgage loan
from SunTrust Bank, Atlanta for the Jackson, Michigan development. The
initial term of the construction financing was one year, after which time the
loan was extended for one additional year in accordance with the loan
agreement. The maximum principal amount of $2,100,000 has been funded. In May
1997, the Company secured a permanent loan commitment for $3,500,000, a
portion of which will be used to pay off the current construction loan. The
permanent loan will have a term of 22 years and bear interest at 8 5/8%. The
commitment requires the establishment of a $500,000 letter of credit at
closing which will be used to pay down the loan in twelve months if certain
leasing requirements are not met.
During the coming fiscal year, the Company plans to acquire an office
building in northwest Atlanta, a portion of which will serve as corporate
headquarters for the Company along with the Construction Segment and the Real
Estate Segment. In addition, the Company is planning to sell the
Manufacturing Segment's wood store fixture manufacturing and warehouse
facility. The Company has plans to purchase or develop a new facility in
suburban Atlanta to be used for manufacturing wood and metal fixtures and ware
house space. Furthermore, the Company intends to sell the Merchants Crossing
Shopping Center in Oakwood, Georgia within the next fiscal year.
Income-producing properties will be sought for acquisition during the
next fiscal year. It is anticipated that new acquisitions will be primarily
financed through long-term, permanent debt instruments. The cash portion of
the proceeds from the sale (1) in April 1997, of the freestanding Kmart
properties located in Niles, Michigan, Shawnee, Oklahoma, and Warner Robins,
Georgia; (2) in May 1997, of an outparcel in North Fort Myers, Florida; and
(3) of the freestanding Kmart in Newark, Ohio currently under contract to be
sold will be used to fund any equity requirements of the aforementioned
acquisitions. In addition, the Company expects a portion of the permanent
loan proceeds on the Jackson, Michigan property will be available for
acquiring new properties.
At April 30, 1997, the Company and its subsidiaries had bank lines of
credit of $9,000,000, of which none was outstanding. <PAGE>
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 protect its profit
margin percentage.
In the Manufacturing Segment, the raw material prices were stable.
In the Real Estate Segment, many of the 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 tenant 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
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditors' Report 17
Consolidated Balance Sheets - April 30, 1997 and 1996 18
Consolidated Statements of Operations - For the years ended April 30,
1997, 1996 and 1995 19
Consolidated Statements of Shareholders' Equity - For the years ended
April 30, 1997, 1996 and 1995 20
Consolidated Statements of Cash Flows - For the years ended April 30,
1997, 1996 and 1995 21
Notes to Consolidated Financial Statements - April 30, 1997, 1996 and 1995 22
Schedules:
SCHEDULE NUMBER
II Valuation and Qualifying Accounts 31
III Real Estate and Accumulated Depreciation 32
</TABLE>
<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, 1997 and 1996, and
the results of their operations and cash flows for each of the years in the
three-year period ended April 30, 1997, 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 13, 1997
Atlanta, Georgia
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
April 30,
------------------------------------------
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents, including restricted cash of $609,629
and $76,001 in 1997 and 1996 $ 7,611,051 $ 5,452,453
Receivables -
Trade notes and accounts, net 3,512,652 1,684,916
Contracts, net, including retained amounts of
$4,057,528 in 1997 and $3,364,896 in 1996 (note 3) 15,402,509 14,389,915
Inventories, net (note 2) 1,557,964 1,676,541
Costs and earnings in excess of billings (note 3) 2,785,340 2,858,389
Property held for sale (note 4) 6,577,973 ---
Deferred income taxes (note 9) 682,321 999,100
Other 467,733 384,292
- -----------------------------------------------------------------------------------------------------------------------------------
Total current assets 38,597,543 27,445,606
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME-PRODUCING PROPERTIES, net (notes 5, 7 and 8) 43,324,407 50,661,940
PROPERTY, PLANT AND EQUIPMENT, NET (notes 6 and 8) 1,703,948 3,831,902
OTHER ASSETS:
Land held for future development or sale 3,889,361 4,980,903
Notes receivable 515,832 624,017
Cash surrender value of life insurance on officers, net 1,021,481 947,134
Deferred loan costs, net 531,812 914,153
Other 1,915,054 1,229,443
- -----------------------------------------------------------------------------------------------------------------------------------
$91,499,438 $90,635,098
===================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade and subcontractors payables, including
retained amounts of $1,904,080 in 1997 and
$1,892,870 in 1996 $10,385,079 $11,246,736
Billings in excess of costs and earnings (note 3) 1,148,665 781,818
Accrued cash and deferred profit-sharing (note 10) 3,130,097 1,617,932
Accrued expenses 3,438,412 1,895,766
Current maturities of long-term debt (notes 7 and 8) 7,420,171 1,485,657
- -----------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 25,522,424 17,027,909
- -----------------------------------------------------------------------------------------------------------------------------------
DEFERRED INCOME TAXES (note 9) 1,884,453 1,713,014
OTHER LIABILITIES 848,462 539,263
MORTGAGE NOTES AND BONDS PAYABLE,
less current maturities (note 7) 24,919,282 39,102,270
OTHER LONG-TERM DEBT, less current
maturities (note 8) 16,199,603 12,100,266
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 69,374,224 70,482,722
- -----------------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (notes 4, 5, 7 and 8)
SHAREHOLDERS' EQUITY (note 10):
Common stock, $1 par value; authorized
5,000,000 shares; 3,010,039 issued
and 2,938,356 outstanding in 1997
and 2,970,856 outstanding in 1996 3,010,039 3,010,039
Additional paid-in capital 2,012,190 2,012,190
Retained earnings 17,473,536 15,289,448
- -----------------------------------------------------------------------------------------------------------------------------------
Total paid-in capital and retained earnings 22,495,765 20,311,677
Less cost of treasury stock (71,683 shares in 1997
and 39,183 shares in 1996) 370,551 159,301
- -----------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 22,125,214 20,152,376
- -----------------------------------------------------------------------------------------------------------------------------------
$ 91,499,438 $ 90,635,098
===================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended April 30,
---------------------------------------------------
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Construction $97,976,902 $ 107,494,271 $ 94,039,455
Manufacturing 16,661,798 14,999,240 16,348,294
Rental income 11,770,889 11,169,294 11,131,136
Real estate sales 9,214,758 --- 630,000
Interest 452,992 462,858 406,302
Other 46,262 173,577 53,495
- --------------------------------------------------------------------------------------------------------------
136,123,601 134,299,240 122,608,682
- --------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Applicable to revenues -
Construction 91,637,636 101,893,350 88,847,494
Manufacturing 10,412,263 11,587,307 12,895,856
Rental property operating expenses,
exclusive of interest 6,526,306 6,295,145 6,046,094
Cost of real estate sold 4,085,881 --- 312,670
Provision for impairment on
income-producing
property (note 5) 2,750,000 --- ---
- --------------------------------------------------------------------------------------------------------------
115,412,086 119,775,802 108,102,114
- --------------------------------------------------------------------------------------------------------------
Selling, shipping, general and administrative 12,084,015 10,273,008 10,207,016
Interest costs incurred, less interest capitalized
of $25,000 $70,000 and $0 in 1997, 1996 and
1995, respectively 4,779,102 4,717,618 4,806,571
- --------------------------------------------------------------------------------------------------------------
132,275,203 134,766,428 123,115,701
- --------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) BEFORE INCOME TAXES 3,848,398 (467,188) (507,019)
- --------------------------------------------------------------------------------------------------------------
INCOME TAXES (note 9)
Current 968,782 117,820 (103,490)
Deferred 488,218 (280,820) (72,510)
- --------------------------------------------------------------------------------------------------------------
1,457,000 (163,000) (176,000)
- --------------------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) $ 2,391,398 $ (304,188) $ (331,019)
===============================================================================================================
NET EARNINGS (LOSS) PER SHARE, based on weighted
average outstanding shares of 2,965,800,
2,977,163, and 2,993,540 in 1997, 1996 and 1995,
respectively $ .81 $ (.10) $ (.11)
===============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Retained Treasury
Shares Amount Capital Earnings Stock Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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)
Acquisition 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
Net earnings --- --- --- 2,391,398 --- 2,391,398
Cash dividends declared -
$.07 per share --- --- --- (207,310) --- (207,310)
Acquisition of 32,500 shares
of treasury stock --- --- --- --- (211,250) (211,250)
============================================================================================================================
BALANCES at April 30, 1997 3,010,039 $3,010,039 $2,012,190 $ 17,473,536 $(370,551) $ 22,125,214
============================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended April 30,
-------------------------------------------------
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 2,391,398 $ (304,188) $ (331,019)
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Depreciation and amortization 3,401,334 3,242,738 3,078,878
Deferred tax expense (benefit) 488,218 (280,820) (72,510)
Gain on sales of real estate (5,128,877) --- (317,330)
Provision for impairment on income-producing property 2,750,000 --- ---
Decrease (increase) in assets:
Receivables (2,840,330) (5,392,110) 3,367,446
Inventories 118,577 979,365 (293,675)
Costs and earnings in excess of billings 73,049 (1,289,544) (79,501)
Other current assets (83,441) 3,787 (15,440)
Other assets (681,259) (271,099) 506,692
Increase (decrease) in liabilities:
Accounts payable (861,657) 3,387,122 (508,760)
Accrued cash and deferred profit-sharing 1,512,165 124,451 (1,208,632)
Billings in excess of costs and earnings 366,847 281,350 (199,090)
Accrued expenses 1,542,646 (71,722) (852,252)
Other liabilities 309,199 (46,520) 60,019
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 3,357,869 362,810 3,134,826
- ------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales of real estate 1,496,831 --- 630,000
Additions to properties, property, plant and equipment, net (5,828,593) (2,363,431) (1,114,794)
- -------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (4,331,762) (2,363,431) (484,794)
- --------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Debt proceeds 5,061,143 6,419,282 5,951,000
Debt repayments (1,486,522) (6,821,440) (7,093,519)
Additions to deferred loan costs (23,570) --- (4,773)
Cash dividends (207,310) (312,603) (359,225)
Repurchases of common stock (211,250) (102,868) ---
- -------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 3,132,491 (817,629) (1,506,517)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 2,158,598 (2,818,250) 1,143,515
Cash and cash equivalents at beginning of year 5,452,453 8,270,703 7,127,188
- -------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 7,611,051 $ 5,452,453 $ 8,270,703
===============================================================================================================================
Supplemental disclosure of non-cash investing and
financing activities
Assumption of mortgage loans by purchaser in
conjunction with sale of income-producing properties $7,723,758 $ --- $ ---
Supplemental schedule of cash flow information:
Interest paid, net of amounts capitalized $4,829,201 $ 4,699,374 $ 4,756,176
Income taxes paid $ 382,873 $ 107,653 $ 696,712
===============================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 1997, 1996 and 1995
(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 $6,536,827 and $4,365,006 at April 30, 1997 and
1996, 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
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.
Capitalized costs are allocated to individual lots sold based on
relative sales values or other value methods appropriate under the
circumstances.
(D) 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.
Revenues from the sale of manufactured goods are recognized on the
date products are shipped to the customer for sales other than "bill and
hold" sales. Revenues from "bill and hold" sales, on which delivery is
delayed at the customer's explicit request, are recognized when
conditions for such revenues are met; principally, the completed product
is ready for delivery and transfer of both title and risk of ownership
has passed to the buyer.
(E) 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.
(F) 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.
(G) LAND HELD FOR FUTURE DEVELOPMENT OR SALE
Land held for future development or sale is carried at the lower of
cost or fair value less costs to sell.
(H) PROPERTY HELD FOR SALE
Property held for sale is expected to be sold in the near term and
is carried at the lower of cost or fair value less costs
to sell. Depreciation and amortization are suspended during the
sale period except for manufacturing facilities that are in operation.
(I) DEFERRED LOAN COSTS
Costs incurred to obtain loans have been capitalized and are being
amortized on a straight-line basis over the terms of the indebtedness.
<PAGE>
(J) 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 enacted tax rates expected to apply to 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.
(K) 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 option plan
are not included in average outstanding shares. No material dilution in
earnings per share would result if all the options were exercised.
(L) 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 period. Actual results could differ
from those estimates.
(M) FAIR VALUE OF FINANCIAL INSTRUMENTS
Management believes that the carrying amounts of cash and cash
equivalents, receivables, other assets, accounts payable, 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.
(N) RECLASSIFICATIONS
Certain reclassifications have been made to the 1996 and 1995
consolidated financial statements to conform with classifications
adopted in 1997.
(O) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
The Company adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," on May
1, 1996. This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future
net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceed the fair
value of the assets. The Company's policy is to consider an asset to be
held for disposal when the Company has committed to sell such asset in
the near term. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell. Adoption of this
Statement did not have a material impact on the Company's financial
position, results of operations or liquidity.
(P) STOCK OPTIONS
The Company accounts for its stock option plan in accordance with
the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB Opinion 25"), and
related interpretations. As such, compensation expense is recorded only
to the extent that the market price of the underlying stock at the date
of grant exceeds the exercise price. In October 1995, SFAS No. 123,
Accounting for Stock-Based Compensation, was issued. SFAS 123 allows
entities to apply the provisions of APB Opinion 25 for recognizing
stock-based compensation expense in the basic financial statements.
However, companies are encouraged to adopt a new accounting method based
on the estimated fair value of stock-based compensation. Companies that
do not follow the new fair value based method are required to provide
expanded disclosures in the footnotes. SFAS 123 is effective for the
fiscal year ended April 30, 1997. The Company has elected to continue to
apply the provisions of APB Opinion 25 and, to the extent material,
follow the disclosure provisions of SFAS 123.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
(2) INVENTORIES
<TABLE>
<CAPTION>
The classes of inventory at April 30 were:
1997 1996
-------------------------------
<S> <C> <C>
Finished goods $ 939,784 $1,355,296
Work in progress 110,119 73,029
Raw materials 508,061 248,216
-------------------------------
$1,557,964 $1,676,541
===============================
</TABLE>
(3) CONTRACTS IN PROGRESS
Assets and liabilities related to contracts in progress, including
contracts receivable, are included in current assets and current liabilities
as they will be liquidated in the normal course of contract completion, which
is expected to occur within one year. Amounts billed and costs recognized on
contracts in progress at April 30 were:
<TABLE>
<CAPTION>
1997 1996
----------------------------------
<S> <C> <C>
Costs and earnings in excess of billings:
Accumulated costs and earnings $ 24,480,989 $ 25,901,915
Amounts billed 21,695,649 23,043,526
----------------------------------
$ 2,785,340 $ 2,858,389
==================================
Billings in excess of costs and earnings:
Amounts billed $ 29,161,445 $ 29,022,583
Accumulated costs and earnings 28,012,780 28,240,765
----------------------------------
$ 1,148,665 $ 781,818
==================================
</TABLE>
(4) PROPERTY HELD FOR SALE
As of April 30, 1997, the Company had entered into a contract to sell
a parcel of undeveloped land in North Fort Myers, Florida for a sales price
of $770,000. This sale closed in May 1997, and resulted in a gain. In March
of 1997, the Company entered into a contract to sell a property in Newark,
Ohio that is tenanted by Kmart Corporation. The contract amount is $225,000
in cash plus assumption by the purchaser of the mortgage which had a balance
of $1,310,000 as of April 30, 1997. This sale is expected to result in a
gain. In late 1997, the Company entered into negotiations to sell a parcel of
undeveloped land in North Fort Myers, Florida and a shopping center in
Oakwood, Georgia. In addition, the Company began actively marketing for sale
its primary manufacturing facility in Atlanta, Georgia. Management intends to
move into a new primary manufacturing facility in fiscal year 1998. The
Company anticipates that the aforementioned properties not under contract for
sale as of April 30, 1997 will be sold at gains. The Company expects to sell
these five properties in fiscal year 1998 and has classified the carrying
amounts of these properties as property held for sale in the accompanying
April 30, 1997 consolidated balance sheet. All of these properties are
included in the real estate segment except for the manufacturing facility
which is included in the manufacturing segment.
The results of operation for the year ended April 30, 1997 for the
properties in the real estate segment that are held for sale are summarized
below:
<TABLE>
<CAPTION>
<S> <C>
Revenues $1,054,182
Operating expenses, including depreciation and interest 869,463
----------
Results of operations $ 184,719
==========
</TABLE>
The results of operations for the manufacturing segment are
summarized in note 11.
<PAGE>
(5) 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>
<CAPTION>
Estimated useful lives 1997 1996
----------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C>
Land $ 12,604,290 $ 14,832,628
Buildings and
improvements 7 - 39 years 45,161,119 55,937,446
------------------------------------
57,765,409 70,770,074
Less - Accumulated
depreciation and
amortization 14,441,002 20,108,134
------------------------------------
$ 43,324,407 $ 50,661,940
====================================
</TABLE>
During the fourth quarter of 1997, management received market
information which it believed indicated that the carrying value of its
shopping center in North Fort Myers, Florida had been impaired. Management
completed a recoverability review of the carrying value of the shopping
center based upon an estimate of undiscounted future cash flows expected to
result from its use and eventual disposition. As of April 30, 1997,
management concluded that the sum of the undiscounted future cash flows
estimated to be generated by the shopping center is less than the carrying
value and, as a result, the Company recorded a provision for impairment of
$2,750,000 which reduced the shopping center's carrying value to its
estimated fair value of $21,867,000 as of April 30, 1997. The estimated fair
value was determined by using market value studies compiled by two
independent commercial real estate brokerage firms. This shopping center is
classified as an income-producing property in the accompanying April 30, 1997
consolidated balance sheet and is included in the real estate segment.
On April 28, 1997, the Company sold income-producing properties
occupied by Kmart in Shawnee, Oklahoma, Warner Robins, Georgia and Niles,
Michigan. These sales transactions have been structured as tax-deferred,
like-kind exchanges pursuant to Internal Revenue Code Section 1031, which
allows a deferral of the tax gain if the Company utilizes the proceeds of the
sale to purchase other real estate within 180 days of the sale. The Company
has recognized a pre-tax gain of $5,048,293 for financial statement purposes.
Management expects to comply with the provisions of Internal Revenue Code
Section 1031 and thus fully defer the tax gain on these sales.
(6) PROPERTY, PLANT AND EQUIPMENT
The major components of property, plant and equipment and their
estimated useful lives at April 30 were:
<TABLE>
<CAPTION>
Estimated useful lives 1997 1996
------------------------------------------------------------------
<S> <C> <C> <C>
Land $ 92,226 $ 529,224
Buildings and
improvements 3-31.5 years 1,513,989 4,817,330
Machinery and
equipment 3-10 years 5,322,714 4,949,832
-----------------------------
6,928,929 10,296,386
Less - Accumulated
depreciation 5,224,981 6,464,484
-----------------------------
$1,703,948 $ 3,831,902
=============================
</TABLE>
(7) MORTGAGE NOTES AND BONDS PAYABLE AND LEASES
The Company owns nine shopping centers which are pledged as
collateral on related mortgage notes, bonds payable and construction mortgage
loans (note 8). It is also lessee of nine 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 8).
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
(7) MORTGAGE NOTES AND BONDS PAYABLE AND LEASES - (continued)
The leaseback centers are leased to the Kmart Corporation and Kmart
is an anchor in seven of the nine owned centers. The owned centers are leased
for periods expiring from fiscal years 1998 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 5 - 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 1997, 1996 and 1995 was approximately $7,829,000, $7,116,000
and $7,261,000, respectively. Base rental revenue received from
sale/leaseback centers in 1997, 1996 and 1995 was approximately $2,694,000,
$2,917,000 and $2,917,000, respectively. Contingent rentals received on all
centers in 1997, 1996 and 1995 were approximately $164,000, $171,000 and
$103,000, respectively.
Approximate future minimum annual rentals to be received on all
centers are:
<TABLE>
<CAPTION>
Owned Leaseback
--------------------------------------------------
Years Ending April 30, Rental Receipts
--------------------------------------------------------------------------------------------
<S> <C> <C>
1998 $ 6,901,000 $ 2,620,000
1999 6,627,000 2,620,000
2000 6,203,000 2,552,000
2001 6,033,000 2,538,000
2002 5,905,000 2,056,000
2003 and thereafter 70,076,000 5,803,000
-------------------------------------------------------------------------------------------
$ 101,745,000 $18,189,000
===========================================================================================
</TABLE>
Pertinent information on future expected payments on mortgage notes
and bonds on seven of the owned centers and approximate minimum rentals to be
paid on leaseback centers are as follows:
<TABLE>
<CAPTION>
Owned Centers
Mortgage Payments
--------------------------- Leaseback Centers
Years Ending April 30, Principal Interest Rental Payments
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1998 $ 6,459,000 $ 2,776,000 $ 2,136,000
1999 6,026,000 1,751,000 2,136,000
2000 613,000 1,702,000 2,136,000
2001 666,000 1,648,000 2,136,000
2002 12,943,000 1,589,000 1,720,000
2003 and thereafter 4,671,000 1,945,000 5,674,000
-------------------------------------------------------------------------------------------------
$31,378,000 $11,411,000 $ 15,938,000
=================================================================================================
</TABLE>
The notes and bonds are due at various dates between April 1, 2002
and November 1, 2014, and bear interest at rates ranging from 7% to 10%, with
a weighted average rate of 8.57% at April 30, 1997. The outstanding principal
balance at April 30, 1997 and scheduled interest payments for fiscal year 1998
on mortgage notes for two owned centers which have been classified as
property held for sale in the accompanying April 30, 1997 consolidated
balance sheet (note 4) have been included in the fiscal year 1998 future
payment totals.
<PAGE>
(8) OTHER LONG-TERM DEBT AND CREDIT FACILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
Other long-term debt at April 30 was:
1997 1996
---------------------------
79% of prime rate (6.72% at April 30, 1997), industrial development
bond payable in quarterly installments of $57,143 principal plus
interest, final payment due March 1, 2000; secured by real property $ 685,708 $ 914,280
Prime rate plus 3/8% (8.875% at April 30, 1997), construction mortgage
loan; monthly principal and interest payments of $87,729
required with principal due May 28, 1998; secured by income-
producing property and assignment of leases and rents; guaranteed by
a subsidiary of the Company 9,454,624 9,691,669
Prime rate plus 3/8% (8.875% at April 30, 1997), 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 $42,113
required beginning December 1996, with principal due May 28, 1998;
secured by income-producing property and assignment of leases and
rents; guaranteed by a subsidiary of the Company 4,920,425 549,754
Prime rate (8.50% at April 30, 1997), 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,
1997; secured by income-producing property and assignment of leases
and rents; guaranteed by a subsidiary of the Company 2,100,000 1,409,528
---------------------------
Total other long-term debt 17,160,757 12,565,231
Less - current maturities 961,154 464,965
---------------------------
Total other long-term debt, excluding current maturities $16,199,603 $ 12,100,266
===========================
</TABLE>
The aggregate maturities of other long-term debt are as follows:
Years Ending April 30, Amount
-----------------------------------------------------
1998 $ 961,154
1999 16,199,603
-----------------------------------------------------
$ 17,160,757
=====================================================
The outstanding principal balance of $685,708 on the industrial
development bond payable has been included in the current maturities of
long-term debt as the real property secured by this balance is included in
property held for sale in the accompanying consolidated balance sheet at
April 30, 1997 (note 4).
The Company classified the $2,100,000 of borrowings under its
construction mortgage loan as long-term at April 30, 1997. The Company has a
commitment from a lender and intends to refinance this loan 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,
1997, 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, 1997, the Company had available bank lines of credit of
$9,000,000, of which none was outstanding. These lines of credit which expire
during fiscal years 1998 and 1999, bear interest at the prime rate (8.50% at
April 30, 1997) and have a 3/8% commitment fee on the unused portion.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
(9) INCOME TAXES
<TABLE>
<CAPTION>
Income tax expense(benefit) consists of:
Current Deferred Total
------------------------------------------
<S> <C> <C> <C>
Year ended April 30, 1997:
U.S. federal $ 908,173 $ 436,827 $ 1,345,000
State and local 60,609 51,391 112,000
------------------------------------------
$ 968,782 $ 488,218 $ 1,457,000
==========================================
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)
===========================================
</TABLE>
Income tax expense (benefit) was $1,457,000, $(163,000), and
$(176,000) for the years ended April 30, 1997, 1996 and 1995, 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>
<CAPTION>
1997 1996 1995
---------------------------------------------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit) $1,308,455 $(158,802) $(172,386)
Increase in income taxes resulting from:
State and local income taxes, net
of federal income tax benefit 73,920 (12,372) (12,232)
Other, net 74,625 8,174 8,618
---------------------------------------------
$1,457,000 $(163,000) $(176,000)
=============================================
</TABLE>
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax liabilities
at April 30, 1997 and 1996 are presented below:
<TABLE>
<CAPTION>
1997 1996
--------------------------
<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 $ 261,841 $ 409,745
Provision for impairment on income-producing property
not currently deductible for tax purposes 1,036,175 ---
Accrued directors' fees not currently deductible for tax purposes 235,386 183,266
Compensated absences not currently deductible for tax purposes 120,451 137,058
Other accrued expenses not currently deductible for tax purposes 444,354 339,027
Other 503,372 402,952
--------------------------
Total gross deferred tax assets 2,601,579 1,472,048
==========================
Deferred tax liabilities:
Properties, plant and equipment, principally because of
differences in depreciation and capitalized interest 1,720,215 1,902,417
Gain on real estate sales; proceeds from which will
be used in tax-deferred, like-kind exchanges 1,885,351 --
Profit related to installment sale 151,575 180,007
Other 46,570 103,538
--------------------------
Total gross deferred tax liabilities 3,803,711 2,185,962
--------------------------
Net deferred tax liability $ 1,202,132 $ 713,914
===========================
</TABLE>
The valuation allowance was $0 at April 30, 1997 and 1996.<PAGE>
(10) STOCK OPTION PLAN AND DEFERRED PROFIT-SHARING PLAN
The Company adopted a Key Employee Incentive Stock Option Plan which
expired in May 1996 and which provided that stock options could have been
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>
<CAPTION>
1997 1996 1995
--------------------------------------
<S> <C> <C> <C>
Options outstanding
at beginning of year 17,666 24,332 24,332
Options granted --- --- ---
Options canceled --- (6,666) ---
Options exercised --- --- ---
-------------------------------------
Options outstanding
at end of year 17,666 17,666 24,332
-------------------------------------
Options prices per share:
Options granted during the year $ --- $ --- $ ---
-------------------------------------
Options canceled $ --- $ 3.75 $ ---
-------------------------------------
Options exercised $ --- $ --- $ ---
-------------------------------------
Options outstanding
at end of year $2.875-4.50 $2.875-4.50 $ 2.875-4.50
==========================================
</TABLE>
Options outstanding at April 30, 1997 are fully vested and have a
weighted average contractual life of four years.
The Company has a deferred Profit-Sharing Plan ("Plan") which covers
substantially all of its employees. Funded employer contributions to the Plan
for 1997, 1996 and 1995 were approximately $1,032,000, $502,000 and $571,000,
respectively. The net assets in the Plan, which is administered by an
independent trustee, were approximately $14,304,000 at April 30, 1997 and
$14,122,000 at April 30, 1996.
(11) SEGMENT REPORTING
The Company operates in three industry segments: Construction,
Manufacturing and Real Estate.
The construction segment provides construction services for
commercial and industrial projects. The manufacturing segment produces store
fixtures for retail outlets, display fixtures for point-of-sale merchandising
and other products. The real estate segment develops income-producing
properties for sale or for investment. The Company usually provides property
management for 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 51%, 48% and
43% of consolidated revenues in 1997, 1996 and 1995, 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% of consolidated revenues in 1995.
Operating earnings (loss) is total revenue less operating expenses,
including depreciation and interest. Selling, shipping, general and
administrative and interest costs deducted in the computation of operating
earnings (loss) of each segment represent the actual costs incurred by that
segment. Allocated parent expenses and income taxes have not been deducted.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
<TABLE>
<CAPTION>
Construction Manufacturing Real Estate Parent Eliminations Consolidated
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1997
Revenues from unaffiliated customers $ 97,976,902 $ 16,661,798 $ 20,985,647 $ -- $ -- $135,624,347
Interest and other income 138,096 41,460 146,512 257,519 (84,333) 499,254
Intersegment revenue 345,048 -- -- 300,000 (645,048) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Revenue $ 98,460,046 $ 16,703,258 $ 21,132,159 $ 557,519 $ (729,381) $136,123,601
==================================================================================================================================
Operating earnings (loss) $ 3,088,094 $ 1,749,033 $ 1,003,370 $(1,778,337) $ (213,762) $ 3,848,398
==================================================================================================================================
Identifiable assets $ 19,582,800 $ 10,300,421 $ 59,833,984 $ 8,692,770 $(6,910,537) $ 91,499,438
==================================================================================================================================
Depreciation and amortization $ 226,929 $ 600,628 $ 2,633,151 $ 25,382 $ (84,756) $ 3,401,334
==================================================================================================================================
Capital expenditures $ 176,539 $ 467,771 $ 5,184,283 $ -- $ -- $ 5,828,593
==================================================================================================================================
1996
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 and amortization $ 198,390 $ 586,497 $ 2,519,163 $ 23,444 $ (84,756) $ 3,242,738
==================================================================================================================================
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 and amortization $ 160,916 $ 532,417 $ 2,453,524 $ 16,777 $ (84,756) $ 3,078,878
==================================================================================================================================
Capital expenditures $ 196,801 $ 773,348 $ 140,890 $ 3,755 $ -- $ 1,114,794
==================================================================================================================================
/TABLE
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
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, 1997 $ 57,541 $ 117,426 $ -- $ 109,383<F1> $ 65,584
================================================================================================================================
Year ended
April 30, 1996 $ 100,189 $ 107,837 $ -- $ 150,485<F1> $ 57,541
- --------------------------------------------------------------------------------------------------------------------------------
Year ended
April 30, 1995 $ 41,041 $ 63,559 $ -- $ 4,411<F1> $100,189
- --------------------------------------------------------------------------------------------------------------------------------
INVENTORY RESERVES
Year ended
April 30, 1997 $ 757,896 $ 203,561 $ -- $ 587,010<F2> $374,447
================================================================================================================================
Year ended
April 30, 1996 $ 773,455 $ 160,000 $ -- $ 175,559<F2> $757,896
- --------------------------------------------------------------------------------------------------------------------------------
Year ended
April 30, 1995 $ 485,859 $ 287,596 $ -- $ -- $773,455
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Allowance for doubtful accounts deductions resulted from the subsequent
write-off and/or recovery of the related receivable.
<F2> Inventory reserve deductions resulted from the subsequent sale and/or
write-off of the related inventory.
</FN>
/TABLE
<PAGE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
April 30, 1997
<TABLE>
<CAPTION>
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:
Shopping Center - Jackson, MI $ 2,100,000 $ 401,195 $ 1,788,183 $ 1,134,608 $ 453,293
Kmart - Tifton, GA 701,965 132,894 1,418,266 160,816 132,894
Shopping Center - Newnan, GA 5,590,015 696,829 5,291,120 (61,383) 696,829
Kmart - Morton, IL 3,317,726 18,005 2,767,765 (115,562) 18,005
Kmart - Columbus, GA 2,988,181 11,710 2,356,920 10,078 11,710
Shopping Center - Englewood, FL 12,969,345 6,072,805 8,823,506 10,173 6,072,805
Shopping Center - N. Fort Myers, FL 14,375,049 5,940,143 11,290,778 3,292,621 5,218,754
Leaseback Shopping Center - Davenport, IA -- -- 2,150 176,261 --
Leaseback Shopping Center - Jacksonville, FL -- -- 42,151 -- --
Leaseback Shopping Center - Orange Park, FL -- -- 127,487 35,731 --
Leaseback Shopping Center - W. St. Paul, MN -- -- -- 54,403 --
Leaseback Shopping Center - Bayonet Point, FL -- -- -- 9,384 --
- -----------------------------------------------------------------------------------------------------------------------------------
42,042,281 13,273,581 33,908,326 4,707,130 12,604,290
- -----------------------------------------------------------------------------------------------------------------------------------
LAND HELD FOR FUTURE DEVELOPMENT
OR SALE:
Davenport, IA -- 183,572 -- -- 183,572
Louisville, KY -- 80,011 -- -- 80,011
Oakwood, GA -- 234,089 -- 543,330 777,419
North Fort Myers, FL -- 2,760,187 -- (3,159) 2,757,028
Jackson, MI -- -- -- 74,687 74,687
- -----------------------------------------------------------------------------------------------------------------------------------
-- 3,257,859 -- 614,858 3,872,717
- -----------------------------------------------------------------------------------------------------------------------------------
PROPERTY HELD FOR SALE (2):
Kmart-Newark, OH 1,310,000 153,900 2,296,100 -- 153,900
Shopping Center - Oakwood, GA 4,501,067 556,416 3,568,163 53,296 556,416
North Fort Myers, FL -- 640,605 -- 72,453 713,058
- -----------------------------------------------------------------------------------------------------------------------------------
5,811,067 1,350,921 5,864,263 125,749 1,423,374
- -----------------------------------------------------------------------------------------------------------------------------------
$47,853,348 $ 17,882,361 $ 39,772,589 $ 5,447,737 $17,900,381
===================================================================================================================================
<CAPTION>
Gross Amounts at Which Life on Which
Carried at Close of Year Depreciation
---------------------------------- In Latest
Building Net Earnings
and Capitalized Accumulated Date of Date Statement
Improvements Interest Total <F1> Depreciation Construction Acquired is Computed
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME-PRODUCING PROPERTIES:
Shopping Center - Jackson, MI $ 2,922,791 $ 89,866 $ 3,465,950 $ 1,866,970 1972, 1996 -- 39 years
Kmart - Tifton, GA 1,579,082 88,237 1,800,213 1,394,222 1974, 1991 -- 25 years
Shopping Center - Newnan, GA 5,229,737 311,528 6,238,094 2,736,017 1974,1987,1989 -- 31.5 years
Kmart - Morton, IL 2,652,203 -- 2,670,208 1,882,123 1980, 1992 -- 25 years
Kmart - Columbus, GA 2,366,998 238,970 2,617,678 1,724,267 1980, 1988 -- 25 years
Shopping Center - Englewood, FL 8,833,679 1,346,273 16,252,757 2,320,999 1990 -- 32 years
Shopping Center - N. Fort Myers, FL 14,583,399 4,470,789 24,272,942 2,405,522 1993, 1996 -- 31.5 years
Leaseback Shopping Center - Davenport, IA 178,411 -- 178,411 40,355 1995 -- 7 years
Leaseback Shopping Center - Jacksonville, FL 42,151 -- 42,151 7,587 1994 -- 25 years
Leaseback Shopping Center - Orange Park, FL 163,218 -- 163,218 51,386 1995 -- 7 years
Leaseback Shopping Center - W. St. Paul, MN 54,403 -- 54,403 11,554 1996 -- 8 years
Leaseback Shopping Center - Bayonet Point, FL 9,384 -- 9,384 -- 1997 -- -- (7)
------------------------------------------------
38,615,456 6,545,663 57,765,409 14,441,002
------------------------------------------------
LAND HELD FOR FUTURE DEVELOPMENT
OR SALE:
Davenport, IA -- -- 183,572 -- -- 1977 --
Louisville, KY -- -- 80,011 -- -- 1979 --
Oakwood, GA -- 16,644 794,063 -- -- 1987 --
North Fort Myers, FL -- -- 2,757,028 -- -- 1994 --
Jackson, MI -- -- 74,687 -- -- 1997 --
-----------------------------------------------
-- 16,644 3,889,361 --
------------------------------------------------
PROPERTY HELD FOR SALE <F2>:
Kmart-Newark, OH 2,296,100 -- 2,450,000 1,606,890 1979 -- 25 years
Shopping Center - Oakwood, GA 3,621,459 384,700 4,562,575 1,414,409 1988 -- 31.5 years
North Fort Myers, FL -- -- 713,058 -- -- 1993,1996 --
---------------------------------------------------
5,917,559 384,700 7,725,633 3,021,299
---------------------------------------------------
$ 44,533,015 $6,947,007 $69,380,403 $17,462,301
===================================================
NOTE: Reconciliations of total real estate carrying value and accumulated
depreciation for the three years ended April 30, 1997 are as follows:
<CAPTION>
Real Estate Accumulated Depreciation
---------------------------------------- ------------------------------------------
1997 1996 1995 1997 1996 1995
---------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR $75,750,977 $73,767,825 $73,927,553 $20,108,134 $18,033,487 $ 15,950,677
ADDITIONS DURING YEAR
Additions 4,771,612<F3> 1,983,152<F3> 182,539 -- -- --
Depreciation -- -- -- 2,102,932 2,074,647 2,082,810
---------------------------------------- -------------------------------------------
4,771,612 1,983,152 182,539 2,102,932 2,074,647 2,082,810
---------------------------------------- -------------------------------------------
DEDUCTIONS DURING YEAR
Accumulated depreciation on
properties sold in 1997 -- -- -- 4,748,765 -- --
Carrying value of real estate
sold and retirements 8,392,186<F5> -- 342,267<F4> -- -- --
Provision for impairment on income-
producing property 2,750,000<F6> -- -- -- -- --
--------------------------------------- -----------------------------------------
11,142,186 -- 342,267 4,748,765 -- --
--------------------------------------- ------------------------------------------
BALANCE AT CLOSE OF YEAR $69,380,403 $ 75,750,977 $73,767,825 $17,462,301 $20,108,134 $18,033,487
======================================= ===========================================<PAGE>
NOTES:
(1) The aggregated cost for land and building and improvements for federal
income tax purposes at April 30, 1997 is $67,995,399.
(2) The manufacturing facility, which is classified as property held for sale
in the April 30, 1997 consolidated balance sheet included herein, is not
included in this schedule as it is not part of the Company's real estate
operations.
(3) Primarily represents additions to a shopping center development in North
Fort Myers, Florida and a Kroger in Jackson, Michigan.
(4) Primarily represents sales of land in North Fort Myers, Florida, Atlanta,
Georgia and Gwinnett County, Georgia.
(5) Primarily represents sales of three freestanding Kmarts in Niles,
Michigan, Warner Robins, Georgia and Shawnee, Oklahoma.
(6) Represents a provision for impairment which was recorded to reduce the
carrying value of a shopping center in North Fort Myers, Florida to its
estimated fair value.
(7) Represents construction in progress which has not been depreciated.
<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 1997 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 Auditor's Report
Consolidated Balance Sheets at April 30, 1997 and 1996
Consolidated Statement of Operations for the Years Ended April 30,
1997, 1996 and 1995
Consolidated Statements of Shareholders' Equity for the Years
Ended April 30, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the Years Ended April 30,
1997, 1996 and 1995
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. Restated Bylaws
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 Agreement
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, 1997
21. List of the Company's Subsidiaries (8)
27. Financial Data Schedule
99. Proxy Statement for 1997 Annual Meeting of Shareholders
Explanation of Exhibits
(1) This exhibit is 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 quarter ended October 31, 1995.
(8) This exhibit is incorporated by reference to the Company's Form 10-K
for the year ended April 30, 1996.
# Management compensatory plans or arrangement.
(b) Reports on Form 8-K: None filed during the fourth quarter of fiscal
1997.
(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.
<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 10, 1997 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 10, 1997 /s/ Edward M. Abrams
Edward M. Abrams
Chairman of the Board of Directors
and Chief Executive Officer
Dated: July 10, 1997 /s/ Joseph H. Rubin
Joseph H. Rubin
Director, President and Chief Operating Officer
Dated: July 10, 1997 /s/ Bernard W. Abrams
Bernard W. Abrams
Director, Chairman of the Executive Committee
Dated: July 10, 1997 /s/ Alan R. Abrams
Alan R. Abrams
Director
Dated: July 10, 1997 /s/ J. Andrew Abrams
J. Andrew Abrams
Director
Dated: July 10, 1997 /s/ Richard H. Danielson
Richard H. Danielson
Director
Dated: July 10, 1997 /s/ Paula Lawton Bevington
Paula Lawton Bevington
Director
Dated: July 10, 1997 /s/ Donald W. MacLeod
Donald W. MacLeod
Director
Dated: July 10, 1997 /s/ Anthony Montag
Anthony Montag
Director
Dated: July 10, 1997 /s/ Felker W. Ward, Jr.
Felker W. Ward, Jr.
Director
Dated: July 10, 1997 /s/ Melinda S. Garrett
Melinda S. Garrett
Chief Financial Officer and
Chief Accounting Officer
</TABLE>
ABRAMS INDUSTRIES, INC.
RESTATED BYLAWS
ARTICLE I OFFICES .................................................. 1
Section 1. Registered Office ................................... 1
Section 2. Other Offices ....................................... 1
ARTICLE II SHAREHOLDER MEETINGS ..................................... 1
Section 1. Annual Meeting ..................................... 1
Section 2. Special Meetings ................................... 1
Section 3. Notice of Meetings ................................. 2
Section 4. Organization ....................................... 3
Section 5. Quorum ............................................. 3
Section 6. Voting ............................................. 4
Section 7. List of Shareholders ............................... 5
Section 8. Action Without a Meeting ........................... 5
Section 9. Notice of Shareholder Business ..................... 5
Section 10. Notice of Shareholder Nominees ..................... 6
ARTICLE III DIRECTORS .............................................. 7
Section 1. Powers ............................................. 7
Section 2. Number, Election, Term ............................ 7
Section 3. Vacancies ......................................... 8
Section 4. Meetings and Notice ............................... 8
Section 5. Quorum ............................................. 8
Section 6. Telephone Conference Meeting ...................... 9
Section 7. Action Without a Meeting ............................ 9
Section 8. Executive Committee ................................ 9
Section 9. Other Committees ................................... 10
Section 10. Removal of Directors ............................... 10
Section 11. Compensation of Directors .......................... 10
ARTICLE IV OFFICERS ................................................ 10
Section 1. Number ............................................. 10
Section 2. Compensation ....................................... 10
Section 3. Term of Office ..................................... 10
Section 4. Removal ............................................ 11
Section 5. Vacancies .......................................... 11
Section 6. Powers and Duties .................................. 11
Section 7. Titles of Recognition .............................. 12
Section 8. Securities of Corporation .......................... 13
Section 9. Checks and Drafts .................................. 13
ARTICLE V SHARES .................................................... 13
Section 1. Form and Content of Certificate .................... 13
Section 2. Lost Certificates .................................. 13
Section 3. Transfers .......................................... 13
Section 4. Record Date ........................................ 14
<PAGE>
ARTICLE VI GENERAL PROVISIONS ...................................... 15
Section 1. Distribution and Share Dividends ................... 15
Section 2. Fiscal Year ........................................ 15
Section 3. Seal ............................................... 15
Section 4. Annual Statements ................................... 16
Section 5. List of Shareholders; Inspection of Records ........ 16
ARTICLE VII INDEMNIFICATION OF OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS ................................. 17
Section 1. Authority to Indemnity ............................. 17
Section 2. Mandatory Indemnification ......................... 17
Section 3. Determination and Authorization of Indemnification .. 18
Section 4. Advance for Expenses ................................ 18
ARTICLE VII AMENDMENTS ............................................. 19
<PAGE>
RESTATED BYLAWS
OF
ABRAMS INDUSTRIES, INC.
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The Corporation
shall maintain at all times a registered office in the State of
Georgia and a registered agent at that office.
SECTION 2. OTHER OFFICES. The Corporation may also
have offices at such other places both within and without the
State of Georgia as the business of the Corporation may require
or make desirable.
ARTICLE II
SHAREHOLDER MEETINGS
SECTION 1. ANNUAL MEETING.
1.1. DATE, TIME AND PURPOSE OF MEETING. The
annual meeting of the shareholders for the election of directors
and for the transaction of such other business as may properly
come before the meeting shall be held at such place, either
within or without the State of Georgia, during the month of
August on such date and at such time as the Board of Directors
may by resolution provide. The Board of Directors may specify by
resolution prior to any special meeting of shareholders held
within the year that such meeting shall be in lieu of the annual
meeting.
1.2. FAILURE TO HOLD MEETING. The failure to hold
an annual meeting at the time stated in or fixed in accordance
with these bylaws shall not affect the validity of any corporate
action.
SECTION 2. SPECIAL MEETINGS.
2.1. CALL OF SPECIAL MEETINGS. (a) The Board of
Directors, acting by majority vote, the Chairman of the Board, or
the President may call a special meeting at any time. Special
meetings of shareholders shall be called by the Chairman of the
Board or the President upon the demand in writing of shareholders
owning at least forty percent (40%) of the issued and outstanding
capital shares of the Corporation entitled to vote thereat,
provided such request states the purposes for which the meeting
is to be called.
<PAGE>
(b) Promptly after the receipt of written
shareholder demands (the "Demand Date") to hold a special meeting
purporting to comply with the provisions of the Georgia Business
Corporation Code, as amended from time to time (the "Code"), and
these bylaws, the Corporation shall engage independent inspectors
for the purpose of determining the validity of the demand(s) and
any revocations thereof. Within 15 days of the Demand Date, such
independent inspectors shall deliver to the Corporation a written
report stating whether the demand comports with the requirements
of the Code and these bylaws. If such written report states that
the demand is adequate, or if no report is delivered by the
independent inspectors within 15 days from the Demand Date, the
Chairman of the Board or the President of the Corporation shall
call a special shareholders meeting by mailing notice within 15
days after receipt of the report by said independent inspectors
or after the expiration of the reporting period.
2.2. BUSINESS CONDUCTED. Except as otherwise
provided in these bylaws, only business described within the
purpose or purposes described in the notice of the meeting may be
conducted at a special meeting.
2.3. PLACE OF MEETINGS. Special meetings shall be
held at the principal office of the Corporation in the State of
Georgia, or at such other place, either within or without the
State of Georgia, as it is specified in the notice of the
meeting.
SECTION 3. NOTICE OF MEETINGS.
3.1. NOTICE REQUIREMENTS. Unless otherwise
provided by law, whenever shareholders are required or permitted
to take any action at a meeting, a written notice of the meeting
stating the place, date and hour of the meeting, and, in the case
of a special meeting, the purpose of purposes for which the
meeting is called, shall be given to each shareholder entitled to
vote at such meeting not less than ten (10) days nor more than
sixty (60) days before the date of the meeting. No notice need
be given of the place, date and hour of the reconvening of any
adjourned meeting if the time and place to which the meeting is
adjourned are announced at the adjourned meeting. If, after the
adjournment, a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting.
3.2. NOTICE BY MAIL. Notice may be given in any
manner permitted by law. If mailed, such notice shall be deemed
to be given when deposited in the mail, postage prepaid, directed
to the shareholder at such shareholder's address as it appears on
the records of the Corporation.
-2-<PAGE>
3.3. WAIVER BY ATTENDANCE. A shareholder's
attendance, in person or by proxy, at a meeting of shareholders
shall constitute:
(1) a waiver of notice of the meeting and of all
objections to lack of notice or defective notice of the meeting,
unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting; and
(2) a waiver of objection to consideration of a
particular matter at the meeting that is not within the purpose
or purposes described in the meeting notice, unless the
shareholder objects to considering the matter when it is
presented.
3.4. OTHER WAIVERS OF NOTICE. Notice of a meeting of
shareholders need not be given to any shareholder who signs a
waiver of notice, in person or by proxy, either before or after
the meeting. Neither the business transacted nor the purpose of
the meeting need be specified in the waiver, except that any
waiver of the notice of a meeting at which the shareholders
consider an amendment of the Articles of Incorporation, a plan of
merger or share exchange, or a sale or other disposition of
assets, or any other action that would entitle the shareholder to
dissent and obtain payment for his shares shall not be effective
unless:
(1) prior to the execution of the waiver, the
shareholder has been furnished the same material that would have
been required to be sent to the shareholder in a notice of the
meeting, including notice of any applicable dissenters' rights;
or
(2) the waiver expressly waives the right to receive
the material required to be furnished.
SECTION 4. ORGANIZATION. Meetings of shareholders
shall be presided over by the Chairman of the Board, if any, or
in his absence by the President, or in his absence by the
Executive Vice President, or in the absence of the foregoing
persons by a Chairman to be chosen by a majority of the
shareholders entitled to vote who are present in person or by
proxy at the meeting. The Secretary, or in his absence, an
Assistant Secretary, shall act as secretary of the meeting, or in
the absence of the foregoing persons, the chairman of the meeting
may appoint any person present to act as secretary of the
meeting.
SECTION 5. QUORUM.
5.1. REQUIRED NUMBER. A quorum for the transaction of
business at any annual or special meeting of shareholders shall
exist when the holders of a majority of the outstanding shares
entitled to vote are represented either in person or by proxy at
such meeting. Absent special circumstances, shares of its own
stock belonging to the Corporation or to another corporation, if
a majority of the shares entitled to vote in the election of
-3-<PAGE>
directors of such other corporation is held, directly or
indirectly, by the corporation, shall neither be entitled to vote
nor be counted for quorum purposes; provided, however, that the
foregoing shall not limit the right of the Corporation to vote
stock, including but not limited to its own stock, held by it in
a fiduciary capacity.
5.2. WHEN SHARES PRESENT. When a quorum is once
present to organize a meeting, the shareholders present may
continue to do business at the meeting or at any adjournment
thereof notwithstanding the withdrawal of enough shareholders to
leave less than a quorum.
5.3. ADJOURNMENT. If a quorum is not present at any
meeting of the shareholders, a majority of the shares present and
entitled to vote thereat may adjourn the meeting, until a quorum
shall be present. At such adjourned meeting at which quorum
shall be present, any business may be transacted that might have
been transacted at the original meeting.
SECTION 6. VOTING.
6.1. NUMBER OF VOTES PER SHARE. Unless the Articles
of Incorporation or applicable law provide otherwise, each
outstanding share, regardless of class, shall be entitled to one
vote on each matter voted on at a meeting of shareholders.
6.2. VOTES REQUIRED. If a quorum is present, in all
matters other than the election of directors, the affirmative
vote of a majority of the shares present in person or represented
by proxy at the meeting and entitled to vote on the subject
matter shall be the act of the shareholders, unless a greater
vote is required by law, by the Articles of Incorporation or by
these bylaws.
6.3. ELECTION OF DIRECTORS. Directors shall be
elected by the affirmative vote of a plurality of the shares
present in person or represented by proxy at the meeting and
entitled to vote on the election of directors in a meeting where
a quorum is present. Shareholders do not have the right to
cumulate their votes for directors.
6.4. PROXIES. A shareholder may vote either in person
or by a proxy which such shareholder has duly executed in
writing. No proxy shall be valid eleven (11) months from the
date of its execution unless a longer period is expressly
provided in the proxy. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A shareholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy
or another duly executed proxy bearing a later date with the
Secretary of the Corporation.
-4-<PAGE>
SECTION 7. LIST OF SHAREHOLDERS.
7.1. MAINTENANCE OF LIST. The Corporation shall keep
or cause to be kept, a complete list of its shareholders,
arranged in alphabetical order, showing the address of each
shareholder and the number, class and series, if any, of shares
held by each. After fixing a record date for a meeting, the
Corporation shall prepare an alphabetical list of the names of
all shareholders entitled to notice of the meeting. The list
shall show the address of and number of shares held by each
shareholder, and shall comply in all other respects with
applicable law.
7.2. INSPECTION BY SHAREHOLDERS. The list of
shareholders shall be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected
by any shareholder who is present.
SECTION 8. ACTION WITHOUT MEETING.
8.1. GENERALLY. Unless otherwise provided in the
Articles of Incorporation, any action required to be, or which
may be, taken at any annual or special meeting of shareholders,
may be taken without a meeting, without prior notice and without
a vote if the action is taken by all shareholders entitled to
vote on the action or, if so provided in the Articles of
Incorporation, by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Such consent
shall have the same force and effect as an affirmative vote of
the shareholders and shall be filed with the minutes of the
proceeding of the shareholders.
8.2. REQUIREMENTS FOR CONSENT. A written consent is
valid only if:
(1) the consenting shareholder was furnished the same
material that would have been required to be sent to shareholders
in a notice of a meeting at which the proposed action would have
been submitted to the shareholders for action, including notice
of any applicable dissenters' rights; or
(2) it contains an express waiver of the right to
receive the material otherwise required to be furnished.
SECTION 9. NOTICE OF SHAREHOLDER BUSINESS. At any
meeting of the shareholders, only such business shall be
conducted as shall have been properly brought before the meeting.
To be properly brought before a meeting, business must be (a)
specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (c) otherwise properly
brought before the meeting by a shareholder. For business to be
properly brought before a meeting by a shareholder, the
shareholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a shareholder's
-5-<PAGE>
notice must be delivered to or mailed and received at the
principal executive offices of the Corporation, not less than 60
days nor more than 90 days prior to the meeting; provided,
however, that in the event that less that 60 days' notice or
prior public disclosure of the date of the meeting is given or
made to shareholders, notice by the shareholder to be timely must
be so received not later than the close of business on the 10th
day following the day on which such notice of the date of the
meeting was mailed or such public disclosure was made. A
shareholder's notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the meeting (a) a
brief description of the business desired to be brought before
the meeting and the reasons for conducting such business at the
meeting, (b) the name and address, as they appear on the
Corporation's books, of the shareholder proposing such business,
(c) the class and number of shares of the Corporation which are
beneficially owned by the shareholder, and (d) any material
interest of the shareholder in such business. Nothing in this
Section 9 shall be construed to limit the applicability and
requirements of Regulation 14A under the Securities Exchange Act
of 1934, as amended, or any other applicable laws or regulations,
the requirements of which, if any, would have to be met for a
matter to be properly brought before the meeting.
Notwithstanding anything in these bylaws to the contrary, no
business shall be conducted at any meeting except in accordance
with the procedures set forth in this Section 9. The Chairman of
the meeting shall, if the facts warrant, determine that business
was not properly brought before the meeting in accordance with
the provisions of this Section 9, and if he should so determine,
he shall so declare to the meeting any such business not properly
brought before the meeting shall not be transacted.
SECTION 10. NOTICE OF SHAREHOLDER NOMINEES. Only
persons who are nominated in accordance with the procedures set
forth in this Section 10 shall be eligible for election as
Directors. Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of
shareholders by or at the direction of the Directors or by a
shareholder of the Corporation entitled to vote for the election
of Directors at the meeting who complies with the notice
procedures set forth in this Section 10. Such nominations, other
than those made by or at the direction of the Board of Directors,
shall be made pursuant to timely notice in writing to the
Secretary of the Corporation. To be timely, a shareholder's
notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 60
days nor more than 90 days prior to the meeting; provided,
however, that in the event that less than 60 days' notice or
prior public disclosure of the date of the meeting is given or
made to shareholders, notice by the shareholder must be so
received no later than the close of business on the 10th day
following the day on which such notice of the date of the meeting
was mailed or such public disclosure was made. Such shareholder
notice shall set forth (a) as to each person whom the shareholder
proposes to nominate for election or re-election as a Director,
(i) the name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the Corporation
which are beneficially owned by such person, and (iv) any other
information relating to such person that is required to be
-6-<PAGE>
disclosed in solicitations of proxies for election of Directors,
or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including,
without limitation, a copy of such person's written consent to
being named in any applicable proxy statement as a nominee and to
serving as a Director if elected); and (b) as to the shareholder
giving the notice, (i) the name and address, as they appear on
the Corporation's books, of such shareholder and (ii) the class
and number of shares of the Corporation which are beneficially
owned by each shareholder. At the request of the Board of
Directors, any person nominated by the Board of Directors for
election as a Director shall furnish to the Secretary of the
Corporation that information required to be set forth in
shareholder's notice of nomination which pertains to the nominee.
No person shall be eligible for election as a Director of the
Corporation, other than nomination made by or at the direction of
the Board of Directors, unless nominated in accordance with the
procedures set forth in this Section 10. The Chairman of the
meeting shall, if the facts warrant, determine that a nomination
was not made in accordance with the procedure prescribed by this
Section 10, and if he should so determine, he shall so declare to
the meeting and the defective nomination shall be disregarded.
Nothing in this Section 10 shall be construed to affect the
requirements for proxy statements of the Corporation under
Regulation 14A of the Securities Exchange Act of 1934.
ARTICLE III
DIRECTORS
SECTION 1. POWERS. Except as otherwise provided by
any legal agreement among shareholders, the property, affairs and
business of the Corporation shall be managed and directed by the
Board of Directors, which may exercise all powers of the
Corporation and do all lawful acts and things which are not by
law, by any legal agreement among shareholders, by the Articles
of Incorporation or by these bylaws directed or required to be
exercised or done by the shareholders.
SECTION 2. NUMBER, ELECTION AND TERM.
2.1. NUMBER OF DIRECTORS. The number of directors
which shall constitute the whole of Directors shall be ten (10).
The number of directors may be increased or decreased from time
to time by amendment of these bylaws or by election by the
shareholders of a different number of directors when electing the
entire Board of Directors.
2.2. QUALIFICATIONS. Directors shall be natural
persons who are 18 years of age or older, but need not be
residents of the State of Georgia nor shareholders of the
Corporation.
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2.3. TERM OF OFFICE. The terms of the directors shall
expire at the annual meeting of shareholders following their
election, or at their earlier resignation, removal from office or
death. A decrease in the number of directors by amendment of
these bylaws shall not shorten an incumbent director's term. A
director whose term has expired shall remain in office until his
successor is elected and qualified or until there is a decrease
in the number of directors. A director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in
office. A director elected by the Board of Directors to fill a
vacancy created by reason of an increase in the number of
directors shall serve until the next election of directors by the
shareholders and until the election and qualification of his
successor.
SECTION 3. VACANCIES. Except as otherwise provided in
the Articles of Incorporation, these bylaws, or applicable law, a
vacancy on the Board of Directors, including a vacancy resulting
from an increase in the number of directors, may be filled by the
shareholders, the Board of Directors, or the affirmative vote of
a majority of all the directors remaining in office, if the
directors remaining in office constitute fewer than a quorum of
the Board of Directors.
SECTION 4. MEETINGS AND NOTICE.
4.1. PLACE OF MEETINGS. The Board of Directors may
hold regular or special meetings either within or without the
State of Georgia.
4.2. NOTICE OF MEETINGS. Regular meetings of the
Board of Directors may be held without notice at such date, time
and place as are determined from time to time by the Board of
Directors. Special meetings of the Board of Directors may be
called by the Chairman of the Board, if any, the President or any
two directors, on at least 24 hours oral, telegraphic, or written
notice of the date, time and place of the meeting. Notice of a
meeting need not state the purpose of the meeting.
4.3. WAIVER OF NOTICE. Notice of a meeting of the
Board of Directors need not be given to any director who signs a
waiver of notice either before or after the meeting. Attendance
of a director at a meeting shall constitute a waiver of notice of
such meeting unless the director at the beginning of the meeting
or promptly upon his arrival objects to holding the meeting or
transacting business at the meeting and does not thereafter vote
for or assent to action taken at the meeting.
SECTION 5. QUORUM. Except as otherwise provided by
law, the Articles of Incorporation, or these bylaws, a majority
of directors shall constitute a quorum for the transaction of
business. If a quorum is present when a vote is taken, the
affirmative vote of a majority of directors present is the act of
the Board of Directors. If a quorum is not present, or ceases to
be present, at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting,
until a quorum is present.
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SECTION 6. TELEPHONE CONFERENCE MEETING. Directors
may participate in a meeting of the of Directors by means of
conference telephone or similar communications equipment whereby
all persons participating in the meeting can hear each other.
Participation in the meeting shall constitute presence in person.
SECTION 7. ACTION WITHOUT MEETING. Action required or
permitted to be taken at a meeting of the Board of Directors may
be taken without a meeting if the action is evidenced by one or
more written consents describing the action taken and signed by
each director. Action by consent has the effect of a meeting
vote and may be described as such in any document.
SECTION 8. EXECUTIVE COMMITTEE.
8.1. CREATION. The Board of Directors from time to
time may create an Executive Committee to consist of at least
three directors of the Corporation. The Board of Directors may
designate one or more directors as alternate members of the
committee, who may replace any absent or disqualified member at
any meeting of the committee.
8.2. AUTHORITY. To the extent specified by the Board
of Directors, the Articles of Incorporation or these bylaws, an
Executive Committee may exercise the authority of the Board of
Directors, except that, unless otherwise permitted by law, an
Executive Committee may not:
(1) approve or propose to shareholders action that is
required by Georgia law to be approved by
shareholders;
(2) fill vacancies on the Board of Directors or on any
of its committees;
(3) amend articles of incorporation pursuant to
Section 14-2-1002 of the Georgia Business
Corporation Code;
(4) adopt, amend or repeal bylaws; or
(5) approve a plan of merger not requiring shareholder
approval.
8.3. MEETINGS, NOTICE, QUORUM AND VOTING. Sections 4
through 7 of this Article II shall also apply to Executive
Committees and their members, unless otherwise provided by the
Articles of Incorporation, these bylaws or applicable law.
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SECTION 9. OTHER COMMITTEES. The Board of Directors
may from time to time create one or more other committees, in
addition to the Executive Committee, each consisting of two or
more of the directors of the Corporation. Any such committee
shall have the powers and responsibilities provided in the
resolution of appointment, subject to the limitations on
authority specified in Section 8 above.
SECTION 10. REMOVAL OF DIRECTORS.
10.1. REMOVAL RIGHT. The shareholders may remove any
director, with or without cause, by a majority of the votes
entitled to be cast for the election of directors.
10.2. MEETING REQUIRED. A director may be removed
only at a meeting called for the purpose of removing him and the
meeting notice must state that the purpose, or one of the
purposes, of the meeting is removal of the director.
10.3. REPLACEMENT. A vacancy resulting from the
removal of a director by the shareholders may be filled by the
shareholders at the same meeting at which the director was
removed or at any subsequent meeting of the shareholders, or, if
the shareholders do not fill the vacancy within 60 days after the
removal, by majority vote of the remaining directors.
SECTION 11. COMPENSATION OF DIRECTORS. Directors
shall be entitled to such reasonable compensation for their
services as directors or as members of any committee of the Board
of Directors as shall be fixed from time to time by resolution
adopted by the Board of Directors, and shall also be entitled to
reimbursement for any reasonable expenses incurred in attending
any meeting of the Board of Directors or any such committee.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The principal officers of the
Corporation shall be chosen by the Board of Directors and shall
be a Chairman of the Board, a President, a Secretary and a Chief
Financial Officer. The Board of Directors may also elect one or
more Vice Presidents to serve as principal officers of the
Corporation. Any number of offices may be held by the same
person.
SECTION 2. COMPENSATION. The salaries of all officers
and agents of the Corporation shall be fixed by the Board of
Directors or by a committee or officer acting with the authority
of the Board of Directors.
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SECTION 3. TERM OF OFFICE. Unless otherwise provided
by the Board of Directors, the principal officers shall be chosen
annually by the Board of Directors at the first meeting of the
Board of Directors following the annual meeting of shareholders,
or as soon thereafter as is conveniently possible. Other
officers may be chosen from time to time. Each officer shall
serve until his successor shall have been chosen and qualified,
or until his death, resignation or removal, and any failure to
choose officers annually shall not affect the validity of any
action taken by or the authority of an officer previously chosen
and qualified who has not resigned or been removed by the Board
of Directors.
SECTION 4. REMOVAL. Any officer may be removed from
office at any time, with or without cause, by the Board of
Directors whenever in its judgment the best interest of the
Corporation will be served thereby.
SECTION 5. VACANCIES. Any vacancy in an office
resulting from any cause may be filled by the Board of Directors.
SECTION 6. POWERS AND DUTIES. Except as hereinafter
provided and subject to the control of the Board of Directors,
the officers shall each have such powers and duties as generally
pertain to their respective offices, as well as such powers and
duties as from time to time may be conferred by the Board of
Directors.
(1) CHAIRMAN OF THE BOARD. The Chairman of the Board
shall be the Chief Executive Officer of the Corporation, shall
preside at all meetings of the shareholders and the Board of
Directors, shall have general and active management of the
business of the Corporation, and shall see that all orders and
resolutions of the Board of Directors are carried into effect and
shall have such powers and duties that generally pertain to the
office of Chief Executive Officer. He may execute bonds,
mortgages and other contracts requiring a seal, under the seal of
the Corporation, except where required by law to be otherwise
signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the Corporation.
(2) PRESIDENT. The President shall perform such
duties and has such powers as the Board of Directors may from
time to time prescribe. If the Chairman of the Board is absent,
or if he refuses or is unable to act, the President shall perform
the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the
Chairman of the Board.
(3) SECRETARY. The Secretary shall attend all
meetings of the Board of Directors and of the shareholders, shall
have responsibility for the preparation of minutes of all
meetings of the Board of Directors and of the shareholders, and
shall keep, or cause to be kept, as permanent records of the
Corporation, in a book or books for that purpose, all minutes of
such meetings, all executed consents evidencing corporate actions
taken without a meeting, records of all actions taken by a
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committee of the Board of Directors in place of the Board, and
waivers of notice of all meetings of the Board of Directors and
its committees. He shall have responsibility for authenticating
records of the Corporation. He shall give, or cause to be given,
notice of all meetings of the shareholders and special meetings
of the Board of Directors, and shall perform such other duties as
may be prescribed by the Board of Directors or the Chairman of
the Board, under whose supervision he shall be. He shall have
charge of the corporate seal of the Corporation and shall be
authorized to use the seal of the Corporation on all documents
that are authorized to be executed on behalf of the Corporation
under its seal.
(4) CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall have the legal custody of the corporate funds and
securities and shall keep or cause to be kept full and accurate
accounts of receipts and disbursements and other appropriate
accounting records in books belonging to the Corporation and
shall deposit all funds and other valuable items in the name and
to the credit of the Corporation in such depositories as may be
designated by the Board of Directors. He shall render to the
Chairman of the Board and the Board of Directors, at its regular
meetings, or when the Chairman of the Board or the Board of
Directors so requires, an account of all his transactions as
Chief Financial Officer and of the financial condition of the
Corporation. If required by the Board of Directors, he shall
give the Corporation a bond in such sum, or such conditions, and
with such surety or sureties as shall be satisfactory to the
Board of Directors for the faithful performance of the duties of
his office.
(5) VICE PRESIDENT. In the event that the Board of
Directors elects a Vice President as an executive officer of the
Corporation, such elected any Vice President may, if the
President is absent, or if he refuses or is unable to act,
perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions
upon the President. A Vice President shall also perform such
other duties and have such other powers as the Board of Directors
may from time to time prescribe.
SECTION 7. TITLES OF RECOGNITION. The Board of
Directors may, from time to time, give employees of the
Corporation who are not intended to be actual officers thereof
one or more of the titles of Senior Vice President, Vice
President, Assistant Vice President, Assistant Secretary,
Assistant Chief Financial Officer or other title, solely for the
purpose of recognizing such employees for their performance in
their respective jobs for public, civic and customer relations
and distinguishing them from other employees who do not hold such
titles. Employees holding such titles shall hold the positions
signified thereby in name only, shall not be considered actual
officers of the Corporation and shall have no powers or duties
which are incident or pertain to any offices of the Corporation,
with the exception that any employee who holds the title of
Assistant Secretary may, in the absence of the Secretary of the
Corporation, perform the purely administrative task of attesting
the signature of any officer of the Corporation and affixing the
Corporation's seal to any instrument executed on behalf of the
Corporation or signing stock certificates in the Secretary's
absence or in the event of the Secretary's inability or refusal
to sign same.
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SECTION 8. SECURITIES OF CORPORATION. Any security
issued by any other corporation or entity and owned or controlled
by the Corporation may be voted, and all rights and powers
incident to the ownership of such securities, including without
limitation execution of any consent of shareholders or other
consents in respect thereof, may be exercised on behalf of the
Corporation by the Chairman of the Board, who may in his
discretion delegate any of the foregoing powers, by executing
proxies or otherwise. The Board of Directors may from time to
time confer similar powers on any other officer of the
Corporation.
SECTION 9. CHECKS AND DRAFTS. All checks, drafts and
similar items drawn on the Corporation's bank account shall be
signed by such officer or officers, or agent or agents, as the
Board of Directors determines from time to time.
ARTICLE V
SHARES
SECTION 1. FORM AND CONTENT OF CERTIFICATE.
1.1. FORM. Every holder of fully-paid shares in the
Corporation shall be entitled to have a certificate in such form
as the Board of Directors may from time to time prescribe in
accordance with applicable law.
1.2. REQUIRED SIGNATURES. Except as otherwise
provided by the Board of Directors from time to time, each share
certificate shall be signed by any two officers of the
Corporation, who may, but shall not be required to, seal the
certificate with the seal of the Corporation or a facsimile
thereof.
SECTION 2. LOST CERTIFICATES. The Board of Directors
may direct that a new share certificate be issued in place of any
certificate theretofore issued by the Corporation and alleged to
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to
be lost, stolen or destroyed. When authorizing such issue of a
new certificate, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or his legal
representative, to advertise the same in such manner as it shall
require and/or to give the Corporation a bond in such sum and on
such conditions as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the cer-
tificate alleged to have been lost, stolen or destroyed, and/or
satisfy any other reasonable requirements imposed by the Board of
Directors.
SECTION 3. TRANSFERS. (1) Transfers of shares of the
Corporation shall be made only on the books of the Corporation by
the registered holder thereof, or by his duly authorized
attorney, or with a transfer agent or registrar appointed as
provided in Section 5 of this Article V, and on surrender of the
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certificate or certificates for such shares properly endorsed and
the payment of all taxes thereon.
(2) The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and
for all other purposes, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it has express or
other notice thereof, except as otherwise provided by law.
(3) Shares of the Corporation may be transferred by
delivery of the certificates therefor, accompanied either by an
assignment in writing on the back of the certificates or by
separate written power of attorney to sell, assign and transfer
the same, signed by the record holder thereof, or by his duly
authorized attorney-in-fact, and accompanied by such evidence
that all such signatures are genuine as the Corporation may, at
its option, request, but no transfer shall affect the right of
the Corporation to pay any dividend upon the stock to the holder
of record as the holder in fact thereof for all purposes, and no
transfer shall be valid, except between the parties thereto,
until such transfer is made upon the books of the Corporation as
herein provided.
(4) The Board of Directors may, from time to time,
make such additional rules and regulations as it deems expedient,
not inconsistent with these bylaws or the Articles of
Incorporation, concerning the issue, transfer and registration of
certificates for shares of the Corporation, and nothing contained
herein shall limit or waive any right of the Corporation with
respect to such matters under applicable law or any subscription
or other agreement.
SECTION 4. RECORD DATE.
4.1. FIXING OF RECORD DATE. For the purpose of
determining the shareholders entitled to notice of a meeting of
shareholders, to demand a special meeting, to vote to take any
other action, to receive payment of any dividend or other
distribution or allotment of any rights, to exercise any rights
in respect of any change, conversion or exchange of shares, or
for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be
more than 70 days before any meeting or action requiring a
determination of shareholders.
4.2. NO RECORD DATE FIXED. If no record date is fixed
by the Board of Directors for the determination of shareholders
entitled to notice of and to vote at any meeting of shareholders,
the record date shall be at the close of business on the day
before the day on which the first notice thereof is given, or, if
notice is waived, at the close of business on the day before the
day on which the meeting is held. If no record date is fixed by
the Board of Directors for determining shareholders entitled to
express consent to corporate action in writing without a meeting
when no prior action by the Board of Directors is required by
law, the record date shall be the first date on which a signed
written consent to such action shall have been delivered to the
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Corporation in any manner permitted by law on behalf of all
shareholders. If no record date is fixed for other purposes, the
record date shall be at the close of business on the day on which
the Board of Directors adopts the resolution or otherwise takes
formal action relating thereto.
4.3. ADJOURNMENT OF MEETING. A determination of the
shareholders entitled to notice of or to vote at a meeting of
shareholders shall be effective for any adjournment of the
meeting unless the Board of Directors fixes a new record date.
The Board of Directors must fix a new record date if the meeting
is adjourned to a date more than 120 days after the date fixed
for the original meeting.
SECTION 5. TRANSFER AGENT AND REGISTRAR. The Board of
Directors may appoint such transfer agents and/or registrars as
it shall determine, and may require all stock certificates to
bear the signature or signatures of any of them.
ARTICLE VI
GENERAL PROVISIONS
SECTION 1. DISTRIBUTIONS AND SHARE DIVIDENDS.
Distributions upon the shares of the Corporation, subject to the
provisions, if any, of the Articles of Incorporation, or any
lawful agreement among shareholders, may be declared by the Board
of Directors at any regular or special meetings, pursuant to law.
Distributions may be paid in cash or in property, subject to the
provisions of the Articles of Incorporation. Before payment of
any distribution, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, deem
proper as a reserve or reserves to meet contingencies, or for
equalizing distributions, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the
directors deem conducive to the interest of the Corporation, and
the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 2. Fiscal Year. The fiscal year of this
Corporation shall be from May 1st to April 30th of each year.
Section 3. Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its
organization and the words "Corporate Seal" and "Georgia." The
seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise. If it is
inconvenient to use such a seal at any time, the signature or
name of the Corporation followed by or used in conjunction with
the word "Seal" or the words "Corporate Seal" or words of similar
import shall be deemed the seal of the Corporation.
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Section 4. Annual Statements.
4.1. Required statements. Not later than four months
after the close of each fiscal year, and in any case prior to the
next annual meeting of shareholders, the Corporation shall
prepare the following financial statements:
(1) a balance sheet showing in reasonable detail the
financial condition of the Corporation as of the close of such
fiscal year; and
(2) an income statement showing the results of
operations during such fiscal year.
4.2. Principles used; other information. If financial
statements are prepared by the Corporation on the basis of
generally accepted accounting principles, the annual financial
statements must also be prepared, and must disclose that they are
so prepared, on that basis. If otherwise prepared, they must so
disclose and must be prepared on the same basis as other reports
or statements prepared by the Corporation for the use of others.
If the statements are reported upon by a public accountant, his
report must accompany them. If not, the statements shall be
accompanied by a statement of the person responsible for the
Corporation's accounting records:
(1) stating his reasonable belief whether the
statements were prepared on the basis of generally accepted
accounting principles and, if not, describing the basis of
preparation; and
(2) describing any respects in which the statements
were not prepared on a basis of accounting consistent with the
statements prepared for the preceding year.
4.3. Requests for financial statements. Upon written
request, the Corporation promptly shall mail to any shareholder
of record a copy of the most recent annual balance sheet and
income statement. If prepared for other purposes, the
Corporation shall also furnish upon written request a statement
of changes in shareholders' equity for the most recent fiscal
year.
Section 5. List of Shareholders; Inspection of
Records. (a) The Corporation shall keep at its registered office
or principal place of business, or at the office of its transfer
agent or registrar, a record of its shareholders, giving their
names and addresses and the number, class and series, if any, of
the shares held by each.
(b) Shareholders are entitled to inspect the corporate
records as and to the extent provided by the Code; provided,
however, that only shareholders owning more than two percent (2%)
of the outstanding shares of any class of capital stock shall be
entitled to inspect (1) the minutes from any board, board
committee or shareholders meeting (including any records of
action taken thereby without a meeting), (2) the accounting
records of the Corporation or (3) any record of the shareholders
of the Corporation.
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ARTICLE VII
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
Section 1. Authority to Indemnify. Every person who
is or was an officer, director, employee or agent of the
Corporation may in accordance with Section 3 of this Article VII
be indemnified for any liability and expense that may be incurred
by him in connection with or resulting from any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether formal or
informal, or, in connection with any appeal relating thereto, in
which he may have become involved, as a party, prospective party
or otherwise, by reason of his being an officer, director,
employee or agent of the Corporation, if he conducted himself in
good faith and reasonably believed in the case of conduct in his
official capacity, that such conduct was in the best interest of
the Corporation, and in all other cases, that such conduct was at
least not opposed to the best interests of the Corporation and,
in the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful. As used in this
Article VII, the terms "expense," "liability," "official
capacity," "party" and "proceeding" have the meanings provided by
Section 14-2-850 of the Georgia Business Corporation Code.
Notwithstanding the foregoing, the Corporation shall
not indemnify an officer, director, employee or agent:
(1) in connection with a proceeding by or in the right
of the Corporation, except for reasonable expenses incurred in
connection with the proceeding if it is determined that the
officer, director, employee or agent has not met the standards of
conduct as described in this Section 1 above, or
(2) in connection with any other proceeding for which
he was adjudged liable on the basis that a personal benefit was
improperly received by him, whether or not involving action in
his official capacity.
Section 2. Mandatory Indemnification. Every officer,
director, employee or agent who has been wholly successful, on
the merits or otherwise, in defense of any proceeding to which he
was a party, or in defense of any claim, issue or matter therein,
because he is or was an officer, director, employee or agent of
the Corporation, must be indemnified by the Corporation against
reasonable expenses incurred by him in connection therewith.
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Section 3. Determination and Authorization of
Indemnification. Except as provided in Section 2 of this Article
VII, any indemnification under Section 1 of this Article VII
shall not be made unless a determination has been made for each
proceeding that indemnification is permissible under the
circumstances because the officer, director, employee or agent
has met the standard of conduct set forth in Section 1 of this
Article VII. Such determination that indemnification is
permissible shall be made:
(a) if there are two or more disinterested directors,
by the Board of Directors by a majority vote of all disinterested
directors (a majority of whom for such purpose constitute a
quorum), or, by a majority of the members of a committee of two
or more disinterested directors appointed by such vote;
(b) by special legal counsel selected (i) by the Board
of Directors or its committee in the manner prescribed in
Subsection (a) of this Section above if there are two or more
disinterested directors, or (ii) by the Board of Directors (in
which selection directors who are parties to the proceeding may
participate) if there are fewer than two disinterested directors;
or
(c) by the shareholders, but shares owned by or voted
under the control of directors who are parties to the proceeding
may not be voted on the determination.
Authorization of indemnification or an obligation to
indemnify, and evaluation of reasonableness of expenses, must be
made in the same manner as the determination that indemnification
is permissible, except that if there are less than two
disinterested directors, or if the determination that
indemnification is permissible is made by special legal counsel,
authorization of indemnification and evaluation of reasonableness
of expenses must be made by the Board (in which processes
directors who are not disinterested directors may participate).
Section 4. Advance for Expenses. Expenses incurred
with respect to any claim, action, suit or proceeding of the
character described in Section 1 of this Article VII may be
advanced by the Corporation prior to the time of the disposition
thereof upon the receipt of written affirmation from the officer,
director, employee or agent of his good faith belief that he has
met the standard of conduct set forth in Section 1 of this
Article VII or that the proceeding involves conduct for which
liability has been eliminated in the Articles of Incorporation in
accordance with applicable law, and the officer, director,
employee or agent furnishes the Corporation a written undertaking
to repay any funds advanced if it is ultimately determined that
the director is not entitled to indemnification under Section 1
of this Article VII. The determination that an advance for
expenses is permissible shall be made:
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(1) if there are two or more disinterested directors,
then by the Board by a majority vote of all disinterested
directors (a majority of whom for such purpose shall constitute
quorum);
(2) if there are fewer than two disinterested
directors, then by the Board (in which selection directors who
are not disinterested directors may participate); or
(3) by the shareholders, but shares owned or voted
under the control of a disinterested director may not be voted on
the authorization.
ARTICLE VIII
AMENDMENTS
Except as provided below, the Board of Directors or
shareholders may amend or repeal the Corporation's bylaws or
adopt new bylaws. The Board of Directors may amend or repeal the
Corporation's bylaws or adopt new bylaws unless the shareholders
in amending or repealing a particular bylaw provision provide
expressly that the Board of Directors may not amend or repeal
that provision. A bylaw provision limiting the authority of the
Board of Directors or establishing staggered terms for directors
may be adopted, amended or repealed only by the shareholders. A
bylaw provision which sets a supermajority quorum or voting
requirement for the shareholders may be adopted only by the
shareholders and may not be adopted, amended or repealed by the
Board of Directors, except as provided in Georgia Business
Corporation Code Section 14-2-1113 or Section 14-2-1133.
-19-
[cover]
abrams
industries
1997
annual
report
[inside front cover]
Percentage of revenues by segment:
Construction Manufacturing Real Estate
72% 12% 16%
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.
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
SUMMARY FINANCIAL DATA *
<TABLE>
<CAPTION>
% %
1997 1996 CHANGE 1996 1995 CHANGE
<S> <C> <C> <C> <C> <C> <C>
Revenues $136,123,601 $134,299,240 +1 $134,299,240 $122,608,682 +10
Net Earnings (Loss) $ 2,391,398 $ (304,188) N/A $ (304,188) $ (331,019) +8
Net Earnings (Loss) per Share $ .81 $ (.10) N/A $ (.10) $ (.11) +9
Cash Dividends per Share $ .07 $ .105 -33 $ .105 $ .12 -13
Shareholders' Equity $ 22,125,214 $ 20,152,376 +10 $ 20,152,376 $ 20,872,035 -3
Return on Average
Shareholders' Equity 11.3% (1.5%) N/A (1.5%) (1.6%) +6
Return on total Assets 2.6% (.3%) N/A $ ( .3%) ( .4%) +25
</TABLE>
*For complete 11 year review, see Selected Financial Data, pages 12 and 13.
[end inside front cover]
1997 ANNUAL REPORT
DEAR SHAREHOLDERS: OUR 72nd YEAR WAS A VERY SUCCESSFUL AND GRATIFYING
ONE. ABRAMS CONSTRUCTION, INC. ONCE AGAIN POSTED SOLID RESULTS FOR THE
YEAR AS THEY CONTINUE TO SERVE MANY RETAILERS. ABRAMS FIXTURE
CORPORATION DEMONSTRATED THROUGH "RE-ENGINEERING" THEIR ABILITY TO BOUNCE
BACK FROM A COUPLE OF UNPROFITABLE YEARS. ABRAMS PROPERTIES, INC. BEGAN
THE IMPLEMENTATION OF ITS LONG-TERM STRATEGY OF DIVERSIFYING ITS REAL
ESTATE PORTFOLIO.
FINANCIAL
For the year ended April 30, 1997, revenues increased to $136,123,601
from $134,299,240 in the prior year. While revenues increased only
modestly, we made tremendous improvements in our operating results. This
year we are extremely happy to report to you net earnings of $2,391,398
or $.81 per share compared to last year's net loss of $304,188 or $.10
per share. The per share figures are based on weighted average shares
outstanding of 2,965,800 during 1997 and 2,977,163 during 1996. All
segments contributed significantly to this year's profitability as is
shown by the following:
-- continued improvement in operations of the Construction Segment
-- the turn-around in operations of the Manufacturing Segment
-- sale of three "freestanding" Kmarts by the Real Estate Segment
On May 30, 1997, your Board of Directors increased the regular
quarterly dividend to $.04 per share from $.02 per share, the Company's
72nd consecutive quarterly dividend. The record date was June 16, 1997,
and the payment date was June 27, 1997. In addition, because of the
exceptional year we enjoyed, your Board declared an additional one-time
dividend of $.03 per share having the same record and payment dates as
the regular dividend.<PAGE>
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.
Many times it has been said "the fewer words, the better" or "let
actions speak for themselves." This is exactly what Abrams Construction,
Inc. has done during 1997. They completed 203 construction projects for
major retailers in 29 different states. While revenues decreased this
year to $98,460,046 from $108,437,335 in the prior year, operating
earnings increased by 10% to $3,088,094 from $2,806,030. Our focus on
improving job-level profits is a continuous one. By controlling overhead
and job-level costs and also through the outstanding efforts of
management, project managers and job superintendents, we feel we were
fairly successful this past year. This is the Company's twelfth
consecutive year of producing operating earnings in an arena that
continually becomes more competitive.
TOTAL OPERATING
REVENUES EARNINGS
1997 $ 98,460,046 $ 3,088,094
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
NOTE: TOTAL REVENUES AND OPERATING EARNINGS INCLUDE REVENUES
GENERATED FROM INTERCOMPANY SOURCES OF $345,000, $792,000 AND
$-0- IN 1997, 1996 AND 1995, RESPECTIVELY. IN COMPUTING
OPERATING EARNINGS, ALLOCATED PARENT EXPENSES AND INCOME TAXES
HAVE NOT BEEN CONSIDERED. (FOR ADDITIONAL INFORMATION, SEE NOTE
11 TO CONSOLIDATED FINANCIAL STATEMENTS HEREIN.)
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.
We are extremely pleased with the progress of Abrams Fixture
Corporation has made during the past year. The seeds that were
sown last year through our re-engineering efforts have truly
borne fruit this year. Several examples of the results of our
re-engineering are as follows:
-- Gross profit margin increased to 38% in 1997, from 23%
in 1996.
-- Total revenues increased 11% to $16,703,258 in 1997,
from $15,008,358 in 1996.
-- The purchase of a new computer numerically controlled
panel saw gives us greater quality, speed, efficiency
and accuracy. As a result of taking advantage of the
saw's optimizing feature, we were able to increase
productivity by 15% and material yield by 10%.
-- We have completed the installation of our Production
Data Management (PDM) software system. This network
ties all of our key processes together. The increase
in communication ability has helped us to significantly
reduce our costs in both pre-production and production.
We are currently entering product information into PDM<PAGE>
which will allow us to improve our scheduling. The
addition of PDM has given us a powerful tool to help us
manage and control our business.
Our marketing efforts have also brought positive results.
New Accounts acquired in 1997 were:
The John Ryan Company (in-store bank fixtures), Athlete's Foot,
Pricellular and Stiffel Lamps. In addition, to help us better
serve our customers, we have entered into the fixture
installation business.
In conclusion, we have made the single most important
decision that might possibly impact the future of our business.
After nearly 50 years at the same location in Atlanta, Georgia,
we have decided to move our manufacturing facility to a single
building that will include both our wood and metal operations.
The proposed new building of approximately 200,000+ square feet
will help us to: (1) reduce costs associated with material
handling; (2) reduce indirect labor costs; (3) increase quality;
(4) reduce overall operating costs and (5) improve communication.
OPERATING
TOTAL EARNINGS
REVENUES (LOSS)
1997 $16,703,258 $1,749,033
1996 15,088,358 (160,226)
1995 16,356,539 (478,235)
1994 19,554,858 1,680,087
1993 16,530,893 1,297,374
NOTE: IN COMPUTING OPERATING EARNINGS (LOSS), ALLOCATED PARENT
EXPENSES AND INCOME TAXES HAVE NOT BEEN CONSIDERED (FOR
ADDITIONAL INFORMATION, SEE NOTE 11 TO CONSOLIDATED FINANCIAL
STATEMENTS HEREIN.)
REAL ESTATE BEGAN IN 1960. ABRAMS PROPERTIES, INC. DEVELOPS,
OWNS AND MANAGES INCOME-PRODUCING COMMERCIAL PROPERTIES. THE
COMPANY CURRENTLY MANAGES EIGHTEEN COMPANY-DEVELOPED RETAIL
PROPERTIES IN NINE STATES.
We continued the implementation of our long-term strategic plan
and ended the year with a satisfying level of profitability.
A cornerstone of our strategy is to diversify our real
estate investment portfolio through tax-deferred sales and re-
investments in selected income-producing properties. In April
1997, we sold our free-standing Kmarts in Niles, Michigan;
Shawnee, Oklahoma; and Warner Robins, Georgia for $8.4 million,
resulting in a pre-tax gain of $5 million. We plan to reinvest
the proceeds from these sales through tax-deferred, like-kind
exchanges into a more diverse mix of income-producing properties.
We entered into a contract in June 1997 to purchase an office
building in northwest metropolitan Atlanta, part of which will
become our new corporate headquarters. The balance of the
proceeds will be used to purchase other income-producing
property. In continuing our diversification efforts, on March
26, 1997, we executed a contract to sell our freestanding Kmart
property in Newark, Ohio. The sale is expected to close in
fiscal 1998.
<PAGE>
A second component of our plan is to increase our return on
assets and improve liquidity by reducing our investment in non-
income-producing assets. We anticipate accomplishing this
through land sales or development. Early in the year, we closed
on the sale of a 1.56 acre parcel at Merchants Crossing of
Oakwood, Georgia to Jameson Inns for $256,000. In November 1996,
we sold our last outparcel at Merchants Crossing of Englewood,
Florida to World Savings Bank for $510,000. In May 1997, we
closed on a sale to First Union National Bank of Florida of a
1.21 acre outparcel at Merchants Crossing of North Fort Myers,
Florida for $770,000.
As part of our focus on asset management, the third part of
our plan is to intensify our efforts to maximize occupancy
through effective leasing and property management, and by
selective expansions and redevelopment of our real estate assets.
At Merchants Crossing of Jackson, Michigan, we opened a new
63,024 square foot Kroger Superstore, entered into a new ten year
lease agreement with Consolidated Stores (Big Lots) and expanded
that existing store from 21,022 square feet to 26,022 square
feet. At Merchants Crossing of Englewood, Florida, for the first
time we are now 100% leased. Our Merchants Crossing shopping
center in Newnan, Georgia remains 100% leased. At Merchants
Crossing of North Fort Myers, Florida, we completed construction
and have already leased over 50% of the square footage of the new
shops located adjacent to the AMC 16 screen movie theater which
opened in May, 1996. At April 30, 1997, our total portfolio of
1,992,000 square feet of income-producing property was 98%
leased.
An additional part of our real estate plan is to seek
strategic opportunities to create synergies with our sister
companies. The pending purchase of our corporate office building
will provide new home offices for Abrams Industries, Inc. and
Abrams Construction, Inc. We are also in the planning process of
developing a new manufacturing facility that will become the
headquarters for Abrams Fixture Corporation.
Our asset management plan requires the periodic examination
or our real estate to formulate potential property sales or
disposal strategies and to identify any possible asset
impairment. Through such an examination this spring, it was
determined that it was necessary to reduce the carrying value of
Merchants Crossing Shopping Center of North Fort Myers, Florida,
by $2.75 million. Also during the year, we transferred the
leaseback Kmart property in Rock Island, Illinois to the lessor
of the property, resulting in a non-cash charge of $98,000.
For the year, we had operating earnings of $1,003,370 on
revenues of $21.1 million, compared to an operating loss of
$1,261,552 on revenues of $11.5 million last year.
OPERATING
TOTAL EARNINGS
REVENUES (LOSS)
1997 $21,132,159 $1,003,370
1996 11,473,415 (1,261,552)
1995 11,982,530 (900,864)
1994 17,123,553 (66,350)
1993 11,449,654 236,279
NOTE: IN COMPUTING OPERATING EARNINGS (LOSS), ALLOCATED PARENT
EXPENSES AND INCOME TAXES HAVE NOT BEEN CONSIDERED. (FOR
ADDITIONAL INFORMATION, SEE NOTE 11 TO CONSOLIDATED FINANCIAL
STATEMENTS HEREIN.)
CONCLUSION AND OUTLOOK<PAGE>
Richard H. Danielson is retiring after serving nineteen years on
our Board of Directors. Dick has been a source of wisdom and
knowledge. We wish him the best of luck in his future endeavors.
While we have closed out a very successful year, we believe
there is much more to be accomplished. We feel we have the right
people in place to take us along a path of continued success,
which, in turn, will bring value to you, our shareholders.
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>
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 (A)(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
IRT Property Company
L. Anthony Montag (A)(C)
Chief Executive Officer
A. Montag & Associates, Inc.
* Joseph H. Rubin (E)
President and Chief Operating Officer
Abrams Industries, Inc.
Felker W. Ward, Jr. (A)(C)
Chairman
Pinnacle Investment Advisors, 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<PAGE>
George W. Hodges
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<PAGE>
[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 20, 1997, in the
Ascot Room of the Renaissance Waverly Hotel, 2450 Galleria
Parkway, Atlanta, Georgia.
Transfer Agent:
SunTrust Bank, Atlanta
Post Office Box 4625
Atlanta, Georgia 30302<PAGE>
[back cover]
ABRAMS INDUSTRIES, INC.
CORPORATE HEADQUARTERS
5775-A GLENRIDGE DRIVE, N.E.
SUITE 202
ATLANTA, GEORGIA 30328
(404) 256-9785
FAX (404) 252-7481
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000001923
<NAME> ABRAMS INDUSTRIES, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
<CASH> 7,611,051
<SECURITIES> 0
<RECEIVABLES> 18,980,745
<ALLOWANCES> 65,584
<INVENTORY> 1,557,964
<CURRENT-ASSETS> 38,597,543
<PP&E> 64,694,338
<DEPRECIATION> 19,665,983
<TOTAL-ASSETS> 91,499,438
<CURRENT-LIABILITIES> 25,522,424
<BONDS> 41,118,885
0
0
<COMMON> 3,010,039
<OTHER-SE> 19,115,175
<TOTAL-LIABILITY-AND-EQUITY> 91,499,438
<SALES> 135,624,347
<TOTAL-REVENUES> 136,123,601
<CGS> 115,412,086
<TOTAL-COSTS> 115,412,086
<OTHER-EXPENSES> 12,075,972
<LOSS-PROVISION> 8,043
<INTEREST-EXPENSE> 4,779,102
<INCOME-PRETAX> 3,848,398
<INCOME-TAX> 1,457,000
<INCOME-CONTINUING> 2,391,398
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,391,398
<EPS-PRIMARY> .81
<EPS-DILUTED> .81
</TABLE>
ABRAMS INDUSTRIES, INC.
Atlanta, Georgia
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On August 20, 1997
The annual meeting of shareholders of ABRAMS INDUSTRIES, INC. (the
"Company") will be held on Wednesday, August 20, 1997, at 4:00 P.M., Atlanta
time, in the Ascot Room of the Renaissance Waverly Hotel, 2450 Galleria
Parkway, Atlanta, Georgia, for the purpose of considering and voting upon the
following:
(1) The election of nine 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 14,
1997, 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 18, 1997
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>
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 20, 1997, at
4:00 P.M., Atlanta time, in the Ascot Room of the Renaissance Waverly Hotel,
2450 Galleria Parkway, Atlanta, Georgia. A copy of the Company's annual
report for the fiscal year ended April 30, 1997, 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 18, 1997.
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. For purposes of determining approval of a matter presented at the
meeting other than the election of directors, abstentions will be deemed
present and entitled to vote and will, therefore, have the same legal effect
as a vote "against" a matter presented at the meeting. Broker non-votes will
be deemed not entitled to vote on the subject matter as to which the non-vote
is indicated and will, therefore, have no legal effect on the vote on that
particular matter. 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 other means.
As of July 14, 1997, the record date for the annual meeting, there
were 2,942,356 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.
1<PAGE>
NOMINATION AND ELECTION OF DIRECTORS
The Board of Directors recommends the election of the nine (9)
nominees listed below to constitute the entire Board to hold office until the
next annual meeting of shareholders and until their 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.
The Company's By-Laws contain an advance notice procedure for the
nomination of candidates for election to the Board. Notice of proposed
shareholder nominations for election of directors must be given to the
Secretary of the Company not less than 60 days nor more than 90 days prior to
the meeting at which directors are to be elected, unless the notice of
meeting is given less than 60 days prior to the meeting, in which case the
notice of nomination must be received not later than the 10th day following
the day on which the notice of meeting was mailed to shareholders.
The notice of nomination must contain information about each proposed
nominee, including age, address, principal occupation, the number of shares
of stock of the Company beneficially owned by such nominee and such other
information as would be required to be disclosed under the Securities Exchange
Act of 1934 (the "Exchange Act"), in connection with any acquisition of
shares by such nominee or with the solicitation of proxies by such nominee for
his election as a director. Information must also be disclosed by and about
the shareholder proposing to nominate that person. The chairman of a
shareholder meeting may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedure.
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 20, 1997; (2) directorships in
other publicly-held companies; (3) positions with the Company; (4)
principal employment; and (5) Common Stock beneficially owned as of June
30, 1997, has been furnished by the respective nominees. Except as otherwise
indicated, each nominee has been or was engaged in his present or last
principal employment, in the same or a similar position, for more than five
years.
<TABLE>
<CAPTION>
================================================================================================================
SHARES OF
COMMON STOCK
INFORMATION ABOUT NOMINEES BENEFICIALLY OWNED
NAME FOR DIRECTOR (PERCENT OF CLASS)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alan R. Abrams A Director of the Company since 1992, he has 97,093 <F1>
been President of Abrams Properties, Inc. since (3.30%)
September 1994. Prior to that he served as
Vice President of Abrams Properties, Inc.
Mr. Abrams is 42.
Bernard W. Abrams A Director of the Company since 1952, he has 612,208 <F2>
been Chairman of the Executive Committee (20.81%)
since August 1995. Prior to that he served as
Chairman of the Board of Directors and Chief
Executive Officer. Mr. Abrams is 72.
2<PAGE>
Edward M. Abrams A Director of the Company since 1953, he has 597,900 <F3>
been Chairman of the Board of Directors and (20.32%)
Chief Executive Officer since August 1995.
Prior to that he served as President and
Treasurer of the Company. Mr. Abrams is 70.
J. Andrew Abrams A Director of the Company since 1992, he has 81,390
been a Vice President of Abrams Fixture (2.77%)
Corporation since September 1994. Prior to
that he served as Vice President of Abrams
Properties, Inc. Mr. Abrams is 37.
Paula Lawton Bevington A Director of the Company since 1992, she is 200*
Chairman of Servidyne Systems, Inc.
(mechanical engineering services company).
Ms. Bevington is 59.
Donald W. MacLeod A Director of the Company since 1984, he is 2,500*
Chairman of the Board of IRT Property
Company (a real estate investment trust).
Mr. MacLeod is 72.
L. Anthony Montag A Director of the Company since 1969, he is 5,461* <F4>
Chief Executive Officer of A. Montag &
Associates, Inc. (investment counselors).
Mr. Montag is 63.
Joseph H. Rubin A Director of the Company since 1983, he has 15,159* <F5>
been President and Chief Operating Officer
since August 1995. Prior to that he served
as Executive Vice President, Chief Financial
Officer and Secretary of the Company.
Mr. Rubin is 54.
Felker W. Ward, Jr. A Director of the Company since 1992, he is 2,103*
Chairman of Pinnacle Investment Advisors,
Inc. (investment advisory services) and President
of Ward and Associates, Inc. (investment bankers).
He is a Director of AGL Resources, Inc. and
Fidelity National Bank. Mr. Ward is 64.
===================================================================================================================
*Owns less than 1% of outstanding shares.
<FN>
<F1>Includes 17,132 shares owned by Mr. Abrams as custodian for
his minor children and 100 shares owned by his wife.
<F2>Does not include 144,817 shares (4.92% 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.
3
<PAGE>
<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 (4.92% 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>Shares are owned by a partnership of which Mr. Montag is the
managing partner and in which he has a substantial beneficial
interest.
<F5>Includes 14,330 shares owned jointly with Mr. Rubin's wife
and 829 shares owned by Mrs. Rubin as custodian for their son.
</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.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings, the Audit
Committee held one meeting and the Compensation Committee held one
meeting during the year ended April 30, 1997. 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 exception of
Bernard W. Abrams who attended 50% of the aggregate of such meetings.
The Board has a standing Executive Committee currently
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 Paula Lawton Bevington, Richard H. Danielson, Donald W. MacLeod,
L. Anthony Montag 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, 1997.
The Board formed a Compensation Committee, composed
entirely of outside Directors, in May 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 Compensation Committee held one meeting during
the year ended April 30, 1997. No fees are paid for service on this
Committee.
The Company does not have a Nominating Committee.
4<PAGE>
PRINCIPAL HOLDERS OF THE COMPANY'S SECURITIES
AND HOLDINGS BY EXECUTIVE OFFICERS AND DIRECTORS
As of June 30, 1997, the following "persons" (as that
term is defined by the Securities and Exchange Commission) are deemed to
be owners of record or beneficial owners of the Common Stock: (1) persons
who own more than 5% of the outstanding shares of such stock; (2) persons
who are executive officers of the Company who are not Directors; and (3)
all persons who are executive officers and Directors of the Company as a
group.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
COMMON STOCK OUTSTANDING
NAME AND ADDRESS BENEFICIALLY OWNED SHARES
<S> <C> <C>
Bernard W. Abrams 612,208 <F1> 20.81%
Post Office Box 76600
Atlanta, Georgia 30358
Edward M. Abrams 597,900 <F2> 20.32%
Post Office Box 76600
Atlanta, Georgia 30358
Melinda S. Garrett -- --
Post Office Box 76600
Atlanta, Georgia 30358
B. Michael Merritt -- --
Post Office Box 76600
Atlanta, Georgia 30358
Richard V. Priegel 13,933 <F3> *
Post Office Box 76600
Atlanta, Georgia 30358
All Executive Officers 1,427,947 <F3> 48.53%
and Directors as a group (12 persons)
*Less than 1%
<FN>
<F1>Does not include 144,817 shares (4.92% 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 (4.92% 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.
5<PAGE>
<F3>Includes 13,666 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 each of the five other most highly compensated Executive
Officers for services rendered in all capacities during the Company's
last three fiscal years:
<TABLE>
<CAPTION>
Other
Annual All Other
Name and Fiscal Salary Bonus Compensation Compensation
Principal Position Year ($) ($) <F1> ($) <F2> ($)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Edward M. Abrams 1997 355,420 81,084 -- 35,207 <F3>
Chairman of the Board of Directors 1996 341,744 76,555 -- 33,759
and Chief Executive Officer 1995 341,744 73,693 -- 32,161
Joseph H. Rubin 1997 301,860 62,429 -- 32,547 <F4>
Director, President, Chief Operating 1996 251,836 51,611 -- 31,347
Officer 1995 251,836 47,233 -- 30,459
Bernard W. Abrams 1997 206,904 58,255 -- 14,755 <F5>
Director, Chairman of the Executive 1996 246,334 79,416 -- 16,959
Committee 1995 341,744 73,693 -- 33,614
Alan R. Abrams 1997 137,752 72,669 -- 30,706 <F6>
Director, President, 1996 123,614 16,164 -- 17,886
Abrams Properties, Inc. 1995 105,000 26,307 -- 16,324
B. Michael Merritt 1997 118,850 125,433 -- 17,701 <F7>
President, Abrams Construction, 1996 108,925 119,958 -- 15,925
Inc. 1995 103,980 107,913 -- 15,845
Richard V. Priegel 1997 125,976 80,485 -- 14,532 <F8>
President, Abrams Fixture 1996 117,988 6,269 -- --
Corporation 1995 117,988 6,269 -- 1,378
<FN>
<F1>Consists of cash bonuses, cash profit-sharing and special incentive
payments (both accrued and deferred, during the applicable fiscal
year, at the election of the Executive Officer).
<F2>Perquisites and other benefits paid by the Company on behalf
of the Executive Officers do not meet the SEC threshold for
disclosure.
<F3>Consists of benefits derived from Company paid premiums on
split dollar life insurance policies of $4,607, amounts credited to
Mr. Abrams' account in the Company's Deferred Profit-Sharing Plan of
$19,200, and directors fees of $11,400.
6
<PAGE>
<F4>Consists of amounts credited to Mr. Rubin's account in the
Company's Employee's Deferred Compensation Plan of $1,850, benefits
derived from Company paid premiums on a split dollar life insurance
policy of $97, amounts credited to Mr. Rubin's account in the
Company's Deferred Profit-Sharing Plan of $19,200, and directors fees
of $11,400.
<F5>Consists of benefits derived from Company paid premiums on a split
dollar life insurance policy of $5,755, and directors fees of $9,000.
<F6>Consists of amounts credited to Mr. Abrams' account in the
Company's Deferred Profit-Sharing Plan of $19,306, and directors fees
of $11,400.
<F7>Consists of amount credited to Mr. Merritt's account in the
Company's Deferred Profit-Sharing Plan.
<F8>Consists of amount credited to Mr. Priegel'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 $200,000 with annual increases of 5%. Mr. Abrams
is also entitled to participate in other employee benefit plans generally
provided by the Company.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows for the Company's CEO and
other Executive Officers named in the Summary Compensation Table on the
previous page, the number of shares covered by both exercisable and
non-exercisable stock options as of April 30, 1997, and the values for
"in-the-money" options, based on the positive spread between the exercise
price of any such existing stock options and the fiscal year-end market
price of the Company's Common Stock.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
SHARES SHARES OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
EXERCISE REALIZED AT APRIL 30, 1997 APRIL 30, 1997
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Edward M. Abrams -- -- -- -- $ -- $ --
Joseph H. Rubin -- -- 4,000 -- 10,500 --
Bernard W. Abrams -- -- -- -- -- --
Alan R. Abrams -- -- -- -- -- --
B. Michael Merritt -- -- -- -- -- --
Richard V. Priegel -- -- 13,666 -- 25,041 --
</TABLE>
7
<PAGE>
COMPENSATION COMMITTEE OF THE 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 and annual bonus. 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. The Compensation
Committee reviews and approves the compensation of the Company's
Executive Officers.
SALARY. The Compensation Committee 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.
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. As a result, profit-sharing plan allocations are based on
the same factors as are the salaries of the Executive Officers.
The Board of Directors of the Company or the Board of
Directors of a subsidiary company, as the case may be, 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.
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
Compensation Committee of the Board of Directors: Paula Lawton Bevington,
Richard H. Danielson, Donald W. MacLeod, L. Anthony Montag, 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
8<PAGE>
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.
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, 1997, five members of
the Board of Directors (including two 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),
NASDAQ RETAIL TRADE STOCKS 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, 1997, 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, (ii) all retail trade companies quoted on NASDAQ and
(iii) 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>
04/30/92 04/30/93 04/30/94 04/30/95 04/30/96 04/30/97
<S> <C> <C> <C> <C> <C> (c)
Abrams Industries, Inc. $100.00 $ 118.07 $151.73 $119.83 $ 99.33 $147.97
NASDAQ Stock Market (US Companies) $100.00 $ 114.98 $127.97 $148.76 $212.07 $224.79
NASDAQ Retail Trade Stocks *(See note next page) $100.00 $ 93.10 $101.70 $ 98.97 $135.91 $121.67
NASDAQ Non-Financial Stocks $100.00 $ 110.18 $123.20 $143.13 $204.48 $208.20
</TABLE>
9
<PAGE>
*The Company has selected a different index to use for
comparative purposes for the fiscal year ended April 30, 1997. In
the past, the Company has used the NASDAQ Non-Financial Stocks index;
however, the Company believes the NASDAQ Retail Trade Stocks index is
more closely related to its overall business, considering that the
majority of the Company's operating revenues are derived from retailers
or from companies related to the retail industry.
INFORMATION CONCERNING THE COMPANY'S INDEPENDENT AUDITORS
KPMG Peat Marwick LLP were the independent public
accountants for the Company during the fiscal year ended April 30, 1997.
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 1998 annual meeting of shareholders
must be received by the Company at its executive offices on or before
March 21, 1998, in order to be eligible for inclusion in the Company's
proxy statement and form of proxy for that meeting.
The Company's By-Laws require notice to the Secretary
in advance of any regular shareholders' meeting of any shareholder
proposals. The By-Laws further require that in connection with such
proposals the shareholders provide certain information to the Secretary.
The summary descriptions of the By-Laws contained in this Proxy Statement
are not intended to be complete and are qualified in their entirety by
reference to the text of the By-Laws, which are available upon request of
the Company.
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 18, 1997
10
<PAGE>
ABRAMS INDUSTRIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON AUGUST 20, 1997
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 for and to vote all of the
undersigned's share of Common Stock of Abrams Industries, Inc. at the
Annual Meeting of Shareholders to be held in Atlanta, Georgia, on
Wednesday, the 20th day of August 1997 at 4:00 P.M., and at any and all
adjournments thereof as follows:
(1) Election of Directors
/ / FOR all nominees listed below (except as marked to the
contrary below)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: BERNARD W. ABRAMS; EDWARD M. ABRAMS; ALAN R. ABRAMS; J.
ANDREW ABRAMS; PAULA LAWTON BEVINGTON; DONALD W. MACLEOD;
L. ANTHONY MONTAG; JOSEPH H. RUBIN; AND FELKER W. WARD
(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.
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.
The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders dated July 18, 1997, and the Proxy
Statement furnished therewith.
______________________________________
Date and ______________________________________
signed _________, 1997 (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 to SunTrust Bank, Attn: Corporate Trust
Department, P.O. Box 4625, Atlanta, Georgia 30302, in the accompanying
prepaid envelope.
