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, 1998
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.)
1945 The Exchange, Suite 300, Atlanta, GA 30339
----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 953-0304
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. _____
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES
OF THE REGISTRANT AS OF JUNE 15, 1998, WAS $10,949,258. SEE PART III. THE
NUMBER OF SHARES OF COMMON STOCK OF THE REGISTRANT OUTSTANDING AS OF JUNE 15,
1998, WAS 2,936,356.
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 1998 ANNUAL MEETING OF SHAREHOLDERS WHICH IS TO BE FILED
PURSUANT TO REGULATION 14A.
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 and development
of income-producing properties, including acquisition, 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 12 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 of 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. In 1998, the Company also
invested in existing income-producing properties, including office and
retail, and developed an industrial facility in order to diversify the
Company's real estate portfolio.
The Company currently owns and manages seven shopping centers, all of
which are held as long-term investments. Six of the centers were developed by
the Company, and one was purchased. 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. The Company also owns two
office properties. See "ITEM 2. PROPERTIES - Office Buildings".
The Company, with the collective efforts of all of its segments, has
recently completed the development and construction of a state-of-the-art
facility for the Manufacturing Segment. This facility is owned by the Real
Estate Segment and leased to the Manufacturing Segment. See "ITEM 2.
PROPERTIES".
EMPLOYEES AND EMPLOYEE RELATIONS
At April 30, 1998, the Company employed 173 salaried employees and
112 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.
SEASONAL NATURE OF BUSINESS
The Company's business historically has been slightly seasonal, with
the Construction Segment being affected by weather conditions. The Company
limits this exposure by operating in several regions of the country, with
operations primarily in the southern United States where favorable weather
conditions prevail for most of the year. The business of the Real Estate
Segment and Manufacturing Segment is generally not seasonal.
COMPETITION
The businesses of the Company are highly competitive. In its
construction work and store fixture and display manufacturing businesses, 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 and asset management areas
are also extremely competitive, with numerous companies competing for
available financing, properties, tenants and investors.
PRINCIPAL CUSTOMERS
During fiscal 1998, the Company derived approximately 61%
($109,312,000) 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 12 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.
<PAGE>
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,
1998 1997
------------------------------------------------------------
<S> <C> <C>
Construction $50,880,000 $40,862,000
Manufacturing 4,603,000 8,632,000
Real Estate 9,928,000 11,677,000
------------------------------------------------------------
Total Backlog $65,411,000 $61,171,000
=============================================================
</TABLE>
The Company estimates that most of the backlog at April 30, 1998,
will be completed prior to April 30, 1999. 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, 1998.
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>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of the Company are as follows:
Name and Age Positions with the Company Officer Since
- ------------ ---------------------------- -------------
<S> <S> <C>
Joseph H. Rubin (55) A Director of the Company since 1983, he has been 1979
Chief Executive Officer since August 1997. From
August 1995 to May 1998 he served as President and
Chief Operating Officer. Prior to August 1995,
he served as Executive Vice President, Chief Financial
Officer and Secretary of the Company.
Alan R. Abrams (43) A Director of the Company since 1992, he has been President 1988
and Chief Operating Officer since May 1998. He served as
Executive Vice President of the Company from August 1997
to May 1998. From 1994 to May 1998, he served as President
and Chief Executive Officer of Abrams Properties, Inc. Prior
to that he served as Vice President of Abrams Properties, Inc.
J. Andrew Abrams (38) A Director of the Company since 1992, he has been Executive 1988
Vice President since August 1997. He also has served as Chief
Executive Officer of Abrams Fixture Corporation since July 1997.
From 1994 to July 1997, he served as Vice President of Abrams
Fixture Corporation. Prior to that he served as Vice President
of Abrams Properties, Inc.
B. Michael Merritt (48) President, Abrams Construction, Inc. since May 1995. Prior to 1986
that he served as Executive Vice President of Abrams
Construction, Inc.
Richard V. Priegel (45) President, Abrams Fixture Corporation since 1990 and Chief 1988
Operating Officer, Abrams Fixture Corporation since 1997.
Prior to 1990, he served as Executive Vice President and Chief
Financial Officer of Abrams Fixture Corporation.
Melinda S. Garrett (42) Chief Financial Officer since February 1997. She also has 1990
served Abrams Properties, Inc. as Chief Financial Officer
since May 1998, Vice President since 1993 and Treasurer since
1990.
Gerald T. Anderson, II (35) President and Chief Executive Officer, Abrams Properties, Inc. 1995
since May 1998. Prior to that he served as Executive Vice
President and Vice President of Abrams Properties, Inc.
Before joining Abrams Properties, Inc. in 1995, he was employed
for four years by JDN Realty Corporation as Vice
President/Development Leasing.
</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, a member
of the Board of Directors, and Edward M. Abrams, Chairman of the Board, 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 Executive Officer or Director and any other Executive Officer or
Director of the Company.
<PAGE>
ITEM 2. PROPERTIES.
In October 1997, the Company purchased its corporate headquarters
building, which contains approximately 66,000 square feet of office space.
The building is located in the North X Northwest Office Park, 1945 The
Exchange, in suburban Atlanta, Georgia. The Company's Real Estate Segment and
Construction Segment are also located in this building. In addition to the
26,600 square feet of offices occupied by the Abrams entities, another 31,100
square feet is leased to unrelated tenants, and the remaining 8,200 square
feet is available for lease.
During the summer of 1998, the Manufacturing Segment relocated its
wood manufacturing and warehousing and metal fabrication facilities to a
250,000 square foot facility, owned by the Company, located in Lithia
Springs, Georgia, a suburb of Atlanta. The Company also owns its two
previously used manufacturing facilities, which are located near downtown
Atlanta. The former wood manufacturing facility, which contains approximately
255,000 square feet of light industrial, warehouse and office space, is
currently for sale. The 104,000 square foot former metal fabrication and
warehousing facility will continue to be used by the Company for warehouse
space.
In addition, the Company owns, or has an interest in, the following
properties as of April 30, 1998:
OWNED SHOPPING CENTERS
The Company, through its Real Estate Segment, owns six shopping
centers which it developed and one which it purchased. The following chart
provides relevant information relating to the owned shopping centers:
<TABLE>
<CAPTION>
Principal
Amount of
Leasable Mortgage Debt
Square Rental Cash Mortgage Outstanding
Feet In Year(s) Income: Flow: Payments: As Of April 30,
Location Acres Building(s) Completed 1998 1998 <F1> 1998 <F2> 1998<F3>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1100 W. Argyle Street 10.5 110,046 1972, 1997 $ 422,101 $ 391,886 $ 361,114 $ 3,402,393
Jackson, MI
- -----------------------------------------------------------------------------------------------------------------------------------
44-56 Bullsboro Drive 16.3 174,059 1974, 1987, 872,563 865,940 668,016 5,461,376
Newnan, GA 1989
- -----------------------------------------------------------------------------------------------------------------------------------
1075 W. Jackson Street 7.3 92,120 1980, 1992 474,824 430,954 405,842 3,213,631
Morton, IL <F4>
- -----------------------------------------------------------------------------------------------------------------------------------
2500 Airport Thruway 8.0 87,543 1980, 1988 441,286 401,870 391,954 2,805,786
Columbus, GA <F4> <F5>
- -----------------------------------------------------------------------------------------------------------------------------------
1500 Placida Road 28.7 213,739 1990 1,642,685 1,627,156 1,352,167 12,844,212
Englewood, FL
- -----------------------------------------------------------------------------------------------------------------------------------
15201 N. Cleveland 72.3 293,801 1993, 1996 2,161,488 1,922,363 1,562,071 14,086,592
North Fort Myers, FL
- -----------------------------------------------------------------------------------------------------------------------------------
5700 Harrison Avenue 10.8 86,396 1982 78,144 37,042 --- ---
Cincinnati, OH <F6>
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> 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.
<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 loan which has been guaranteed by Abrams Properties, Inc.
See Notes 7 and 8 to the Consolidated Financial Statements of the
Company.
<F4> Land is leased, not owned.
<F5> 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.
<F6> Property was acquired in 1998. There is no debt on the property.
</FN>
</TABLE>
The two centers located in Morton, Illinois, and Columbus, Georgia,
are leased exclusively to Kmart. The Columbus, Georgia Kmart lease expires in
2008 and has ten five-year renewal options and the Morton, Illinois Kmart
lease expires in 2016 and has eight five-year renewal options. 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>
Jackson, MI Big Lots 26,022 2007 2 for 5 years each
Kroger 63,024 2021 6 for 5 years each
- -------------------------------------------------------------------------------------------------------------------------------
Newnan, GA Goody's 24,986 1998 <F1> 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 <F2> 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
- --------------------------------------------------------------------------------------------------------------------------------
Cincinnati, OH Kroger 42,456 2000 4 For 5 years each
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Tenant currently has "tenancy at will".
<F2> Tenant may terminate its lease with six months notice at five
year intervals beginning in 2010.
</FN>
</TABLE>
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 1998, the Company received $117,015 in contingent rentals,
net of offsets, which amounts are included in the aggregate rentals set forth
above.
<PAGE>
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). Kmart has complete maintenance responsibility for
the Morton, Illinois and Columbus, Georgia centers.
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. 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 1998, the Company received $77,930 in
contingent rentals, net of offsets, which amounts are included in the
aggregate annual rentals set forth below. The Company has responsibility for
structural and roof maintenance of the buildings. The Company also has
responsibility for parking lots and driveways, except routine upkeep, which
is the responsibility of the tenant, Kmart. The Company's leases contain
exculpatory provisions which limit the Company's liability to its interest in
the respective subleases.
The following chart provides certain information relating to the
leaseback shopping centers:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Square Rental Rent
Feet In Year(s) Income Expense
Location Acres Building(s) Completed 1998 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bayonet Point, FL 10.8 109,340 1976, 1994 $363,614 $269,568
- ----------------------------------------------------------------------------------------------------------------------------
Orange Park, FL 9.4 84,180 1976 264,000 226,796
- ----------------------------------------------------------------------------------------------------------------------------
Davenport, IA 10.0 84,180 1977 279,624 209,724
- ----------------------------------------------------------------------------------------------------------------------------
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, 1994 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>
OFFICE BUILDINGS
The Company, through its Real Estate Segment, owns two office
properties: the corporate headquarters building discussed above and an office
park in northwest suburban Atlanta, Georgia. Both were acquired in fiscal
year 1998. The following chart provides pertinent information relating to the
office buildings:
<TABLE>
<CAPTION>
Principal
Amount of
Leasable Mortgage Debt
Square Rental Cash Mortgage Outstanding
Feet In Year(s) Income Flow Payments As Of April 30,
Location Acres Building(s) Completed 1998 1998<F1> 1998 1998
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1945 The Exchange 3.12 65,946 1974, 1997 $420,321 $108,428 $188,663 $4,793,583
Atlanta, GA <F2>
- --------------------------------------------------------------------------------------------------------------------------------
1501-1523 Johnson Ferry Road 8.82 121,476 1980,1985 918,453 651,754 264,487 6,460,231
Marietta, GA
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> 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.
<F2> Corporate headquarters building of which the Parent Company and
the Construction Segment and Real Estate Segment occupy approximately
27,000 square feet. Rental income and cash flow includes intercompany
market rent of $287,814 paid by the Parent Company and the Construction
and Real Estate Segments. The building is in its initial lease-up phase.
As of April 30, 1998, the building is approximately 88% leased.
</FN>
</TABLE>
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 12.4 1993 Six outlots, anchor pads and retail shops
North Fort Myers, FL
- -------------------------------------------------------------------------------------------------------------------------------
<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.
</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 or lease to
others.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to, nor is any of its properties 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>
DIVIDENDS PAID
CLOSING MARKET PRICES PER SHARE
------------------------------------------------------------------------------------------------
FISCAL | FISCAL | FISCAL FISCAL
1998 | 1997 | 1998 1997
---------------------------|--------------------------------------|-----------------------------
HIGH LOW | HIGH LOW |
TRADE TRADE | TRADE TRADE |
---------------------------|--------------------------------------|-----------------------------
<S> <C> <C> | <C> <C> | <C> <C>
First Quarter $7.875 $5.000 | $4.125 $3.250 | $.070 $.015
Second Quarter 7.625 5.375 | 4.625 3.438 | .040 .015
Third Quarter 8.406 6.000 | 5.250 4.250 | .040 .020
Fourth Quarter 8.813 6.500 | 5.500 4.750 | .040 .020
---------------------------|--------------------------------------|-----------------------------
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, 1998.
<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>
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consolidated Revenues $178,590,842 $136,123,601 $134,299,240 $122,608,682 $123,602,954
Net Earnings (Loss) $ 2,999,478 $ 2,391,398 $ (304,188) $ (331,019) $ 1,359,408
Net Earnings (Loss) Per Share* $ 1.02 $ .81 $ (.10) $ (.11) $ .46
Shares Outstanding at Year-End 2,936,356 2,938,356 2,970,856 2,993,540 2,993,540
Cash Dividends Paid Per Share $ .19 $ .07 $ .105 $ .12 $ .11
Shareholders' Equity $ 24,535,863 $ 22,125,214 $ 20,152,376 $ 20,872,035 $ 21,562,279
Shareholders' Equity Per Share* $ 8.36 $ 7.53 $ 6.78 $ 6.97 $ 7.20
Working Capital $ 15,283,031 $ 13,075,119 $ 10,417,697 $ 11,447,872 $ 9,445,073
Depreciation and Amortization Expense $ 2,853,634 $ 3,401,334 $ 3,242,738 $ 3,078,878 $ 2,787,078
Total Assets $121,309,444 $ 91,499,438 $ 90,635,098 $ 88,576,745 $ 92,732,567
Income-Producing Property Under
Development, Income-Producing
Properties and Property, Plant and
Equipment, net $ 67,119,159 $ 45,028,355 $ 54,493,842 $ 55,065,157 $ 56,787,858
Long-Term Debt $ 62,938,807 $ 41,118,885 $ 51,202,536 $ 51,580,229 $ 52,637,298
Return on Average Shareholders' Equity 12.9% 11.3% (1.5%) (1.6%) 6.5%
<CAPTION>
1993 1992 1991 1990 1989 1988
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Revenues $82,878,911 $ 83,818,090 $ 78,020,796 $54,887,568 $50,331,871 $51,032,736
Net Earnings (Loss) $ 1,710,381 $ 1,021,303 $ 1,027,373 $ 1,534,063 $ 1,435,567 $ 1,082,883
Net Earnings (Loss) Per Share* $ .57 $ .34 $ .34 $ .51 $ .48 $ .36
Shares Outstanding at Year-End 2,977,540 2,977,540 2,977,540 2,994,039 2,978,039 1,787,000
Cash Dividends Paid Per Share $ .11 $ .20 $ .20 $ .20 $ .18 $ .14
Shareholders' Equity $20,484,880 $ 19,102,028 $ 18,676,233 $18,304,102 $17,310,146 $16,402,538
Shareholders' Equity Per Share* $ 6.84 $ 6.38 $ 6.24 $ 6.11 $ 5.78 $ 5.48
Working Capital $ 8,030,898 $ 2,783,427 $ 3,140,650 $21,575,826 $18,830,026 $12,955,259
Depreciation and Amortization Expense $ 2,162,472 $ 2,106,703 $ 1,938,687 $ 1,707,985 $ 1,668,105 $ 1,491,401
Total Assets $90,537,249 $ 78,260,810 $ 76,606,498 $64,047,108 $56,318,968 $51,178,946
Income-Producing Property Under
Development, Income-Producing
Properties and Property, Plant and
Equipment, net $64,340,348 $ 52,976,540 $49,999,625 $22,797,353 $24,088,285 $21,069,833
Long-Term Debt $55,197,178 $ 41,513,804 $39,104,720 $29,955,918 $30,071,322 $23,337,984
Return on Average Shareholders' Equity 8.6% 5.4% 5.6% 8.6% 8.5% 6.7%
</TABLE>
*Adjusted to reflect stock dividends and stock splits.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR FISCAL YEARS ENDED APRIL 30, 1998, 1997
AND 1996.
RESULTS OF OPERATIONS
REVENUES
Revenues for 1998 were $178,590,842, compared to $136,123,601 and
$134,299,240 for 1997 and 1996, respectively. This represents an increase in
Revenues of 31% and 33% from those of 1997 and 1996, respectively. Revenues
include Interest income of $684,270, $452,992 and $462,858 for 1998, 1997 and
1996, respectively, and Other income of $124,357, $46,262 and $173,577 for
1998, 1997 and 1996, 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.
<TABLE>
<CAPTION>
REVENUE SUMMARY BY SEGMENT
(Dollars in Thousands)
CHART A
Years Ended Increase Years Ended Increase
April 30, (Decrease) April 30, (Decrease)
-------------------------------------------------- ------------------------------------------
1998 1997 Amount Percent 1998 1996 Amount Percent
--------------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Construction <F1> $141,453 $ 97,977 $43,476 44 $141,453 $107,495 $33,958 32
Manufacturing <F2> 14,970 16,662 (1,692) (10) 14,970 14,999 (29) --
Real Estate <F3> 21,359 20,985 374 2 21,359 11,169 10,190 91
--------------------------------------------------- ----------------------------------------
Total $177,782 $135,624 $42,158 31 $177,782 $133,663 $44,119 33
=================================================== =========================================
NOTES:
<FN>
<F1> The increase in 1998 from those in 1997 and 1996 is attributable
to an increase in the level of activity in the construction of new buildings
for an existing customer and revenue recognized from new customers. The
amounts reported exclude $5,026,181 in 1998 related to construction of the
new facility for the Manufacturing Segment, and $345,000 in 1997 and $792,000
in 1996 related to construction work at two shopping centers for the Real
Estate Segment.
<F2> The decrease in 1998 from that in 1997 is attributable to a
postponement of a major order from an existing customer. The order is now
expected in 1999. The 1998 amounts reported exclude $181,003 related to
manufactured items supplied to one of the Construction Segment's customers.
<F3> Rental revenues for 1998 were $11,334,000, compared to
$11,771,000 in 1997 and $11,169,000 in 1996. Revenues from sales of real
estate amounted to $10,025,000 in 1998, $9,215,000 in 1997, and $-0- in 1996.
The 1998 real estate sales include sales of a shopping center in Oakwood,
Georgia, freestanding Kmarts in Tifton, Georgia, and Newark, Ohio, and an
outparcel in North Fort Myers, Florida. The 1997 real estate sales include
outparcel sales in Englewood, Florida, and Oakwood, Georgia, and freestanding
Kmarts in Niles, Michigan, Shawnee, Oklahoma, and Warner Robins, Georgia.
</FN>
</TABLE>
<PAGE>
COSTS: APPLICABLE TO SEGMENT REVENUES
As a percentage of total Segment Revenues (See Chart A), the
applicable total Segment Costs (See Chart B) of $155,520,419 for 1998,
$115,412,086 for 1997, and $119,775,802 for 1996 were 87%, 85% and 90%,
respectively.
<TABLE>
<CAPTION>
COSTS: APPLICABLE TO REVENUES SUMMARY BY SEGMENT
(Dollars in Thousands)
CHART B
Percent of
Segment Revenues
Years Ended For Years Ended
April 30, April 30,
-------------------------------------- ---------------------------------------
1998 1997 1996 1998 1997 1996
-------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Construction $133,430 $ 91,638 $101,894 94 94 95
Manufacturing <F1> 10,547 10,412 11,587 70 62 77
Real Estate <F2> 11,543 13,362 6,295 54 64 56
--------------------------------------
Total $155,520 $115,412 $119,776 87 85 90
======================================
NOTES:
<FN>
<F1> The increase in the percentage in 1998 as compared to 1997 is
attributable to the product mix of fixtures sold and the installation of
fixtures. The installation of fixtures is a new line of business that the
Company is offering to better service its customers and does not command the
same profit margin as does manufacturing fixtures. The decrease in the dollar
amount and percentage in 1998 as compared to 1996 is a result of
"re-engineering" efforts that have focused on cost control.
<F2> The decrease in the dollar amount and percentage in 1998 as
compared to 1997 is attributable to a 1997 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. There was no impairment loss
provision in 1998 or 1996. See Note 5 to the Consolidated Financial
Statements for further discussion.
</FN>
</TABLE>
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES
For the years 1998, 1997 and 1996, Selling, shipping, general and
administrative expenses (See Chart C) were $13,571,655, $12,084,015 and
$10,273,008, respectively. As a percentage of Consolidated Revenues, these
expenses were 8% for 1998, 9% for 1997 and 8% for 1996. 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.
<PAGE>
<TABLE>
<CAPTION>
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES SUMMARY BY SEGMENT
(Dollars in Thousands)
CHART C
Percent of
Segment Revenues
Years Ended For Years Ended
April 30, April 30,
------------------------------------------ -----------------------------------
1998 1997 1996 1998 1997 1996
------------------------------------------ -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Construction <F1> $ 4,525 $ 3,386 $ 2,952 3 3 3
Manufacturing <F2> 3,941 4,470 3,454 26 27 23
Real Estate <F3> 2,500 1,905 1,628 12 9 15
Parent 2,606 2,323 2,239 2 2 2
------------------------------------------
Total $13,572 $12,084 $10,273 8 9 8
==========================================
NOTES:
<FN>
<F1> On a dollar basis comparison, the higher expenses in 1998 as
compared to 1997 and 1996 stemmed from increased incentive-based compensation
expenses which were a result of increased Segment profits.
<F2> The decrease in the dollar amount and percentage of expenses in
1998 as compared to 1997 is a result of a decrease in personnel costs, which
was partially offset by an increase in engineering and design expenses and an
increase in prototype expenditures. The increase in the dollar amount and
percentage of expenses in 1998 as compared to 1996 is a result of an increase
in compensation expense due to increased profits and an increase in
engineering and prototype costs.
<F3> The increase in the dollar amount of expenses in 1998 as compared
to 1997 and 1996 is attributable to increased employee compensation expenses
which were a result of increased Segment profits.
</FN>
</TABLE>
INTEREST COSTS
The majority of interest costs expensed of $4,666,290, $4,779,102 and
$4,717,618 in 1998, 1997 and 1996, respectively, are related to debt on real
estate and utilization of lines of credit. Interest costs of $112,000,
$25,000 and $70,000, relating to properties under development in 1998, 1997
and 1996, respectively, were capitalized.
FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION
Income-producing property increased by $13,938,133 in fiscal year
ending April 30, 1998, primarily as a result of the purchases of: (1) an
approximately 66,000 square foot, four-story office building located in
suburban Atlanta, Georgia, which the Parent Company partially occupies with
the Construction Segment and the Real Estate Segment; (2) an approximately
121,000 square foot, twelve building office park located in Marietta,
Georgia; and (3) an 86,000 square foot shopping center anchored by Kroger and
located in Cincinnati, Ohio. These purchases were partially offset by the
sale of the Tifton, Georgia Kmart for $1,012,121 in cash plus the repayment
of the outstanding mortgage of $675,879. This sale was structured as a
tax-deferred, like-kind exchange 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 gain on the sale of this property for
financial statement purposes. The proceeds of this sale, in conjunction with
the proceeds from the tax-deferred exchange transactions from prior year
sales of properties in Niles, Michigan, Shawnee, Oklahoma, and Warner Robins,
Georgia, were used to purchase the above Income-producing properties.
Management believes that it has fully complied with the provisions of
Internal Revenue Code Section 1031 and thus will defer most of the tax gain
on these sales.
Property held for sale decreased by $4,886,209 in 1998 primarily as a
result of the sales of three properties: (1) a shopping center in Oakwood,
Georgia, which was sold for $1,607,752 in cash plus the assumption of the
$4,468,899 mortgage loan; (2) a freestanding Kmart in Newark, Ohio, which was
sold for $225,000 in cash plus the assumption of the $1,265,000 mortgage loan
and (3) an outparcel in North Fort Myers, Florida, which was sold for
$770,000 in cash. The first two sales were also structured as tax-deferred,
like-kind exchanges pursuant to Internal Revenue Code Section 1031. All of
the properties were sold at gains. As of April 30, 1998, the only Property
held for sale was the Company's former wood manufacturing facility in
Atlanta, Georgia, which is currently being marketed and is expected to be
sold at a gain. The mortgage debt associated with the facility has been
reclassified as short-term.
Property, plant and equipment increased by $8,152,671 during the
fiscal year, primarily as a result of the construction of the Manufacturing
Segment's new facility. As of April 30, 1998, the capitalized costs of the
project to date were $7,855,561, which includes the land and building
construction expenditures. The land was purchased with funds received from
the tax-deferred exchanges previously discussed. The facility was completed
in early summer 1998 and is now fully operational. For further information
related to the financing of this property, see "LIQUIDITY AND CAPITAL
RESOURCES".
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 also has 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 $15,283,031 at
the end of 1998, from $13,075,119 and $10,417,697 at the end of 1997 and
1996, respectively. In 1998, operating activities provided cash of
$5,954,188; investing activities used cash of $21,037,561, primarily for
additions to Income-producing properties; and financing activities provided
cash of $20,712,793.
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, August 1995, March 1996, July 1997 and March 1998. The
primary term of the construction financing was five years, and the loan has
been extended to June 1999, in accordance with the loan agreement. The loan
carries a floating interest rate of prime plus 3/8%. The maximum amount to be
funded will be determined by a formula based on future development.
In August 1997, the Company refinanced the $2,100,000 construction
loan on its Jackson, Michigan shopping center with a permanent loan of
$3,500,000. The permanent loan has a term of 22 years and bears interest at 8
5/8%. The loan required the establishment of a $500,000 letter of credit at
closing which is to be used to pay down the loan in August 1998 if certain
leasing requirements are not attained.
In October 1997, the Company entered into an acquisition and
construction loan with SunTrust Bank, Atlanta, to fund the purchase and
renovations of the corporate headquarters office building in Atlanta,
Georgia. The maximum amount of the loan is $5,200,000, and the loan is due in
October 1999. The Company has the option of paying interest at the prime rate
or based on the Eurodollar rate plus 2.0%, which may be locked in for one,
two, three, or six month periods at the Company's discretion.
In November 1997, the Company closed on the $11,000,000, twenty-one
year bond financing for the construction of its new manufacturing facility.
The bonds bear interest at prevailing market rates, reset weekly. In an
effort to minimize exposure to interest rate fluctuations in connection with
the bonds, the Company entered into two separate interest rate swap
agreements with SunTrust Bank, Atlanta, in February 1998. The first swap
agreement terminates in February 2001. The notional amount reduces annually
from $5,500,000 at inception to $5,300,000 at the expiration of the
agreement. The agreement calls for the Company to make fixed rate payments to
SunTrust of 5.57% per annum of the notional amount, in exchange for SunTrust
making floating rate payments based on the 30-day Non-financial AA Commercial
Paper rate. The second interest rate swap agreement terminates in February
2003. The notional amount reduces annually from $5,500,000 at inception to
$5,057,500 at the expiration of the agreement. The remaining terms of the
second agreement are identical to the terms of the first except the fixed
rate payment is 5.67% per annum. The notional amounts of the swap agreements
are set to match the outstanding principal amount of the bonds. The swap
floating rates are reset weekly, and the Company settles with the
counterparty monthly. The Company expects the counterparty to the agreements
to abide by the terms of the agreements.
In December 1997, the Company obtained a $6,480,000 permanent loan on
the office park in Marietta, Georgia. The property was originally purchased
in October 1997 with a portion of the proceeds from the tax-deferred exchange
transactions previously discussed and draws on the bank lines of credit,
which have been repaid. The loan bears interest at 7.41% per annum, and the
final payment of the loan is due in January 2008.
During the coming fiscal year, the Company plans to obtain financing
on the Cincinnati, Ohio shopping center purchased in February 1998. As of
April 30, 1998, there was no debt on this property. Management expects the
proceeds from the financing will be used to fund future purchases of
income-producing properties.
At April 30, 1998, the Company had unsecured committed lines of
credit totaling $7,000,000, of which $6,500,000 was available and $500,000
was reserved for the letter of credit issued for the Jackson, Michigan loan
discussed above. The Company also had a committed line of credit totaling
$2,500,000, secured by the Manufacturing Segment's inventory and receivables,
of which none was outstanding.
EFFECTS OF INFLATION ON REVENUES AND OPERATING PROFITS
The effects of inflation upon the Company's operating results are
varied. Inflation in the current year has been modest and has had minimal
effect on the Company. The Construction Segment subcontracts most of its work
at fixed prices, which normally will help that segment 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 tenants 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.
<PAGE>
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.
YEAR 2000
Management has undertaken a program to prepare the Company's
financial and operating computer systems and ancillary applications for the
year 2000. All necessary software modifications are expected to occur in a
timely manner at a cost which is not expected to be material.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Report 27
Consolidated Balance Sheets - April 30, 1998 and 1997 28
Consolidated Statements of Operations - For the years ended April 30, 1998, 1997 and 1996 29
Consolidated Statements of Shareholders' Equity - For the years ended April 30, 1998, 1997 and 1996 30
Consolidated Statements of Cash Flows - For the years ended April 30, 1998, 1997 and 1996 31
Notes to Consolidated Financial Statements - April 30, 1998, 1997 and 1996 32
Schedules:
SCHEDULE NUMBER
---------------
II Valuation and Qualifying Accounts 43
III Real Estate and Accumulated Depreciation 44
/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, 1998 and 1997, and
the results of their operations and cash flows for each of the years in the
three-year period ended April 30, 1998, 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 12, 1998
Atlanta, Georgia
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
April 30,
---------------------------------------
1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents, including restricted cash of $4,860,226
and $609,629 in 1998 and 1997, respectively $ 13,240,471 $ 7,611,051
Receivables:
Trade notes and accounts, net 1,996,831 3,512,652
Contracts, net, including retained amounts of
$5,480,974 in 1998 and $4,057,528 in 1997 (note 3) 19,148,413 15,402,509
Inventories, net (note 2) 1,495,063 1,557,964
Costs and earnings in excess of billings (note 3) 5,637,599 2,785,340
Property held for sale (note 4) 1,691,764 6,577,973
Deferred income taxes (note 9) 848,939 682,321
Other 614,244 467,733
- --------------------------------------------------------------------------------------------------------------------------------
Total current assets 44,673,324 38,597,543
- --------------------------------------------------------------------------------------------------------------------------------
INCOME-PRODUCING PROPERTIES, net (notes 5, 7 and 8) 57,262,540 43,324,407
PROPERTY, PLANT AND EQUIPMENT, NET (notes 6 and 8) 9,856,619 1,703,948
OTHER ASSETS:
Land held for future development or sale 4,237,845 3,889,361
Notes receivable 415,538 515,832
Cash surrender value of officers life insurance 1,282,790 1,021,481
Deferred loan costs, net 814,405 531,812
Other 2,766,383 1,915,054
- --------------------------------------------------------------------------------------------------------------------------------
$ 121,309,444 $91,499,438
================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade and subcontractors payables, including
retained amounts of $3,797,162 in 1998 and
$1,904,080 in 1997 $ 19,445,101 $10,385,079
Accrued expenses 3,664,863 3,438,412
Billings in excess of costs and earnings (note 3) 1,369,148 1,148,665
Accrued cash and deferred profit-sharing (note 10) 3,325,048 3,130,097
Current maturities of long-term debt (notes 7 and 8) 1,586,133 7,420,171
- --------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 29,390,293 25,522,424
- --------------------------------------------------------------------------------------------------------------------------------
DEFERRED INCOME TAXES (note 9) 3,018,429 1,884,453
OTHER LIABILITIES 1,426,052 848,462
MORTGAGE NOTES PAYABLE, less current maturities (note 7) 33,433,945 24,919,282
OTHER LONG-TERM DEBT, less current maturities (notes 7 and 8) 29,504,862 16,199,603
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities 96,773,581 69,374,224
- --------------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (notes 4, 5, 7, and 8)
SHAREHOLDERS' EQUITY (note 10):
Common stock, $1 par value; authorized 5,000,000 shares;
3,014,039 issued and 2,936,356 outstanding in 1998;
3,010,039 issued and 2,938,356 outstanding in 1997 3,014,039 3,010,039
Additional paid-in capital 2,019,690 2,012,190
Retained earnings 19,914,685 17,473,536
- ---------------------------------------------------------------------------------------------------------------------------------
Total paid-in capital and retained earnings 24,948,414 22,495,765
Less treasury stock, 77,683 and 71,683 shares in 1998
and 1997, respectively 412,551 370,551
- ---------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 24,535,863 22,125,214
- ---------------------------------------------------------------------------------------------------------------------------------
$ 121,309,444 $91,499,438
=================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended April 30,
-----------------------------------------------------
1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Construction $141,453,025 $97,976,902 $ 107,494,271
Manufacturing 14,970,261 16,661,798 14,999,240
Rental income 11,334,278 11,770,889 11,169,294
Real estate sales 10,024,651 9,214,758 ---
Interest 684,270 452,992 462,858
Other 124,357 46,262 173,577
- ----------------------------------------------------------------------------------------------------------------
178,590,842 136,123,601 134,299,240
- ----------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES:
Applicable to revenues:
Construction 133,430,395 91,637,636 101,893,350
Manufacturing 10,547,381 10,412,263 11,587,307
Rental property operating expenses,
exclusive of interest 6,385,181 6,526,306 6,295,145
Cost of real estate sold 5,157,462 4,085,881 ---
Provision for impairment on income-producing
property (note 5) --- 2,750,000 ---
- ---------------------------------------------------------------------------------------------------------------
155,520,419 115,412,086 119,775,802
- ---------------------------------------------------------------------------------------------------------------
Selling, shipping, general and administrative 13,571,655 12,084,015 10,273,008
Interest costs incurred, less interest capitalized of
$112,000, $25,000, and $70,000 in 1998, 1997 and
1996, respectively 4,666,290 4,779,102 4,717,618
- ---------------------------------------------------------------------------------------------------------------
173,758,364 132,275,203 134,766,428
- ---------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) BEFORE INCOME TAXES 4,832,478 3,848,398 (467,188)
- ---------------------------------------------------------------------------------------------------------------
INCOME TAXES EXPENSE (BENEFIT) (note 9):
Current 865,642 968,782 117,820
Deferred 967,358 488,218 (280,820)
- ---------------------------------------------------------------------------------------------------------------
1,833,000 1,457,000 (163,000)
- ---------------------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) $ 2,999,478 $2,391,398 $ (304,188)
===============================================================================================================
NET EARNINGS (LOSS) PER SHARE (note 11):
Basic $ 1.02 $ .81 $ (.10)
- ---------------------------------------------------------------------------------------------------------------
Diluted $ 1.02 $ .80 $ (.10)
===============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common Stock Additional
---------------------- Paid-In Retained Treasury
Shares Amount Capital Earnings Stock Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
Net earnings --- --- --- 2,999,478 --- 2,999,478
Cash dividends declared -
$.19 per share --- --- --- (558,329) --- (558,329)
Exercise of stock options 4,000 4,000 7,500 --- --- 11,500
Acquisition of 6,000 shares
of treasury stock --- --- --- --- (42,000) (42,000)
- ----------------------------------------------------------------------------------------------------------------------------
BALANCES at April 30, 1998 3,014,039 $3,014,039 $2,019,690 $19,914,685 $ (412,551) $ 24,535,863
============================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended April 30,
-------------------------------------------------
1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 2,999,478 $ 2,391,398 $ (304,188)
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation and amortization 2,853,634 3,401,334 3,242,738
Deferred tax expense (benefit) 967,358 488,218 (280,820)
Gain on sales of real estate (4,867,189) (5,128,877) ---
Provision for impairment on income-producing property --- 2,750,000 ---
Decrease (increase) in assets:
Receivables, net (2,230,083) (2,840,330) (5,392,110)
Inventories, net 62,901 118,577 979,365
Costs and earnings in excess of billings (2,852,259) 73,049 (1,289,544)
Other current assets (146,511) (83,441) 3,787
Other assets (1,112,638) (790,074) (430,375)
Increase (decrease) in liabilities:
Trade and subcontractors payable 9,060,022 (861,657) 3,387,122
Accrued expenses 226,451 1,542,646 (71,722)
Accrued cash and deferred profit-sharing 194,951 1,512,165 124,451
Billings in excess of costs and earnings 220,483 366,847 281,350
Other liabilities 577,590 309,199 (46,520)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 5,954,188 3,249,054 203,534
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales of real estate 3,818,393 1,496,831 ---
Additions to income-producing properties (16,045,209) (5,205,926) ---
Additions to property, plant and equipment, net (8,911,039) (622,667) (2,363,431)
Repayments received on notes receivable 100,294 108,815 159,276
- -----------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (21,037,561) (4,222,947) (2,204,155)
- -----------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Debt proceeds 32,145,583 5,061,143 6,419,282
Debt repayments (10,425,800) (1,486,522) (6,821,440)
Additions to deferred loan costs (418,161) (23,570) ---
Cash dividends (558,329) (207,310) (312,603)
Repurchases of common stock (42,000) (211,250) (102,868)
Proceeds from exercise of stock options 11,500 --- ---
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 20,712,793 3,132,491 (817,629)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 5,629,420 2,158,598 (2,818,250)
Cash and cash equivalents at beginning of year 7,611,051 5,452,453 8,270,703
- -----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $13,240,471 $ 7,611,051 $ 5,452,453
=============================================================================================================================
Supplemental disclosure of noncash financing activities:
Assumption of mortgage loans by purchasers in
conjunction with sale of income-producing properties $ 5,733,899 $ 7,723,758 $ ---
Supplemental schedule of cash flow information:
Interest paid, net of amounts capitalized $ 4,817,206 $ 4,829,201 $ 4,699,374
Income taxes paid $ 726,733 $ 382,873 $ 107,653
=============================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1998, 1997, AND 1996
(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 (the "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) 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.
(c) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include money market funds and other
financial instruments. For purposes of the statements of cash flows, the
Company considers all highly liquid debt instruments with maturities of
three months or less to be cash equivalents.
In 1998, restricted cash includes proceeds from the issuance of
industrial development revenue bonds. The proceeds of these bonds are
restricted for use in constructing and equipping the Company's new
manufacturing facility. In 1997, restricted cash includes amounts held
for the payment of outstanding bonds and proceeds from the sale of real
estate. Restricted cash from real estate sales was held in escrow by a
qualified intermediary in order to complete tax-deferred exchanges in
accordance with Section 1031 of the Internal Revenue Code.
(d) 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.
<PAGE>
(e) 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.
(f) INCOME-PRODUCING PROPERTIES AND PROPERTY, PLANT AND EQUIPMENT
Income-producing properties are stated at the lower of cost or fair
value and are depreciated for financial reporting purposes using the
straight-line method over the estimated useful lives of the properties
and related assets.
Property, plant, and equipment is recorded at cost and is
depreciated 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.
Interest and other carrying costs related to assets under
construction are capitalized. 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.
The Company reviews income-producing properties and property,
plant, and equipment 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 the asset to future net cash
flows expected to be generated by the asset. If an asset is considered
to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the asset exceeds the asset's
fair value.
(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) DEFERRED LOAN COSTS
Costs incurred to obtain loans have been deferred and are being
amortized over the terms of the related loans.
(i) 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 of a change in tax rates on deferred
tax assets and liabilities is recognized in income in the period that
includes the enactment date.
(j) EARNINGS PER SHARE
On April 30, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share.
SFAS No. 128 supersedes APB Opinion No. 15, Earnings Per Share, and
specifies the computation, presentation, and disclosure requirements for
earnings per share ("EPS"). SFAS No. 128 replaces the presentation of
primary EPS and fully diluted EPS with a presentation of basic EPS and
diluted EPS, respectively. SFAS No. 128 also requires dual presentation
of basic and diluted EPS on the face of the income statement for all
entities with complex capital structures. Prior period EPS data has been
restated to conform with SFAS No. 128.
(k) 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 their fair value.
(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) STOCK OPTIONS
The Company accounted 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 was recorded only to the
extent that the market price of the underlying stock at the date of
grant exceeded 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.
Companies not following the fair value based method are required to
provide expanded disclosures in the footnotes. The Company elected to
continue to apply the provisions of APB Opinion 25 and, to the extent
material, followed the disclosure provisions of SFAS 123.
(n) RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 130, Reporting Comprehensive Income. This statement
establishes standards for reporting and displaying comprehensive income
and its components in a full set of general purpose financial
statements. SFAS No. 130 requires all items that are required to be
recognized under accounting standards as components of comprehensive
income be reported in a financial statement that is displayed in equal
prominence with the other financial statements. The term "comprehensive
income" is used in the statement to describe the total of all components
of comprehensive income including net income. "Other comprehensive
income" refers to revenues, expenses, gains, and losses that are
included in comprehensive income but excluded from earnings under
current accounting standards. SFAS No. 130 is effective for financial
statements for years beginning after December 15, 1997. The Company will
adopt SFAS No. 130 effective May 1, 1998.
In June 1997, the FASB issued SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information. This statement
establishes standards for the way public business enterprises are to
report information about operating segments in annual financial
statements and requires those enterprises to report selected information
about operating segments using the "management approach" concept. It
also establishes standards for related disclosures about products and
services, geographic areas, and major customers. SFAS No. 131 supersedes
SFAS No. 14, Financial Reporting for Segments of a Business Enterprise,
but retains the requirement to report information about major customers.
SFAS No. 131 is effective for financial statements for periods beginning
after December 15, 1997. The Company will adopt SFAS No. 131 effective
May 1, 1998.
(o) RECLASSIFICATIONS
Certain reclassifications have been made to the 1997 and 1996
consolidated financial statements to conform with classifications
adopted in 1998.
(2) INVENTORIES
The balances of major classes of inventory, net of their related
valuation reserves, at April 30 were as follows:
1998 1997
--------------------------------
Finished goods $ 787,520 $ 939,784
Work-in-progress 219,802 110,119
Raw materials 487,741 508,061
--------------------------------
$ 1,495,063 $1,557,964
================================
(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>
1998 1997
--------------------------------
<S> <C> <C>
Costs and earnings in excess of billings:
Accumulated costs and earnings $48,672,342 $24,480,989
Amounts billed 43,034,743 21,695,649
--------------------------------
$ 5,637,599 $ 2,785,340
================================
Billings in excess of costs and earnings:
Amounts billed $27,774,973 $29,161,445
Accumulated costs and earnings 26,405,825 28,012,780
--------------------------------
$ 1,369,148 $ 1,148,665
================================
</TABLE>
<PAGE>
(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 1997, the Company entered into a contract to sell a property in Newark,
Ohio, tenanted by Kmart Corporation. The contract amount was $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 closed in fiscal 1998 resulting in
a gain. In August 1997, the Company closed the sale of a shopping center in
Oakwood, Georgia. The sale resulted in a gain. The sales described above,
with the exception of the sale of undeveloped land in North Fort Myers,
Florida, were structured as tax-deferred, like-kind exchanges pursuant to
Internal Revenue Code Section 1031 (note 5).
In addition, during fiscal 1997, the Company began actively
marketing for sale its former wood manufacturing facility in Atlanta,
Georgia. The Manufacturing Segment moved into a new manufacturing facility in
fiscal year 1999. The Company anticipates the former wood manufacturing
facility will be sold at a gain. In anticipation of the sale of the four
aforementioned properties during fiscal 1998, the Company classified the
carrying amounts of these properties as property held for sale in the
accompanying April 30, 1997 consolidated balance sheet. As of April 30, 1998,
only the Company's manufacturing facility is classified as property held for
sale. 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 operations for the year ended April 30, 1997, for
the properties in the Real Estate Segment that were held for sale are
summarized below:
Revenues $1,054,182
Operating expenses, including depreciation and interest 869,463
Results of operations ---------
$ 184,719
=========
The results of operations for the manufacturing segment are
summarized in note 12.
(5) INCOME-PRODUCING PROPERTIES
Income-producing properties and their estimated useful lives at
April 30 were as follows:
<TABLE>
<CAPTION>
Estimated useful lives 1998 1997
---------------------------------------------------------------
<S> <S> <C> <C>
Land $16,580,806 $12,604,290
Buildings and improvements 7-39 years 55,472,762 45,161,119
-------------------------------------
72,053,568 57,765,409
Less - accumulated depreciation
and amortization 14,791,028 14,441,002
-------------------------------------
$57,262,540 $ 43,324,407
=====================================
</TABLE>
During the fourth quarter of fiscal year 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. 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, 1998 and 1997 consolidated balance sheets and is
included in the Real Estate Segment.
During 1998, the Company sold income-producing properties located
in Oakwood, Georgia, Newark, Ohio, and Tifton, Georgia, and recognized gains
for financial statement purposes. During fiscal year 1997, income-producing
properties located in Shawnee, Oklahoma, Warner Robins, Georgia, and Niles,
Michigan, also were sold for gains. These sales transactions were 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
proceeds of the sale to purchase other real estate within 180 days of sale.
(6) PROPERTY, PLANT, AND EQUIPMENT
The major components of property, plant, and equipment and their
estimated useful lives at April 30 were as follows:
<TABLE>
<CAPTION>
Estimated useful lives 1998 1997
-------------------------------------------------------
<S> <S> <C> <C>
Land $ 92,226 $ 92,226
Buildings and improvements 3-31.5 years 1,729,884 1,513,989
Machinery and equipment 3-10 years 5,684,239 5,322,714
----------------------------
7,506,349 6,928,929
Less - accumulated depreciation 5,505,291 5,224,981
----------------------------
2,001,058 1,703,948
New manufacturing facility
under construction 7,855,561 ---
----------------------------
$9,856,619 $1,703,948
============================
(7) MORTGAGE NOTES PAYABLE AND LEASES
The Company owns rental property consisting of seven shopping
centers, an office building, and an office park, all of which, with the
exception of one of the shopping centers, are pledged as collateral on
related mortgage notes payable. It is also lessee of nine shopping centers
under leaseback arrangements expiring from 2001 to 2014. Each debt instrument
and leaseback arrangement contains an exculpatory provision limiting the
Company's liability to its interest in the mortgaged property or lease,
except for a construction mortgage loan secured by a shopping center in North
Fort Myers, Florida, and a note payable to a bank secured by an office building
in Atlanta, Georgia, both of which are guaranteed by a subsidiary of the
Company (note 8).
All of the leaseback centers are leased to the Kmart Corporation,
and Kmart is a tenant in five of the seven owned shopping centers. The owned
shopping centers are leased for periods expiring from fiscal years 1999 to
2040, while leases on the owned office properties expire from fiscal years
1999 to 2003. Leases on the leaseback centers correspond to the leaseback
periods. All leases are operating leases. The shopping center leases
typically require that the tenant make fixed rental payments over a 5- to
25-year period and provide for renewal options and for contingent rentals if
the tenants' sales volumes exceed predetermined amounts. In most cases, the
shopping center leases provide that the tenant bear the cost of insurance,
repairs, maintenance and taxes. Base rental revenue received from owned
shopping centers and office properties in 1998, 1997, and 1996 was
approximately $7,708,000, $7,829,000, and $7,116,000, respectively. Base
rental revenue received from leaseback centers in 1998, 1997, and 1996 was
approximately $2,620,000, $2,694,000, and $2,917,000, respectively.
Contingent rental revenue received on all centers in 1998, 1997, and 1996 was
approximately $195,000, $164,000, and $171,000, respectively.
Approximate future minimum annual rental to be received from all
rental properties are as follows:
</TABLE>
<TABLE>
<CAPTION>
Owned Leaseback
---------------------------------------
Years ending April 30, Rental receipts
---------------------------------------------------------------------------------------
<S> <C> <C>
1999 $ 5,602,000 $ 2,620,000
2000 5,340,000 2,620,000
2001 5,216,000 2,620,000
2002 5,073,000 2,138,000
2003 4,998,000 1,911,000
2004 and thereafter 59,521,000 4,875,000
---------------------------------------------------------------------------------------
$85,750,000 $ 16,784,000
=======================================================================================
</TABLE>
The Company leases office space from one of its subsidiaries. In
accordance with the noncancelable leases, the subsidiary will receive
approximately $1,985,000 in rental payments from the Company over the term of
the leases. These rental receipts have been reflected in the future minimum
rental receipts from owned properties.
The expected future minimum principal and interest payments on
mortgage notes payable on the owned rental properties and the future minimum
rentals to be paid on leaseback centers are as follows:
<TABLE>
<CAPTION>
Owned Rental Properties
Mortgage Payments Leaseback
--------------------------------- Centers
Years ending April 30, Principal Interest Rental Payments
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
1999 $ 753,684 $ 3,003,153 $ 2,136,000
2000 822,663 2,934,178 2,136,000
2001 898,091 2,858,714 2,136,000
2002 13,178,058 2,878,307 1,719,000
2003 861,854 1,542,848 1,536,000
2004 and thereafter 17,673,279 8,900,032 4,137,000
------------------------------------------------------------------------------------------------------
$34,187,629 $ 22,117,232 $ 13,800,000
======================================================================================================
</TABLE>
The mortgage notes payable are due at various dates between April 1,
2002, and September 1, 2019, and bear interest at rates ranging from 7.25% to
9.75%, with a weighted average rate of 8.0% at April 30, 1998.
<PAGE>
(8) OTHER LONG-TERM DEBT AND CREDIT FACILITIES
<TABLE>
<CAPTION>
Other long-term debt at April 30 was as follows:
1998 1997
-----------------------------------
<S> <C> <C>
Industrial development revenue bonds with a variable
interest rate, repricing on a weekly basis, based on rates
available for debt instruments of a similar nature and
comparable terms (5.75% at April 30, 1998); requires
monthly interest only payments until November 1, 1998,
thereafter interest and bond sinking fund payments
required monthly; matures on November 1, 2018;
secured by irrevocable letter of credit $11,000,000 $ ---
Note payable to bank with variable interest rate of LIBOR
plus 2% (7.625% at April 30, 1998); requires monthly
interest only payments with principal due October 2,
1999; secured by income-producing property; guaranteed
by a subsidiary of the Company 4,793,583 ---
Industrial development bond bearing interest at 79% of
prime rate (6.72% at April 30, 1998), requires quarterly
installments of $57,143 principal plus interest, final
payment due March 1, 2000; secured by real property 457,136 685,708
Construction mortgage loan bearing interest at the prime rate plus
3/8% (8.875% at April 30, 1998); and interest
monthly principal payments of $87,729 required
with principal due June 30, 1999; secured by income-
producing property and assignment of leases and
rents; guaranteed by a subsidiary of the Company 9,231,297 9,454,624
Amendment to construction mortgage loan shown above
permitting borrowings of up to $4,942,419; bearing
interest at the prime rate plus 3/8% (8.875% at April 30,
1998); monthly principal and interest payments of $42,113
required with principal due June 30, 1999; secured by
income-producing property and assignment of leases
and rents; guaranteed by a subsidiary of the Company 4,855,295 4,920,425
Construction mortgage loan permitting borrowings of
up to $2,100,000; with principal due and paid August 15, 1997 --- 2,100,000
-----------------------------------
Total other long-term debt 30,337,311 17,160,757
Less current maturities 832,449 961,154
-----------------------------------
Total other long-term debt, excluding
current maturities $29,504,862 $16,199,603
===================================
</TABLE>
<PAGE>
(8) OTHER LONG-TERM DEBT AND CREDIT FACILITIES (CONTINUED)
The future minimum principal payments due on long-term debt are as
follows:
Years ending April 30,
---------------------------------------------------
1999 $ 603,313
2000 19,027,862
2001 221,136
2002 242,500
2003 267,500
2004 and thereafter 9,975,000
---------------------------------------------------
$ 30,337,311
===================================================
The outstanding principal balance of $457,136 on the industrial
development bond payable has been included in the current maturities of
long-term debt as the former wood manufacturing facility securing this bond
is included in property held for sale in the accompanying consolidated
balance sheet at April 30, 1998 (note 4).
At April 30, 1998, the Company had commitments from a bank for
unsecured lines of credit totaling $6,000,000, of which $5,500,00 was
available. The remaining $500,000 was restricted as it secures a letter of
credit described below. These lines of credit, which expire during fiscal
year 1999, bear interest at the prime rate (8.50% at April 30, 1998) and have
a 3/8% commitment fee on the unused portion. In addition, the Company had a
commitment, which expires during fiscal year 1999, for an unsecured $1,000,000
line of credit from a bank, of which none was outstanding at April 30, 1998.
This line of credit bears interest at the prime rate or at LIBOR plus 2.7%
(8.325% at April 30, 1998) and has a 3/8% commitment fee on the unused
portion. The Company also had a committed line of credit, which expires
during fiscal year 1999, totalling $2,500,000, secured by the Manufacturing
Segment's inventory and receivables, of which none was outstanding at April
30, 1998. The secured line of credit bears interest at the prime rate or at
LIBOR plus 2.7% and has a 3/10% commitment fee on the unused portion.
The Company entered into two interest rate swap agreements related
to the $11 million industrial development revenue bonds shown above. The
first interest rate swap agreement was effective February 4, 1998, and
terminates February 1, 2001. The notional amount reduces annually from $5.5
million, at the effective date, to $5.3 million prior to expiration of the
agreement. The agreement requires the Company to pay a fixed rate of 5.57% in
exchange for floating rate payments based on the 30-day Non-financial AA
Commercial Paper rate (5.53% at April 30, 1998).
The second interest rate swap agreement was effective February 4,
1998, and terminates February 1, 2003. The notional amount reduces annually
from $5.5 million, at the effective date, to $5,057,500 prior to the
expiration of the agreement. The interest rate terms of the second agreement
are identical to the terms of the first except that the fixed interest rate
paid by the Company is 5.67%. The notional amounts of the swap agreements are
set to match the outstanding principal amounts of the bonds. The swap
floating rates are reset weekly, and the Company settles with the counter
party monthly.
In connection with the issuance of the industrial development
revenue bonds, the Company was required to obtain an irrevocable letter of
credit in the amount of $11,162,740. The letter of credit was issued
November 12, 1997, and expires on November 15, 2002. The letter of credit
can be extended for three additional five-year terms. The letter of credit
is guaranteed by the Company and a subsidiary of the Company. The letter of
credit contains covenants that require the maintenance of certain financial
ratios. The Company is in compliance with all covenants or has obtained waivers
in cases of non-compliance.
In addition, in conjunction with the origination of a mortgage on
an income-producing property, the Company obtained an irrevocable, standby
letter of credit in the amount of $500,000. The letter of credit was issued
on July 30, 1997, and expires on November 30, 1998. The mortgage lender is
allowed to draw on the letter in order to paydown the related mortgage loan
if certain leasing requirements are not met by August 15, 1998. The letter of
credit is secured by a portion of a bank line of credit.
<PAGE>
(9) INCOME TAXES
<TABLE>
<CAPTION>
Income tax expense(benefit) consists of:
Current Deferred Total
----------------------------------------------
<S> <C> <C> <C>
Year ended April 30, 1998:
U.S. federal $ 712,383 $ 843,817 $ 1,556,200
State and local 153,259 123,541 276,800
----------------------------------------------
$ 865,642 $ 967,358 $ 1,833,000
==============================================
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)
===============================================
</TABLE>
Income tax expense (benefit) was $1,833,000, $1,457,000, and
$(163,000) for the years ended April 30, 1998, 1997, and 1996, 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>
1998 1997 1996
----------------------------------------------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit) $ 1,643,043 $ 1,308,455 $ (158,802)
Increase in income taxes resulting from:
State and local income taxes, net
of federal income tax benefit 182,688 73,920 (12,372)
Other, net 7,269 74,625 8,174
----------------------------------------------
$ 1,833,000 $ 1,457,000 $ (163,000)
==============================================
/TABLE
<PAGE>
(9) INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax liabilities
at April 30, 1998 and 1997 are presented below:
<TABLE>
<CAPTION>
1998 1997
----------------------------
<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 $ 203,760 $ 261,841
Items not currently deductible for tax purposes:
Provision for impairment on income-producing property 1,026,816 1,036,175
Accrued directors' fees 343,907 235,386
Compensated absences 170,450 120,451
Other accrued expenses 756,094 444,354
Other 523,592 503,372
-----------------------------
Total gross deferred tax assets 3,024,619 2,601,579
=============================
Deferred tax liabilities:
Properties, plant and equipment, principally because of
differences in depreciation and capitalized interest 1,567,009 1,720,215
Gain on real estate sales; proceeds from which were used in
tax deferred like-kind exchanges 3,469,700 1,885,351
Profit related to installment sale 124,572 151,575
Other 32,828 46,570
-----------------------------
Total gross deferred tax liabilities 5,194,109 3,803,711
-----------------------------
Net deferred tax liability $ 2,169,490 $ 1,202,132
=============================
</TABLE>
The valuation allowance was $0 at April 30, 1998 and 1997.
(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>
1998 1997 1996
---------------------------------------
<S> <C> <C> <C>
Options outstanding at beginning of year 17,666 17,666 24,332
Options granted --- --- ---
Options canceled 13,666 --- (6,666)
Options exercised 4,000 --- ---
---------------------------------------
Options outstanding at end of year --- 17,666 17,666
=======================================
Option prices per share:
Options granted during the year $ --- $ --- $ ---
Options canceled $2.875-4.50 $ --- $3.75
Options exercised $2.875 $ --- $ ---
Options outstanding at end of year $ --- $2.875-4.50 $2.875-4.50
=========================================
</TABLE>
As of April 30, 1998, there were no stock options outstanding.
The Company has a deferred Profit-Sharing Plan ("Plan") which
covers substantially all of its employees. Funded employer contributions to
the Plan for 1998, 1997 and 1996 were approximately $843,000, $1,032,000, and
$502,000, respectively. The net assets in the Plan, which is administered by
an independent trustee, were approximately $18,962,000, $14,304,000, and
$14,122,000 at April 30, 1998, 1997, and 1996, respectively.
(11) NET EARNINGS PER SHARE
The following tables set forth the computations of basic and
diluted net earnings per common share.
<TABLE>
<CAPTION>
For the year ended April 30, 1998
-----------------------------------------
Earnings Shares Per share
(numerator) (denominator) amount
-----------------------------------------
<S> <C> <C> <C>
Basic EPS - earnings available to
common shareholders $ 2,999,478 2,937,712 $ 1.02
Effect of dilutive securities - outstanding =========
stock options --- 3,851
--------------------------
Diluted EPS - earnings available to common
shareholders plus assumed conversions $ 2,999,478 2,941,563 $ 1.02
========================== =========
For the year ended April 30, 1997
-----------------------------------------
Earnings Shares Per share
(numerator) (denominator) amount
-----------------------------------------
Basic EPS - earnings available to
common shareholders $ 2,391,398 2,971,442 $ 0.81
Effect of dilutive securities - outstanding =========
stock options --- 2,129
--------------------------
Diluted EPS - earnings available to common
shareholders plus assumed conversions $ 2,391,398 2,973,571 $ 0.80
========================== ==========
For the year ended April 30, 1996
-----------------------------------------
Earnings Shares Per share
(numerator) (denominator) amount
-----------------------------------------
Basic EPS - earnings available to
common shareholders $(304,188) 2,980,611 $ (0.10)
Effect of dilutive securities - outstanding ===========
stock options --- 3,379
--------------------------
Diluted EPS - earnings available to common
shareholders plus assumed conversions $(304,188) 2,983,990 $ (0.10)
=========================== ===========
</TABLE>
<PAGE>
(12) 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 or acquires
income-producing properties for investment. The Company usually provides
property management for the properties after development or acquisition.
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.
The Company had revenues from The Home Depot, Inc., primarily
representing revenues in the construction segment, aggregating 61%, 51%, and
48% of consolidated revenues in 1998, 1997 and 1996, respectively. Revenues
from Baby Superstore, Inc., primarily representing revenues in the
construction segment, constituted 18% of consolidated revenues in 1996.
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>
(12) SEGMENT REPORTING (CONTINUED)
<TABLE>
<CAPTION>
Construction Manufacturing Real Estate Parent Eliminations Consolidated
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998
Revenues from unaffiliated customers $141,453,025 $14,970,261 $21,358,929 $ --- $ --- $177,782,215
Interest and other income 139,672 42,389 522,468 207,999 (103,901) 808,627
Intersegment revenue 5,026,181 181,003 200,615 --- (5,407,799) ---
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenue $146,618,878 $15,193,653 $22,082,012 $ 207,999 $ (5,511,700) $178,590,842
==================================================================================================================================
Operating earnings (loss) $ 3,506,217 $ 459,468 $ 2,882,496 $(2,580,307) $ 564,604 $ 4,832,478
==================================================================================================================================
Identifiable assets $ 30,834,340 $ 8,185,294 $83,017,169 $ 9,470,541 $(10,197,900) $121,309,444
==================================================================================================================================
Depreciation and amortization $ 276,259 $ 586,629 $ 2,029,121 $ 28,825 $ (67,200) $ 2,853,634
==================================================================================================================================
Capital expenditures $ 771,808 $ 81,164 $24,021,793 $ 81,483 $ --- $ 24,956,248
==================================================================================================================================
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
==================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
Additions
-----------------------------
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
Description of Year Expenses Accounts Deductions of Year
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Year ended
April 30, 1998 $ 65,584 $ 90,496 $ --- $ 21,210 <F1> $134,870
- --------------------------------------------------------------------------------------------------------------------------------
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
================================================================================================================================
INVENTORY RESERVES
Year ended
April 30, 1998 $374,447 $147,564 $ --- $ 204,370 <F2> $317,641
- --------------------------------------------------------------------------------------------------------------------------------
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
================================================================================================================================
<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>
<TABLE>
<CAPTION>
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
APRIL 30, 1998
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 (2):
Shopping Center - Jackson, MI $ 3,402,393 $ 401,195 $ 1,788,183 $ 1,167,902 $ 453,293
Shopping Center - Newnan, GA 5,461,376 696,829 5,291,120 258,136 696,829
Kmart - Morton, IL 3,213,631 18,005 2,767,765 (220,638) 18,005
Kmart - Columbus, GA 2,805,786 11,710 2,356,920 10,078 11,710
Shopping Center - Englewood, FL 12,844,212 6,072,805 8,823,506 (80,073) 6,072,805
Shopping Center - N. Fort Myers, FL 14,086,592 5,940,143 11,290,778 3,164,530 5,218,754
Leaseback Shopping Center - Davenport, IA --- --- 2,150 193,261 ---
Leaseback Shopping Center - Jacksonville, FL --- --- 42,151 --- ---
Leaseback Shopping Center - Orange Park, FL --- --- 127,487 35,731 ---
Leaseback Shopping Center - W. St. Paul, MN --- --- --- 86,983 ---
Leaseback Shopping Center - Bayonet Point, FL --- --- --- 9,384 ---
Leaseback Shopping Center - Minneapolis, MN --- --- --- 7,391 ---
Office Building - Atlanta, GA 4,793,583 660,000 4,338,102 465,484 660,000
Office Park - Marietta, GA 6,460,231 1,750,000 6,417,275 54,628 1,750,000
Shopping Center - Cincinnati, OH --- 1,699,410 617,102 --- 1,699,410
- ------------------------------------------------------------------------------------------------------------------------------------
53,067,804 17,250,097 43,862,539 5,152,797 16,580,806
- ------------------------------------------------------------------------------------------------------------------------------------
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 --- 345,325 3,105,512
Jackson, MI --- --- --- 74,687 74,687
- ------------------------------------------------------------------------------------------------------------------------------------
--- 3,257,859 --- 963,342 4,221,201
- ------------------------------------------------------------------------------------------------------------------------------------
$53,067,804 $20,507,956 $43,862,539 $ 6,116,139 $20,802,007
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
APRIL 30, 1998 (CONTINUED)
Gross Amounts at Which Life on Which
Carried at Close of Year Depreciation
---------------------------------- In Latest
Building Net Earnings
and Capitalized Accumulated Date(s) 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 $ 2,956,085 $ 89,866 $ 3,499,244 $ 1,908,897 1972, 1996 -- 39 years
Shopping Center - Newnan, GA 5,549,256 311,528 6,557,613 2,943,581 1974,1987,1989 -- 31.5 years
Kmart - Morton, IL 2,547,127 -- 2,565,132 1,992,837 1980, 1992 -- 25 years
Kmart - Columbus, GA 2,366,998 238,970 2,617,678 1,828,566 1980, 1988 -- 25 years
Shopping Center - Englewood, FL 8,743,433 1,346,273 16,162,511 2,682,130 1990 -- 32 years
Shopping Center - N. Fort Myers, FL 14,455,308 4,470,789 24,144,851 3,084,893 1993, 1996 -- 31.5 years
Leaseback Shopping Center - Davenport, IA 195,411 -- 195,411 66,503 1995 -- 7 years
Leaseback Shopping Center - Jacksonville, FL 42,151 -- 42,151 9,273 1994 -- 25 years
Leaseback Shopping Center - Orange Park, FL 163,218 -- 163,218 77,700 1995 -- 7 years
Leaseback Shopping Center - W. St. Paul, MN 86,983 -- 86,983 19,641 1996 -- 8 years
Leaseback Shopping Center - Bayonet Point, FL 9,384 -- 9,384 -- 1997 -- --
Leaseback Shopping Center - Minneapolis, MN 7,391 -- 7,391 289 1997 -- 15 years
Office Building - Atlanta, GA 4,803,586 -- 5,463,586 90,130 1974, 1997 1997 39 years
Office Park - Marietta, GA 6,471,903 -- 8,221,903 83,951 1980,1985 1997 39 years
Shopping Center - Cincinnati, OH 617,102 -- 2,316,512 2,637 1982 1998 39 years
------------------------------------------------
49,015,336 6,457,426 72,053,568 14,791,028
------------------------------------------------
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 -- -- 3,105,512 -- -- 1994 --
Jackson, MI -- -- 74,687 -- -- 1997 --
------------------------------------------------
-- 16,644 4,237,845 --
------------------------------------------------
$49,015,336 $6,474,070 $76,291,413 $14,791,028
=================================================
</TABLE>
NOTE: Reconciliations of total real estate carrying value and
accumulated depreciation for the three years ended April 30, 1998, are as
follows:
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
APRIL 30, 1998 (CONTINUED)
Real Estate Accumulated Depreciation
---------------------------------------- ------------------------------------------
1998 1997 1996 1998 1997 1996
---------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR $69,380,403 $75,750,977 $73,767,825 $17,462,301 $20,108,134 $18,033,487
---------------------------------------- ------------------------------------------
ADDITIONS DURING YEAR
Additions 16,803,252<F4> 4,771,612<F3> 1,983,152<F3> --- --- ---
Depreciation --- --- --- 1,800,747 2,102,932 2,074,647
---------------------------------------- ------------------------------------------
16,803,252 4,771,612 1,983,152 1,800,747 2,102,932 2,074,647
---------------------------------------- ------------------------------------------
DEDUCTIONS DURING YEAR
Accumulated depreciation on
properties sold --- --- --- 4,472,020 4,748,765 ---
Carrying value of real estate
sold and retirements 9,892,242<F7> 8,392,186<F5> --- --- --- ---
Provision for impairment on income-
producing property --- 2,750,000<F6> --- --- --- ---
---------------------------------------- ------------------------------------------
9,892,242 11,142,186 --- 4,472,020 4,748,765 ---
---------------------------------------- ------------------------------------------
BALANCE AT CLOSE OF YEAR $76,291,413 $69,380,403 $75,750,977 $14,791,028 $17,462,301 $20,108,134
======================================== ==========================================
NOTES:
<FN>
<F1> The aggregated cost for land and building and improvements for federal
income tax purposes at April 30, 1998 is $66,147,436.
<F2> The former wood manufacturing facility, which is classified as property
held for sale in the April 30, 1998 and 1997 consolidated balance sheets
included herein, is not included in this schedule as
it is not part of the Company's real estate operations.
<F3> Primarily represents additions to a shopping center development in North
Fort Myers, Florida, and a shopping center in Jackson, Michigan.
<F4> Primarily represents the acquisition of and improvements to an office
building in Atlanta, Georgia, and the acquisitions of an office park in
Marietta, Georgia, and a shopping center in Cincinnati, Ohio.
<F5> Primarily represents sales of three freestanding Kmarts in Niles,
Michigan, Warner Robins, Georgia, and Shawnee, Oklahoma.
<F6> 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.
<F7> Primarily represents sales of two freestanding Kmarts in Newark, Ohio,
and Tifton, Georgia, and a shopping center located in Oakwood, Georgia.
</FN>
</TABLE>
<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 1998 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, 1998 and 1997
Consolidated Statement of Operations for the Years Ended April 30,
1998, 1997 and 1996
Consolidated Statements of Shareholders' Equity for the Years
Ended April 30, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the Years Ended April 30,
1998, 1997 and 1996
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 (2), Amendment to 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 (3)
10b. Abrams Industries, Inc. 1986 Key Employee Incentive
Stock Option Plan (4), 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 (5)#
10d. Edward M. Abrams Split Dollar Life Insurance Agreement
dated July 29, 1991 (6)#
10e. Joseph H. Rubin Split Dollar Life Insurance Agreement
dated August 27, 1991 (6)#
10f. Bernard W. Abrams Split Dollar Life Insurance Agreement
dated July 16, 1993 (7)#
10g. Bernard W. Abrams Employment Agreement dated August 23,
1995 (8)#
13. Annual Report to Shareholders for the fiscal year ended
April 30, 1998
21. List of the Company's Subsidiaries (9)
27. Financial Data Schedule
99. Proxy Statement for 1998 Annual Meeting of Shareholders
Explanation of Exhibits
(1) These exhibits are incorporated by reference to the
Company's Form 10-K for the year ended April 30, 1985.
(2) This exhibit is incorporated by reference to the Company's
Form 10-K for the year ended April 30, 1997.
(3) This exhibit is incorporated by reference to the Company's
Form 10-Q for the quarter ended July 31, 1985.
(4) This exhibit is incorporated by reference to the Company's
Form 10-K for the year ended April 30, 1986.
(5) This exhibit is incorporated by reference to the Company's
Form 10-K for the year ended April 30, 1991.
(6) These exhibits are incorporated by reference to the
Company's Form 10-K for the year ended April 30, 1993.
(7) This exhibit is incorporated by reference to the Company's
Form 10-K for the year ended April 30, 1994.
(8) This exhibit is incorporated by reference to the Company's
Form 10-Q for the quarter ended October 31, 1995.
(9) 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 1998.
(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 15, 1998 By: /s/ Joseph H. Rubin
Joseph H. Rubin
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 15, 1998 /s/ Edward M. Abrams
Edward M. Abrams
Chairman of the Board of Directors
Dated: July 15, 1998 /s/ Joseph H. Rubin
Joseph H. Rubin
Director, Chief Executive Officer
Dated: July 15, 1998 /s/ Bernard W. Abrams
Bernard W. Abrams
Director, Chairman Emeritus of the
Executive Committee
Dated: July 15, 1998 /s/ Alan R. Abrams
Alan R. Abrams
Director, President and Chief
Operating Officer
Dated: July 15, 1998 /s/ J. Andrew Abrams
J. Andrew Abrams
Director, Executive Vice President
Dated: July 15, 1998 /s/ Paula Lawton Bevington
Paula Lawton Bevington
Director
Dated: July 15, 1998 /s/ Donald W. MacLeod
Donald W. MacLeod
Director
Dated: July 15, 1998 /s/ Anthony Montag
Anthony Montag
Director
Dated: July 15, 1998 /s/ Felker W. Ward, Jr.
Felker W. Ward, Jr.
Director
Dated: July 15, 1998 /s/ Melinda S. Garrett
Melinda S. Garrett
Chief Financial Officer and
Chief Accounting Officer
<PAGE>
Exhibit Index
--------------
Exhibit 3b. Restated Bylaws, Amendments to Bylaws
Exhibit 13 Annual Report to Shareholders for the fiscal year ended
April 30, 1998
Exhibit 27 Financial Data Schedule (for SEC use only)
Exhibit 99 Proxy Statement
Exhibit 3B
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.
-7-<PAGE>
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.
-8-<PAGE>
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.
-9-<PAGE>
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.
-10-<PAGE>
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
-11-<PAGE>
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.
-12-<PAGE>
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
-13-<PAGE>
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
-14-<PAGE>
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.
-15-<PAGE>
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.
-16-
<PAGE>
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.
-17-<PAGE>
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:
-18-<PAGE>
(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-
<PAGE>
FIRST AMENDMENT
TO
THE RESTATED BYLAWS
OF
ABRAMS INDUSTRIES, INC.
1.
Article III of the Corporation's Bylaws is hereby amended by
adding the following new section:
SECTION 8.4. CHAIRMAN OF THE EXECUTIVE COMMITTEE.
The Chairman of the Executive Committee shall preside
over all meetings of the Executive Committee of the
Board of Directors and shall call meetings of the
Executive Committee. He shall also supervise the
preparation of the minutes of meetings of the Executive
Committee.
2.
Article III of the Corporation's Bylaws is hereby amended by
adding the following new section:
SECTION 12. POSITIONS ON THE BOARD. The Board of
Directors shall elect a Chairman of the Board. The
Chairman of the Board shall preside at all regularly
called meetings of the shareholders and the Board of
Directors. He shall call special meetings of the Board
of Directors as necessary. He shall supervise the
preparation of the minutes of all meetings of the Board
of Directors and shareholders. He shall provide
leadership to the Board of Directors and shall assist
in its organization, including the recruitment of new
members of the Board of Directors, the creation of
committees and the appointment of members of the Board
to serve on such committees. He shall interact with
the officers of the Corporation in the preparation of
the Corporation's annual report and press releases and
shall advise the Chief Executive Officer with regard to
matters concerning corporate policy or strategy and
executive employment, including hiring, termination and
compensation of executive level employees of the
Corporation. He shall also perform such duties and
have such powers as the Board of Directors may from
time to time prescribe. The Board of Directors may
also designate such other positions on the Board as it
may so desire, including without limitation one or more
Vice Chairmen or Chairmen Emeriti.<PAGE>
3.
Article IV, Section 1 of the Corporation's Bylaws is hereby
deleted in its entirety and the following substituted therefor:
SECTION 1. OFFICES. The executive officers of
the Corporation shall be chosen by the Board of
Directors and shall be a Chief Executive Officer, a
President, a Chief Financial Officer and one or more
Executive Vice Presidents. The Board may also elect
one or more Vice Presidents, a Secretary and one or
more Assistant Secretaries, who will be non-executive
officers of the Corporation. Any number of offices may
be held by the same person.
4.
Article IV, Section 6 of the Corporation's Bylaws is hereby
deleted in its entirety and the following substituted therefor:
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) CHIEF EXECUTIVE OFFICER. The Chief
Executive Officer shall be a member of the Board of
Directors and a member of the Executive Committee of
the Board of Directors. He shall be ultimately
responsible for all ongoing business activities of the
Corporation and shall supervise strategic planning,
investor relations, succession planning and the
employment of key executives at the Corporation's
subsidiaries. He shall use his best efforts to enhance
the reputation and stature of the Corporation through
community involvement. He shall also perform such
duties and have such powers as the Board of Directors
may from time to time prescribe. He may also 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 be a
member of the Board of Directors and a member of the
Executive Committee of the Board of Directors. He
shall be the Chief Operating Officer and shall report
to the Chief Executive Officer of the Corporation. He
shall also perform such duties and have such powers as
the Board of Directors or the Chief Executive Officer
may from time to time prescribe and shall have such
powers and duties that generally pertain to the office
of Chief Operating Officer, including planning,
supervising and controlling the day-to-day operations
and tactical affairs of the Corporation and its
subsidiaries. The key executives of the Corporation's
subsidiaries shall report to the President. If the
Chief Executive Officer is absent or is unable to act,
the President shall perform the duties of the Chief
Executive Officer and when so acting, shall have all<PAGE>
the powers of and be subject to all the restrictions
upon the Chief Executive Officer.
(3) 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 its
subsidiaries. He shall deposit all funds and other
valuable items in the name and to the credit of the
Corporation or its subsidiaries in such depositories as
may be designated by the Board of Directors. He shall
perform such duties and have such powers as the Board
of Directors may from time to time prescribe. He shall
report to the Chief Executive Officer and shall render
to the Chief Executive Officer and the Board of
Directors, at its regular meetings, or when the Chief
Executive Officer or the Board of Directors so
requires, an account of the financial condition of the
Corporation. If required by the Chief Executive
Officer or 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 Chief Executive Officer or the Board of
Directors for the faithful performance of the duties of
his office.
(4) EXECUTIVE VICE PRESIDENT. An Executive
Vice President shall be a member of the Board of
Directors and a member of the Executive Committee of
the Board of Directors. He shall report to the Chief
Executive Officer and shall have such powers and duties
that generally pertain to the office of Executive Vice
President. An Executive Vice President shall also
perform such duties and have such powers as the Chief
Executive Officer and the President may from time to
time prescribe including various strategic and
operating responsibilities with respect to the
Corporation and its subsidiaries. If the President is
absent or unable to act, an Executive Vice President
may 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.
(5) VICE PRESIDENT. A Vice President may,
if an Executive Vice President is absent or unable to
act, perform the duties of an Executive Vice President,
and when so acting, shall have all the powers of and be
subject to all the restrictions upon an Executive Vice
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.
(6) 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 committee of the
Board of Directors in place of the Board, and waivers<PAGE>
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.
(7) ASSISTANT SECRETARY. An Assistant
Secretary may, if the Secretary is absent or unable to
act, perform the duties of the Secretary, and when so
acting, shall have all the powers of and be subject to
all the restrictions upon the Secretary. An Assistant
Secretary shall also perform such other duties and have
such other powers as the Board of Directors may from
time to time prescribe.<PAGE>
SECOND AMENDMENT
TO
THE RESTATED BYLAWS
OF
ABRAMS INDUSTRIES, INC.
1.
Article III, Section 12 of the Corporation's Bylaws is
hereby amended by adding an additional sentence as the second
sentence thereof so that such section shall read in full as
follows:
SECTION 12. POSITIONS ON THE BOARD. The Board of
Directors shall elect a Chairman of the Board. The
Board may elect two persons to serve as Co-Chairmen of
the Board and, in such case, any references herein to
Chairman of the Board shall refer to such persons
collectively. The Chairman of the Board shall preside
at all regularly called meetings of the shareholders
and the Board of Directors. He shall call special
meetings of the Board of Directors as necessary. He
shall supervise the preparation of the minutes of all
meetings of the Board of Directors and shareholders.
He shall provide leadership to the Board of Directors
and shall assist in its organization, including the
recruitment of new members of the Board of Directors,
the creation of committees and the appointment of
members of the Board to serve on such committees. He
shall interact with the officers of the Corporation in
the preparation of the Corporation's annual report and
press releases and shall advise the Chief Executive
Officer with regard to matters concerning corporate
policy or strategy and executive employment, including
hiring, termination and compensation of executive level
employees of the Corporation. He shall also perform
such duties and have such powers as the Board of
Directors may from time to time prescribe. The Board
of Directors may also designate such other positions on
the Board as it may so desire, including without
limitation one or more Vice Chairmen or Chairmen
Emeriti.
Exhibit 13
[front cover]
ABRAMS INDUSTRIES
1998 ANNUAL REPORT
<PAGE>
[picture]
ABOUT THE COVER--OUR CORPORATE HEADQUARTERS BUILDING, ACQUIRED AND RENOVATED
DURING THE CURRENT FISCAL YEAR.
BUSINESS DESCRIPTION
ABRAMS INDUSTRIES, INC. (THE "COMPANY") CONSISTS OF THREE INDUSTRY SEGMENTS
(CONSTRUCTION, MANUFACTURING, AND REAL ESTATE) WHICH WORK FOR THE BETTERMENT
OF THE WHOLE. THE BUSINESS OF THE COMPANY, THEREFORE, IS THE BUSINESS OF ITS
SEGMENTS.
DEAR SHAREHOLDERS:
OUR 73RD YEAR SAW THE UNFOLDING OF OUR PLANS FOR A DRAMATIC
TRANSFORMATION AT ABRAMS INDUSTRIES, INC. IN EACH OF OUR
SEGMENTS, WE ARE MOVING FORWARD IN NEW AND EXCITING
DIRECTIONS. WE HAVE BEGUN TO REAP THE BENEFITS OF EXTENSIVE STRATEGIC
PLANNING, REPOSITIONING, AND, MOST IMPORTANT OF ALL,
EFFECTIVE IMPLEMENTATION.
CONTENTS
LETTER TO SHAREHOLDERS . . . . . . . . . IFC-14
SUMMARY FINANCIAL DATA . . . . . . . . . 1
FORM 10-K . . . . . . . . . . . . . . . . . . 15-48
DIRECTORS, OFFICERS
AND DIRECTORY . . . . . . . . . . . . . . . . 48
ABRAMS PHILOSOPHY,
ANNUAL MEETING AND
OTHER INFORMATION . . . . . . . . . . . . IBC
<PAGE>
<TABLE>
<CAPTION>
SUMMARY FINANCIAL DATA*
% %
1998 1997 CHANGE 1997 1996 CHANGE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES $178,590,842 $136,123,601 +31 $ 136,123,601 $ 134,299,240 +1
- --------------------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) $ 2,999,478 $ 2,391,398 +25 $ 2,391,398 $ (304,188) N/A
- --------------------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) PER SHARE $ 1.02 $ 0.81 +26 $ 0.81 $ (0.10) N/A
- --------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS PER SHARE $ 0.19 $ 0.07 +171 $ 0.07 $ 0.105 -33
- --------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY $ 24,535,863 $ 22,125,214 +11 $ 22,125,214 $ 20,152,376 +10
- --------------------------------------------------------------------------------------------------------------
RETURN ON AVERAGE
SHAREHOLDERS' EQUITY 12.9% 11.3% +14 11.3% (1.5%) N/A
- --------------------------------------------------------------------------------------------------------------
*FOR COMPLETE 11 YEAR REVIEW, SEE SELECTED FINANCIAL DATA, PAGES 22 AND 23.
</TABLE>
THE HIGHLIGHTS OF THIS HIGHLY SIGNIFICANT YEAR INCLUDE:
* The acquisition and redevelopment of a new corporate headquarters facility
for Abrams Industries, Inc., Abrams Construction, Inc. and Abrams Properties,
Inc.;
* Record revenues and record net earnings;
* All three segments were profitable with record operating earnings in our
Construction Segment and Real Estate Segment;
* The once-in-a-generation opportunity to
synergistically team our three operating segments through development of
a new manufacturing facility for Abrams Fixture Corporation.
FINANCIAL
For the year ended April 30, 1998, revenues grew to a record $178,590,842, a
31% increase over the $136,123,601 recorded in the previous year. This was
due predominantly to the nearly 50% growth achieved by Abrams Construction,
Inc.
We are also pleased to report record net earnings of $2,999,478 or $1.02
per share, a 25% increase over last year's $2,391,398 or $.81 per share.
These per share figures are based on weighted average shares outstanding of
2,937,712 during 1998 and 2,965,800 during 1997. On May 27, 1998, your Board
of Directors increased the quarterly dividend by 25% to $.05 per share
(previously $0.04 per share), the Company's 76th consecutive quarterly
dividend. The dividend was paid on June 24, 1998, to shareholders of record
as of June 12, 1998.
A "NEW" ABRAMS INDUSTRIES
Our achievements in 1998 and the types of activities undertaken clearly
underscore the new directions in which your Company is heading. For example,
for more than 25 years we have rented our office facilities. However, we
determined that it would be prudent to convert those rental payments into
real estate equity. The acquisition and redevelopment by the Real Estate
Segment of our new 66,000 square foot headquarters building in suburban
Atlanta allowed us to relocate our offices at a lower cost than if we
had renewed our existing lease. We leased 26,600 square feet
to our own companies and have already leased 31,100 square feet of the
remaining space to other tenants. Our beautiful new corporate home offers us
not only the space to accommodate current and future growth, but it also
represents an important addition to our real estate portfolio. This move is
part and parcel of a forward-looking corporate philosophy. Each of
our segments is transforming for the future.
We have expanded our horizons in Construction, which enjoyed record
volume and operating earnings this year. We have sought out and hired new
construction professionals who are ready to help us expand this business to
the next level.
To be competitive in the store fixture business, we recognized that we
had to be in a location and in a facility that would allow us to expand in
order to better serve our customers. In June 1998 we moved into that
facility.
In Real Estate, we continued to significantly reshape and diversify our
portfolio through tax-deferred sales, reinvestments, redevelopment and new
development. For the second consecutive year, we ended the year with record
operating earnings.
<PAGE>
CONSTRUCTION
[picture]
IRON WORKER PREPARES ROOFING MEMBER FOR PLACEMENT.
TOTAL OPERATING
REVENUES EARNINGS
- ---------------------------------------------------------------------
1998 $146,618,878 $ 3,506,217
- ---------------------------------------------------------------------
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
- ---------------------------------------------------------------------
NOTE: TOTAL REVENUES AND OPERATING EARNINGS INCLUDE REVENUES GENERATED FROM
INTERCOMPANY SOURCES OF $5,026,181, $345,048, AND $792,213 IN 1998, 1997 AND
1996, RESPECTIVELY. IN COMPUTING OPERATING EARNINGS, ALLOCATED PARENT
EXPENSES AND INCOME TAXES HAVE NOT BEEN CONSIDERED. (FOR ADDITIONAL
INFORMATION, SEE NOTE 12 TO CONSOLIDATED FINANCIAL STATEMENTS HEREIN.)
OUR CONSTRUCTION BUSINESS WAS ESTABLISHED IN 1925. ABRAMS
CONSTRUCTION, INC.'S ACTIVITIES INCLUDE BUILDING AND RENOVATING
RETAIL STORES, SHOPPING CENTERS, FINANCIAL INSTITUTIONS,
DISTRIBUTION CENTERS, MANUFACTURING FACILITIES, OFFICE BUILDINGS
AND OTHER TYPES OF COMMERCIAL CONSTRUCTION.
Revenues grew at a substantial rate in 1998, from $98,460,046 to
$146,618,878, or a 49% increase. Operating earnings likewise topped 1997's
figures, rising from $3,088,094 to $3,506,217, or a 14% increase.
OUR GROWTH IN 1998 CAN BE ATTRIBUTED
TO SEVERAL FACTORS:
* Our ongoing ability to deliver on our
commitments;
* An increase in the size of our typical project;
* The expansion programs of our existing
customers.
Overall, we see the demand for our services increasing. Clearly, the
continuing strength of the economy, as well as the rising fortunes
of the retail industry, have provided us with opportunities to continue to
grow our business. We have a broad presence in the marketplace, both in terms
of geography and customer base. In 1998, we completed 189 projects in 30
states. We continue to prosper from our ability to deliver projects on
schedule; we have never missed a deadline.
Our growth has been due not only to increased business from existing
customers, but to the addition of new customers as well. Our client base now
includes The Home Depot, Stein Mart, Borders, Academy Sports, Service
Merchandise, SunTrust Banks, Talbot's, Jo-Ann Fabrics, CompUSA, Wal-Mart,
Target Stores, Kmart, and other specialty retailers. Another area of growth
has been the renovation of existing shopping centers, a market that we see
expanding in the future.
One of the highlights of 1998 was the construction of a major new plant
for Abrams Fixture Corporation in metropolitan Atlanta. This facility was
developed by our sister company, Abrams Properties.
Looking to the future, we anticipate continued growth at a controlled pace,
allowing sufficient time to recruit and properly train new employees.
[picture]
TILT-UP CONCRETE PANEL BEING RAISED.
<PAGE>
MANUFACTURING
[picture]
ABRAMS FIXTURE CORPORATION'S NEW MANUFACTURING FACILITY.
OUR MANUFACTURING BUSINESS WAS ESTABLISHED IN 1946. ABRAMS FIXTURE
CORPORATION PRODUCES STORE FIXTURES FOR MANY OF THE NATION'S LEADING
RETAILERS. IN ADDITION, IT PRODUCES AND MARKETS DISPLAYS FOR THE BANKING
INDUSTRY.
Volume was lower than in 1997--$15,193,653 compared with $16,703,258. This
was primarily because of the delay of a major order from an existing
customer, which is now anticipated to be produced and shipped in 1999. We
were able, however, to add several new customers, including Stein Mart,
Aaron Rents, and Domino's Pizza. We are proud of what we accomplished in
1998.
Some of the year's milestones include:
* Formulating and executing the plan to move into a new manufacturing
facility which houses both our wood and metal operations;
* The unfolding of our strategic plan;
* Significant advances in technology
and quality control.
[picture]
THIS NEW GIBEN PANEL SAW ADDS CAPABILITIES AND INCREASES EFFICIENCY.
[picture]
WOOD, LAMINATE, AND METAL WERE COMBINED IN THIS DISTINCTIVE CASH/WRAP FOR THE
ATHLETE'S FOOT.
OPERATING
TOTAL EARNINGS
REVENUES (LOSS)
- ---------------------------------------------------------------------
1998 $15,193,653 $ 459,468
- ---------------------------------------------------------------------
1997 $16,703,258 $ 1,749,033
- ---------------------------------------------------------------------
1996 $15,008,358 $ (160,226)
- ---------------------------------------------------------------------
1995 $16,356,539 $ (478,235)
- ---------------------------------------------------------------------
1994 $19,554,858 $ 1,680,087
- ---------------------------------------------------------------------
NOTE: TOTAL REVENUES AND OPERATING EARNINGS INCLUDE REVENUES GENERATED FROM
INTERCOMPANY SOURCES OF $181,003 IN 1998. IN COMPUTING OPERATING EARNINGS
(LOSS), ALLOCATED PARENT EXPENSES AND INCOME TAXES HAVE NOT BEEN CONSIDERED.
(FOR ADDITIONAL INFORMATION, SEE NOTE 12 TO CONSOLIDATED FINANCIAL STATEMENTS
HEREIN.)
<PAGE>
BUILDING A FOUNDATION FOR THE FUTURE
Fiscal 1998 saw the construction of our new, 250,000 square foot facility on
a picturesque 32 acre tract along the Chattahoochee River in Lithia Springs,
Georgia, a suburb of Atlanta. The site will accommodate future expansion of
up to 125,000 square feet.
This was a monumental task, and our own internal re-engineering
contributed greatly to its successful completion. When it came time to design
and build the new facility, we already had in place a powerful team-based
mentality, which gave us strength to complete the project within one year.
The facility, developed and built by our sister companies, broke ground
in November 1997 and was delivered for occupancy in June 1998. This was a
remarkable feat in light of the fact 1998 was one of the wettest winters and
springs in the Southeast in the past 25 years.
The facility gives us a strategic advantage over our competition. The
market is shifting towards the integration of wood and metal in the same
product. The fact that we will have both operations under one roof allows us
to more easily prototype, develop and manufacture new products. Additionally,
we will be able to meet the needs of our retail customers with increased
efficiency and a reduced response time. We firmly believe that in our
industry, "The Future Belongs to the Flexible," and this facility will give
us that all-important flexibility. The plant, with its new (1) dust
collection system, (2) wood finishing system, and (3) metal powder coat
finishing system, is truly state-of-the-art.
IMPLEMENTING OUR STRATEGIC PLAN
In January 1998 we completed a new strategic plan--a new roadmap to follow.
Designed to enhance our reputation as "the" leading manufacturer and provider
of products and services, it also reaffirms our dedication to:
* Complete customer satisfaction;
* Innovative technologies;
* Continued development of a highly skilled team of professionals;
* A safe and rewarding work environment.
This plan incorporates key strategies to capture new business. For
example, we will analyze and serve new OEM (Original Equipment Manufacturer)
markets in various capacities that match our manufacturing core competencies.
Recognizing that many of the components we currently use can also be adapted
for office furniture, architectural millwork, and consumer products, we will
be looking to open up new channels of distribution. This market
diversification would not be possible were it not for our new plant, which
gives us the ability to produce these varied new products.
FLEXIBILITY, EFFICIENCY AND QUALITY
A continual upgrading of our computer hardware and software underscores our
commitment to flexibility, efficiency and quality. To that end, we have
installed a number of software network information packages that allow us to
communicate more effectively internally. Our presence on the Internet
provides our customers and suppliers an additional method of conducting
business with us.
Another major achievement in 1998 was the introduction of Statistical
Quality Control -- a quality tracking system.
We trained existing employees and added new members to the team. The
upgraded level of skills they now bring to the job enables us to build a
higher-quality product than ever before.
Our strategic plan provides us an outline for future growth. As part of
that overall plan, we will seek to form strategic alliances with other
fixture manufacturers that have similar skills or facilities. We will also be
considering partnerships with other manufacturers who have complementary
seasonal peaks and valleys.
Moving into our new facility has created many challenges and
opportunities. We are very excited about our prospects for the future.
<PAGE>
REAL ESTATE
[picture] JOHNSON'S SQUARE
OUR REAL ESTATE ACTIVITIES BEGAN IN 1960. ABRAMS PROPERTIES, INC. ENGAGES IN
REAL ESTATE DEVELOPMENT, REDEVELOPMENT, ACQUISITION, DISPOSITION, AND ASSET
MANAGEMENT ACTIVITIES. THE COMPANY DEVELOPS, REDEVELOPS AND INVESTS IN
INCOME-PRODUCING PROPERTIES, PRIMARILY SHOPPING CENTERS, AS WELL AS OFFICE
AND INDUSTRIAL PROPERTIES. ABRAMS PROPERTIES ACQUIRES OR DEVELOPS PROPERTIES
FOR SALE TO OTHERS AND FOR ITS OWN INVESTMENT PURPOSES. THE COMPANY FURTHER
PROVIDES PROPERTY MANAGEMENT SERVICES FOR MANY OF ITS PROPERTIES HELD
FOR INVESTMENT, AS WELL AS FOR PROPERTIES OWNED BY OTHERS. ABRAMS PROPERTIES'
PORTFOLIO OF APPROXIMATELY 2.3 MILLION SQUARE FEET,
IN NINE STATES, CURRENTLY CONSISTS OF SIXTEEN RETAIL PROPERTIES, TWO OFFICE
PROPERTIES AND ONE INDUSTRIAL PROPERTY.
OPERATING
TOTAL EARNINGS
REVENUES (LOSS)
- --------------------------------------------------------------------
1998 $22,080,012 $ 2,882,496
- --------------------------------------------------------------------
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)
- --------------------------------------------------------------------
NOTE: TOTAL REVENUES AND OPERATING EARNINGS INCLUDE REVENUES GENERATED FROM
INTERCOMPANY SOURCES OF $200,615 IN 1998. IN COMPUTING OPERATING EARNINGS
(LOSS), ALLOCATED PARENT EXPENSES AND INCOME TAXES HAVE NOT BEEN CONSIDERED.
(FOR ADDITIONAL INFORMATION, SEE NOTE 12 TO CONSOLIDATED FINANCIAL STATEMENTS
HEREIN.)
<PAGE>
With a continuing commitment to strategic planning, Abrams Properties has
re-invented itself over the last three years. The Company has formulated and
successfully executed its business plan to:
* Diversify its real estate portfolio through asset sales, acquisitions, new
developments and redevelopments;
* Increase net worth;
* Reduce non-earning assets (land);
* Build cash flow;
* Leverage our relationship with our sister companies for new business
opportunities;
* Generate profits.
A STRATEGY OF DIVERSIFICATION
In a continuation of our strategy of seeking diversification through
tax-deferred sales and reinvestments, Abrams Properties sold three
of its retail income-producing properties during the year for a combined
sales price of $9,255,000, resulting in pre-tax gains totaling $4,509,000.
The retail properties sold were freestanding Kmart stores in Newark, Ohio,
and Tifton, Georgia, and the Merchants Crossing Shopping Center in
Oakwood, Georgia. Through a combination of asset sales and redevelopment
efforts during the past three years, the Company has reduced its ownership
of freestanding Kmart stores from eight to two.
In order to vary the mix of real estate assets in the portfolio, and to
defer the income taxes otherwise payable on the gains realized on these
sales, the proceeds were re-invested
in a variety of income-producing properties.
In October 1997, the Real Estate Segment acquired and completely
renovated a vacant four-story office building in northwest Atlanta, known
locally as "The Gold Building". The 66,000 square foot building now serves as
the corporate headquarters for Abrams Industries, Abrams Construction and
Abrams Properties. In addition, approximately 25,000 square feet of office
space was leased to SunTrust Bank, Atlanta. Subsequent leasing, completed
shortly after the end of the fiscal year, has brought the occupancy to
approximately 88%.
Also in October 1997, Abrams Properties acquired Johnson's Square, a
12-building, approximately 121,000 square foot office park in suburban
northwest Atlanta. This property has already become one of the biggest
contributors to our operating cash flow.
The Company used an additional portion of the proceeds from the real
estate sales to acquire approximately 32 acres of land in the Riverside
Business Park in Lithia Springs, Georgia. In conjunction with our sister
company, Abrams Construction, we developed the new state-of-the-art
250,000 square foot manufacturing and office facility on the site for
Abrams Fixture Corporation. Further, we arranged low-rate bond financing
for the development, and used interest rate swaps to limit the exposure
to interest rate fluctuations on the bonds for several years. Abrams
Properties intends to hold this industrial development as a strategic
addition to its real estate portfolio.
In February 1998, we used the remaining proceeds from the tax-deferred
sales to acquire Manchester Plaza Shopping Center in Cincinnati, Ohio. A
Kroger supermarket anchors this 86,000 square foot neighborhood retail
center. Plans are now being discussed with Kroger to possibly redevelop or to
totally renovate the center during 1999.
The real estate portfolio now contains a more balanced mix of retail,
office and industrial properties, with annual cash flows expected to continue
to grow. We plan to continue our diversification efforts.
<PAGE>
[picture]
ABOVE LEFT--MERCHANTS CROSSING SHOPPING CENTER IN JACKSON, MICHIGAN. ABOVE
RIGHT--MERCHANTS CROSSING SHOPPING CENTER IN NORTH
FORT MYERS, FLORIDA. RIGHT--MERCHANTS CROSSING SHOPPING CENTER IN ENGLEWOOD,
FLORIDA.
PROPERTIES BOUGHT
LOCATION
- ---------------------------------------------------------
OFFICE BUILDING, ATLANTA, GA 66,000 SF
- ---------------------------------------------------------
OFFICE PARK, MARIETTA, GA 121,000 SF
- ---------------------------------------------------------
INDUSTRIAL SITE, LITHIA SPRINGS, GA 32 ACRES
- ---------------------------------------------------------
SHOPPING CENTER, CINCINNATI, OH 86,000 SF
- ---------------------------------------------------------
PROPERTIES SOLD
LOCATION
- ---------------------------------------------------------
KMART, NEWARK, OH 68,000 SF
- ---------------------------------------------------------
KMART, TIFTON, GA 85,000 SF
- ---------------------------------------------------------
SHOPPING CENTER, OAKWOOD, GA 71,500 SF
- ---------------------------------------------------------
OUTPARCEL, NORTH FORT MYERS, FL 1.2 ACRES
- ---------------------------------------------------------
<PAGE>
[picture]
Early in the fiscal year, we furthered our efforts to reduce non-earning
assets through the profitable sale of a 1.21 acre outparcel at the Merchants
Crossing Shopping Center in North Fort Myers, Florida, to First Union
National Bank of Florida.
Operations within the shopping center portfolio remained solid throughout
1998. Overall, at April 30, 1998, the retail centers were 97% leased. The
Company is currently evaluating proposals to redevelop or expand several of
our existing retail properties during fiscal 1999.
We have invested heavily in technology, which has significantly enhanced
our productivity. We are continually upgrading hardware and software, and are
now electronically linked to our sister and parent companies.
For the year, Abrams Properties enjoyed record operating earnings of
$2,882,496 on revenues of $22,080,012, compared to operating earnings of
$1,003,370 on revenues of $21,132,159 last year. This is our second
consecutive year of significant profitability, during which time we have
nearly doubled our net worth.
Abrams Properties enters 1999 with great confidence and optimism. We plan
to continue to expand our portfolio, through a combination of new
developments, redevelopments, acquisitions and strategic sales.
<PAGE>
OUR PEOPLE
[picture]
BUILDINGS, STORE FIXTURES AND REAL ESTATE COMPRISE THE PRODUCTS
AND SERVICES OF ABRAMS INDUSTRIES, INC. HOWEVER, IT IS OUR
PEOPLE WHO MAKE ABRAMS THE SUCCESSFUL COMPANY THAT IT
IS TODAY. WE ALWAYS STRIVE TO HIRE ONLY THE BEST.
[picture]
The ongoing success of Abrams Construction, Inc. is due in no small part to
our talented field superintendents and project managers. Many of these
professionals are long-time Abrams Construction veterans. They have extensive
experience in building for the retail industry, and our retail clients
receive the benefits of that expertise. We are proud to announce one such
experienced and talented project manager, Michael W. Arasin, was promoted to
Vice President on May 1, 1998.
Abrams Fixture Corporation has successfully incorporated a team-based
philosophy throughout its organization. We regularly create cross-functional
groups of people to solve problems and find opportunities. In addition,
cross-training enables our people to gain a wide variety of skills. By
melding wise, experienced veterans with new, young talent, we have formed the
best team in the fixture business.
At Abrams Properties we have assembled a talented group of individuals
from within and from outside the Company, each of whom is the very best at
what he or she does. It is this team that has enabled us to re-invent Abrams
Properties, Inc. On May 2, 1998, in recognition of his outstanding leadership
and his major role in the turnaround of the Real Estate Segment, Gerald T.
Anderson, II, formerly Executive Vice President, was promoted to the position
of President and Chief Executive Officer of Abrams Properties. Jerry
succeeded Alan R. Abrams, who in May 1998, assumed new leadership positions
at the Parent Company. In addition, Abrams Properties hired two new
executives: James D. O'Donnell as Vice President of Acquisition and
Development and Brett M. Koutnik as Vice President of Asset Management.
Brennon E. Smith, Director of Construction, was promoted to Assistant Vice
President. Our team of real estate professionals has never been stronger.
<PAGE>
CONCLUSION AND OUTLOOK
[picture]
L TO R: EDWARD M. ABRAMS, ALAN R. ABRAMS, JOSEPH H. RUBIN, AND J. ANDREW
ABRAMS
THE TRANSFORMATION OF ABRAMS INDUSTRIES, INC. DURING THE PAST FEW YEARS
LEAVES US WELL POSITIONED FOR CONTINUED GROWTH AS WE HEAD TOWARD THE 21ST
CENTURY. LOOKING AHEAD, EACH OF OUR COMPANIES HAS A CLEAR FOCUS ON WHAT WE
WISH TO ACCOMPLISH. EACH IS EQUALLY CLEAR ON WHAT MUST BE DONE TO ACHIEVE
THESE GOALS, AND HOW TO POSITION THE COMPANIES WITHIN THEIR RESPECTIVE
DISCIPLINES.
On May 27, 1998, Alan R. Abrams was promoted to President and Chief Operating
Officer of the Company. Mr. Abrams previously served as President and Chief
Executive Officer of Abrams Properties, Inc.
Our Executive team, led by Joseph H. Rubin, Chief Executive Officer, is
strongly positioned to guide the Company in its continual pursuit of
maximizing shareholder value.
At year end, our Chairman of the Board, Edward M. Abrams, announced his
desire to step down in August 1998 after 46 years of dedicated service and
leadership to the Company. He has recommended to the Board of Directors that
his sons, Alan R. Abrams and J. Andrew Abrams, be elected to succeed him
as Co-Chairmen of the Board.
Abrams Industries has been built on a solid foundation of integrity,
quality, and fair treatment. Those who came before us, our Founder, A.R.
Abrams, and his sons, Bernard W. Abrams, our former long-time Chairman and
CEO, and retiring Chairman Edward M. Abrams, handed down a legacy of vision,
leadership, achievements and dedication to the business. To their great
credit, our company today is still a business in formation, a business with a
great future and a vast potential. We are honored and proud to carry forward
our 73-year tradition of creating value for you, the shareholders.
Sincerely,
/s/ Edward M. Abrams
- --------------------------
Edward M. Abrams
Chairman of the Board
/s/ Joseph H. Rubin
- --------------------------
Joseph H. Rubin
Chief Executive Officer
/s/ Alan R. Abrams
- --------------------------
Alan R. Abrams
President and Chief Operating Officer
<PAGE>
FOUNDER
Alfred R. Abrams
(1899-1979)
BOARD OF DIRECTORS
*Edward M. Abrams (E)
Chairman of the Board
Abrams Industries, Inc.
*Bernard W. Abrams (E)
Chairman Emeritus of the Executive Committee
Abrams Industries, Inc.
*Alan R. Abrams (E)
President and Chief Operating Officer
Abrams Industries, Inc.
*J. Andrew Abrams (E)
Executive Vice President
Abrams Industries, Inc.
Chief Executive Officer
Abrams Fixture Corporation
Paula Lawton Bevington (A)(C)
Chairman
Servidyne Systems, Inc.
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)
Chief Executive Officer
Abrams Industries, Inc.
Felker W. Ward, Jr. (A)(C)
Chairman
Pinnacle Investment Advisors, Inc.
Committees:
E-Executive
A-Audit
C-Compensation
*Executive Officer
<PAGE>
OFFICERS OF ABRAMS INDUSTRIES, INC.
AND SUBSIDIARIES
Alan R. Abrams
J. Andrew Abrams
Gerald T. Anderson, II
Michael W. Arasin
Jack T. Cothran
Steven J. Curvino
Sarah M. Edwards
Janis H. Fowler
Melinda S. Garrett
George W. Hodges, Jr.
Brett M. Koutnik
Douglas S. McKenzie
B. Michael Merritt
James D. O'Donnell
Richard V. Priegel
Joseph H. Rubin
Brennon E. Smith
Wyona L. Stephens
Thomas F. Stock
CONSTRUCTION SEGMENT
ABRAMS CONSTRUCTION, INC.
1945 The Exchange
Suite 350
Atlanta, Georgia 30339
(770) 952-3555
MANUFACTURING SEGMENT
ABRAMS FIXTURE CORPORATION
375 Riverside Parkway
Lithia Springs, Georgia 30057
(770) 372-1000
REAL ESTATE SEGMENT
ABRAMS PROPERTIES, INC.
1945 The Exchange
Suite 400
Atlanta, Georgia 30339
(770) 953-1777
<PAGE>
[inside back cover page]
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 19, 1998, AT THE CORPORATE
HEADQUARTERS, 1945 THE EXCHANGE,
SUITE 300, ATLANTA, GEORGIA.
TRANSFER AGENT:
SUNTRUST BANK, ATLANTA
POST OFFICE BOX 4625
ATLANTA, GEORGIA 30302
[back cover page]
ABRAMS INDUSTRIES, INC.
CORPORATE HEADQUARTERS
1945 THE EXCHANGE
SUITE 300
ATLANTA, GEORGIA 30339
(770) 953-0304
FAX (770) 953-0302
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000001923
<NAME> ABRAMS INDUSTRIES, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> APR-30-1998
<CASH> 13,240,471
<SECURITIES> 0
<RECEIVABLES> 19,278,453
<ALLOWANCES> (130,040)
<INVENTORY> 1,495,063
<CURRENT-ASSETS> 44,673,324
<PP&E> 87,415,478
<DEPRECIATION> 20,296,319
<TOTAL-ASSETS> 121,309,444
<CURRENT-LIABILITIES> 29,390,293
<BONDS> 62,938,807
0
0
<COMMON> 3,014,039
<OTHER-SE> 21,521,824
<TOTAL-LIABILITY-AND-EQUITY> 121,309,444
<SALES> 177,782,215
<TOTAL-REVENUES> 178,590,842
<CGS> 155,520,419
<TOTAL-COSTS> 155,520,419
<OTHER-EXPENSES> 13,507,199
<LOSS-PROVISION> 64,456
<INTEREST-EXPENSE> 4,666,290
<INCOME-PRETAX> 4,832,478
<INCOME-TAX> 1,833,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,999,478
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.02
</TABLE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Age of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(6)(2)
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ABRAMS INDUSTRIES, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-
6(i)(1)(4) and 0-11.
/ / (1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of class of securities to which
transaction applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined):
----------------------------------------------------------
<PAGE>
ABRAMS INDUSTRIES, INC.
ATLANTA, GEORGIA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 19, 1998
The annual meeting of shareholders of ABRAMS INDUSTRIES, INC. (the
"Company") will be held on Wednesday, August 19, 1998, at 4:00 P.M., Atlanta
time, at the Corporate Headquarters, 1945 The Exchange, Suite 300, 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 9,
1998, 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
CHIEF EXECUTIVE OFFICER
Atlanta, Georgia
July 17, 1998
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
1945 THE EXCHANGE
SUITE 300
ATLANTA, GEORGIA 30339
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 19, 1998, at
4:00 P.M., Atlanta time, at the Corporate Headquarters, 1945 The Exchange,
Suite 300, Atlanta, Georgia. A copy of the Company's annual report for the
fiscal year ended April 30, 1998, 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 17, 1998.
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 9, 1998, the record date for the annual meeting, there
were 2,936,356 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 19, 1998; (2) directorships in other
publicly-held companies; (3) positions with the Company; (4) principal
employment; and (5) Common Stock owned beneficially as of April 30, 1998,
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 OWNED
INFORMATION ABOUT NOMINEES BENEFICIALLY
NAME FOR DIRECTOR (PERCENT OF CLASS)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alan R. Abrams A Director of the Company since 1992, he 500,100 <F1>
has been President and Chief Operating (17.03%)
Officer since May 1998. He served as Executive Vice
President of the Company from August 1997 to
May 1998. From 1994 to May 1998, he served as
President and Chief Executive Officer of
Abrams Properties, Inc. Prior to that he served
as Vice President of Abrams Properties, Inc.
Mr. Abrams is 43.
2
<PAGE>
Bernard W. Abrams A Director of the Company since 1952, 612,208 <F2>
he has been Chairman Emeritus of the (20.85%)
Executive Committee since May 1998.
From 1995 to May 1998, he served as
Chairman of the Executive Committee.
Prior to that he served as Chairman of the
Board of Directors and Chief Executive Officer.
Mr. Abrams is 73.
Edward M. Abrams A Director of the Company since 1953, 776,283 <F3>
he has been Chairman of the Board of (26.44%)
Directors since August 1995 and Chairman
of the Executive Committee since May 1998.
He served as Chief Executive Officer from
1995 to August 1997. Prior to that he served as
President and Treasurer of the Company.
Mr. Abrams is 71.
J. Andrew Abrams A Director of the Company since 1992, 500,000 <F4>
he has been Executive Vice President (17.03%)
since August 1997. He also has served as
Chief Executive Officer of Abrams Fixture
Corporation since July 1997. From 1994 to
July 1997, he served as Vice President of Abrams
Fixture Corporation. Prior to that he served as
Vice President of Abrams Properties, Inc.
Mr. Abrams is 38.
Paula Lawton Bevington A Director of the Company since 1992, 200*
she is Chairman of Servidyne Systems, Inc.
(mechanical engineering services company).
Ms. Bevington is 60.
Donald W. MacLeod A Director of the Company since 1984, 2,500*
he is Chairman of the Board of IRT
Property Company (a real estate investment
trust). Mr. MacLeod is 73.
L. Anthony Montag A Director of the Company since 1969, 5,461* <F5>
he is Chief Executive Officer of A. Montag
& Associates, Inc. (investment counselors).
Mr. Montag is 64.
3
<PAGE>
Joseph H. Rubin A Director of the Company since 1983, 13,859* <F6>
he has been Chief Executive Officer since
August 1997. From August 1995 to May 1998,
he served as President and Chief Operating Officer.
Prior to August 1995, he served as Executive Vice
President, Chief Financial Officer and
Secretary of the Company. Mr. Rubin is 55.
Felker W. Ward, Jr. A Director of the Company since 1992, 2,103*
he is Chairman of Pinnacle Investment
Advisors, Inc. (investment advisory services)
and President of Ward and Associates, Inc.
(investment bankers). He is a Director of
Shoney's, Inc., AGL Resources, Inc. and
Fidelity National Bank. Mr. Ward is 65.
*Owns less than 1% of outstanding shares.
<FN>
<F1> Includes 500,000 shares (17.03% of the outstanding shares)
owned by a limited partnership which Mr. Abrams beneficially owns
due to his joint control of the general partner of such partnership.
Also includes 100 shares owned by Mr. Abrams' wife. Does not include
144,817 shares (4.93% of the outstanding shares) owned by trusts
established by the grandparents of Alan R. Abrams and under which
Alan R. Abrams, his father, Edward M. Abrams, and Alan R. Abrams'
siblings, including J. Andrew Abrams, are beneficiaries. Both trusts
are administered by an independent trustee who holds the power to
vote and dispose of the shares.
<F2> Does not include 144,817 shares (4.93% of the outstanding shares)
owned by trusts established by the parents of Bernard W. Abrams, and
under which Bernard W. Abrams and his children are beneficiaries.
Both trusts are administered by an independent trustee who holds the
power to vote and dispose of the shares.
<F3> Includes 500,000 shares (17.03% of the outstanding shares) owned by
a limited partnership which Mr. Abrams beneficially owns due to his
joint control of the general partner of such partnership. Also
includes 12,389 shares owned jointly with Mr. Abrams' wife and
16,109 shares owned by Mrs. Abrams. Does not include 144,817 shares
(4.93% of the outstanding shares) owned by trusts established by the
parents of Edward M. Abrams and under which Edward M. Abrams and his
children are beneficiaries. Both trusts are administered by an
independent trustee who holds the power to vote and dispose of the
shares.
<F4> Includes 500,000 shares (17.03% of the outstanding shares) owned by
a limited partnership which Mr. Abrams beneficially owns due to his
joint control of the general partner of such partnership. Does not
include 144,817 shares (4.93% of the outstanding shares) owned by
trusts established by the grandparents of J. Andrew Abrams and under
which J. Andrew Abrams, his father, Edward M. Abrams, and J. Andrew
Abrams' siblings, including Alan R. Abrams, are beneficiaries. Both
trusts are administered by an independent trustee who holds the
power to vote and dispose of the shares.
<F5> Shares are owned by a partnership of which Mr. Montag is the
managing partner and in which he has a substantial beneficial
interest.
<F6> Includes 13,030 shares owned jointly with Mr. Rubin's wife and
829 shares owned by Mrs. Rubin as custodian for their son.
</FN>
</TABLE>
4<PAGE>
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, 1998. 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 and Felker W. Ward,
Jr. who attended 50% and 67%, respectively, of the aggregate of such
meetings.
The Board has a standing Executive Committee consisting of Bernard
W. Abrams, Edward M. Abrams, Alan R. Abrams, J. Andrew Abrams and Joseph H.
Rubin. This committee is empowered to take actions that do not require the
approval of the full Board of Directors. All actions of the Executive
Committee are subsequently reviewed and approved by the full Board of
Directors.
The Board has a standing Audit Committee currently consisting of
Paula Lawton Bevington, 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, 1998.
The Board has a standing Compensation Committee, composed entirely
of outside Directors. The committee currently consists of Paula Lawton
Bevington, 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, 1998.
The Company does not have a Nominating Committee.
5
<PAGE>
PRINCIPAL HOLDERS OF THE COMPANY'S SECURITIES
AND HOLDINGS BY EXECUTIVE OFFICERS AND DIRECTORS
As of April 30, 1998, the following reflects beneficial ownership
of the Common Stock by persons (as that term is defined by the Securities and
Exchange Commission): (1) who own more than 5% of the outstanding shares of
such stock; (2) who are Executive Officers, named in the Summary Compensation
Table below, who are not Directors; and (3) who are Executive Officers and
Directors of the Company as a group.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
SHARES OF COMMON PERCENTAGE OF
STOCK OUTSTANDING
NAME AND ADDRESS BENEFICIALLY OWNED SHARES
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Edward M. Abrams 776,283 <F1> 26.44%
Bernard W. Abrams 612,208 <F2> 20.85%
Abrams Partners, L.P. 500,000 <F3> 17.03%
Post Office Box 724728
Atlanta, Georgia 31139
Alan R. Abrams 500,100 <F4> 17.03%
J. Andrew Abrams 500,000 <F5> 17.03%
NationsBank Corporation 289,634 <F6> 9.86%
101 South Tryon Street
NationsBank Plaza
Charlotte, North Carolina 28255
Melinda S. Garrett -- --
B. Michael Merritt -- --
All Executive Officers 1,412,981 48.12%
and Directors as a group (12 persons)
<FN>
<F1> Includes 500,000 shares (17.03% of the outstanding shares)
owned by a limited partnership which Mr. Abrams beneficially owns due
to his joint control of the general partner of such partnership. Also
includes 12,389 shares owned jointly with Mr. Abrams' wife and 16,109
shares owned by Mrs. Abrams. Does not include 144,817 shares (4.93% 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.
6
<PAGE>
<F2> Does not include 144,817 shares (4.93% of the outstanding shares)
owned by trusts established by the parents of Bernard W. Abrams, and
under which Bernard W. Abrams and his children are beneficiaries.
Both trusts are administered by an independent trustee who holds the
power to vote and dispose of the shares.
<F3> Messrs. Edward M. Abrams, Alan R. Abrams and J. Andrew Abrams own
the controlling interests in this limited partnership and in the
limited liability company that serves as its general partner.
<F4> Includes 500,000 shares (17.03% of the outstanding shares) owned by
a limited partnership which Mr. Abrams beneficially owns due to his
joint control of the general partner of such partnership. Also
includes 100 shares owned by Mr. Abrams' wife. Does not include
144,817 shares (4.93% of the outstanding shares) owned by trusts
established by the grandparents of Alan R. Abrams and under which
Alan R. Abrams, his father, Edward M. Abrams, and Alan R. Abrams'
siblings, including J. Andrew Abrams, are beneficiaries. Both
trusts are administered by an independent trustee who holds the
power to vote and dispose of the shares.
<F5> Includes 500,000 shares (17.03% of the outstanding shares) owned by
a limited partnership which Mr. Abrams beneficially owns due to his
joint control of the general partner of such partnership. Does not
include 144,817 shares (4.93% of the outstanding shares) owned by
trusts established by the grandparents of J. Andrew Abrams and
under which J. Andrew. Abrams, his father, Edward M. Abrams, and J.
Andrew Abrams' siblings, including Alan R. Abrams, are
beneficiaries. Both trusts are administered by an independent
trustee who holds the power to vote and dispose of the shares.
<F6> Consists of shares owned by the trusts referenced in Footnotes
1, 2, 4 and 5, of which NationsBank Corporation serves as trustee.
</FN>
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers and persons who own more than 10% of
the outstanding Common Stock of the Company to file with the Securities and
Exchange Commission reports of changes in ownership of the Common Stock of
the Company held by such persons. Officers, directors and greater than ten
percent shareholders are also required to furnish the Company with copies of
all forms they file under this regulation. To the Company's knowledge, based
solely on a review of the copies of such reports furnished to the Company,
all required forms were timely filed, except that Abrams Partners, L.P. and
Messrs. Bernard W. Abrams, B. Michael Merritt and Felker W. Ward, Jr., each
inadvertently filed one of the required forms late. Mr. Richard V. Priegel,
President of Abrams Fixture Corporation, inadvertently filed two of the required
forms, which reported a total of four transactions, late.
7
<PAGE>
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 each of the persons who served during the
last fiscal year as the Chief Executive Officer ("CEO") and each of the four
other most highly compensated Executive Officers for services rendered in all
capacities during the Company's last three fiscal years:
<TABLE>
<CAPTION>
Other
Annual Compensation Annual All Other
Name and Fiscal Salary Bonus Compensation Compensation
Principal Position Year ($) ($) <F1> ($) <F2> ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Edward M. Abrams 1998 390,962 133,394 -- 35,553 <F3>
Chief Executive Officer to August 1997 1997 355,420 81,084 -- 35,207
1996 341,744 76,555 -- 33,759
- ---------------------------------------------------------------------------------------------------------------------
Joseph H. Rubin 1998 347,139 112,084 -- 32,288 <F4>
Chief Executive Officer 1997 301,860 62,429 -- 32,547
since August 1997 1996 251,836 51,611 -- 31,347
- ---------------------------------------------------------------------------------------------------------------------
Alan R. Abrams 1998 185,000 185,274 -- 34,111 <F5>
President, Chief Operating Officer; 1997 137,752 72,669 -- 30,706
Chief Executive Officer and 1996 123,614 16,164 -- 17,886
President, Abrams Properties, Inc.
to May 1998
- ---------------------------------------------------------------------------------------------------------------------
B. Michael Merritt 1998 126,068 237,470 -- 19,559 <F6>
President, Abrams Construction, Inc. 1997 118,850 125,433 -- 17,701
1996 108,925 119,958 -- 15,925
- ---------------------------------------------------------------------------------------------------------------------
Melinda S. Garrett 1998 115,001 101,072 -- 16,508 <F6>
Chief Financial Officer; 1997 96,191 42,434 -- 13,386
Vice President and Chief Financial 1996 87,699 12,070 -- 4,533
Officer, Abrams Properties, Inc.
- ---------------------------------------------------------------------------------------------------------------------
J. Andrew Abrams 1998 150,020 10,853 -- 15,704 <F7>
Executive Vice President; 1997 117,548 55,576 -- 24,387
Chief Executive Officer, 1996 109,186 4,060 -- 11,400
Abrams Fixture Corporation
- ---------------------------------------------------------------------------------------------------------------------
<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 amounts credited to Mr. Abrams' account in the Company's
Deferred Profit-Sharing Plan of $18,273, benefits derived from
Company-paid premiums on a split dollar life insurance policy of
$5,180, and directors fees of $12,100.
<F4> Consists of amounts credited to Mr. Rubin's account in the
Company's Employee's Deferred Compensation Plan of $1,801, benefits
derived from Company-paid premiums on a split dollar life insurance
policy of $114, amounts credited to Mr. Rubin's account in the
Company's Deferred Profit-Sharing Plan of $18,273, and directors
fees of $12,100.
<F5> Consists of amounts credited to Mr. Abrams' account in the Company's
Deferred Profit-Sharing Plan of $22,011, and directors fees of
$12,100.
8<PAGE>
<F6> Consists of amounts credited to the Executive Officer's account
in the Company's Deferred Profit-Sharing Plan.
<F7> Consists of amounts credited to Mr. Abrams' account in the
Company's Deferred Profit-Sharing Plan of $3,604 and directors fees
of $12,100.
</FN>
</TABLE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows for the Company's CEO and other Executive
Officers named in the Summary Compensation Table above, the number of shares
covered by both exercisable and non-exercisable stock options as of April 30,
1998, and the values for "in-the-money" options, based on the positive spread
between the exercise price of any such existing stock options and the fiscal
year-end market price of the Company's Common Stock.
<TABLE>
<CAPTION>
SHARES SHARES OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
EXERCISE REALIZED AT APRIL 30, 1998 APRIL 30, 1998
------------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward M. Abrams -- -- -- -- $ -- $ --
Joseph H. Rubin 4,000 15,500 -- -- -- --
Alan R. Abrams -- -- -- -- -- --
B. Michael Merritt -- -- -- -- -- --
Melinda S. Garrett -- -- -- -- -- --
J. Andrew Abrams -- -- -- -- -- --
</TABLE>
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 as annual cash bonuses,
as described below, and pursuant to the Company's profit-sharing plan. In
general, all employees meeting certain service requirements are
9<PAGE>
eligible to participate in the profit-sharing 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.
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,
Donald W. MacLeod, L. Anthony Montag, Felker W. Ward, Jr.
DIRECTORS COMPENSATION
Each Director is paid a retainer of $600 per month and a fee of
$1,300 per Board of Directors meeting attended. In addition, Directors who
are members of the Audit Committee or Compensation Committee, but who are not
Officers of the Company, are paid a fee of $600 for each Audit Committee or
Compensation Committee meeting attended.
DIRECTORS' DEFERRED COMPENSATION PLAN. The Company maintains a
Directors' Deferred Compensation Plan (the "Deferred Compensation Plan")
under which members of the Board of Directors of the Company may elect to
defer to a future date receipt of all or any part of their compensation as
Directors and/or as members of a committee of the Board. For purposes of the
Deferred Compensation Plan, "compensation" means the retainer fees and
meeting fees payable to such Directors by the Company in their capacities as
Directors or as members of the Audit or Compensation 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, 1998, four members of the Board
of Directors (including three Executive Officers who are also Directors)
participated in the Deferred Compensation Plan.
10<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ON
$100 INVESTMENT AMONG ABRAMS INDUSTRIES, INC.,
NASDAQ STOCK MARKET (U.S. COMPANIES)
AND NASDAQ RETAIL TRADE STOCKS
ASSUMING REINVESTMENT OF DIVIDENDS
Set forth below is a line graph comparing, for the five-year period
ending April 30, 1998, the cumulative total shareholder return (stock price
increase plus dividends, divided by beginning stock price) on the Company's
common stock with that of all U.S. companies quoted on NASDAQ and all retail
trade companies quoted on NASDAQ. The stock price performance shown on the
graph below is not necessarily indicative of future price performance.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
04/30/93 04/30/94 04/30/95 04/30/96 04/30/97 04/30/98
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Abrams Industries, Inc. $100.00 $ 128.49 $ 101.48 $ 84.12 $125.31 $ 163.81
NASDAQ Stock Market (US Companies) $100.00 $ 111.29 $ 129.38 $ 184.43 $195.20 $ 292.16
NASDAQ Retail Trade Stocks $100.00 $ 109.23 $ 106.30 $ 145.99 $130.50 $ 200.49
/TABLE
<PAGE>
INFORMATION CONCERNING THE COMPANY'S INDEPENDENT AUDITORS
KPMG Peat Marwick LLP were the independent public accountants for
the Company during the year ended April 30, 1998. 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 1999 annual meeting of shareholders must be
received by the Company at its executive offices on or before March 20, 1999,
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
CHIEF EXECUTIVE OFFICER
ATLANTA, GEORGIA
JULY 17, 1998
12
<PAGE>
[front of proxy card]
ABRAMS INDUSTRIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON AUGUST 19, 1998
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 19th day of August 1998 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.<PAGE>
[back of proxy card]
The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders dated July 17, 1998, and the Proxy
Statement furnished therewith.
______________________________________
Date and ______________________________________
signed _________, 1998 (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: Stock Transfer
Department, P.O. Box 4625, Atlanta, Georgia 30302, in the accompanying
prepaid envelope.
