SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended Commission File No.
July 31, 1998 0-10146
- --------------------- -------------------
ABRAMS INDUSTRIES, INC.
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Georgia 58-0522129
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1945 The Exchange, Suite 300, Atlanta, Georgia 30339
---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(770) 953-0304
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
---------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /
The number of shares of $1.00 par value Common Stock of the
Registrant outstanding as of August 31, 1998 was 2,936,356.
<PAGE>
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
ABRAMS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
July 31, 1998 April 30, 1998
------------- --------------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS
Cash and cash equivalents $ 4,956,278 $ 13,240,471
Receivables 28,128,368 21,275,284
Less: Allowance for doubtful accounts (101,047) (130,040)
Inventories, net 1,755,972 1,495,063
Costs and earnings in excess of billings 4,099,134 5,637,599
Property held for sale 5,214,897 1,691,764
Deferred income taxes 848,939 848,939
Other 1,169,751 614,244
------------ ------------
Total current assets 46,072,292 44,673,324
------------ ------------
INCOME-PRODUCING PROPERTIES, net 53,244,699 57,262,540
PROPERTY, PLANT AND EQUIPMENT, net 11,778,762 9,856,619
LAND HELD FOR FUTURE DEVELOPMENT OR SALE 4,237,845 4,237,845
OTHER ASSETS
Notes receivable 389,242 415,538
Cash surrender value of life insurance on
officers, net 1,308,290 1,282,790
Deferred loan costs, net 813,220 814,405
Other 3,001,627 2,766,383
------------ ------------
$120,845,977 $121,309,444
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Trade and subcontractors payables $ 22,653,452 $ 19,445,101
Billings in excess of costs and earnings 2,159,346 1,369,148
Accrued expenses 3,033,622 6,989,911
Current maturities of long-term debt 6,811,699 1,586,133
------------ ------------
Total current liabilities 34,658,119 29,390,293
------------ ------------
DEFERRED INCOME TAXES 3,018,429 3,018,429
OTHER LIABILITIES 1,580,970 1,426,052
MORTGAGE NOTES PAYABLE, less current maturities 27,993,259 33,433,945
OTHER LONG-TERM DEBT, less current maturities 29,513,172 29,504,862
------------ ------------
Total liabilities 96,763,949 96,773,581
------------ ------------
<PAGE>
SHAREHOLDERS' EQUITY
Common stock, $1 par value; authorized
5,000,000 shares; 3,014,039 issued and
2,936,356 outstanding 3,014,039 3,014,039
Additional paid-in capital 2,019,690 2,019,690
Retained earnings 19,460,850 19,914,685
------------ ------------
24,494,579 24,948,414
Less cost of treasury stock 412,551 412,551
------------ ------------
Total shareholders' equity 24,082,028 24,535,863
------------ ------------
$120,845,977 $121,309,444
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
1<PAGE>
<PAGE>
ABRAMS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST QUARTER ENDED
JULY 31,
--------------------------------
1998 1997
----------- ------------
<S> <C> <C>
REVENUES
Construction $47,152,931 $38,397,378
Manufacturing 2,532,136 3,316,333
Real estate 3,269,997 3,415,816
------------ -----------
52,955,064 45,129,527
Less: Intersegment eliminations (1,214,257) -
----------- -----------
51,740,807 45,129,527
Interest 152,426 118,693
Other 10,706 11,099
----------- -----------
51,903,939 45,259,319
----------- -----------
COSTS AND EXPENSES
Applicable to REVENUES--
Construction 45,250,251 36,938,279
Manufacturing 2,533,132 2,514,231
Real estate, exclusive of interest 1,754,390 1,779,414
----------- -----------
49,537,773 41,231,924
Less: Intersegment eliminations (1,170,374) -
----------- -----------
48,367,399 41,231,924
----------- -----------
Selling, shipping, general and administrative
Construction 912,215 699,308
Manufacturing 1,032,731 978,480
Real estate 639,575 532,954
Parent 534,434 553,535
----------- -----------
3,118,955 2,764,277
Less: Intersegment eliminations (362,619) -
----------- -----------
2,756,336 2,764,277
----------- -----------
Interest costs incurred, less interest capitalized 1,263,219 1,091,323
----------- -----------
52,386,954 45,087,524
----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES (483,015) 171,795
INCOME TAX EXPENSE (BENEFIT) (176,000) 71,000
----------- -----------
NET EARNINGS (LOSS) $ (307,015) $ 100,795
=========== ===========
NET EARNINGS (LOSS) PER SHARE -- BASIC AND DILUTED $ (0.10) $ .03
=========== ===========
DIVIDENDS PER SHARE $ .05 $ .07
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 2,936,356 2,940,445
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2<PAGE>
<PAGE>
<TABLE>
<CAPTION>
ABRAMS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FIRST QUARTER ENDED JULY 31,
-------------------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities
Net earnings (loss) $ (307,015) $ 100,795
Adjustments to reconcile net earnings (loss) to net cash
used in operating activities
Depreciation and amortization 780,725 703,304
Gain on sales of real estate - (360,604)
Decrease (increase) in assets
Receivables (6,882,077) (3,911,842)
Inventories (260,909) (20,315)
Costs and earnings in excess of billings 1,538,465 (3,176,374)
Other current assets (555,507) (422,668)
Other assets (250,896) (278,243)
Increase (decrease) in liabilities
Accounts payable 3,208,351 8,184,913
Billings in excess of costs and earnings 790,198 763,644
Accrued expenses (3,956,290) (3,432,216)
Other liabilities 154,917 193,060
------------ ------------
Net cash used in operating activities (5,740,038) (1,656,546)
------------ ------------
Cash flows from investing activities
Proceeds from sales of real estate - 770,000
Additions to properties, property, plant and equipment, net (2,161,963) (228,195)
------------ ------------
Net cash provided by (used in) investing activities (2,161,963) 541,805
------------ ------------
Cash flows from financing activities
Debt proceeds 380,472 -
Debt repayments (587,285) (364,817)
Additions to deferred loan costs (28,561) (88,740)
Cash dividends (146,818) (205,957)
Proceeds from exercise of stock options - 11,500
------------ ------------
Net cash used in financing activities (382,192) (648,014)
------------ ------------
Net decrease in cash and cash equivalents (8,284,193) (1,762,755)
Cash and cash equivalents at beginning of period 13,240,471 7,611,051
------------ ------------
Cash and cash equivalents at end of period $ 4,956,278 $ 5,848,296
============ ============
Supplemental schedule of cash flow information
Interest paid, net of amounts capitalized $ 1,342,256 $ 1,093,232
============ ============
Income taxes paid, net of refunds $ 116,101 $ 470,642
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3<PAGE>
<PAGE>
ABRAMS INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1998 AND APRIL 30, 1998
(UNAUDITED)
NOTE 1. UNAUDITED STATEMENTS
- -----------------------------
The accompanying unaudited consolidated financial statements
have been prepared by the Company in accordance with generally
accepted accounting principles, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements have been condensed or omitted pursuant to
such rules and regulations, although management believes that
the disclosures are adequate to make the information presented
not misleading. In the opinion of management, the accompanying
financial statements contain all adjustments, which consist
solely of normal recurring accruals, necessary for a fair
statement of the results for the interim periods presented.
These financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included
in the Company's Annual Report to Shareholders for the year ended
April 30, 1998. Results of operations for interim periods are
not necessarily indicative of annual results.
NOTE 2. RECEIVABLES
- --------------------
All contract and trade receivables are expected to be
collected within one year.
NOTE 3. INVENTORIES
- --------------------
The classes of inventory are as follows:
July 31, 1998 April 30, 1998
------------- --------------
Finished goods $ 750,093 $ 787,520
Work in process 346,071 219,802
Raw materials 659,808 487,741
----------- -----------
$ 1,755,972 $ 1,495,063
=========== ===========
NOTE 4. STATEMENT OF FINANCIAL ACCOUTING STANDARDS NO. 130,
- ------------------------------------------------------------
REPORTING COMPREHENSIVE INCOME
- ------------------------------
On May 1, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 130, REPORTING
COMPREHENSIVE INCOME. This Statement establishes standards for
reporting and display of comprehensive income and its components
in a full set of general purpose financial statements. The term
"comprehensive income" is used in SFAS 130 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. The Company
has no "other comprehensive income" to report for the quarters
ended July 31, 1997 and 1998.
4<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS.
- ------------------------------------
Changes in CONSOLIDATED BALANCE SHEETS between April 30, 1998,
- --------------------------------------------------------------
and July 31, 1998.
- -----------------
Accounts receivable increased by $6,853,084 and Trade and
subcontractors payable increased by $3,208,351 primarily because
of the timing of the submission and payment of invoices for
construction work performed and increased construction activity.
Property held for sale increased $3,523,133 as a result of
the reclassification of the net book value of a shopping center
in Newnan, Georgia. This property was classified as Income-
producing property at April 30, 1998, and was reclassified in
July 1998, as the property is currently being marketed for sale.
The property is expected to be sold for a gain.
Income-producing properties decreased by $4,017,841
primarily as a result of the reclassification of the net book
value of the shopping center in Newnan, Georgia to Property held
for sale as discussed above.
Property, plant and equipment increased by $1,922,143,
primarily through additional costs related to the substantial
completion of constructing and equipping the Company's new
manufacturing facility.
Accrued expenses decreased by $3,956,289 because of the
payment of year-end accruals.
Current maturities of long-term debt increased by $5,225,566,
and Mortgage notes payable decreased by $5,440,686, primarily as
a result of the reclassification of the Newnan, Georgia shopping
center mortgage to Current maturities of long-term debt. The
center is being held for sale as discussed above.
Results of operations of the first quarter of fiscal 1999
- ---------------------------------------------------------
compared to the first quarter of fiscal 1998.
- ---------------------------------------------
REVENUES
For the first quarter 1999, Consolidated REVENUES, including
Interest income and Other income and net of intersegment
eliminations, were $51,903,939, compared to $45,259,319 for the
first quarter 1998, an increase of 15%.
The figures in Chart A are Segment revenues before
Intersegment eliminations and do not include Interest income or
Other income.
5<PAGE>
CHART A
REVENUE SUMMARY BY SEGMENT
First Quarter Ended
July 31, Amount Percent
-------------------------- Increase Increase
1998 1997 (Decrease) (Decrease)
----------- ----------- ---------- ----------
Construction <F1> $47,152,931 $38,397,378 $8,755,553 23
Manufacturing <F2> 2,532,136 3,316,333 (784,197) (24)
Real Estate <F3> 3,269,997 3,415,816 (145,819) (4)
----------- ----------- ----------
$52,955,064 $45,129,527 $7,825,537 17
=========== =========== ==========
NOTES TO CHART A
----------------
[FN]
<F1>REVENUES for the first quarter of fiscal year 1999 were higher
than those of the first quarter of fiscal year 1998 because
of an increase in sales to existing customers and sales to
new customers.
<F2>REVENUES for the first quarter 1999 were lower than those of
the first quarter 1998 primarily because of decreased orders
from two major customers.
<F3>REVENUES for the first quarter 1999 were slightly lower
than those of the first quarter 1998. The first quarter 1998
included a real estate sale of $770,000. There were no real
estate sales in the first quarter of 1999. The first quarter
1999 had an increase in rental revenues of $624,181 over
those of first quarter 1998.
</FN>
The following table indicates the backlog of contracts,
orders and expected rentals for the next twelve months by
industry segment:
July 31,
-----------------------------------
1998 1997
-------------- -------------
Construction $ 50,481,000 $ 41,039,000
Manufacturing 4,180,000 8,405,000
Real Estate <F1> 10,278,000 18,400,000
-------------- -------------
Total Backlog $ 64,939,000 $ 67,844,000
============== =============
[FN]
<F1> The Real Estate Segment's backlog at July 31, 1997 includes $9,307,000
for sales of properties that were under contract. At July 31, 1998, there
are no properties under contract for sale in the backlog.
</FN>
COSTS AND EXPENSES: Applicable to REVENUES
As a percentage of Segment REVENUES (See Chart A) for the
first quarters of fiscal year 1999 and 1998, the applicable COSTS
AND EXPENSES (See Chart B) were 94% and 91%, respectively.
The figures in Chart B are prior to Intersegment
eliminations.
6<PAGE>
CHART B
COSTS AND EXPENSES APPLICABLE TO REVENUES SUMMARY BY SEGMENT
<TABLE>
<CAPTION>
Percent of Segment Revenues
First Quarter Ended For First Quarter Ended
July 31, July 31,
------------------------- --------------------------
1998 1997 1998 1997
------------------------- --------------------------
<S> <C> <C> <C> <C>
Construction $45,250,251 $36,938,279 96 96
Manufacturing <F1> 2,533,132 2,514,231 100 76
Real Estate 1,754,390 1,779,414 54 52
----------- -----------
$49,537,773 $41,231,924 94 91
=========== ===========
</TABLE>
NOTES TO CHART B
----------------
[FN]
<F1>The increase in the percentage of COSTS AND EXPENSES: Applicable
to REVENUES for the first quarter 1999 compared to the first
quarter 1998 was a result of (a) the temporary disruption of
the segment's normal manufacturing efficiencies caused by the
relocation to a new facility during the period and (b) a
change in the product mix of fixtures sold.
</FN>
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES
For the first quarter 1999 and the first quarter 1998,
Selling, shipping, general and administrative expenses, prior to
intersegment eliminations, were $3,118,955 and $2,764,277,
respectively. As a percentage of Consolidated REVENUES, these
expenses were 6% for both periods. In reviewing Chart C, the
reader should recognize that the volume of revenues generally
will affect the amounts and percentages. The percentages in
Chart C are based upon expenses as they relate to Segment
REVENUES (Chart A) prior to Intersegment eliminations, except
that Parent and Total expenses relate to Consolidated REVENUES.
7
<PAGE>
CHART C
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES BY SEGMENT
<TABLE>
<CAPTION>
Percent of Segment Revenues
First Quarter Ended For First Quarter Ended
July 31, July 31,
------------------------ --------------------------
1998 1997 1998 1997
------------------------ --------------------------
<S> <C> <C> <C> <C>
Construction $ 912,215 $ 699,308 2 2
Manufacturing <F1> 1,032,731 978,480 41 30
Real Estate 639,575 532,954 20 16
Parent 534,434 553,535 1 1
---------- ----------
$3,118,955 $2,764,277 6 6
========== ==========
</TABLE>
NOTES TO CHART C
----------------
[FN]
<F1>On a percentage basis, Selling, shipping, general and
administrative expenses were higher for the first quarter
1999 compared to the first quarter 1998 primarily because of
expenses incurred in moving to the new facility.
</FN>
Liquidity and capital resources.
- -------------------------------
Between April 30, 1998, and July 31, 1998, working capital
decreased by $3,868,858. Operating activities used cash of
$5,740,038, principally as a result of the increase in
receivables. Investing activities used cash of $2,161,963,
primarily for additional costs related to constructing and
equipping the new manufacturing facility. Financing activities
used cash of $382,192 for debt repayment and payment of dividends
to shareholders. At July 31, 1998, the Company and its
subsidiaries had unsecured committed lines of credit totaling
$7,000,000, of which $6,500,000 was available and $500,000 was
reserved for a letter of credit issued as security for a mortgage
loan on an Income-producing property. The letter of credit has
been extended until August 1999 at which time it will be used to
pay down the mortgage if certain leasing requirements are not
attained. In addition, the Company had a committed line of credit
totaling $2,500,000, secured by the Manufacturing Segment's
inventory and receivables, of which none was outstanding.
Year 2000
- ---------
Management has undertaken a program to prepare the Company's
financial and operating computer systems and ancillary systems
for the year 2000. The Company has reviewed its computer systems
and has determined that most of its systems are year 2000
compliant. Where replacement or reprogramming has been found to
be necessary, the Company is either currently making those
changes or has plans to make the changes in the near future. The
Company's cost of becoming year 2000 compliant is not expected to
be material.
8<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
- -------------------------------------------------------------
RISK.
- -----
Not applicable.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibit 27 - Financial Data Schedule (For SEC use only)
(b) The Registrant has not filed any reports on form 8-K during the
quarter ended July 31, 1998.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ABRAMS INDUSTRIES, INC.
-----------------------
(Registrant)
Date: September 10, 1998 /s/ Joseph H. Rubin
------------------ ------------------------
Joseph H. Rubin
Chief Executive Officer
Date: September 10, 1998 /s/ Melinda S. Garrett
------------------ -----------------------
Melinda S. Garrett
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000001923
<NAME> ABRAMS INDUSTRIES, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 4,956,278
<SECURITIES> 0
<RECEIVABLES> 28,128,368
<ALLOWANCES> 101,047
<INVENTORY> 1,755,972
<CURRENT-ASSETS> 46,072,292
<PP&E> 82,864,530
<DEPRECIATION> 17,841,070
<TOTAL-ASSETS> 120,845,977
<CURRENT-LIABILITIES> 34,658,119
<BONDS> 57,506,431
0
0
<COMMON> 3,014,039
<OTHER-SE> 21,067,989
<TOTAL-LIABILITY-AND-EQUITY> 120,845,977
<SALES> 51,740,807
<TOTAL-REVENUES> 51,903,939
<CGS> 48,367,399
<TOTAL-COSTS> 48,367,399
<OTHER-EXPENSES> 2,785,329
<LOSS-PROVISION> (28,993)
<INTEREST-EXPENSE> 1,263,219
<INCOME-PRETAX> (483,015)
<INCOME-TAX> (176,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (307,015)
<EPS-PRIMARY> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
