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, 2000
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 30339-2029
------------------------------------------ ----------
(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. /x/
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of June 15, 2000, was $6,217,431. See Part III. The number of
shares of Common Stock of the registrant outstanding as of June 15, 2000, 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 2000 Annual Meeting of Shareholders which is to be filed pursuant to
Regulation 14A.
<PAGE>
PART I
ITEM 1. BUSINESS.
Abrams Industries, Inc. engages in (i) construction of retail and commercial
projects and (ii) investment in income-producing properties, including
acquisition, development, re-development and sale. Prior to July 2000, the
Company engaged in the property management of properties in which it had an
ownership or leasehold interest.
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.
During the quarter ended January 31, 2000, the Board of Directors of the
Company decided to discontinue the operations of the Company's Manufacturing
Segment. See Note 3 to the Consolidated Financial Statements of the Company.
Financial information for the continuing operating segments is set forth in
Note 14 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, banks,
shopping centers, warehouses and distribution 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.
REAL ESTATE SEGMENT
The Company, through its wholly owned subsidiary, Abrams Properties, Inc.,
has engaged in real estate activities since 1960. These activities primarily
have involved the development, management and ownership of shopping centers in
the Southeast and Midwest. Selection of target markets; evaluation and
acquisition of sites; securing construction and permanent financing; contracting
for design and construction; expansion, renovation and re-tenanting of
properties; and the sale of properties are all part of the Company's asset
management and development activities. In 1998, the Company began investing in
existing income-producing properties, including office and retail originally
developed by others. As of July 2000, the Company was in the process of
outsourcing its asset and property management functions.
The Company currently owns seven shopping centers, all of which are held as
long-term investments. Five of the centers were developed by the Company, and
two were acquired. See "ITEM 2. PROPERTIES - Owned Shopping Centers." The
Company is also lessee and sublessor of nine Company-developed shopping centers
which were sold and leased back by the Company. See "ITEM 2. PROPERTIES -
Leaseback Shopping Centers." Kmart is an anchor tenant in a majority of the
Company's shopping centers. The Company also owns two office properties. See
"ITEM 2. PROPERTIES - Office Buildings." The former manufacturing facility that
was developed and owned by the Real Estate Segment was sold in April 2000.
EMPLOYEES AND EMPLOYEE RELATIONS
At April 30, 2000, the Company employed 104 salaried employees and 18 hourly
employees. 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 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 is
generally less seasonal.
COMPETITION
The businesses of the Company are highly competitive. In the Construction
Segment, the Company competes with a large number of national and local
construction companies, many of which have greater financial resources than the
Company. The Real Estate Segment also operates in a competitive environment,
with numerous parties competing for available financing, properties, tenants and
investors.
<PAGE>
PRINCIPAL CUSTOMERS
During Fiscal 2000, the Company derived approximately 49% ($85,445,000) of
its consolidated revenues from continuing operations from direct transactions
with The Home Depot, Inc. These revenues resulted principally from construction
activities. See Note 14 to the Consolidated Financial Statements of the Company.
No other single customer accounted for 10% or more of the Company's consolidated
revenues from continuing operations during the year.
BACKLOG
The following table indicates the backlog of construction contracts,
expected rental income under existing leases and contracted real estate sales
for the next twelve months by industry segment:
April 30, April 30,
2000 1999
----------- -----------
Construction-contracts $71,827,000 $54,460,000
Real Estate-rental income 11,202,000 9,976,000
Real Estate-sales 195,000 6,900,000
----------- -----------
Total Backlog $83,224,000 $71,336,000
=========== ===========
The Company estimates that most of the backlog at April 30, 2000, will be
recognized as revenues prior to April 30, 2001. 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, 2000.
REGULATION
The Company is subject to the authority of various federal, state and local
regulatory agencies concerned with its construction operations, including among
others, the Occupational Health and Safety Administration. The Company is also
subject to local zoning regulations and building codes in performing its
construction and real estate activities. Management believes that it is in
substantial compliance with all such governmental regulations. Management
believes that compliance with federal, state and local provisions which have
been enacted or adopted for regulating the discharge of materials into the
environment does not have a material effect upon the capital expenditures,
earnings and competitive position of the Company.
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of the Company as of April 30, 2000, were as follows:
<TABLE>
<CAPTION>
Name and Age Positions with the Company Officer Since
------------------------------------------------------------------------------------------------------------
<S> <S> <C>
Alan R. Abrams (45) Co-Chairman of the Board since August 1998, 1988
and a Director of the Company since 1992,
he has been Chief Executive Officer since
July 1999 and President since May 2000.
From May 1998 to July 1999, he was
President and Chief Operating Officer. He
served as Executive Vice President from
August 1997 to May 1998. From 1994 to 1998
he served as President, and from 1997 to
1998 as Chief Executive Officer of Abrams
Properties, Inc.
------------------------------------------------------------------------------------------------------------
Melinda S. Garrett (44) Director of the Company since September 1990
1999, she has been Chief Financial Officer
since February 1997. She also has served
Abrams Properties, Inc. as Chief Financial
Officer since May 1998, and Vice President
since June 1993.
------------------------------------------------------------------------------------------------------------
B. Michael Merritt (50) Director of the Company since February 1986
2000, he has been President of Abrams
Construction, Inc. since May 1995. Prior to
that he served Abrams Construction, Inc. as
Executive Vice President.
------------------------------------------------------------------------------------------------------------
J. Andrew Abrams (40) Co-Chairman of the Board since August 1998, 1988
and a Director of the Company since 1992,
he has been Vice President-Business
Development since May 2000, and served as
President and Chief Operating Officer from
July 1999 to May 2000. From August 1997 to
July 1999, he was Executive Vice President.
He also has served as Chief Executive
Officer of Abrams Fixture Corporation since
July 1997. From September 1994 to July 1997
he served Abrams Fixture Corporation as
Vice President.
------------------------------------------------------------------------------------------------------------
Gerald T. Anderson II (37) President and Chief Executive Officer, 1995
Abrams Properties, Inc. since May 1998. He
served as Executive Vice President of
Abrams Properties, Inc. from February 1997
to April 1998, and Vice President from
April 1995 to January 1997.
------------------------------------------------------------------------------------------------------------
</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 respective Board. Alan R. Abrams and J. Andrew Abrams are
brothers, the sons of Edward M. Abrams, a member of the Board of Directors.
David L. Abrams, a member of the Board of Directors, is a first cousin of Alan
R. Abrams and J. Andrew Abrams, and a nephew of Edward M. 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, through its Real Estate Segment, 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 Parent Company and the Real
Estate and Construction Segments are located in this building. In addition to
the 29,200 square feet of offices currently utilized by the Abrams entities,
another 34,800 square feet is leased to unrelated tenants, and the remaining
approximately 2,000 square feet is currently available for lease.
In May 1999, the Company sold its shopping center located in Newnan,
Georgia. The 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. In July 1999, the Company acquired a shopping
center in Jacksonville, Florida, as the replacement property. See "ITEM 7.
LIQUIDITY AND CAPITAL RESOURCES" for discussion regarding the transactions.
In June 1999, the Company received notice from the Georgia State Properties
Commission that the Georgia World Congress Center Authority had made the
determination to acquire the Manufacturing Segment's former wood manufacturing
facility in Atlanta, Georgia. In October 1999, a Special Master appointed by the
court awarded the Company $4,500,000 for the property, which amount was paid to
the Manufacturing Segment. Both the State and the Company have appealed the
award amount, and at April 30, 2000, the ultimate outcome was unknown. Pending
resolution of the appeals, the Company has recorded the deferred gain of
approximately $2.76 million from this transaction as a reduction of Net assets
of discontinued operations at April 30, 2000.
In April 2000, the Company's former manufacturing plant located in Lithia
Springs, Georgia, which was developed and owned by the Real Estate Segment, was
sold at a pre-tax gain of approximately $2.4 million. The Company continues to
own the vacant former metal manufacturing facility located in Atlanta, Georgia.
The Company owns, or has an interest in, the following properties:
OWNED SHOPPING CENTERS
As of April 30, 2000, the Company's Real Estate Segment owned five shopping
centers which it developed and two which it acquired. The following chart
provides relevant information relating to the owned shopping centers:
<TABLE>
<CAPTION>
Principal
Calendar Amount of
Leasable Year(s) Debt Debt
Square Placed in Rental Cash Service Outstanding
Feet in Service Income Flow Payments as of April 30,
Location Acres Building(s) by Company 2000 2000 <F1> 2000 <F2> 2000 <F3>
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1100 W. Argyle Street 10.5 110,046 1972, 1996 $ 518,296 $ 393,285 $ 397,179 $ 3,175,010
Jackson, MI
-----------------------------------------------------------------------------------------------------------------------------------
1075 W. Jackson Street 7.3 92,120 1980, 1992 505,291 453,673 405,679 2,974,331
Morton, IL <F4>
-----------------------------------------------------------------------------------------------------------------------------------
2500 Airport Thruway 8.0 87,543 1980, 1988 441,286 401,181 391,783 2,398,956
Columbus, GA <F4> <F5>
-----------------------------------------------------------------------------------------------------------------------------------
1500 Placida Road 28.7 213,739 1990 1,913,799 1,656,692 1,352,167 12,557,693
Englewood, FL
-----------------------------------------------------------------------------------------------------------------------------------
15201 N. Cleveland 72.3 293,801 1993, 1996 2,756,025 2,228,949 1,558,105 13,369,042
North Fort Myers, FL
-----------------------------------------------------------------------------------------------------------------------------------
5700 Harrison Avenue 10.8 86,396 1998 498,859 354,114 -- --
Cincinnati, OH <F6>
-----------------------------------------------------------------------------------------------------------------------------------
8106 Blanding Blvd. 18.8 174,220 1999 1,089,106 863,454 703,671 9,339,295
Jacksonville, FL <F7>
-----------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Cash flow is defined as net operating income before the following:
depreciation, amortization of loan and lease costs, and debt service
payments.
<F2> Includes principal and interest on mortgage notes or other debt.
<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 9 and 10 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> Originally completed by others in 1982.
<F7> Originally completed by others in 1985.
</FN>
</TABLE>
<PAGE>
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> <S> <C> <C> <C>
Jackson, MI Big Lots 26,022 2007 2 for 5 years each
Kroger 63,024 2021 6 for 5 years each
------------------------------------------------------------------------------------------------------------------------------------
Englewood, FL Beall's 31,255 2006 4 for 5 years each
Kmart 86,479 2015 10 for 5 years each
Publix 48,555 2010 4 for 5 years each
Walgreens 13,500 2040 <F1> None
------------------------------------------------------------------------------------------------------------------------------------
North Fort Myers, FL AMC 54,805 2016 4 for 5 years each
Beall's 35,600 2009 9 for 5 years each
Kash n' Karry 33,000 2013 4 for 5 years each
Jo-Ann Fabrics 16,000 2004 3 for 5 years each
Kmart 107,806 2018 10 for 5 years each
------------------------------------------------------------------------------------------------------------------------------------
Cincinnati, OH Kroger 42,456 2005 3 for 5 years each
------------------------------------------------------------------------------------------------------------------------------------
Jacksonville, FL Publix <F2> 85,560 2010 6 for 5 years each
Office Depot 22,692 2003 3 for 5 years each
------------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Tenant may terminate its lease with six months notice at five year
intervals beginning in 2010.
<F2> Tenant has vacated the premises, but remains responsible for lease
payments until the Expiration Date.
</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. In 2000, the Company received $79,183 in
contingent rentals, net of offsets, which amounts are included in the aggregate
Rental Income set forth above.
Typically, tenants are responsible for their pro rata share of ad valorem
taxes, insurance and common area maintenance (subject to the right of offset
mentioned above). Kmart has total 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 that it developed, sold, and leased back under leases expiring from
calendar years 2001 to 2014. The nine centers are subleased by the Company to
Kmart Corporation for periods corresponding with 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 2000, the Company received $72,449 in contingent rentals, net of offsets,
which amounts are included in the aggregate Rental Income 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.
<PAGE>
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 2000 2000
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bayonet Point, FL 10.8 109,340 1976, 1994 $378,670 $269,564
---------------------------------------------------------------------------------------------------------------------------------
Orange Park, FL 9.4 84,180 1976 264,000 226,796
---------------------------------------------------------------------------------------------------------------------------------
Davenport, IA 10.0 84,180 1977 259,087 204,645
---------------------------------------------------------------------------------------------------------------------------------
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>
OFFICE BUILDINGS
The Company, through its Real Estate Segment, owns two office properties:
the corporate headquarters building located at 1945 The Exchange, Atlanta,
Georgia; and an office park in northwest suburban Atlanta, Georgia. The
following chart provides pertinent information relating to the office buildings:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Principal
Calendar Amount of
Leasable Year Debt Debt
Square Placed in Rental Cash Service Outstanding
Feet In Service Income Flow Payments As Of April 30,
Location Acres Building(s) by Company 2000 2000<F1> 2000 <F2> 2000
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1945 The Exchange 3.12 65,880 1997 $1,108,642 $ 735,117 $477,711 $4,933,813
Atlanta, GA <F3>
------------------------------------------------------------------------------------------------------------------------------------
1501-1523 Johnson Ferry Rd. 8.82 121,476 1997 1,758,890 1,050,089 538,925 6,346,536
Marietta, GA <F4>
------------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Cash flow is defined as net operating income before the following:
depreciation, amortization of loan and lease costs, and debt service
payments.
<F2> Includes principal and interest on mortgage notes or other debt.
<F3> Corporate headquarters building of which the Parent Company, Construction
Segment, and Real Estate Segment occupy approximately 29,200 square feet.
Rental income and cash flow includes intercompany rent at market rates of
$488,252 paid by the Parent Company and the Construction and Real Estate
Segments. The debt is guaranteed by Abrams Properties, Inc. Originally
constructed by others in 1974 and acquired and redeveloped by the Company
in 1997.
<F4> The Company, through a subsidiary of its Real Estate Segment, is the
lessee of 16,859 square feet of space under a master lease agreement to
satisfy a condition required by the lender. Rental income and cash flow
include intercompany rent at market rates of $267,826 paid by the Real
Estate Segment. Originally constructed by others in 1980 and 1985.
</FN>
</TABLE>
<PAGE>
LAND LEASED OR HELD FOR FUTURE DEVELOPMENT OR SALE
The Company, through its Real Estate Segment, owns or has an interest in
the following land that is leased or held for future development or sale:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Calendar Year
Development Intended
Location Acres Completed Use <F1>
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <S>
W. Argyle Street 0.9 1972 One outlot or retail shops
Jackson, MI
-----------------------------------------------------------------------------------------------------------------------------------
Kimberly Road & Fairmont Street 6.0 1977 Food store and/or retail stops and outlot
Davenport, IA <F2>
-----------------------------------------------------------------------------------------------------------------------------------
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 5.3 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
shopping center parcel and is generally sold for, leased for, or developed
as, a fast-food operation, bank or similar use.
<F2> Includes 1.1 acre outlot currently under contract to be sold at a
gain.
<F3> Leased under leases terminating in years 2005 and 2010 with a right to
extend for three additional five-year periods. Both outlots are subleased
for terms coextensive with the Company's lease.
</FN>
</TABLE>
There is no debt on any of the above properties, except for the North Fort
Myers, Florida anchor pads and retail shop land. See Note 10 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 property the subject of,
any pending legal proceedings which are likely, in the opinion of management, to
have a material, adverse effect on the Company's operations or financial
condition.
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
| 2000 | 1999 | 2000 | 1999
|______________________________|_______________________________|_____________|_____________
| HIGH LOW | HIGH LOW | |
| TRADE TRADE | TRADE TRADE | |
_________________________|______________________________|_______________________________|_____________|_____________
<S> | <C> <C> | <C> <C> | <C> | <C>
First Quarter | $5.375 $3.875 | $7.500 $6.250 | $.040 | $.050
_________________________|______________________________|_______________________________|_____________|_____________
Second Quarter | 5.938 3.750 | 7.750 5.500 | .040 | .050
_________________________|______________________________|_______________________________|_____________|_____________
Third Quarter | 4.500 2.940 | 7.750 4.125 | .040 | .050
_________________________|______________________________|_______________________________|_____________|_____________
Fourth Quarter | 4.000 3.375 | 6.875 3.031 | .040 | .050
_________________________|______________________________|_______________________________|_____________|_____________
</TABLE>
The common stock of Abrams Industries, Inc. is traded over-the-counter in
the NASDAQ National Market System (Symbol: ABRI). The approximate number of
holders of common stock was 460 (including shareholders of record and shares
held in street name) at May 31, 2000.
<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 the
notes thereto.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consolidated Revenues <F1> $ 174,579,492 $ 172,201,090 $ 163,586,356 $ 119,420,343 $ 119,290,881
-----------------------------------------------------------------------------------------------------------------------------
Net Earnings (Loss) <F1> $ 2,367,190 $ (39,599) $ 2,694,211 $ 1,274,545 $ (220,785)
-----------------------------------------------------------------------------------------------------------------------------
Net Earnings (Loss) Per
Share <F1> <F2> $ .80 $ (.01) $ .92 $ .43 $ (.07)
-----------------------------------------------------------------------------------------------------------------------------
Shares Outstanding at
Year-End 2,936,356 2,936,356 2,936,356 2,938,356 2,970,856
-----------------------------------------------------------------------------------------------------------------------------
Cash Dividends Paid Per Share $ .16 $ .20 $ .19 $ .07 $ .105
-----------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity $ 22,346,138 $ 23,272,560 $ 24,535,863 $ 22,125,214 $ 20,152,376
-----------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity Per
Share <F2> $ 7.61 $ 7.93 $ 8.36 $ 7.53 $ 6.78
-----------------------------------------------------------------------------------------------------------------------------
Working Capital $ 10,820,179 $ 9,885,902 $ 15,283,031 $ 13,075,119 $ 10,417,697
-----------------------------------------------------------------------------------------------------------------------------
Depreciation and
Amortization Expense <F1> $ 3,067,959 $ 2,702,555 $ 2,338,854 $ 2,811,472 $ 2,668,060
-----------------------------------------------------------------------------------------------------------------------------
Total Assets $ 102,845,867 $ 126,132,540 $ 121,309,444 $ 91,499,438 $ 90,635,098
-----------------------------------------------------------------------------------------------------------------------------
Income-Producing Properties
and Property, Plant and
Equipment, net $ 61,456,455 $ 64,680,003 $ 67,119,159 $ 45,028,355 $ 54,493,842
-----------------------------------------------------------------------------------------------------------------------------
Long-Term Debt $ 51,929,637 $ 56,554,488 $ 62,938,807 $ 41,118,885 $ 51,202,536
-----------------------------------------------------------------------------------------------------------------------------
Return on Average
Shareholders' Equity <F1> 10.4% (0.2%) 11.5% 6.0% (1.1%)
-----------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> From continuing operations.
<F2> Adjusted to reflect stock dividends and stock splits.
</FN>
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR FISCAL YEARS ENDED APRIL 30, 2000, 1999, AND 1998.
RESULTS OF OPERATIONS
REVENUES
Revenues from continuing operations for 2000 were $174,579,492, compared
to $172,201,090 and $163,586,356, for 1999 and 1998, respectively. This
represents an increase in Revenues of 1% in 2000, and 5% in 1999. Revenues
include Interest income of $372,524, $421,315, and $649,910, for 2000, 1999, and
1998, respectively, and Other income of $73,882, $56,532, and $121,429, for
2000, 1999, and 1998, 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.
<PAGE>
<TABLE>
<CAPTION>
REVENUE FROM CONTINUING OPERATIONS SUMMARY BY SEGMENT
(Dollars in Thousands)
CHART A
Years Ended Increase Years Ended Increase
April 30, (Decrease) April 30, (Decrease)
-------------------------------------------------- ----------------------------------------------------
2000 1999 Amount Percent 1999 1998 Amount Percent
-------------------------------------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Construction <F1> $143,916 $159,273 $(15,357) (10) $159,273 $141,453 $17,820 13
Real Estate <F2> 30,217 12,450 17,767 143 12,450 21,362 (8,912) (42)
------------------------------------ -----------------------------------
Total $174,133 $171,723 $ 2,410 1 $171,723 $162,815 $ 8,908 5
==================================== ===================================
<FN>
NOTES:
<F1> The decrease in 2000 from that in 1999 is primarily attributable to a
temporary decrease in business from an existing customer. The increase in
1999 was primarily attributable to the addition of new customers.
<F2> Rental revenues for 2000 were $12,551,729, compared to $12,449,850 in
1999, and $11,337,342 in 1998. Rental revenues exclude $1,527,856 in 2000,
$1,485,038 in 1999, and $200,615 in 1998, received from the Company's
other segments. Revenues from sales of real estate were $17,665,456 in
2000, and $10,024,650 in 1998. There were no sales of real estate in 1999.
The real estate revenues in 2000 include the sale of the shopping center
in Newnan, Georgia, and the Company's manufacturing facility in Lithia
Springs, Georgia. The revenues in 2000 do not include any amounts related
to the deferred gain on the eminent domain taking of the Atlanta, Georgia
former manufacturing facility. The 1998 real estate revenues 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 Company reviews its real estate portfolio on an ongoing basis and
places a property on the market for sale when it believes it is in its
best interests to do so. In addition, a property may be marketed in one
fiscal year, but the sale may not close until a subsequent year, due to
individually negotiated contract terms. Real estate sales, which may have
a material impact on the Company's results of operations, do not occur
every year, and the Company cannot predict the timing of any such sales.
</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 $155,731,989 for 2000,
$157,525,283 for 1999, and $144,973,450 for 1998, were 89%, 92%, and 89%,
respectively.
<TABLE>
<CAPTION>
COSTS AND EXPENSES APPLICABLE TO REVENUES FROM
CONTINUING OPERATIONS SUMMARY BY SEGMENT
(Dollars in Thousands)
CHART B
Percent of
Segment Revenues
Years Ended For Years Ended
April 30, April 30,
------------------------------------------------- -----------------------------------------
2000 1999 1998 2000 1999 1998
------------------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Construction $136,396 $150,603 $133,430 95 95 94
Real Estate <F1> 19,336 6,922 11,543 64 56 54
-------------------------------------------------
Total $155,732 $157,525 $144,973 89 92 89
=================================================
NOTES:
<FN>
<F1> The increase in the dollar amount and percentage in 2000 is attributable
to the costs of the real estate sales during the year. The decrease in the
dollar amount and percentage in 1999 is because there were no real estate
sales in 1999. See Chart A for discussion of real estate sales in 2000 and
1998.
</FN>
</TABLE>
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES
For the years 2000, 1999, and 1998, Selling, shipping, general and
administrative expenses (See Chart C) were $9,597,295, $9,458,766, and
$9,630,691, respectively. As a percentage of Consolidated Revenues, these
expenses were 6% in each of the three years. In reviewing Chart C, the reader
should recognize that the volume of revenues generally would 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
FROM CONTINUING OPERATIONS BY SEGMENT
(Dollars in Thousands)
CHART C
Percent of
Segment Revenues
Years Ended For Years Ended
April 30, April 30,
------------------------------------------------- -----------------------------------------
2000 1999 1998 2000 1999 1998
------------------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Construction <F1> $4,267 $4,584 $4,525 3 3 3
Real Estate <F2> 2,160 2,325 2,500 7 19 12
Parent <F3> 3,170 2,550 2,606 2 2 2
------------------------------------------------
Total $9,597 $9,459 $9,631 6 6 6
================================================
NOTES:
<FN>
<F1> On a dollar basis comparison, the decreased expense in 2000 stemmed from
decreased incentive-based compensation expenses, which were a result of
decreased Segment earnings. This was partially offset by an increase in
2000 in the cost of employee medical claims, which varies from year to
year.
<F2> As noted above, the volume of revenues generally affects these amounts and
percentages. In 1999, revenues declined, as there were no real estate
sales. In 2000 and 1998, real estate sales were reported, producing
increased revenues. The gains on such sales affect incentive-based
compensation expenses, which are included in these amounts.
<F3> On a dollar basis comparison, the increased expense in 2000 includes an
accrual related to an existing employment agreement, and additional legal,
accounting, and professional consulting fees resulting from the Company's
investigation of strategic alternatives.
</FN>
</TABLE>
<PAGE>
INTEREST COSTS
The majority of interest costs expensed of $5,386,257, $5,159,222, and
$4,613,004, in 2000, 1999, and 1998, respectively, is related to debt on real
estate and utilization of lines of credit. Interest costs increased in 2000
primarily due to the purchase of the Jacksonville, Florida shopping center, and
in 1999 primarily due to the bond financing of the Lithia Springs, Georgia
manufacturing facility, which was sold in April 2000. Interest costs of $199,000
and $112,000, relating to properties under development in 1999 and 1998,
respectively, were capitalized. There was no capitalized interest in 2000.
FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION
Property held for sale decreased by $5,235,074 in 2000 as a result of the
sale of the shopping center in Newnan, Georgia, and the eminent domain taking of
the Company's former manufacturing facility located in Atlanta, Georgia, as
discussed in "ITEM 2. PROPERTIES." The mortgage debt associated with the Newnan
shopping center was included in Current maturities of long-term debt at April
30, 1999.
Income producing properties increased by $7,542,489 during 2000, primarily
as a result of the purchase of a shopping center in Jacksonville, Florida. The
mortgage note used to finance the purchase of the Jacksonville shopping center
is classified as Mortgage notes payable at April 30, 2000. See "ITEM 2.
PROPERTIES" for further discussion.
Property, plant and equipment decreased by $11,087,747 during 2000,
primarily as a result of the sale of the Company's manufacturing facility
located in Lithia Springs, Georgia, and its related fixed assets. See "ITEM
2. PROPERTIES" and "DISCONTINUED OPERATIONS" for further information.
LIQUIDITY AND CAPITAL RESOURCES
Except for certain real estate construction loans and occasional
short-term operating loans, the Company normally has been able to finance its
working capital needs through funds generated internally. If adequate funds are
not generated through normal operations, the Company has available bank lines of
credit. Working capital increased to $10,820,179 at the end of 2000, from
$9,885,902 at the end of 1999. Operating activities provided cash of $7,057,728.
Investing activities used cash of $1,639,320, primarily for the purchase of
income-producing property, which was substantially offset by proceeds from the
sales of real estate and property, plant and equipment. Financing activities
used cash of $5,597,985 primarily for repayment of debt and short-term
borrowings.
In 1992, the Company secured a construction loan for the North Fort Myers,
Florida property from SunTrust Bank. The primary term of the construction
financing was five years, and the loan has been extended to August 2001, in
accordance with the loan agreement, as amended. The loan carries a floating
interest rate of prime plus .375%. The maximum amount to be funded will be
determined by a formula based on future development. As of April 30, 2000, the
principal amount outstanding was $13,369,042. Although the Company has
periodically received extensions on this loan, there can be no assurance it will
be able to continue to do so. If future extensions were not granted, it would be
necessary for the Company to either refinance or sell the development and pay
off this loan prior to its due date. There can be no assurance that sufficient
proceeds from a refinancing or sale will be available to pay off the loan prior
to its maturity.
In August 1997, the Company refinanced its Jackson, Michigan shopping
center, replacing a $2,100,000 construction loan with a permanent loan for
$3,500,000. The permanent loan had an original a term of 22 years and bears
interest at 8.625%. Certain provisions of the loan, as amended in August 1999,
required the establishment of a $500,000 letter of credit at closing which is to
be used to pay down the loan in August 2000, if certain leasing requirements are
not met. As of April 30, 2000, these requirements had not been met, and there
can be no assurance that they will be met by August 2000, or that these
provisions can again be amended to extend the date of compliance.
<PAGE>
In October 1997, the Company entered into an acquisition and construction
loan with SunTrust Bank, to fund the purchase and redevelopment of the corporate
headquarters building in Atlanta, Georgia. The loan had a balance at April 30,
2000, of $4,933,813, and its term has been extended to August 2001. There can be
no assurance further extensions will be granted. 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. The Company plans to refinance this loan prior to
maturity; however, there can be no assurance that a refinancing will take place
prior to the loan's due date.
In July 1999, in connection with the financing of the purchase of the
Company's new shopping center in Jacksonville, Florida, the Company entered into
a permanent mortgage loan in the amount of $9,500,000, which is secured by the
center. The loan bears interest at 7.375% and is scheduled to be fully amortized
over twenty years. The lender may call the loan at any time after September 1,
2002. If the loan were called, the Company would have up to thirteen months to
repay the principal amount of the loan without penalty. In conjunction with the
loan, an Additional Interest Agreement was executed which entitles the lender to
be paid additional interest equal to fifty percent of the quarterly net cash
flow and fifty percent of the appreciation in the property upon sale or
refinance. The liability related to the lender's fifty percent share of the
appreciation in the property was $1,989,704 at April 30, 2000.
In February 2000, the Company's Board of Directors authorized the
repurchase of up to 200,000 shares of Common Stock during the twelve-month
period beginning February 25, 2000, and ending February 24, 2001. Any such
purchases, if made, could be in the open market at prevailing prices or in
privately negotiated transactions. The Company expects to finance any purchases
made with currently available cash. No such stock repurchases had been made as
of April 30, 2000.
In April 2000, in connection with the sale of the Company's Lithia
Springs, Georgia manufacturing facility, the $11,000,000 bond financing that was
secured by the facility was assumed by the purchaser of the property.
At April 30, 2000, the Company had unsecured committed lines of credit
totaling $13,000,000, of which none was outstanding. Of this amount, $500,000
was reserved for the letter of credit issued for the Jackson, Michigan loan
discussed above.
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 from erosion due
to inflation.
In the Real Estate Segment, many of the anchor leases are long-term
(original terms 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. In many cases, however, the contingent rent
provisions permit the tenant 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 as well, which, in turn, would cause a decrease in
the contingent rents. Furthermore, the Company has certain repair obligations,
and the costs of repairs increase with inflation.
Inflation causes a rise in interest rates, which has a positive effect on
investment income, but has a negative effect on profit margins because of the
increased costs of contracts and the increase in interest expense on variable
rate loans. Overall, inflation will tend to limit the Company's markets and, in
turn, will reduce revenues as well as operating profits and earnings.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained or incorporated by reference in this Annual
Report on Form 10-K, including without limitation, statements containing the
words "believes," "anticipates," "expects," and words of similar import, are
forward-looking statements within the meaning of the federal securities laws.
Such forward-looking statements involve known and unknown risks, uncertainties
and other matters which may cause the actual results, performance or
achievements of the Company to be materially different from any future results,
performance or uncertainties expressed or implied by such forward-looking
statements.
CONSIDERATION OF STRATEGIC ALTERNATIVES
The Company announced on June 8, 1999, that the Board of Directors decided
to investigate a wide range of possible strategic and financial alternatives
available to maximize shareholder value. The investigation, which has been
completed, resulted in the discontinuance of the Company's manufacturing
operations. See "Discontinued Operations."
Also as a result of the investigation, subsequent to the fiscal year end,
the Company entered into agreements to outsource the property management of
certain of the Company's commercial real estate assets to third parties.
Additionally, the Company has entered into a letter of intent to contract out
its asset management activities to jOjA Partners, LLC, a company newly formed by
executives of the Real Estate Segment, in which the Company would maintain a
minority interest. The Company plans to continue to own and invest in real
estate.
<PAGE>
DISCONTINUED OPERATIONS
During the quarter ended January 31, 2000, the Board of Directors of the
Company decided to discontinue the operations of the Manufacturing Segment. The
financial statements reflect the operating results of this business as a
discontinued operation, and prior year financial information has been
appropriately reclassified. See Note 3 to the Consolidated Financial Statements
of the Company. On February 2, 2000, the Company closed on the sale of the
Manufacturing Segment's machinery, equipment, furniture, and raw materials
inventory for $2.2 million.
The Company recorded an after tax loss from discontinued operations of
$2,612,332 in the fiscal year ended April 30, 2000. At April 30, 2000, the
Manufacturing Segment had ceased all operations and disposed of substantially
all of its assets. The remaining assets and liabilities of the Manufacturing
Segment have been consolidated and presented as Net assets of discontinued
operations on the Consolidated Balance Sheet at April 30, 2000. Included as a
reduction in the Net assets of discontinued operations is an approximately $2.76
million deferred gain on the eminent domain taking of the Company's former
manufacturing facility in Atlanta, Georgia. The amount of the condemnation award
is currently under appeal by both parties, and the ultimate outcome is unknown
at this time.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company's major market risk exposure is the potential loss arising
from changes in interest rates and its impact on variable rate debt instruments.
The following table summarizes information related to the Company's market risk
sensitive debt instruments as of April 30, 2000:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Principal Total Interest
Debt Instrument Balance Availability Maturity Rate
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <S>
Note Payable to Bank $4,933,813 $ 4,933,813 8/31/01 Prime rate or LIBOR plus 2%, at
the Company's option
-----------------------------------------------------------------------------------------------------------------------------
Construction Loan $8,692,094 $ 8,692,094 8/31/01 Prime rate plus .375%
-----------------------------------------------------------------------------------------------------------------------------
Amendment to Construction $4,676,948 To be determined 8/31/01 Prime rate plus .375%
Loan per formula in
Loan Agreement
-----------------------------------------------------------------------------------------------------------------------------
Unsecured Lines of Credit $ 0 $ 11,500,000 10/31/00 Prime rate or LIBOR plus 2%, at
the Company's option
-----------------------------------------------------------------------------------------------------------------------------
Unsecured Line of Credit $ 0 $ 500,000 <F1> 10/31/01 Prime rate or LIBOR plus 2%, at
the Company's option
-----------------------------------------------------------------------------------------------------------------------------
Unsecured Line of Credit $ 0 $ 1,000,000 9/30/00 Prime rate or LIBOR plus 2.7%,
at the Company's option
-----------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> $500,000 is restricted as it secures a letter of credit. See Note 10 to
the Consolidated Financial Statements of the Company.
</FN>
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Index to Consolidated Financial Statements
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Accountants and Independent Auditors' Report 16
Consolidated Balance Sheets - April 30, 2000, and 1999 17
Consolidated Statements of Operations - For the years ended April 30, 2000, 1999, and 1998 18
Consolidated Statements of Shareholders' Equity - For the years ended April 30, 2000, 1999, and 1998 19
Consolidated Statements of Cash Flows - For the years ended April 30, 2000, 1999, and 1998 20
Notes to Consolidated Financial Statements - April 30, 2000, 1999, and 1998 21
Schedules:
Schedule Number
---------------
II Valuation and Qualifying Accounts 33
III Real Estate and Accumulated Depreciation 34
</TABLE>
<PAGE>
Report of Independent Accountants
To The Board of Directors and Shareholders
Abrams Industries, Inc.:
In our opinion, the accompanying consolidated balance sheet as of April
30, 2000 and the related consolidated statements of operations, shareholders'
equity and cash flows present fairly, in all material respects, the financial
position of Abrams Industries, Inc. and subsidiaries (the "Company") at April
30, 2000, and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States. In addition, in our opinion, the financial statement schedules listed
in the accompanying index present fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements as of and for the year ended April 30, 2000.
These financial statements and financial statement schedules are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Atlanta, Georgia
June 2, 2000
================================================================================
Independent Auditor's Report
The Board of Directors and Shareholders
Abrams Industries, Inc.:
We have audited the accompanying consolidated financial statements of
Abrams Industries, Inc. and subsidiaries (the "Company") as of April 30, 1999,
and for the years ended April 30, 1999 and 1998 as listed in the accompanying
index. In connection with our audits of the consolidated financial statements,
we also have audited the financial statement schedules for the years ended April
30, 1999 and 1998 as listed in the accompanying index. These consolidated
financial statements and schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and 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 and schedules are
free of material misstatement. An audit includes examining, on a test basis
evidence supporting the amounts and disclosures in the financial statements and
schedules. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statements and schedule 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, 1999 and the results of their
operations and cash flows for the years ended April 30, 1999 and 1998 in
conformity with generally accepted accounting principles. Also in our opinion,
the related financial statement schedules for the years ended April 30, 1999 and
1998, 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 LLP
Atlanta, Georgia
June 4, 1999
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
April 30,
----------------------------------------
2000 1999
-------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents, including restricted cash of $0
and $95,673, in 2000 and 1999, respectively $ 7,268,974 $ 7,448,551
Receivables:
Trade accounts and notes, net 150,944 3,298,545
Contracts, net, including retained amounts of
$5,105,889 and $4,983,746, in 2000 and 1999,
respectively (note 5) 19,880,333 27,981,694
Inventories, net (note 4) -- 2,972,663
Costs and earnings in excess of billings (note 5) 2,319,102 3,188,100
Net assets of discontinued operations (note 3) 1,423,593 --
Property held for sale (note 6) 33,404 5,268,478
Deferred income taxes (note 11) 685,277 820,829
Other 538,840 599,715
-------------------------------------------------------------------------------------------------------------------
Total current assets 32,300,467 51,578,575
-------------------------------------------------------------------------------------------------------------------
INCOME-PRODUCING PROPERTIES, NET (notes 7 and 9) 59,854,096 52,311,607
PROPERTY, PLANT AND EQUIPMENT, NET (note 8) 1,602,359 12,368,396
OTHER ASSETS:
Land held for future development or sale 4,204,442 4,237,845
Notes receivable 170,433 297,209
Cash surrender value of officers life insurance, net 1,225,265 1,473,963
Deferred loan costs, net 531,959 788,356
Other 2,956,846 3,076,589
-------------------------------------------------------------------------------------------------------------------
$ 102,845,867 $ 126,132,540
===================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade and subcontractors payables, including
retained amounts of $2,150,687 and $2,513,281
in 2000 and 1999, respectively $ 13,373,742 $ 18,391,697
Accrued expenses 4,015,373 2,834,831
Billings in excess of costs and earnings (note 5) 1,289,114 2,947,814
Accrued profit-sharing (note 12) 1,438,884 2,593,654
Short-term borrowings (note 10) -- 8,048,222
Current maturities of long-term debt 1,363,175 6,876,455
-------------------------------------------------------------------------------------------------------------------
Total current liabilities 21,480,288 41,692,673
-------------------------------------------------------------------------------------------------------------------
DEFERRED INCOME TAXES (note 11) 3,448,538 2,910,771
OTHER LIABILITIES 3,641,266 1,702,048
MORTGAGE NOTES PAYABLE, less current maturities (note 9) 34,033,941 27,447,977
OTHER LONG-TERM DEBT, less current maturities (note 10) 17,895,696 29,106,511
-------------------------------------------------------------------------------------------------------------------
Total liabilities 80,499,729 102,859,980
-------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (notes 6, 9, and 10)
SHAREHOLDERS' EQUITY:
Common stock, $1 par value; 5,000,000 shares authorized;
3,014,039 shares issued and 2,936,356 shares outstanding in
2000 and 1999 3,014,039 3,014,039
Additional paid-in capital 2,019,690 2,019,690
Retained earnings 17,724,960 18,651,382
Treasury stock, 77,683 common shares in 2000 and 1999 (412,551) (412,551)
-------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 22,346,138 23,272,560
-------------------------------------------------------------------------------------------------------------------
$ 102,845,867 $ 126,132,540
===================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended April 30,
---------------------------------------------------------
2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------
REVENUES:
<S> <C> <C> <C>
Construction $ 143,915,901 $ 159,273,393 $ 141,453,025
Rental income 12,551,729 12,449,850 11,337,342
Real estate sales 17,665,456 -- 10,024,650
Interest 372,524 421,315 649,910
Other 73,882 56,532 121,429
---------------------------------------------------------------------------------------------------------------------------
174,579,492 172,201,090 163,586,356
---------------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES:
Construction 136,396,070 150,603,062 133,430,395
Rental property operating expenses,
excluding interest 6,999,011 6,922,221 6,385,593
Cost of real estate sold 12,336,908 -- 5,157,462
---------------------------------------------------------------------------------------------------------------------------
155,731,989 157,525,283 144,973,450
---------------------------------------------------------------------------------------------------------------------------
Selling, shipping, general and administrative 9,597,295 9,458,766 9,630,691
Interest costs incurred, less interest capitalized of
$0, $199,000, and $112,000 in 2000, 1999, and
1998, respectively 5,386,257 5,159,222 4,613,004
---------------------------------------------------------------------------------------------------------------------------
170,715,541 172,143,271 159,217,145
---------------------------------------------------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES 3,863,951 57,819 4,369,211
---------------------------------------------------------------------------------------------------------------------------
INCOME TAX EXPENSE (note 11):
Current 1,166,553 71,237 728,753
Deferred 330,208 26,181 946,247
---------------------------------------------------------------------------------------------------------------------------
1,496,761 97,418 1,675,000
---------------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) FROM CONTINUING OPERATIONS 2,367,190 (39,599) 2,694,211
---------------------------------------------------------------------------------------------------------------------------
DISCONTINUED OPERATIONS (note 3):
(Loss) Earnings from discontinued operations, adjusted
for applicable (benefit) expense for income taxes of
($979,455), ($385,006), and $158,000, respectively (1,636,233) (636,432) 305,267
Loss on sale of assets of discontinued operations,
adjusted for applicable benefit for income taxes of
$576,171 (976,099) -- --
---------------------------------------------------------------------------------------------------------------------------
(LOSS) EARNINGS FROM DISCONTINUED OPERATIONS (2,612,332) (636,432) 305,267
---------------------------------------------------------------------------------------------------------------------------
(LOSS) EARNINGS BEFORE EXTRAORDINARY ITEM (245,142) (676,031) 2,999,478
---------------------------------------------------------------------------------------------------------------------------
Extraordinary loss from early extinguishment of debt,
adjusted for applicable benefit for income taxes of
$129,607 (note 8) (211,463) -- --
---------------------------------------------------------------------------------------------------------------------------
NET (LOSS) EARNINGS $ (456,605) $ (676,031) $ 2,999,478
===========================================================================================================================
NET (LOSS) EARNINGS PER SHARE (note 13):
From continuing operations - basic and diluted $ .80 $ (.01) $ .92
From discontinued operations - basic and diluted (.89) (.22) .10
From extraordinary loss from early extinguishment of
debt-basic and diluted (.07) -- --
---------------------------------------------------------------------------------------------------------------------------
Net (loss) earnings per share - basic and diluted $ (.16) $ (.23) $ 1.02
===========================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<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, 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
Net loss -- -- -- (676,031) -- (676,031)
Cash dividends declared -
$.20 per share -- -- -- (587,272) -- (587,272)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCES at April 30, 1999 3,014,039 3,014,039 2,019,690 18,651,382 (412,551) 23,272,560
Net loss -- -- -- (456,605) -- (456,605)
Cash dividends declared -
$.16 per share -- -- -- (469,817) -- (469,817)
-----------------------------------------------------------------------------------------------------------------------------------
BALANCES at April 30, 2000 3,014,039 $ 3,014,039 $ 2,019,690 $ 17,724,960 $ (412,551) $ 22,346,138
===================================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended April 30,
--------------------------------------------------
2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) earnings $ (456,605) $ (676,031) $ 2,999,478
Adjustments to reconcile net (loss) earnings
to net cash provided by (used in) operating activities:
Depreciation and amortization 3,067,959 3,123,369 2,853,634
Deferred tax expense (benefit) 286,337 (79,548) 967,358
Gain on sales of real estate and property, plant,
and equipment (4,987,478) (25,847) (4,867,189)
Loss from discontinued operations 2,612,332 -- --
Changes in assets and liabilities:
Receivables, net 8,154,768 (10,125,120) (2,230,083)
Inventories, net -- (1,477,600) 62,901
Costs and earnings in excess of billings 868,998 2,449,499 (2,852,259)
Other current assets (5,844) 14,529 (146,511)
Other assets 488,734 (628,829) (1,112,638)
Trade and subcontractors payable (3,855,730) (1,053,404) 9,060,022
Accrued expenses 2,344,414 (830,032) 226,451
Accrued profit-sharing (1,150,248) (731,394) 194,951
Billings in excess of costs and earnings (1,658,700) 1,578,666 220,483
Other liabilities (8,201) 275,996 577,590
---------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) continuing operations 5,700,736 (8,185,746) 5,954,188
Net cash provided by discontinued operations 1,356,992 -- --
---------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 7,057,728 (8,185,746) 5,954,188
---------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales of real estate and property, plant,
and equipment 6,081,884 67,355 3,818,393
Proceeds from sale of property, plant and equipment of
discontinued operations 2,070,000 -- --
Additions to income-producing properties (9,463,803) (465,385) (16,045,209)
Additions to property, plant and equipment, net (444,996) (3,566,292) (8,911,039)
Repayments received on notes receivable 117,595 108,454 100,294
---------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,639,320) (3,855,868) (21,037,561)
---------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Short-term borrowings (repayments) proceeds, net (7,600,000) 8,048,222 --
Debt proceeds 9,503,137 234,570 32,145,583
Debt repayments (6,798,879) (1,328,567) (10,425,800)
Deferred loan costs paid (232,426) (117,259) (418,161)
Cash dividends (469,817) (587,272) (558,329)
Repurchases of common stock -- -- (42,000)
Proceeds from exercise of stock options -- -- 11,500
---------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (5,597,985) 6,249,694 20,712,793
---------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (179,577) (5,791,920) 5,629,420
Cash and cash equivalents at beginning of year 7,448,551 13,240,471 7,611,051
---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 7,268,974 $ 7,448,551 $ 13,240,471
===========================================================================================================================
Supplemental disclosure of noncash investing activities:
Transfer of income-producing property to property held for sale $ 33,404 $ 3,576,714 $ --
Supplemental disclosure of noncash financing activities:
Assumption of debt by purchasers in conjunction
with sale of properties $ 10,810,000 $ -- $ 5,733,899
Supplemental cash flow information:
Cash paid during the year for interest,
net of amounts capitalized $ 5,348,759 $ 5,218,298 $ 4,817,206
Cash (refunded) paid during the year for income taxes, net $ (250,703) $ 118,553 $ 726,733
===========================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2000, 1999, and 1998
(1) ORGANIZATION AND BUSINESS
Abrams Industries, Inc. (the "Company") was organized under Delaware
law in 1960. In 1984, the Company changed its state of incorporation from
Delaware to Georgia. The Company engages in (i) construction of retail and
commercial projects, and (ii) acquisition, investment, sale, development, and
redevelopment of income-producing properties. The Company's wholly owned
subsidiaries include Abrams Construction, Inc., the "Construction Segment," and
Abrams Properties, Inc. and subsidiaries, the "Real Estate Segment." Abrams
Fixture Corporation, the "Manufacturing Segment," another wholly owned
subsidiary, which manufactured store fixtures, bank fixtures and display units
for retail outlets, ceased operations during Fiscal Year 2000 (note 3).
Previously the Company engaged in property management of real estate.
In May 2000, the Company decided to outsource to third parties the asset and
property management of the Company's properties owned by the Real Estate
Segment. If contract negotiations are successfully completed, the asset
management of the properties will be contracted to jOjA Partners, LLC, a newly
formed entity in which the Company would own a minority interest.
(2) 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. All significant intercompany balances
and transactions have been eliminated in consolidation.
(b) 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
period. Actual results could differ from those estimates.
(c) Income recognition
------------------
Construction revenues 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.
The Company leases space in its income-producing properties to tenants, and
recognizes minimum base rentals as revenue, on a straight-line basis over
the lease terms. Tenants may also be required to pay additional rental
amounts based on property operating expenses. In addition, certain tenants
are required to pay incremental rental amounts based on store sales. These
percentage rents are recognized as earned.
Revenues from the sale of real estate are recognized at the time of closing.
Costs of sales related to real estate are based on the specific property
sold. When a portion or unit of a development property is sold, a
proportionate share of the total cost of the development is charged to cost
of sales.
Generally, revenues from the sale of manufactured goods were recognized on
the date products were shipped to the customer. Revenues from certain sales,
on which delivery was delayed at the customer's explicit request, were
recognized when conditions for revenue recognition were met.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
(d) Cash and cash equivalents
-------------------------
Cash and cash equivalents include money market funds and other financial
instruments. The Company considers all highly liquid debt instruments with
original maturities of three months or less to be cash equivalents.
In 1999, restricted cash consisted of a bond sinking fund to be used in the
next fiscal year to pay down the principal on industrial development revenue
bonds.
(e) Inventories
-----------
Inventories were 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 were previously established. At April 30, 2000, there was no
remaining inventory.
(f) 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.
(g) Income-producing properties and property, plant and equipment
-------------------------------------------------------------
Income-producing properties are stated at cost, 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 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.
(h) Land held for future development or sale
----------------------------------------
Land held for future development or sale is carried at cost.
(i) Deferred loan costs
-------------------
Costs incurred to obtain loans have been deferred and are being amortized
over the terms of the related loans.
(j) Impairment of long-lived assets and assets to be disposed of
------------------------------------------------------------
The Company reviews its long-lived assets and certain intangible assets 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. Assets to be disposed of are reported at the lower of
their carrying amount or fair value less cost to sell. Depreciation and
amortization are suspended during the sale period, which is not expected to
be greater than one year.
(k) 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.
<PAGE>
(l) 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-term nature 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.
(m) Reclassifications
-----------------
Certain reclassifications have been made to the 1999 and 1998 consolidated
financial statements to conform to classifications adopted in 2000.
(3) DISCONTINUED OPERATIONS
During the quarter ended January 31, 2000, the Board of Directors of the
Company decided to discontinue the operations of the Manufacturing Segment. For
the years ended April 30, 2000, 1999, and 1998, the Company reported net
(losses) earnings from discontinued operations of $(1,636,233), $(636,432), and
$305,267, respectively, net of applicable income taxes, related to the
Manufacturing Segment on the Consolidated Statements of Operations. In addition,
for the year ended April 30, 2000, the Company recorded a loss on the sale of
assets of discontinued operations, net of applicable taxes, of $976,099. The
loss on the sale of assets consisted of the disposal of the Manufacturing
Segment's machinery, equipment, furniture, raw materials inventory, and other
related assets. At April 30, 2000, the Manufacturing Segment had ceased all
operations and disposed of substantially all of its assets. The remaining assets
and liabilities of the Manufacturing Segment have been consolidated and
presented as Net assets of discontinued operations on the Consolidated Balance
Sheet at April 30, 2000.
In June 1999, the Company received notice from the Georgia State
Properties Commission that the Georgia World Congress Center Authority had made
the determination to acquire the Manufacturing Segment's former wood
manufacturing facility in Atlanta, Georgia. In October 1999, a Special Master
appointed by the court awarded the Company $4,500,000 for the property, which
amount was paid to the Manufacturing Segment. Both the State and the Company
have appealed the award amount, and at April 30, 2000, the ultimate outcome was
unknown. Pending resolution of the appeals, the Company has recorded the
deferred gain of approximately $2.76 million from this transaction as a
reduction of Net assets of discontinued operations at April 30, 2000.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
(4) INVENTORIES
The balances of major classes of inventory, net of their related valuation
reserves, at April 30 were as follows:
----------------------------
2000 1999
----------------------------
Finished goods $ -- $1,268,048
Work-in-progress -- 845,495
Raw materials -- 859,120
----------------------------
$ -- $2,972,663
============================
There was no inventory as of April 30, 2000, since all inventory was sold
or disposed of in conjunction with the discontinuance of the manufacturing
operations (see note 3).
(5) 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 and earnings
recognized on contracts in progress at April 30 were:
<TABLE>
----------------------------
2000 1999
----------------------------
<S> <C> <C>
Costs and earnings in excess of billings:
Accumulated costs and earnings $35,370,318 $27,841,460
Amounts billed 33,051,216 24,653,360
------------------------------
$ 2,319,102 $ 3,188,100
==============================
Billings in excess of costs and earnings:
Amounts billed $31,111,031 $33,961,588
Accumulated costs and earnings 29,821,917 31,013,774
------------------------------
$ 1,289,114 $ 2,947,814
==============================
</TABLE>
(6) PROPERTY HELD FOR SALE
As of April 30, 2000, the Company had one outlot classified as held for
sale. As of April 30, 1999, the Company had classified its shopping center
located in Newnan, Georgia, and its former wood manufacturing facility located
in Atlanta, Georgia, as property held for sale.
The shopping center subsequently was sold on May 14, 1999. The Company
recognized a pre-tax gain of approximately $2.9 million on this sale. The 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 proceeds were used in July 1999, to purchase an
approximately 174,000 square foot shopping center located in Jacksonville,
Florida, for $9,000,000 (note 9).
<PAGE>
The results of operations for the year ended April 30, 1999, for the Real
Estate Segment's shopping center that was held for sale at April 30, 1999, are
summarized below:
Revenues $1,024,152
Operating expenses, including depreciation
(until classified as held for sale) and interest 746,872
----------
Results of operations $ 277,280
==========
(7) INCOME-PRODUCING PROPERTIES
Income-producing properties and their estimated useful lives at April 30
were as follows:
<TABLE>
---------------------------------------------------------------------------------------------
Estimated
useful lives 2000 1999
---------------------------------------------------------------------------------------------
<S> <C> <C>
Land $19,791,981 $15,883,977
Buildings and improvements 7-39 years 55,585,414 50,034,275
------------------------------
75,377,395 65,918,252
Less - accumulated depreciation
and amortization 15,523,299 13,606,645
------------------------------
$59,854,096 $52,311,607
==============================
</TABLE>
(8) PROPERTY, PLANT AND EQUIPMENT
The major components of property, plant and equipment and their estimated
useful lives at April 30 were as follows:
<TABLE>
---------------------------------------------------------------------------------------------
Estimated
useful lives 2000 1999
---------------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 92,225 $ 1,984,405
Buildings and improvements 3-39 years 912,430 8,579,274
Machinery and equipment 3-10 years 2,367,815 7,407,729
------------------------------
3,372,470 17,971,408
Less - accumulated depreciation 1,770,111 5,603,012
------------------------------
$ 1,602,359 $12,368,396
==============================
</TABLE>
In April 2000, the Company's Real Estate Segment sold the manufacturing
facility in Lithia Springs, Georgia, to an unrelated third party. The sales
price was approximately $10.9 million, and the Company recognized a pre-tax gain
on this sale of approximately $2.4 million, which is included in Income from
continuing operations. In conjunction with this sale, the Company recorded an
extraordinary loss of $211,463, net of income taxes, from the early
extinguishment of debt on the property.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
(9) LEASES AND MORTGAGE NOTES PAYABLE
As of April 30, 2000, the Company owned five shopping centers and an
office park, which 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 mortgage note and leaseback arrangement contains an
exculpatory provision limiting the Company's liability to its interest in the
respective mortgaged property or lease.
All of the leaseback centers are leased to the Kmart Corporation, and
Kmart is a tenant in four of the seven Company-owned shopping centers. The owned
shopping centers are leased to tenants for terms expiring from fiscal year 2001
to 2040, while leases on the owned office properties expire from fiscal years
2001 to 2006. 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 may provide for renewal options and for contingent rentals if the tenants'
sales volumes exceed predetermined amounts. In some 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 2000, 1999, and 1998, was approximately $8,622,000, $8,440,000,
and $7,438,000, respectively. Base rental revenue received from leaseback
centers in 2000, 1999, and 1998, was approximately $2,620,000, $2,620,000, and
$2,620,000, respectively. Contingent rental revenue received on all centers in
2000, 1999, and 1998, was approximately $152,000, $171,000, and $195,000,
respectively.
Approximate future minimum annual rental receipts from all rental
properties are as follows:
Years ending April 30, Owned Leaseback
--------------------------------------------------------
2001 $ 8,640,000 $ 2,620,000
2002 8,024,000 2,138,000
2003 7,269,000 1,911,000
2004 6,186,000 1,323,000
2005 5,551,000 797,000
Thereafter 41,640,000 2,756,000
--------------------------------------------------------
$77,310,000 $11,545,000
========================================================
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> <C>
2001 $ 956,016 $ 3,045,081 $ 2,136,000
2002 13,234,243 3,063,343 1,719,000
2003 917,954 1,727,940 1,536,000
2004 7,511,694 1,653,951 1,109,000
2005 769,675 1,571,862 677,000
Thereafter 11,600,375 13,629,405 2,351,000
--------------------------------------------------------------------------------------
$34,989,957 $24,691,582 $ 9,528,000
======================================================================================
</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 9.5%
with a weighted average rate of 8.41% at April 30, 2000.
<PAGE>
The outstanding principal balance on the Newnan, Georgia shopping center
mortgage loan of $5,331,968 was included in the current maturities of long-term
debt at April 30, 1999, as the property was classified as Property held for sale
in the accompanying Consolidated Balance Sheet at April 30, 1999 (note 6). In
May 1999, the Company sold this shopping center (note 6), and the mortgage loan
was repaid. The proceeds from this sale were used to purchase a shopping center
in Jacksonville, Florida, in July 1999, for $9,000,000. This purchase was also
financed with cash held by the Company, and by using the Company's lines of
credit. Subsequently, the Company closed on a permanent mortgage loan secured by
the property, and used the proceeds to pay back the lines of credit. The
permanent loan, in the amount of $9,500,000, bears interest at 7.375% and is
scheduled to be fully amortized over twenty years. Loan proceeds received in
excess of the purchase price were used to pay financing costs, and are available
for use for tenant improvements and commissions on new leases, if any. The loan
may be called at any time by the lender after September 1, 2002. If the loan
were called, the Company would have up to thirteen months to repay the principal
amount of the loan without penalty. In conjunction with the loan, an Additional
Interest Agreement was executed which entitles the lender to be paid additional
interest equal to fifty percent of the quarterly net cash flow and fifty percent
of the appreciation in the property upon sale or refinance, as defined in the
Agreement. The liability, which is included in Other liabilities, related to the
lender's fifty-percent share of the appreciation in the property was $1,989,704
at April 30, 2000.
(10) OTHER LONG-TERM DEBT AND CREDIT FACILITIES
Other long-term debt at April 30 was as follows:
<TABLE>
2000 1999
--------------------------------
<S> <C> <C>
Construction loan bearing interest at the prime rate plus .375% (9.375% at
April 30, 2000); requires monthly principal and interest payments of $87,729;
matures August 31, 2001; secured by real property and assignment of
leases and rents; guaranteed by a subsidiary of the Company $ 8,692,094 $ 8,963,340
Amendment to construction loan shown above currently permitting borrowings
of up to $4,942,419; bearing interest at the prime rate plus .375% (9.375% at
April 30, 2000); requires monthly principal and interest payments of
$42,113; matures August 31, 2001; secured by real property and assignment
of leases and rents; guaranteed by a subsidiary of the Company 4,676,948 4,764,593
Note payable to bank with variable interest rate of LIBOR plus 2% (8.19% at
April 30, 2000); requires monthly principal and interest payments of
$41,047; matures August 31, 2001; secured by real property and assignment
of leases and rents; guaranteed by a subsidiary of the Company 4,933,813 5,028,153
Industrial development revenue bonds with a variable interest rate, repriced
on a weekly basis, based on rates available for debt instruments of a
similar nature and comparable terms (5.05% at April 30, 1999); required
monthly interest only payments until November 1, 1998, thereafter interest
and bond sinking fund payments required monthly; secured by irrevocable
letter of credit -- 11,000,000
Industrial development bond bearing interest at 79% of prime rate (6.12% at
April 30, 1999); required quarterly principal payments of $57,143 plus
interest; secured by real property -- 228,564
--------------------------------
Total other long-term debt 18,302,855 29,984,650
Less current maturities 407,159 878,139
--------------------------------
Total other long-term debt, excluding current maturities $17,895,696 $29,106,511
================================
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
The future minimum principal payments due on other long-term debt are as
follows:
Years ending April 30,
---------------------------------------------
2001 $ 407,159
2002 17,895,696
2003 --
2004 --
2005 --
Thereafter --
---------------------------------------------
$18,302,855
=============================================
At April 30, 2000, the Company had commitments from a bank for unsecured
lines of credit totaling $12,000,000, of which $500,000 was restricted as it
secures a letter of credit described below. These lines of credit bear interest
at the prime rate (9.00% at April 30, 2000), and have a commitment fee of 3/8%
on the unused portion. At April 30, 2000, no amount was outstanding on these
lines of credit. In addition, the Company had a commitment for an unsecured
$1,000,000 line of credit from a bank, of which none was outstanding at April
30, 2000. This line of credit bears interest at the prime rate or at LIBOR
(6.19% at April 30, 2000) plus 2.7%, and has a commitment fee of 3/8% on the
unused portion. The Company previously also had a commitment for a line of
credit, totaling $2,500,000, secured by the Manufacturing Segment's inventory
and receivables, of which $448,222 was outstanding at April 30, 1999. The
secured line of credit bore interest at the prime rate or at LIBOR plus 2.7%,
and had a 3/10% commitment fee on the unused portion. This line of credit was
terminated at the Company's request in Fiscal Year 2000 due to discontinuance of
the Manufacturing Segment (note 3).
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 originally issued on July 30, 1997,
and matures on November 30, 2000. The mortgage lender is allowed to draw on the
letter in order to reduce the related mortgage loan if certain leasing
requirements are not met. The letter of credit is secured by a bank line of
credit, discussed above.
In February 1998, the Company entered into two interest rate swap
agreements related to the $11 million industrial development revenue bonds, as
reflected above. The two interest rate swap agreements were terminated in April
2000 in connection with the sale of the manufacturing facility located in Lithia
Springs, Georgia. As a result of the termination of the swap agreements, the
Company recorded a gain of $157,000.
The outstanding principal balance of $228,564 at April 30, 1999, on the
industrial development bond payable was included in the current maturities of
long-term debt, as the former Atlanta, Georgia wood manufacturing facility
securing this bond was included in Property held for sale in the accompanying
Consolidated Balance Sheet at April 30, 1999 (note 6). This facility was taken
by eminent domain in October 1999.
<PAGE>
(11) INCOME TAXES
The provision for income tax expense (benefit) consists of the following:
<TABLE>
============================================================================================
Current Deferred Total
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Year ended April 30, 2000:
Federal $ 818,086 $ 444,653 $ 1,262,739
State and local 348,467 (114,445) 234,022
--------------------------------------------------------------------------------------------
$ 1,166,553 $ 330,208 $ 1,496,761
============================================================================================
Year ended April 30, 1999:
Federal $ (152,609) $ 101,527 $ (51,082)
State and local 223,846 (75,346) 148,500
--------------------------------------------------------------------------------------------
$ 71,237 $ 26,181 $ 97,418
============================================================================================
Year ended April 30, 1998:
Federal $ 578,044 $ 821,156 $ 1,399,200
State and local 150,709 125,091 275,800
--------------------------------------------------------------------------------------------
$ 728,753 $ 946,247 $ 1,675,000
============================================================================================
</TABLE>
Total income tax expense (benefit) recognized in the Consolidated
Statements of Operations differs from the amounts computed by applying the
Federal income tax rate of 34% to pretax earnings (loss) as a result of the
following:
<TABLE>
<CAPTION>
==========================================================================================================
Years ended
April 30,
---------------------------------------------------------------------------------------------------------
2000 1999 1998
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit) $ 1,313,743 $ 19,659 $ 1,485,535
Increase in income taxes resulting from:
State and local income taxes, net
of Federal income tax benefit 154,454 98,010 181,907
Other, net 28,564 (20,251) 7,558
---------------------------------------------------------------------------------------------------------
$ 1,496,761 $ 97,418 $ 1,675,000
=========================================================================================================
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
The tax effect of temporary differences that give rise to significant
portions of the deferred income tax assets and deferred income tax liabilities
at April 30 are presented below:
<TABLE>
<CAPTION>
===================================================================================================
2000 1999
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred income tax assets:
Inventories, primarily because of additional costs
capitalized for tax purposes and the allowance for
decline in net realizable value $ -- $ 275,494
Items not currently deductible for tax purposes:
Provision for impairment on income-
producing property 1,026,816 1,026,816
Net operating loss carryforwards, Federal 148,267 --
Net operating loss carryforwards, state 391,250 404,585
Capitalized costs 519,317 594,156
Accrued directors' fees 134,356 223,032
Deferred compensation plan 401,724 419,740
Compensated absences 90,422 174,385
Other accrued expenses 433,425 413,233
Other 492,098 419,524
---------------------------------------------------------------------------------------------------
Gross deferred income tax assets 3,637,675 3,950,965
---------------------------------------------------------------------------------------------------
Deferred income tax liabilities:
Income-producing properties and property, plant and
equipment, principally because of differences in
depreciation and capitalized interest 1,933,291 2,355,180
Gain on real estate sales structured as tax-deferred
like-kind exchanges 4,241,366 3,500,887
Profit on installment sale 61,247 94,265
Other 165,032 90,575
---------------------------------------------------------------------------------------------------
Gross deferred income tax liabilities 6,400,936 6,040,907
---------------------------------------------------------------------------------------------------
Net deferred income tax liability $2,763,261 $2,089,942
===================================================================================================
</TABLE>
The valuation allowance was $0 at April 30, 2000, and 1999.
For the year ended April 30, 2000, $188,316 of net deferred tax asset has
been reclassified to net assets of discontinued operations (note 3).
The income tax benefit of $1,555,626 related to discontinued operations
consists of current tax benefit of $1,710,421 and deferred expense of $154,795.
The Company has a Federal net operating loss carryforward of $436,081
which expires in 2020. Under the Internal Revenue Code, if certain substantial
changes in the Company's ownership occur, there are annual limitations on the
amount of loss carryforwards.
(12) DEFERRED PROFIT-SHARING PLAN
The Company has a deferred Profit-Sharing Plan (the "Plan") which covers
substantially all of its employees. Funded employer contributions to the Plan
for 2000, 1999, and 1998, were approximately $678,000, $814,000, and $843,000,
respectively. The net assets in the Plan, which is administered by an
independent trustee, were approximately $17,132,000, $18,172,000, and
$18,962,000, at April 30, 2000, 1999, and 1998, respectively.
<PAGE>
(13) NET (LOSS) EARNINGS PER SHARE
The following tables set forth the computations of basic and diluted net
(loss) earnings per share:
<TABLE>
<CAPTION>
For the year ended April 30, 2000
-------------------------------------------------
(Loss) earnings Shares Per share
(numerator) (denominator) amount
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic EPS - earnings per share from continuing operations $ 2,367,190 2,936,356 $ .80
Basic EPS - loss per share from discontinued operations (2,612,332) 2,936,356 (.89)
Basic EPS - extraordinary loss from early extinguishment
of debt (211,463) 2,936,356 (.07)
Effect of dilutive securities -- -- --
----------------------------------------------------------------------------------------------------------------
Diluted EPS - loss per share plus assumed conversions $ (456,605) 2,936,356 $ (.16)
================================================================================================================
<CAPTION>
For the year ended April 30, 1999
--------------------------------------------------
Loss Shares Per share
(numerator) (denominator) amount
----------------------------------------------------------------------------------------------------------------
Basic EPS - loss per share from continuing operations $ (39,599) 2,936,356 $ (.01)
Basic EPS - loss per share from discontinued operations (636,432) 2,936,356 (.22)
Effect of dilutive securities -- -- --
----------------------------------------------------------------------------------------------------------------
Diluted EPS - loss per share plus assumed conversions $ (676,031) 2,936,356 $ (.23)
================================================================================================================
<CAPTION>
For the year ended April 30, 1998
--------------------------------------------------
Earnings Shares Per share
(numerator) (denominator) amount
-----------------------------------------------------------------------------------------------------------------
Basic EPS - earnings per share from continuing operations $ 2,694,211 2,937,712 $ .92
Basic EPS - earnings per share from discontinued operations 305,267 2,937,712 .10
Effect of dilutive securities - weighted-average
outstanding stock options -- 3,851 --
----------------------------------------------------------------------------------------------------------------
Diluted EPS - earnings per share plus assumed conversions $ 2,999,478 2,941,563 $ 1.02
================================================================================================================
</TABLE>
(14) OPERATING SEGMENTS
The Company had two operating segments at April 30, 2000, Construction and
Real Estate. The Construction Segment provides construction services for
commercial and industrial projects. The Real Estate Segment develops or acquires
income-producing properties for investment, and has historically provided
property management for the properties after development or acquisition. As of
July 2000, the Company was in the process of outsourcing its asset and property
management functions (note 1).
The operating segments are managed separately and have maintained separate
personnel due to the differing products offered by each segment. Management of
each of the segments evaluates and monitors the performance of the segments
based on the earnings or losses prior to income taxes. The significant
accounting policies utilized by the operating segments are the same as those
summarized in note 2 to the accompanying Consolidated Financial Statements of
the Company.
As of April 30, 1999, the Company had a third operating segment, which
manufactured store fixtures for retail outlets, display fixtures for
point-of-sale merchandising, and other products. The Manufacturing Segment was
discontinued during fiscal year 2000 (note 3).
Total revenue by operating 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.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
Segment assets are those that are used in the Company's operations in each
segment, including receivables due from other segments. The Parent Company's
Segment assets are primarily cash and cash equivalents, cash surrender value of
life insurance, receivables, and assets related to the deferred compensation
plans. Assets attributable to discontinued operations are also included in the
Parent Company's Segment assets.
Operating earnings (loss) from continuing operations 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. It excludes any extraordinary items. Parent expenses and income
taxes have not been allocated to the other subsidiaries.
The Company had revenues from The Home Depot, Inc., primarily representing
revenues in the Construction Segment, aggregating 49%, 53%, and 61% of
consolidated revenues in 2000, 1999, and 1998, respectively.
<TABLE>
<CAPTION>
Construction Real Estate Parent Eliminations Consolidated
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2000
Revenues from unaffiliated customers $ 143,915,901 $ 30,217,185 $ -- $ -- $ 174,133,086
Interest and other income 168,005 231,261 67,630 (20,490) 446,406
Intersegment revenue -- 1,576,990 -- (1,576,990) --
----------------------------------------------------------------------------------------------------------------------------------
Total revenue from continuing
operations $ 144,083,906 $ 32,025,436 $ 67,630 $ (1,597,480) $ 174,579,492
==================================================================================================================================
Operating earnings (loss) from continuing
operations $ 3,147,237 $ 4,807,481 $ (3,700,003) $ (390,764) $ 3,863,951
==================================================================================================================================
Segment assets $ 26,551,266 $ 72,311,374 $ 10,716,008 $ (6,732,781) $ 102,845,867
==================================================================================================================================
Interest expense $ 30,747 $ 5,382,720 $ 51,562 $ (78,772) $ 5,386,257
==================================================================================================================================
Depreciation and amortization $ 368,574 $ 2,508,117 $ 28,459 $ (34,896) $ 2,870,254
==================================================================================================================================
Capital expenditures $ 439,505 $ 9,463,803 $ 5,491 $ -- $ 9,908,799
==================================================================================================================================
1999
Revenues from unaffiliated customers $ 159,273,393 $ 12,449,850 $ -- $ -- $ 171,723,243
Interest and other income 223,196 267,689 40,517 (53,555) 477,847
Intersegment revenue 1,114,823 1,485,038 -- (2,599,861) --
----------------------------------------------------------------------------------------------------------------------------------
Total revenue from continuing
operations $ 160,611,412 $ 14,202,577 $ 40,517 $ (2,653,416) $ 172,201,090
==================================================================================================================================
Operating earnings (loss) from continuing
operations $ 4,084,633 $ (226,053) $ (3,074,905) $ (725,856) $ 57,819
==================================================================================================================================
Segment assets $ 33,451,167 $ 84,572,912 $ 21,787,666 $ (13,679,205) $ 126,132,540
==================================================================================================================================
Interest expense $ 1,053 $ 5,144,444 $ 13,962 $ (237) $ 5,159,222
==================================================================================================================================
Depreciation and amortization $ 326,053 $ 2,383,194 $ 30,634 $ (37,326) $ 2,702,555
==================================================================================================================================
Capital expenditures $ 470,807 $ 2,740,563 $ 77,119 $ -- $ 3,288,489
==================================================================================================================================
1998
Revenues from unaffiliated customers $ 141,453,025 $ 21,361,992 $ -- $ -- $ 162,815,017
Interest and other income 139,675 519,538 155,335 (43,209) 771,339
Intersegment revenue 5,026,181 200,615 -- (5,226,796) --
-----------------------------------------------------------------------------------------------------------------------------------
Total revenue from continuing
operations $ 146,618,881 $ 22,082,145 $ 155,335 $ (5,270,005) $ 163,586,356
==================================================================================================================================
Operating earnings (loss) from continuing
operations $ 3,506,219 $ 2,882,490 $ (2,130,310) $ 110,812 $ 4,369,211
==================================================================================================================================
Segment assets $ 30,834,340 $ 83,017,169 $ 17,655,835 $ (10,197,900) $ 121,309,444
==================================================================================================================================
Interest expense $ 5,638 $ 4,604,095 $ 54,506 $ (51,235) $ 4,613,004
==================================================================================================================================
Depreciation and amortization $ 276,259 $ 2,029,121 $ 28,825 $ (48,485) $ 2,285,720
==================================================================================================================================
Capital expenditures $ 771,808 $ 24,021,793 $ 81,483 $ -- $ 24,875,084
==================================================================================================================================
</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<F1>
Year ended
April 30, 2000 $122,396 $120,714 $ -- $ 32,333 <F2> $210,777
--------------------------------------------------------------------------------------------------------------------------------
Year ended
April 30, 1999 $134,870 $ 96,853 $ -- $109,327 <F2> $122,396
--------------------------------------------------------------------------------------------------------------------------------
Year ended
April 30, 1998 $ 65,584 $ 90,496 $ -- $ 21,210 <F2> $134,870
--------------------------------------------------------------------------------------------------------------------------------
INVENTORY RESERVES<F1>
Year ended
April 30, 2000 $395,425 $ -- $ -- $395,425 <F3> $ --
--------------------------------------------------------------------------------------------------------------------------------
Year ended
April 30, 1999 $317,641 $662,343 $ -- $584,559 <F3> $395,425
--------------------------------------------------------------------------------------------------------------------------------
Year ended
April 30, 1998 $374,447 $147,564 $ -- $204,370 <F3> $317,641
--------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Includes amounts related to discontinued operations. See note 3 to the
Consolidated Financial Statements.
<F2> Allowance for doubtful accounts deductions resulted from the subsequent
write-off and/or recovery of the related receivable.
<F3> Inventory reserve deductions resulted from the subsequent sale and/or
write-off of the related inventory. All inventory was disposed of as of
April 30, 2000, in conjunction with the discontinuance of the
Manufacturing Segment's operations.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
APRIL 30, 2000
Costs
Capitalized
Subsequent
Initial Cost to Company to Acquisition
-------------------------- --------------- ------
Building
and
Description Encumbrances Land Improvements Improvements Land
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME-PRODUCING PROPERTIES:
Shopping Center - Jackson, MI $ 3,175,010 $ 401,195 $ 1,788,183 $ 1,167,903 $ 453,293
Kmart - Morton, IL 2,974,331 18,005 2,767,765 -- 18,005
Kmart - Columbus, GA 2,398,956 11,710 2,356,920 10,078 11,710
Shopping Center - Englewood, FL 12,557,693 6,072,805 8,823,506 (74,213) 6,072,805
Shopping Center - North Fort Myers, FL 13,369,042 5,940,143 11,290,778 2,963,669 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 -- -- -- -- --
Leaseback Shopping Center - Minneapolis, MN -- -- -- 40,778 --
Office Building - Atlanta, GA 4,933,813 660,000 4,338,102 676,269 660,000
Office Park - Marietta, GA 6,346,536 1,750,000 6,417,275 353,447 1,750,000
Shopping Center - Cincinnati, OH -- 1,699,410 617,102 234,818 1,699,410
Shopping Center - Jacksonville, FL 9,339,295 3,908,004 5,170,420 -- 3,908,004
-----------------------------------------------------------------------------------------------------------------------------------
55,094,676 20,461,272 43,741,839 5,688,724 19,791,981
-----------------------------------------------------------------------------------------------------------------------------------
PROPERTY HELD FOR SALE:
Land - Davenport, IA -- 33,404 -- -- 33,404
-----------------------------------------------------------------------------------------------------------------------------------
LAND HELD FOR FUTURE DEVELOPMENT OR SALE:
Davenport, IA -- 150,168 -- -- 150,168
Louisville, KY -- 80,011 -- -- 80,011
Oakwood, GA -- 234,089 -- 543,330 777,419
North Fort Myers, FL -- 2,760,187 -- 345,325 3,105,513
Jackson, MI -- -- -- 74,687 74,687
-----------------------------------------------------------------------------------------------------------------------------------
-- 3,224,455 -- 963,342 4,187,798
-----------------------------------------------------------------------------------------------------------------------------------
$55,094,676 $ 23,719,131 $ 43,741,839 $ 6,652,066 $24,013,183
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
APRIL 30, 2000 (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>
Description
----------------------------------------------------------------------------------------------------------------------------------
INCOME-PRODUCING PROPERTIES:
Shopping Center - Jackson, MI $ 2,956,086 $ 89,866 $ 3,499,245 $ 2,004,070 1972, 1996 -- 39 years
Kmart - Morton, IL 2,767,764 -- 2,785,769 2,214,266 1980, 1992 -- 25 years
Kmart - Columbus, GA 2,366,998 238,970 2,617,678 2,037,164 1980, 1988 -- 25 years
Shopping Center - Englewood, FL 8,749,293 1,346,273 16,168,371 3,398,077 1990 -- 32 years
Shopping Center - North Fort Myers, FL 14,263,401 4,470,789 23,952,944 4,430,021 1993, 1996 -- 31.5 years
Leaseback Shopping Center - Davenport, IA 195,411 -- 195,411 119,744 1995 -- 7 years
Leaseback Shopping Center - Jacksonville, FL 42,151 -- 42,151 12,645 1994 -- 25 years
Leaseback Shopping Center - Orange Park, FL 163,218 -- 163,218 130,326 1995 -- 7 years
Leaseback Shopping Center - W. St. Paul, MN 86,983 -- 86,983 37,984 1996 -- 8 years
Leaseback Shopping Center - Bayonet Point, FL -- -- -- -- 1997 -- --
Leaseback Shopping Center - Minneapolis, MN 40,778 -- 40,778 3,818 1997 -- 15 years
Office Building - Atlanta, GA 5,014,371 -- 5,674,371 483,523 1974, 1997 <F6> 1997 39 years
Office Park - Marietta, GA 6,770,722 -- 8,520,722 503,050 1980, 1985 <F7> 1997 39 years
Shopping Center - Cincinnati, OH 851,920 -- 2,551,330 38,250 1982 <F7> 1998 39 years
Shopping Center - Jacksonville, FL 5,170,420 -- 9,078,424 110,361 1985 <F7> 1999 39 years
---------------------------------------------------------------------------------------------------
49,439,516 6,145,898 75,377,395 15,523,299
---------------------------------------------------------------------------------------------------
PROPERTY HELD FOR SALE
Land - Davenport, IA -- -- 33,404 -- -- 1977 --
---------------------------------------------------------------------------------------------------
LAND HELD FOR FUTURE DEVELOPMENT OR SALE:
Davenport, IA -- -- 150,168 -- -- 1977 --
Louisville, KY -- -- 80,011 -- -- 1979 --
Oakwood, GA -- 16,644 794,063 -- -- 1987 --
North Fort Myers, FL -- -- 3,105,513 -- -- 1994 --
Jackson, MI -- -- 74,687 -- -- 1997 --
--------------------------------------------------------------------------------------------------
-- 16,644 4,204,442 --
--------------------------------------------------------------------------------------------------
$49,439,516 $ 6,162,542 $79,615,241 $15,523,299
==================================================================================================
</TABLE>
<PAGE>
Reconciliations of total real estate carrying value and accumulated
depreciation for the three years ended April 30, 2000, are as follows:
<TABLE>
<CAPTION>
Real Estate Accumulated Depreciation
----------------------------------------- -------------------------------------------
2000 1999 1998 2000 1999 1998
----------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR $76,756,798 $76,291,413 $69,380,403 $16,587,209 $14,791,028 $17,462,301
----------------------------------------- -------------------------------------------
ADDITIONS DURING YEAR
Real estate 9,459,144<F2> 465,385 16,803,252 <F3> -- -- --
Depreciation -- -- -- 1,916,654 1,796,181 1,800,747
----------------------------------------- ------------------------------------------
9,459,144 465,385 16,803,252 1,916,654 1,796,181 1,800,747
----------------------------------------- ------------------------------------------
DEDUCTIONS DURING YEAR
Accumulated depreciation on
properties sold or transferred -- -- -- 2,980,564 -- 4,472,020
Carrying value of real estate
sold, transferred, or retired 6,600,701 <F4> -- 9,892,242 <F5> -- -- --
----------------------------------------- ------------------------------------------
6,600,701 -- 9,892,242 2,980,564 -- 4,472,020
----------------------------------------- ------------------------------------------
BALANCE AT CLOSE OF YEAR $79,615,241 $76,756,798 $76,291,413 $15,523,299 $16,587,209 $14,791,028
========================================= ==========================================
NOTES:
<FN>
<F1> The aggregated cost for land and building and improvements for federal
income tax purposes at April 30, 2000, is $66,204,310.
<F2> Primarily represents the acquisition of a shopping center in Jacksonville,
Florida.
<F3> Primarily represents the acquisitions of an office building in Atlanta,
Georgia; an office park in Marietta, Georgia; and a shopping center in
Cincinnati, Ohio.
<F4> Primarily represents the sale of a shopping center in Newnan, Georgia.
<F5> Primarily represents sales of two freestanding Kmarts in Newark, Ohio; and
Tifton, Georgia; and a shopping center located in Oakwood, Georgia.
<F6> Constructed by others in 1974, redeveloped by the Company in 1997.
<F7> Constructed by others.
</FN>
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT AUDITORS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
See Form 8-K, Current Report, filed October 14, 1999, reporting changes in
registrant's certifying accountants.
<PAGE>
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 2000 Annual Meeting of Shareholders, will be filed with the Securities
and Exchange Commission under a separate filing.
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:
Report of Independent Accountants and Independent Auditor's Report
Consolidated Balance Sheets at April 30, 2000, and 1999
Consolidated Statement of Operations for the Years Ended April 30, 2000,
1999, and 1998
Consolidated Statements of Shareholders' Equity for the Years Ended
April 30, 2000, 1999, and 1998
Consolidated Statements of Cash Flows for the Years Ended April 30, 2000,
1999, and 1998
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), Amendments to Bylaws (8)
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. Directors Deferred Compensation Plan (4)#
10c. Edward M. Abrams Split Dollar Life Insurance Agreements, dated
July 29, 1991 (5)#
10d. Joseph H. Rubin Split Dollar Life Insurance Agreement, dated August
27, 1991 (5)#
10e. Bernard W. Abrams Split Dollar Life Insurance Agreement, dated July
16, 1993 (6)#
10f. Bernard W. Abrams Employment Agreement, dated August 23, 1995 (7)#
10g. Edward M. Abrams Employment Agreement, dated November 18, 1998 (9)#
10h. Lease Agreement between Development Authority of Douglas County,
Georgia, and Abrams Riverside, LLC, dated as of November 1, 1997 (9)
10i. Letter of Credit and Reimbursement Agreement by and between Abrams
Riverside, LLC, and NationsBank, N.A., dated as of November 1, 1997
(9)
10j. Amendment to Letter of Credit and Reimbursement Agreement, dated
September 1, 1998 (9)
10k. Second Amendment to Letter of Credit and Reimbursement Agreement,
dated as of October 31, 1998 (9)
10l. Guaranty, dated as of November 1, 1997, executed and delivered by
Abrams Properties, Inc. (the Guarantor) in favor of NationsBank,
N.A. (9)
10m. Guaranty, dated as of November 1, 1997, executed and delivered by
Abrams Industries, Inc. (the Guarantor) in favor of NationsBank,
N.A. (9)
10n. Joseph H. Rubin Severance and Consulting Agreement, dated July 13,
1999#
13. Annual Report to Shareholders for the fiscal year ended April 30,
2000
21. List of the Company's Subsidiaries (9)
27. Financial Data Schedules (For SEC use only)
99. Proxy Statement for 2000 Annual Meeting of Shareholders
<PAGE>
Explanation of Exhibits
(1) This exhibit is incorporated by reference to the Company's Form 10-K
for the year ended April 30, 1985.
(2) This exhibit is incorporated by reference to the Company's Form 10-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, 1991.
(5) These exhibits are incorporated by reference to the Company's Form
10-K for the year ended April 30, 1993.
(6) This exhibit is incorporated by reference to the Company's Form 10-K
for the year ended April 30, 1994.
(7) This exhibit is incorporated by reference to the Company's Form 10-Q
for the quarter ended October 31, 1995.
(8) This exhibit is incorporated by reference to the Company's Form 10-K
for the year ended April 30, 1998.
(9) These exhibits are incorporated by reference to the Company's Form
10-K for the year ended April 30, 1999.
# Management compensatory plans or arrangement.
(b) Reports on Form 8-K: None filed during the fourth quarter of fiscal 2000.
(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 26, 2000 By:/s/ Alan R. Abrams
------------------------------------
Alan R. Abrams
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 26, 2000 /s/ Alan R. Abrams
------------------------------------
Alan R. Abrams
Co-Chairman of the Board of Directors,
Chief Executive Officer
Dated: July 26, 2000 /s/ J. Andrew Abrams
------------------------------------
J. Andrew Abrams
Co-Chairman of the Board of Directors
Dated: July 26, 2000 /s/ David L. Abrams
------------------------------------
David L. Abrams
Director
Dated: July 26, 2000 /s/ Edward M. Abrams
------------------------------------
Edward M. Abrams
Director
Dated: July 26, 2000 /s/ Paula Lawton Bevington
------------------------------------
Paula Lawton Bevington
Director
Dated: July 26, 2000 /s/ Gilbert L. Danielson
------------------------------------
Gilbert L. Danielson
Director
Dated: July 26, 2000 /s/ Melinda S. Garrett
------------------------------------
Melinda S. Garrett
Director, Chief Financial Officer
and Chief Accounting Officer
<PAGE>
Dated: July 26, 2000 /s/ Robert T. McWhinney, Jr.
------------------------------------
Robert T. McWhinney, Jr.
Director
Dated: July 26, 2000 /s/ B. Michael Merritt
------------------------------------
B. Michael Merritt
Director
Dated: July 26, 2000 /s/ L. Anthony Montag
------------------------------------
L. Anthony Montag
Director
Dated: July 26, 2000 /s/ Felker W. Ward, Jr.
------------------------------------
Felker W. Ward, Jr.
Director
