SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
FORM 10-Q
QUARTERLY REPORT
================================================================================
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended Commission File No.
JANUARY 31, 2000 0-10146
- ---------------------- --------------------
ABRAMS INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Georgia 58-0522129
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1945 The Exchange, Suite 300, Atlanta, Georgia 30339
---------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
(770) 953-0304
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
---------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No /_/
The number of shares of $1.00 par value Common Stock of the Registrant
outstanding as of February 29, 2000, was 2,936,356.
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
ABRAMS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
January 31, 2000 April 30, 1999
---------------- --------------
ASSETS
- ------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (note 2) $ 4,439,975 $ 7,448,551
Receivables (note 3) 20,772,337 31,402,635
Less: Allowance for doubtful accounts (43,791) (122,396)
Inventories, net -- 2,972,663
Costs and earnings in excess of billings 2,800,123 3,188,100
Net assets of discontinued operations (note 4) 1,869,879 --
Property held for sale (notes 4, 5 and 6) 8,720,967 5,268,478
Deferred income taxes 470,993 820,829
Other 910,295 599,715
------------- -------------
Total current assets 39,940,778 51,578,575
------------- -------------
INCOME-PRODUCING PROPERTIES, net (note 6) 60,227,486 52,311,607
PROPERTY, PLANT AND EQUIPMENT, net 1,535,883 12,368,396
LAND HELD FOR FUTURE DEVELOPMENT OR SALE 4,204,442 4,237,845
OTHER ASSETS
Notes receivable 200,530 297,209
Cash surrender value of life insurance on officers, net 1,232,672 1,473,963
Deferred loan costs, net 551,164 788,356
Other 2,782,062 3,076,589
------------- -------------
$ 110,675,017 $ 126,132,540
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Trade and subcontractors payables $ 13,077,768 $ 18,391,697
Billings in excess of costs and earnings 1,285,365 2,947,814
Accrued expenses 2,947,561 5,202,597
Deferred income -- 225,888
Short-term borrowings 232,600 8,048,222
Current maturities of long-term debt 12,166,199 6,876,455
------------- -------------
Total current liabilities 29,709,493 41,692,673
------------- -------------
DEFERRED INCOME TAXES 4,008,543 2,910,771
OTHER LIABILITIES 3,439,001 1,702,048
MORTGAGE NOTES PAYABLE, less current maturities 34,300,833 27,447,977
OTHER LONG-TERM DEBT, less current maturities 17,946,788 29,106,511
------------- -------------
Total liabilities 89,404,658 102,859,980
------------- -------------
SHAREHOLDERS' EQUITY
Common stock, $1 par value; authorized 5,000,000 shares;
3,014,039 issued and 2,936,356 outstanding 3,014,039 3,014,039
Additional paid-in capital 2,019,690 2,019,690
Retained earnings 16,649,181 18,651,382
------------- -------------
21,682,910 23,685,111
Less cost of treasury stock 412,551 412,551
------------- -------------
Total shareholders' equity 21,270,359 23,272,560
------------- -------------
$ 110,675,017 $ 126,132,540
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ABRAMS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THIRD QUARTER ENDED NINE MONTHS ENDED
JANUARY 31, JANUARY 31,
-------------------------------- ---------------------------------
2000 1999 2000 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES
Construction $ 26,597,648 $ 24,693,465 $ 115,014,236 $ 121,079,265
Real estate 3,892,288 3,725,037 17,368,779 10,504,977
------------ ------------- ------------- -------------
30,489,936 28,418,502 132,383,015 131,584,242
Less: Intersegment eliminations (403,122) (476,335) (1,205,950) (2,222,598)
------------ ------------- ------------- -------------
30,086,814 27,942,167 131,177,065 129,361,644
Interest 88,264 93,326 260,795 355,978
Other 6,323 (5,406) 38,870 46,003
------------ ------------- ------------- -------------
30,181,401 28,030,087 131,476,730 129,763,625
------------ ------------- ------------- -------------
COSTS AND EXPENSES
Applicable to REVENUES--
Construction 24,887,730 22,788,433 110,253,918 115,673,400
Real estate, exclusive of interest 2,093,547 1,905,950 9,498,008 5,322,668
------------ ------------- ------------- -------------
26,981,277 24,694,383 119,751,926 120,996,068
Less: Intersegment eliminations (8,724) (8,724) (330,191) (1,143,425)
------------ ------------- ------------- -------------
26,972,553 24,685,659 119,421,735 119,852,643
------------ ------------- ------------- -------------
Selling, shipping, general and administrative
Construction 1,305,598 1,322,806 2,852,166 3,068,937
Real estate 387,663 551,954 1,742,270 1,763,986
Parent 679,987 831,464 2,481,540 2,235,073
------------ ------------- ------------- -------------
2,373,248 2,706,224 7,075,976 7,067,996
Less: Intersegment eliminations (203,874) (244,635) (608,206) (567,862)
------------ ------------- ------------- -------------
2,169,374 2,461,589 6,467,770 6,500,134
------------ ------------- ------------- -------------
Interest costs incurred, less interest
capitalized 1,374,383 1,319,769 4,084,270 3,895,794
------------ ------------- ------------- -------------
30,516,310 28,467,017 129,973,775 130,248,571
------------ ------------- ------------- -------------
EARNINGS (LOSS) BEFORE INCOME TAXES (334,909) (436,930) 1,502,955 (484,946)
INCOME TAX EXPENSE (BENEFIT) (119,000) (155,000) 590,000 (149,000)
------------ ------------- ------------- -------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (215,909) (281,930) 912,955 (335,946)
DISCONTINUED OPERATIONS (note 4)
Loss from discontinued operations,
adjusted for applicable benefit for income
taxes of $1,076,000, $346,000, $942,000, and
$696,000, respectively (1,812,525) (570,692) (1,549,095) (1,142,862)
Loss reserve for sale of fixed assets of discontinued
operations, adjusted for applicable benefit
for income taxes of $598,000 (1,013,697) -- (1,013,697) --
------------ ------------- ------------- -------------
LOSS FROM DISCONTINUED OPERATIONS (2,826,222) (570,692) (2,562,792) (1,142,862)
------------ ------------- ------------- -------------
NET LOSS $ (3,042,131) $ (852,622) $ (1,649,837) $ (1,478,808)
============ ============= ============= =============
NET EARNINGS (LOSS) PER SHARE FROM:
Continuing Operations-Basic and Diluted $ (.08) $ (.10) $ .31 $ (.11)
Discontinued Operations-Basic and Diluted (.96) (.19) (.87) (.39)
------------ ------------- ------------- -------------
NET LOSS PER SHARE-BASIC AND DILUTED $ (1.04) $ (.29) $ (.56) $ (.50)
============ ============= ============= =============
DIVIDENDS PER SHARE $ .04 $ .05 $ .12 $ .15
============ ============= ============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING 2,936,356 2,936,356 2,936,356 2,936,356
============ ============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ABRAMS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED JANUARY 31,
----------------------------------
2000 1999
------------- --------------
<S> <C> <C>
Cash flows from operating activities
Net loss $(1,649,837) $ (1,478,808)
Add back loss from discontinued operations 2,562,792 --
----------- ------------
Income (loss) from continuing operations 912,955 (1,478,808)
Adjustments to reconcile income (loss) from continuing operations
to net cash from continuing operations
Depreciation and amortization 2,348,912 2,311,110
Deferred tax expense 1,060,626 --
Gain on sales of real estate (2,912,781) --
Decrease (increase) in assets
Receivables 7,457,499 2,446,765
Inventories -- (697,888)
Costs and earnings in excess of billings 387,977 1,693,557
Other current assets (377,299) (461,889)
Other assets 480,036 (224,330)
Increase (decrease) in liabilities
Accounts payable (4,151,704) (7,171,923)
Billings in excess of costs and earnings (1,662,449) 1,453,416
Accrued expenses (1,312,530) (3,200,367)
Other liabilities (174,228) 70,347
----------- ------------
Net cash provided by (used in) continuing operations 2,057,014 (5,260,010)
Net cash provided by discontinued operations 2,975,015 --
----------- ------------
Net cash provided by (used in) operating activities 5,032,029 (5,260,010)
----------- ------------
Cash flows from investing activities
Proceeds from sales of real estate 6,519,731 --
Additions to properties, property, plant and equipment, net (9,597,268) (3,448,134)
----------- ------------
Net cash used in investing activities (3,077,537) (3,448,134)
----------- ------------
Cash flows from financing activities
Net short-term borrowings (7,367,400) 1,262,075
Debt proceeds 9,503,137 234,570
Debt repayments (6,461,536) (966,440)
Additions to deferred loan costs (232,426) (117,259)
Cash dividends (352,364) (440,453)
----------- ------------
Net cash used in financing activities (4,910,589) (27,507)
----------- ------------
Net decrease in cash and cash equivalents (2,956,097) (8,735,651)
Cash and cash equivalents at beginning of period 7,396,072 13,240,471
----------- ------------
Cash and cash equivalents at end of period $ 4,439,975 $ 4,504,820
=========== ============
Supplemental schedule of cash flow information
Interest paid, net of amounts capitalized $ 4,013,623 $ 3,925,383
=========== ============
Income taxes paid, net of refunds $ (291,375) $ 162,809
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ABRAMS INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2000, AND APRIL 30, 1999
(UNAUDITED)
NOTE 1. UNAUDITED STATEMENTS
- -----------------------------
The accompanying unaudited consolidated financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements have been condensed or omitted pursuant to such rules and
regulations, although management believes that the disclosures are adequate to
make the information presented not misleading. In the opinion of management, the
accompanying financial statements contain all adjustments, which consist solely
of normal recurring accruals, necessary for a fair statement of the results for
the interim periods presented. These financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's Annual Report to Shareholders for the year ended April
30, 1999. Results of operations for interim periods are not necessarily
indicative of annual results.
NOTE 2. CASH AND CASH EQUIVALENTS
- ----------------------------------
As of January 31, 2000, Cash and cash equivalents includes $1.75 million
on deposit and subsequently pledged to the Bank which had a collateral interest
in a portion of the assets sold by the Manufacturing Segment in February 2000,
as discussed in Note 4.
NOTE 3. RECEIVABLES
- --------------------
All contract and trade receivables are expected to be collected within
one year.
NOTE 4. DISCONTINUED OPERATIONS
- --------------------------------
On December 10, 1999, the Board of Directors of the Company decided to
discontinue the operations of the Manufacturing Segment. On January 31, 2000,
management completed its plan of liquidation, which was approved by the
Company's Board of Directors on February 23, 2000. The Company estimates the
pre-tax loss to be recognized on the disposal of assets and associated expenses
will not exceed $3 million, net of the gain on the sale of the manufacturing
facility, which is currently under contract to be sold. As of January 31, 2000,
the Company had incurred an approximately $2.56 million after tax loss from
discontinued operations, including a $1.01 million loss accrual for the
subsequent sale of equipment and raw materials inventory and an approximately $1
million loss accrual for discontinued operations subsequent to January 31, 2000.
On February 3, 2000, the Company closed on the $2.2 million sale of the
Manufacturing Segment's machinery, equipment, furniture, and raw materials
inventory. On February 15, 2000, the Company entered into a contract to sell the
Manufacturing Segment's facility in Lithia Springs, Georgia. As of January 31,
2000, the net book value of the land and building is classified as Property held
for sale. The contract price is $10,925,000 and is scheduled to close prior to
April 30, 2000. The Company expects to dispose of the remaining finished goods
inventory and to conclude the liquidation by April 30, 2000.
<PAGE>
NOTE 5. EMINENT DOMAIN TAKING OF FORMER MANUFACTURING PLANT
- ------------------------------------------------------------
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
awarded the Company $4,500,000 for the property which was deposited into the
court for distribution. In November 1999, the cash was distributed to the
Company. Both the State and the Company have filed appeals of the award amount.
Pending a resolution of the appeals, the Company has deferred recognition of the
approximately $2.76 million gain on the transaction. The deferred gain is
currently included as a reduction in Net assets of discontinued operations.
NOTE 6. REAL ESTATE DISPOSITION AND ACQUISITION
- -----------------------------------------------
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. 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. The purchase was also financed with cash held by the
Company, and 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. 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. The liability related to the lender's fifty percent
share of the appreciation in the property was $1,953,466 at January 31, 2000.
NOTE 7. OPERATING SEGMENTS
- --------------------------
The Company has two operating segments: 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 usually provides property
management for the properties after development or acquisition.
The operating segments are managed separately and maintain separate
personnel due to the differing services 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 table below exhibits selected financial data on a segment basis.
Earnings (loss) from Continuing Operations is total revenue less operating
expenses of continuing operations, including depreciation and interest. Parent
expenses and income taxes have not been allocated to the subsidiaries.
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
FOR THE QUARTER ENDED JANUARY 31, 2000 Construction Real Estate Parent Eliminations Consolidated
-------------- ------------- ----------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenues from unaffiliated customers $ 26,597,648 $ 3,489,166 $ - $ - $ 30,086,814
Interest and other income 27,845 53,490 28,675 (15,423) 94,587
Intersegment revenue - 403,122 - (403,122) -
------------ ----------- ---------- ------------ ---------------
Total revenues from continuing operation $ 26,625,493 $ 3,945,778 $ 28,675 $ (418,545) $ 30,181,401
============ =========== ========== =========== ==============
Income (loss) from continuing operations $ 432,130 $ 94,284 $ (681,725) $ (179,598) $ (334,909)
============ =========== ========== =========== ==============
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
For the Quarter Ended January 31, 1999 Construction Real Estate Parent Eliminations Consolidated
-------------- ------------- ----------- -------------- ----------------
Revenues from unaffiliated customers $ 24,693,465 $ 3,248,702 $ - $ - $ 27,942,167
Interest and other income 55,276 21,301 11,343 - 87,920
Intersegment revenue - 476,335 - (476,335) -
------------ ----------- ----------- ----------- --------------
Total revenues from continuing operation $ 24,748,741 $ 3,746,338 $ 11,343 $ (476,335) $ 28,030,087
============ =========== ========== =========== ==============
Income (loss) from continuing operations $ 636,447 $ (10,613) $ (839,788) $ (222,976) $ (436,930)
============ =========== ========== =========== ==============
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
For the Nine Months Ended January 31, 2000 Construction Real Estate Parent Eliminations Consolidated
-------------- ------------- ----------- -------------- ----------------
Revenues from unaffiliated customers $ 115,014,236 $ 16,162,829 $ - $ - $ 131,177,065
Interest and other income 127,390 173,325 66,395 (67,445) 299,665
Intersegment revenue - 1,205,950 - (1,205,950) -
------------ ----------- ---------- ----------- --------------
Total revenues from continuing operation $ 115,141,626 $ 17,542,104 $ 66,395 $ (1,273,395) $ 131,476,730
============ =========== ========== =========== ==============
Income (loss) from continuing operations $ 2,005,220 $ 2,260,424 $(2,461,692) $ (300,997) $ 1,502,955
============ =========== ========== =========== ==============
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
For the Nine Months Ended January 31, 1999 Construction Real Estate Parent Eliminations Consolidated
-------------- ------------- ----------- -------------- ----------------
Revenues from unaffiliated customers $ 119,964,442 $ 9,397,202 $ - $ - $ 129,361,644
Interest and other income 183,149 189,321 29,511 - 401,981
Intersegment revenue 1,114,823 1,107,775 - (2,222,598) -
------------ ----------- ---------- ----------- -------------
Total revenues from continuing operation $ 121,262,414 $ 10,694,298 $ 29,511 $ (2,222,598) $ 129,763,625
============ =========== ========== =========== =============
Income (loss) from continuing operations $ 2,519,391 $ (279,162) $(2,213,864) $ (511,311) $ (484,946)
============ =========== ========== =========== =============
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS.
- -------------
Changes in CONSOLIDATED BALANCE SHEETS between April 30, 1999, and January 31,
- --------------------------------------------------------------------------------
2000.
- -----
Accounts receivable decreased by $10,630,298 and Trade and subcontractors
payable decreased by $5,313,929, primarily because of the timing of the
submission and payment of invoices for construction work performed. The
decreases were also attributable to the reclassification of the amounts related
to discontinued operations in the January 31, 2000 Balance Sheet.
Property held for sale increased $3,452,489, primarily as a result of the
reclassification of the net book value of the Company's former manufacturing
facility in Lithia Springs, Georgia, from Property, plant and equipment, as the
<PAGE>
facility is under contract for sale. This increase is partially offset by the
eminent domain taking of the former manufacturing plant in Atlanta and the sale
of a shopping center in Newnan, Georgia, previously discussed in Notes 5 and 6.
Income-producing properties increased by $7,915,879, primarily as a
result of the purchase of an approximately 174,000 square foot shopping center
in Jacksonville, Florida. Publix Super Markets previously leased approximately
86,000 square feet of space in the center, which it has vacated, while remaining
fully obligated under its lease until August 2010.
Accrued expenses decreased by $2,255,036 because of the payment of
year-end accruals and the reclassification of the amount related to discontinued
operations.
Short term borrowings decreased by $7,815,622, primarily due to
repayments on the lines of credit. On April 30, 1999, in order to facilitate the
sale of the Newnan, Georgia shopping center, the Company drew $5,600,000 on the
lines of credit to have funds available to pay the related mortgage debt. This
draw was repaid in May 1999.
Current maturities of long-term debt increased by $5,289,744, primarily
as a result of the reclassification of the debt remaining on the industrial
revenue bonds that are secured by the Company's former manufacturing facility in
Lithia Springs, Georgia, that is currently under contract for sale. This was
partially offset by the payoff of the mortgage loan related to the Newnan,
Georgia shopping center upon its sale.
Deferred income taxes increased by $1,097,772, primarily reflecting the
income tax deferral of the gain on the sale of the Newnan, Georgia property.
This transaction was structured as a like-kind exchange pursuant to Internal
Revenue Code Section 1031, which allows a deferral of the recognition of the tax
gain if the Company utilizes the proceeds of the sale to purchase other real
estate within 180 days of the sale. Management believes it has complied with the
provisions of Internal Revenue Code Section 1031, and thus will defer federal
tax on the gain of this sale.
Other liabilities (long-term) increased by $1,736,953, primarily as a
result of the participation liability related to the participating mortgage loan
placed on the newly acquired Jacksonville center discussed in Note 6 above.
Mortgage notes payable, less current maturities, increased $6,852,856,
primarily as a result of the placement of the mortgage loan on the newly
acquired shopping center in Jacksonville, Florida, as discussed above.
Other long-term debt, less current maturities, decreased $11,159,723,
primarily as a result of the reclassification of the debt related to the
Manufacturing Segment's former manufacturing facility to Current maturities of
long-term debt.
Results of operations of third quarter and first nine months of fiscal 2000
- --------------------------------------------------------------------------------
compared to third quarter and first nine months of fiscal 1999.
- ---------------------------------------------------------------
REVENUES from Continuing Operations
For the third quarter 2000, Consolidated REVENUES from continuing
operations, including Interest income and Other income, and net of intersegment
eliminations, were $30,181,401, compared to $28,030,087 for the third quarter
1999, an increase of 8%. For the first nine months of fiscal 2000, Consolidated
REVENUES from continuing operations were $131,476,730, compared to $129,763,625
for the first nine months of fiscal 1999, an increase of 1%.
The figures in Chart A are Segment revenues from continuing operations
before Intersegment eliminations and do not include Interest income or Other
income.
<PAGE>
<TABLE>
<CAPTION>
CHART A
REVENUE FROM CONTINUING OPERATIONS SUMMARY BY SEGMENT
(Dollar Amounts in Thousands)
Third Quarter Ended Nine Months Ended
January 31, Amount Percent January 31, Amount Percent
-------------------- Increase Increase ----------------- Increase Increase
2000 1999 (Decrease) (Decrease) 2000 1999 (Decrease) (Decrease)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Construction $26,598 $24,693 $1,905 8 $115,014 $121,079 $(6,065) (5)
Real Estate<F1> 3,892 3,725 167 4 17,369 10,505 6,864 65
------ ------ ------ -------- -------- -------
$30,490 $28,418 $2,072 7 $132,383 $131,584 $ 799 1
======= ======= ====== ======== ======== =======
NOTES TO CHART A
----------------
<FN>
<F1> REVENUES for the first nine months of fiscal 2000 were higher than
those of the first nine months of fiscal 1999 primarily due to the sale
of the Newnan, Georgia shopping center in the first quarter 2000. There
were no real estate sales in the first nine months of fiscal 1999.
</FN>
</TABLE>
The following table indicates the backlog of contracts, orders and
expected rentals for the next twelve months by industry segment. The table does
not include the $10,925,000 contract to sell the discontinued operations'
manufacturing facility, which was entered into in February 2000.
January 31,
----------------------------
2000 1999
----------- ------------
Construction $38,386,000 $57,842,000
Real Estate 11,245,000 10,470,000
----------- -----------
Total Backlog $49,631,000 $68,312,000
=========== ===========
COSTS AND EXPENSES: Applicable to REVENUES from Continuing Operations
As a percentage of Segment REVENUES from Continuing Operations (See Chart
A) for the third quarter 2000 and 1999, the applicable COSTS AND EXPENSES (See
Chart B) were 88% and 87%, respectively. As a percentage of Segment REVENUES
from Continuing Operations for the first nine months 2000 and 1999, the
applicable COSTS AND EXPENSES were 90% and 92%, respectively.
The figures in Chart B are prior to Intersegment eliminations.
CHART B
COSTS AND EXPENSES APPLICABLE TO REVENUES
FROM CONTINUING OPERATIONS SUMMARY BY SEGMENT
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Percent of Segment Percent of Segment
Revenues For Revenues For
Third Quarter Ended Third Quarter Ended Nine Months Ended Nine Months Ended
January 31, January 31, January 31, January 31,
-------------------- ------------------- -------------------- ------------------
2000 1999 2000 1999 2000 1999 2000 1999
------- ------- ------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Construction $24,887 $22,788 94 92 $110,254 $115,673 96 96
Real Estate <F1> 2,094 1,906 54 51 9,498 5,323 55 51
------- ------- -------- --------
$26,981 $24,694 88 87 $119,752 $120,996 90 92
======= ======= ======== ========
NOTES TO CHART B
----------------
<FN>
<F1> The increase in the dollar amount of COSTS AND EXPENSES: Applicable to
REVENUES for the first nine months 2000 compared to the first nine
months 1999 was primarily attributable to the cost of sale of the
Newnan, Georgia shopping center.
</FN>
</TABLE>
<PAGE>
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES
FROM CONTINUING OPERATIONS
For the third quarter 2000 and 1999, Selling, shipping, general and
administrative expenses from continuing operations, prior to intersegment
eliminations, were $2,373,248 and $2,706,224, respectively. As a percentage of
Consolidated REVENUES from Continuing Operations, these expenses were 8% and 10%
respectively. For the first nine months 2000 and 1999, Selling, shipping,
general and administrative expenses from continuing operations, prior to
intersegment eliminations, were $7,075,976 and $7,067,996, respectively. As a
percentage of Consolidated REVENUES from Continuing Operations, these expenses
were 5% for both periods. In reviewing Chart C, the reader should recognize that
the volume of revenues generally will affect the amounts and percentages. The
percentages in Chart C are based upon expenses as they relate to Segment
REVENUES from Continuing Operations (Chart A) prior to Intersegment
eliminations, except that Parent and Total expenses relate to Consolidated
REVENUES from Continuing Operations.
<TABLE>
<CAPTION>
CHART C
SELLING, SHIPPING, GENERAL AND ADMINISTRATIVE EXPENSES
FROM CONTINUING OPERATIONS BY SEGMENT
(Dollar Amounts in Thousands)
Percent of Segment Percent of Segment
Revenues For Revenues For
Third Quarter Ended Third Quarter Ended Nine Months Ended Nine Months Ended
January 31, January 31, January 31, January 31,
--------------------- -------------------- -------------------- -------------------
2000 1999 2000 1999 2000 1999 2000 1999
------ ------ ---- ---- ------ ------ ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Construction $1,306 $1,323 5 5 $2,852 $3,069 2 3
Real Estate <F1> 388 552 10 15 1,742 1,764 10 17
Parent 680 831 2 3 2,482 2,235 2 2
------ ------ ------ ------
$2,374 $2,706 8 10 $7,076 $7,068 5 5
====== ====== ====== ======
NOTES TO CHART C
----------------
<FN>
<F1> On a dollar and percentage basis, Selling, shipping, general and
administrative expenses were lower for third quarter 2000 compared to
third quarter 1999 primarily because of a decrease in personnel and
incentive compensation costs.
</FN>
</TABLE>
Liquidity and capital resources.
- --------------------------------
Between April 30, 1999, and January 31, 2000, working capital increased
by $345,383. Operating activities from continuing operations provided cash of
$2,057,014. Discontinued operations provided cash of $2,975,015. Investing
activities used cash of $3,077,537 primarily for the purchase of the shopping
center in Jacksonville, Florida, which was partially offset by proceeds from the
sale of the Newnan, Georgia shopping center. Financing activities used cash of
$4,910,589, primarily for repayments on the Company's lines of credit and the
payoff of the mortgage on the Newnan center. The proceeds of the mortgage loan
on the newly acquired Jacksonville center partially offset this usage of cash.
<PAGE>
At January 31, 2000, the Company and its subsidiaries had available
unsecured committed lines of credit totaling $13,000,000, of which $232,600 was
outstanding, $12,267,400 was available, and $500,000 was reserved for a letter
of credit issued as security for a mortgage loan on an Income-producing
property. The letter of credit has been extended until November 2000, at which
time it may be used to pay down the mortgage loan if certain leasing
requirements are not attained. In November 1999, the Company received the
$4,500,000 Special Master condemnation award discussed in Note 5 above. The
Manufacturing Segment's line of credit and the $114,278 outstanding debt on the
condemned property were paid off with the award proceeds. In addition, $1.75
million of the remaining balance of the award was deposited with the Bank which
had a collateral interest in the assets sold by the Manufacturing Segment as
discussed below. The $1.75 million deposit will be held by the Bank until it is
used to payoff the industrial development revenue bond financing of the
discontinued operations' manufacturing facility. In January 2000, the Company
requested that its $2,500,000 line of credit associated with the discontinued
manufacturing operations be terminated.
On December 10, 1999, the Board of Directors of the Company decided to
discontinue the operations of the Manufacturing Segment. See Note 4 to the
Consolidated Financial Statements of the Company. On February 3, 2000, the
Company closed on the sale of the Manufacturing Segment's machinery, equipment,
furniture, and raw materials inventory. The $2.2 million cash proceeds from the
sale were used to payoff $1.17 million of associated equipment leases and the
balance is being held to fund the discontinued operations' cash requirements.
On February 15 2000, the Company entered into a contract to sell the
discontinued operations' manufacturing facility. The contract price is
$10,925,000 and is scheduled to close prior to April 30, 2000. The Company plans
to use a portion of the sales proceeds and the $1.75 million deposited with the
Bank (discussed above) to pay off the $10,810,000 industrial revenue development
bond financing on the property. The balance of the proceeds primarily will be
used to pay expenses associated with the sale.
Year 2000.
- ----------
The Year 2000 presented a problem for companies who use computer systems
that were developed without the ability to properly recognize and process data
relating to the Year 2000 and beyond. Such systems may have included hardware,
software and other telecommunications information systems (IT), as well as
computer systems that do not relate to information technology, such as building
and other ancillary systems (non-IT). The Company, its vendors, suppliers, and
other significant third party service providers were all exposed to the
potential disruption of operations if such systems were not replaced or
remediated.
The Construction Segment purchased a new Year 2000 compliant accounting
software package and upgraded its computer hardware system during the prior
fiscal year. The cost of the software and hardware and the installation thereof
was not considered to be material. The Real Estate Segment's accounting software
was Year 2000 compliant. Other non-compliant hardware and software review and
remediation costs were considered to be minimal. The Year 2000 issue did not
have a material impact on the Company's business, results of operations, or
financial condition.
<PAGE>
Cautionary statement regarding forward-looking statements.
- ----------------------------------------------------------
Certain statements contained or incorporated by reference in this
Quarterly Report on Form 10-Q, 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. Such risks, uncertainties and other matters include,
but are not limited to, the sale of the discontinued operations manufacturing
facility and the discontinuance of the manufacturing operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
- -------------------------------------------------------------------
Quantitative and qualitative disclosures about market risk were disclosed
as required in Form 10-K for fiscal year ended April 30, 1999. In July 1999, the
Company entered into a mortgage loan agreement secured by the newly acquired
shopping center in Jacksonville, Florida. 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. 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.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
At the Annual Meeting (held on September 22, 1999), the shareholders
voted upon and approved the Board's nominees for directors. The voting was as
follows:
DIRECTORS VOTES FOR VOTES WITHHELD
--------- --------- --------------
Alan R. Abrams 2,750,934 28,011
Bernard W. Abrams* 2,750,934 28,011
Edward M. Abrams 2,750,934 28,011
J. Andrew Abrams 2,750,934 28,011
Paula Lawton Bevington 2,750,834 28,111
Melinda S. Garrett 2,750,834 28,111
Donald W. MacLeod* 2,750,934 28,011
L. Anthony Montag 2,685,214 93,731
Felker W. Ward, Jr 2,750,934 28,011
* Mr. Bernard W. Abrams resigned from the Board in January 2000, and Mr. MacLeod
resigned from the board in February 2000. On February 23, 2000, two new Board
members were elected by the Board to complete Messrs. Abrams' and MacLeod's
unexpired terms. The new members are B. Michael Merritt, president of Abrams
Construction, Inc. and David L. Abrams, an attorney and son of Bernard W.
Abrams.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule (For SEC Use Only).
(b) The Registrant has not filed any reports on Form 8-K during the quarter
ended January 31, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ABRAMS INDUSTRIES, INC.
-----------------------
(Registrant)
Date: March 10, 2000 /s/ Alan R. Abrams
----------------- ------------------
Alan R. Abrams
Chief Executive Officer
Date: March 10, 2000 /s/ Melinda S. Garrett
----------------- ----------------------
Melinda S. Garrett
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000001923
<NAME> ABRAMS INDUSTRIES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> JAN-31-2000
<CASH> 4,439,975
<SECURITIES> 0
<RECEIVABLES> 20,772,337
<ALLOWANCES> (43,791)
<INVENTORY> 0
<CURRENT-ASSETS> 39,940,778
<PP&E> 79,201,046
<DEPRECIATION> 17,437,677
<TOTAL-ASSETS> 110,675,017
<CURRENT-LIABILITIES> 29,709,493
<BONDS> 52,247,621
0
0
<COMMON> 3,014,039
<OTHER-SE> 18,256,320
<TOTAL-LIABILITY-AND-EQUITY> 110,675,017
<SALES> 131,177,065
<TOTAL-REVENUES> 131,476,730
<CGS> 119,421,735
<TOTAL-COSTS> 119,421,735
<OTHER-EXPENSES> 6,546,375
<LOSS-PROVISION> (78,605)
<INTEREST-EXPENSE> 4,084,270
<INCOME-PRETAX> 1,502,955
<INCOME-TAX> 590,000
<INCOME-CONTINUING> 912,955
<DISCONTINUED> (2,562,792)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,649,837)
<EPS-BASIC> (0.56)
<EPS-DILUTED> (0.56)
</TABLE>
