SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended July 31, 2002
Commission file number 0-10146
ABRAMS INDUSTRIES, INC.
| Georgia | 58-0522129 | |
|
|
||
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer identification No.) |
1945 The Exchange, Suite 300, Atlanta, GA 30339-2029
Registrant’s telephone number, including area code: (770) 953-0304
Former name, former address, former fiscal year, if changed since last report: N/A
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 o
The number of shares of $1.00 par value Common Stock of the Registrant outstanding as of August 31, 2002 was 2,910,179.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ABRAMS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| July 31, 2002 | April 30, 2002 | ||||||||||
ASSETS |
|||||||||||
CURRENT ASSETS: |
|||||||||||
Cash and cash equivalents |
$ | 7,863,169 | $ | 7,911,205 | |||||||
Receivables (Note 3) |
12,569,792 | 12,978,375 | |||||||||
Less:
Allowance for doubtful accounts (Note 5) |
(589,102 | ) | (1,031,460 | ) | |||||||
Assets of discontinued operations (Note 4) |
102,146 | 12,525,941 | |||||||||
Costs and earnings in excess of billings |
853,478 | 682,162 | |||||||||
Deferred income taxes |
864,036 | 864,036 | |||||||||
Other |
765,565 | 686,842 | |||||||||
Total current assets |
22,429,084 | 34,617,101 | |||||||||
INCOME-PRODUCING PROPERTIES, net |
44,123,782 | 44,545,585 | |||||||||
PROPERTY AND EQUIPMENT, net |
580,348 | 642,710 | |||||||||
OTHER ASSETS: |
|||||||||||
Real estate held for future development or sale |
4,211,073 | 4,211,073 | |||||||||
Intangible assets, net (Note 9) |
2,500,579 | 2,416,887 | |||||||||
Goodwill (Note 9) |
1,741,831 | 1,741,831 | |||||||||
Other |
2,792,943 | 2,765,696 | |||||||||
| $ | 78,379,640 | $ | 90,940,883 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|||||||||||
CURRENT LIABILITIES: |
|||||||||||
Trade and subcontractors payables |
$ | 7,599,078 | $ | 8,028,199 | |||||||
Accrued expenses |
536,429 | 794,039 | |||||||||
Liabilities of discontinued operations (Note 4) |
585,868 | 12,541,036 | |||||||||
Billings in excess of costs and earnings |
763,601 | 677,987 | |||||||||
Current maturities of long-term debt |
2,453,718 | 2,700,744 | |||||||||
Total current liabilities |
11,938,694 | 24,742,005 | |||||||||
DEFERRED INCOME TAXES |
4,359,894 | 4,359,894 | |||||||||
OTHER LIABILITIES |
3,958,216 | 3,896,616 | |||||||||
MORTGAGE NOTES PAYABLE, less current maturities |
24,136,736 | 19,501,385 | |||||||||
OTHER LONG-TERM DEBT, less current maturities |
11,153,525 | 15,662,107 | |||||||||
Total liabilities |
55,547,065 | 68,162,007 | |||||||||
SHAREHOLDERS’ EQUITY: |
|||||||||||
Common stock, $1 par value; 5,000,000 shares authorized;
3,055,539 issued and 2,910,179 outstanding in July 2002,
3,054,439 issued and 2,909,079 outstanding in April 2002 |
3,055,539 | 3,054,439 | |||||||||
Additional paid-in capital |
2,139,405 | 2,135,005 | |||||||||
Deferred stock compensation |
(12,000 | ) | (12,744 | ) | |||||||
Retained earnings |
18,321,308 | 18,273,853 | |||||||||
Treasury stock, common shares, 145,360 in 2002 and 97,736 in 2001 |
(671,677 | ) | (671,677 | ) | |||||||
Total shareholders’ equity |
22,832,575 | 22,778,876 | |||||||||
| $ | 78,379,640 | $ | 90,940,883 | ||||||||
See accompanying notes to consolidated financial statements.
ABRAMS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| FIRST QUARTER ENDED | ||||||||||
| JULY 31, | ||||||||||
| 2002 | 2001 | |||||||||
REVENUES: |
||||||||||
Construction |
$ | 14,428,033 | $ | 35,925,156 | ||||||
Rental income |
2,571,162 | 2,773,513 | ||||||||
Energy management |
665,587 | 819,312 | ||||||||
| 17,664,782 | 39,517,981 | |||||||||
Interest |
16,007 | 80,661 | ||||||||
Other |
41,528 | 13,914 | ||||||||
| 17,722,317 | 39,612,556 | |||||||||
COSTS AND EXPENSES: |
||||||||||
Construction |
14,245,415 | 34,900,197 | ||||||||
Rental property operating expenses, excluding interest |
1,661,228 | 1,518,823 | ||||||||
Energy management |
412,020 | 415,369 | ||||||||
| 16,318,663 | 36,834,389 | |||||||||
Selling, general and administrative |
||||||||||
Construction (Note 5) |
203,465 | 735,992 | ||||||||
Real estate |
204,441 | 136,921 | ||||||||
Energy management |
389,074 | 310,558 | ||||||||
Parent |
634,533 | 725,807 | ||||||||
| 1,431,513 | 1,909,278 | |||||||||
Interest costs incurred |
735,302 | 856,129 | ||||||||
| 18,485,478 | 39,599,796 | |||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES |
(763,161 | ) | 12,760 | |||||||
INCOME TAX EXPENSE (BENEFIT): |
(298,213 | ) | 1,000 | |||||||
EARNINGS (LOSS) FROM CONTINUING OPERATIONS |
(464,948 | ) | 11,760 | |||||||
DISCONTINUED OPERATIONS (Note 4): |
||||||||||
Earnings from discontinued operations, adjusted
for applicable income tax expense of $6,608 in 2002,
and $25,000 in 2001 |
10,779 | 40,108 | ||||||||
Gain on sale of assets of discontinued operations,
adjusted for applicable income tax expense of
$372,228 in 2002 and $0 in 2001 |
617,987 | — | ||||||||
EARNINGS FROM DISCONTINUED OPERATIONS |
628,766 | 40,108 | ||||||||
NET EARNINGS |
$ | 163,818 | $ | 51,868 | ||||||
NET EARNINGS (LOSS) PER SHARE — BASIC (Note 7): |
||||||||||
From continuing operations |
$ | (.16 | ) | $ | — | |||||
From discontinued operations |
.22 | .02 | ||||||||
NET EARNINGS PER SHARE — BASIC |
$ | .06 | $ | .02 | ||||||
NET EARNINGS (LOSS) PER SHARE — DILUTED (Note 7): |
||||||||||
From continuing operations |
$ | (.16 | ) | $ | — | |||||
From discontinued operations |
.21 | .02 | ||||||||
NET EARNINGS PER SHARE — DILUTED |
$ | .05 | $ | .02 | ||||||
DIVIDENDS PER SHARE |
$ | 0.04 | $ | 0.04 | ||||||
WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC |
2,909,115 | 2,942,925 | ||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING — DILUTED |
2,937,609 | 2,942,925 | ||||||||
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| FIRST QUARTER ENDED JULY 31, | ||||||||||||
| 2002 | 2001 | |||||||||||
Cash flows from operating activities: |
||||||||||||
Net earnings |
$ | 163,818 | $ | 51,868 | ||||||||
Adjustments to reconcile net earnings to
net cash used in operating activities: |
||||||||||||
Adjustments related to discontinued operations, net of tax |
— | 8,192 | ||||||||||
Depreciation and amortization |
658,120 | 587,700 | ||||||||||
(Recovery of)
provision for doubtful accounts, net |
(442,358 | ) | 50,936 | |||||||||
Gain on sale of real estate |
(990,215 | ) | — | |||||||||
Changes in assets and liabilities: |
||||||||||||
Receivables |
406,130 | (8,149,056 | ) | |||||||||
Costs and earnings in excess of billings |
(171,316 | ) | (3,705,684 | ) | ||||||||
Other current assets |
(78,723 | ) | (65,493 | ) | ||||||||
Other assets |
(31,247 | ) | (99,284 | ) | ||||||||
Trade and subcontractors payable |
(429,121 | ) | 9,368,659 | |||||||||
Accrued expenses |
(257,610 | ) | (1,882,047 | ) | ||||||||
Billings in excess of costs and earnings |
85,614 | 1,034,945 | ||||||||||
Other liabilities |
61,600 | 92,351 | ||||||||||
Net cash used in operating activities |
(1,025,308 | ) | (2,706,913 | ) | ||||||||
Cash flows from investing activities: |
||||||||||||
Additions to income-producing properties, net |
(18,899 | ) | — | |||||||||
Additions to property and equipment, net |
(17,423 | ) | (63,155 | ) | ||||||||
Additions to intangible assets |
(73,071 | ) | (22,728 | ) | ||||||||
Acquisition, net of cash acquired |
— | (2,971,663 | ) | |||||||||
Repayments received on notes receivable |
2,453 | 21,715 | ||||||||||
Net cash used in investing activities |
(106,940 | ) | (3,035,831 | ) | ||||||||
Cash flows from financing activities: |
||||||||||||
Debt proceeds |
4,900,000 | — | ||||||||||
Debt repayments |
(5,048,128 | ) | (437,750 | ) | ||||||||
Deferred loan costs paid |
(107,788 | ) | — | |||||||||
Repurchase of common stock |
— | (46,575 | ) | |||||||||
Cash dividends |
(116,363 | ) | (117,912 | ) | ||||||||
Net cash used in financing activities |
(372,279 | ) | (602,237 | ) | ||||||||
Cash flows from discontinued operations |
1,456,491 | — | ||||||||||
Net decrease in cash and cash equivalents |
(48,036 | ) | (6,344,981 | ) | ||||||||
Cash and cash equivalents at beginning of period |
7,911,205 | 11,448,750 | ||||||||||
Cash and cash equivalents at end of period |
$ | 7,863,169 | $ | 5,103,769 | ||||||||
Supplemental disclosure of noncash investing activities: |
||||||||||||
Transfer of income-producing property to property held for sale |
$ | — | $ | 12,524,333 | ||||||||
Transfer of property to real estate held for future development or sale |
$ | — | $ | 321,710 | ||||||||
Supplemental disclosure of noncash financing activities: |
||||||||||||
Issuance of common stock under Stock Award Plan |
$ | 5,500 | $ | — | ||||||||
See accompanying notes to consolidated financial statements.
ABRAMS INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2002, AND APRIL 30, 2002
(UNAUDITED)
NOTE 1. ORGANIZATION AND BUSINESS
Abrams Industries, Inc. and subsidiaries (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) commercial construction; (ii) ownership of income-producing real estate properties; and (iii) energy management.
NOTE 2. UNAUDITED STATEMENTS
The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America, 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, consisting of normal recurring accruals that are 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, 2002. Results of operations for interim periods are not necessarily indicative of annual results.
Certain reclassifications have been made to the fiscal 2002 consolidated financial statements to conform to classifications adopted in first quarter of fiscal 2003.
NOTE 3. RECEIVABLES
All net contract and trade receivables are expected to be collected within one year.
NOTE 4. DISCONTINUED OPERATIONS
The Company adopted SFAS No. 144 effective May 1, 2002, which requires, among other things, that the operating results of certain assets sold subsequent to April 30, 2002, be included in discontinued operations in the statements of operations for all periods presented. During the quarter ended July 31, 2002, the Company sold its shopping center located in Englewood, Florida, and recognized a pre-tax gain of $990,215. As a result of the sale, the Company’s financial statements have been prepared with the property’s assets and liabilities, results of operations, cash flows, and the gain from sale shown as discontinued operations. All historical statements have been restated to conform to this presentation in accordance with Statement of Financial Accounting Standard No. 144. Summarized financial information for the discontinued operations is as follows:
4
| Three
months ended July 31, |
||||||||
| Results of operations | 2002 | 2001 | ||||||
Revenues |
$ | 289,173 | $ | 469,936 | ||||
Operating expenses, including amortization and interest |
271,786 | 404,828 | ||||||
| $ | 17,387 | $ | 65,108 | |||||
| Assets of discontinued operations | July 31, 2002 | April 30, 2002 | ||||||
Property held for sale |
$ | — | $ | 12,502,037 | ||||
Receivables |
57,020 | 16,713 | ||||||
Other |
45,126 | 7,191 | ||||||
| $ | 102,146 | $ | 12,525,941 | |||||
| Liabilities of discontinued operations | ||||||||
Mortgage debt |
$ | — | $ | (12,206,700 | ) | |||
Accounts payable |
— | (10,764 | ) | |||||
Accrued expenses |
(432,776 | ) | (170,480 | ) | ||||
Deferred income taxes |
(153,092 | ) | (153,092 | ) | ||||
| $ | (585,868 | ) | $ | (12,541,036 | ) | |||
NOTE 5. CHANGE IN AN ALLOWANCE FOR DOUBTFUL ACCOUNTS
Selling, general, and administrative expense for the construction segment for the three months ended July 31, 2002, is net of a $450,000 decrease in an allowance for doubtful accounts reserve for a receivable from Montgomery Ward & Company.
NOTE 6. OPERATING SEGMENTS
The table below exhibits selected financial data on a segment basis. Earnings (loss) from continuing operations before income taxes are total revenues less operating expenses of continuing operations, including depreciation and interest. Parent expenses have not been allocated to the subsidiaries.
5
| For the Quarter Ended July 31, 2002 | Construction | Real Estate | Energy Management | ||||||||||||||||||||||