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SECURITIES AND EXCHANGE COMMISSION  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, 2005 Commission file number 0-10146 ABRAMS INDUSTRIES, INC.  Georgia
(State or other jurisdiction of
incorporation or organization)
 
1945 The Exchange, Suite 300, Atlanta, GA
(Address of principal executive offices)
    
    58-0522129
(I.R.S. Employer
identification No.)
 
30339-2029
(Zip Code)
 Registrants telephone number, including area code: (770) 953-0304 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Title of each class:
    
    Name of each exchange on 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 ü    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. ü Indicate by check mark whether the registrant is an accelerated filer (as defined in the
Exchange 12b-2). YES     NO ü The aggregate market value of Common Stock held by nonaffiliates of the registrant as of
October 31, 2004 was $6,788,591. See Part III for a definition of nonaffiliates. The number
of shares of Common Stock of the registrant outstanding as of April 30, 2005, was 3,209,113. DOCUMENTS INCORPORATED BY REFERENCE The information called for by Part III (Items 10, 11, 13, and 14) is incorporated herein by
reference to the registrants definitive proxy statement for the 2005 Annual Meeting of
Shareholders which is to be filed pursuant to Regulation 14A.




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED SHAREHOLDER MATTERSITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSREVENUES FROM CONTINUING OPERATIONS SUMMARY BY SEGMENTCHART ACOSTS AND EXPENSES: APPLICABLE TO REVENUES FROM CONTINUING OPERATIONS SUMMARY BY SEGMENTCHART BSELLING, GENERAL AND ADMINISTRATIVE EXPENSES FROM CONTINUING OPERATIONS SUMMARY BY SEGMENTCHART CITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKCONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENTS OF OPERATIONSCONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITYCONSOLIDATED STATEMENTS OF CASH FLOWSEX-21 LIST OF THE COMPANY'S SUBSIDIARIESEX-23.(A) CONSENT OF DELOITTE & TOUCHE LLPEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO    Table of Contents  
 PART I 
 ITEM 1. BUSINESS Abrams Industries, Inc. (i) provides energy engineering and analytical consulting
services and develops, implements
and supports facility management software applications; (ii) implements energy saving lighting
programs and provides other energy services, including facility-related improvements that
reduce energy and operating costs; and (iii) engages in real estate investment and development. As used herein, the term Company refers to Abrams Industries, Inc. and its subsidiaries
and predecessors, unless the context indicates otherwise, and the term Parent or Parent
Company refers solely to Abrams Industries, Inc. 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. Further information on the businesses of the Companys operating segments is discussed
below. Financial information for the segments is set forth in Note 14 to the consolidated
financial statements of the Company. ENERGY AND FACILITIES SOLUTIONS SEGMENT Servidyne Systems, LLC (Servidyne), a wholly-owned subsidiary of the Company, provides
energy engineering services and facility management software applications to assist customers
in optimizing facility performance and reducing building operating costs by lowering energy
consumption, increasing work efficiency, extending equipment life and improving occupant
satisfaction. Servidynes engineering and analytical consulting services include LEED®
building certification; energy surveys and audits; design and specification services; MEP due
diligence; energy savings programs; utility monitoring and analysis; ENERGY STAR® labeling
and benchmarking; building commissioning; and energy simulations and modeling. Servidynes
proprietary technology offerings include iTendant; WinSCORE®; SCORE®; Servidyne EnergyCheck®;
Servidyne Checkmate®; and Servidyne Guest Services®. Servidyne provides turnkey
implementation and ongoing support services to customers with its maintenance and service
request software. Servidyne also offers maintenance training for building engineers and
maintenance technicians. Servidynes customers are primarily building owners and operators and energy services
companies in the hospitality, commercial office, gaming, retail, education, government,
healthcare, industrial and multi-family sectors. The primary focus for the business is the
continental United States, although the Company does business internationally as well.
Contracts for energy engineering and analytical consulting services and facility management
software applications are primarily obtained through negotiations, but may also be obtained
through competitive bids on larger proposals. ENERGY SERVICES SEGMENT The Wheatstone Energy Group, LLC (Wheatstone), a wholly-owned subsidiary of the Company,
provides turnkey implementation of energy saving lighting programs and other energy-related
services that reduce energy consumption and operating costs to commercial, industrial,
retail, government, education and institutional facilities. As a vendor-neutral company,
Wheatstone takes an unbiased approach to evaluating and implementing energy saving lighting
programs and developing recommendations of cost-saving strategies. Wheatstone focuses its marketing and sales activities on national accounts, energy services
companies, facility owners and owners agents throughout the United States. Services are
mainly obtained through negotiations, but may also be obtained through competitive bids for
large contracts. REAL ESTATE SEGMENT Abrams Properties, Inc. (Abrams Properties), a wholly-owned subsidiary of the Company, has
engaged in real estate activities since 1960. These activities primarily involve the
acquisition, development, redevelopment, leasing, asset management, ownership, and sale of
shopping centers and office buildings in the Southeast and Midwest. Abrams Properties uses
third-party property managers and leasing agents for all of its multi-tenant properties and
most of its leaseback properties. Abrams Properties currently owns three shopping centers, two that it developed and one that
it acquired. The centers are held as long-term investments or will be marketed for sale, as
management determines is appropriate. See ITEM 2. PROPERTIESOwned Shopping Centers. In
February 2005, Abrams Properties sold its shopping center located in Cincinnati, Ohio. In
April 2005, Abrams Properties sold its Company-developed shopping center located in Jackson,
Michigan. Abrams Properties is also currently lessee and sublessor of five Company-developed
shopping centers that were sold by and leased back to Abrams Properties, and then subleased
to Kmart Corporation. See ITEM 2. PROPERTIESLeaseback Shopping Centers. During fiscal
2005, Abrams Properties sold its leasehold interest in one such property located in
Minneapolis, Minnesota. The Company owns three office properties. See ITEM 2. PROPERTIES ABRAMS INDUSTRIES 1




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Office Buildings. The Company also owns, through its wholly-owned subsidiary, AFC Real Estate,
Inc., a vacant former manufacturing and warehouse facility located in
Atlanta, Georgia, and several
parcels of vacant land. See ITEM 2. REAL ESTATE HELD FOR FUTURE DEVELOPMENT, LEASE OR SALE. EMPLOYEES AND EMPLOYEE RELATIONS At April 30, 2005, the Company employed 70 salaried employees and 13 hourly employees. The Company
believes that its relations with its employees are good. SEASONAL NATURE OF BUSINESS The businesses of the Energy and Facilities Solutions, Energy Services, and Real Estate Segments
generally are not seasonal. However, certain retail customers of the Energy Services Segment
choose to delay lighting installation during the winter holiday season. COMPETITION The industries in which the Company operates are highly competitive. The Energy and Facilities
Solutions Segments competition is widespread and ranges from multi-national firms to local small
businesses. Competition in the Energy Services Segment consists primarily of local and regional
companies. The Real Estate Segment also operates in a competitive environment, with numerous
parties competing for available financing, properties, tenants and investors. PRINCIPAL CUSTOMERS In fiscal 2005, the Company derived approximately 21% ($4,782,852) of its consolidated revenues
from continuing operations from direct transactions with Kmart Corporation. These revenues
resulted from the Real Estate Segment. The Company does not have any other customers that
accounted for more than 10% of the Companys consolidated revenues and that the loss of which
would have a material adverse effect on the Company. See Note 14 to the consolidated financial
statements of the Company for segment information. BACKLOG The following table indicates the backlog of contracts and expected rentals for the next twelve
months by industry segment: April 30,2005
    
    2004Energy and Facilities Solutions(1)
    
    $
    667,000
    
    
    $
    799,000Energy Services
    
    
    2,665,000
    
    
    
    2,234,000Real Estate
    
    
    6,652,000
    
    
    
    6,439,000Less: Intersegment Eliminations
    
    
    (532,000
    )
    
    
    (517,000
    )Total Backlog
    
    $
    9,452,000
    
    
    $
    8,955,000
  (1)
    
    Contracts that can be cancelled with less than one years notice are not included in
backlog. As of April 30, 2005, and April 30, 2004, such contracts not included in backlog
totaled $1.62 million and $1.51 million, respectively, in potential revenue over the ensuing
twelve months, assuming cancellation provisions are not invoked. The Company estimates that most of the backlog at April 30, 2005, will be completed prior to
April 30, 2006. No assurance can be given as to future backlog levels or whether the Company will
realize earnings from revenues resulting from the backlog at April 30, 2005. REGULATION The Company is subject to the authority of various federal, state and local regulatory agencies
including, among others, the Occupational Safety and Health Administration and the Environmental
Protection Agency. The Company is also subject to local zoning regulations and building codes.
Management believes that it is in substantial compliance with all 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 adverse effect upon the capital expenditures, earnings, or competitive position of the
Company. EXECUTIVE OFFICERS OF THE REGISTRANT The Executive Officers of the Company as of April 30, 2005, were as follows: Alan R. Abrams(50)
    
    Officer since 1988
 Co-Chairman of the Board since 1998 and a Director of the Company since 1992,
Mr. Abrams has been Chief Executive Officer since 1999 and President since 2000.
He also served as President and Chief Executive Officer of Servidyne Systems,
LLC from May 2002 to July 2003. ABRAMS INDUSTRIES 2




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PART I(continued) Mark J. Thomas(49)
    
    Officer since 2003
 Mr. Thomas has served as Chief Financial Officer since 2003. Prior to joining the Company, he was
employed by Paragon Trade Brands (a manufacturing company), serving as Vice President of Finance &
Corporate Controller from October 2000 to October 2002. He was employed by Mead Corporation (a
paper packaging company), serving as Director of Finance from April 1997 to October 2000. Melinda S. Garrett(49)
    
    Officer since 1990
 A Director of the Company since 1999, Ms. Garrett has served as Secretary since 2000 and Vice
President since May 2004. She was Chief Financial Officer from 1997 to 2003, and also has served
Abrams Properties, Inc. as Chief Executive Officer since 2003, President since 2001, Chief
Financial Officer from 1998 to 2000, and Vice President from 1993 to 2000. J. Andrew Abrams(44)
    
    Officer since 1988
 Co-Chairman of the Board since 1998 and a Director of the Company since 1992, Mr. Abrams has been
Vice President-Business Development since 2000. He served as President and Chief Operating Officer
from 1999 to 2000. Executive Officers of the Company are elected by the Board of Directors of the Company or the Board
of the respective subsidiary to serve at the pleasure of the Board. Alan R. Abrams and J. Andrew
Abrams are brothers. David L. Abrams, a member of the Board of Directors, is first cousin to Alan
R. Abrams and J. Andrew Abrams. There are no other family relationships between any Executive
Officers or Directors of the Company. 
 ITEM 2. PROPERTIES The Company, through its Real Estate Segment, owns its corporate headquarters building, which
contains approximately 65,880 square feet of leasable office space. The building is located in the
North x Northwest Office Park, 1945 The Exchange, in suburban Atlanta, Georgia. The Parent Company
and all the operating segments have their main offices located in this building. In addition to the
25,928 square feet of offices leased by Abrams entities, the remaining 39,952 square feet is leased
to unrelated tenants. The Company through its Energy Services Segment leases 5,000 square feet of
space for a warehouse through a lease that expires in March 2007. The Company also owns a vacant former manufacturing and warehouse facility located in
Atlanta, Georgia. The Company owns, or has an interest in, the following properties: OWNED SHOPPING CENTERS As of April 30, 2005, the Companys Real Estate Segment owned three shopping centers, two that it
developed and one that it acquired. The following chart provides relevant information relating to
the owned shopping centers: Percentage
    
    
    
    
    
    
    
    
    
    
    Rental
    
    
    
    
    
    
    Principalof Square
    
    
    Calendar
    
    
    
    
    
    
    Income
    
    
    
    
    
    
    Amount ofLeasable
    
    
    Footage
    
    
    Year(s)
    
    
    
    
    
    
    Per Leased
    
    
    Debt
    
    
    DebtSquare
    
    
    Leased as of
    
    
    Placed in
    
    
    Rental
    
    
    Square
    
    
    Service
    
    
    OutstandingFeet in
    
    
    April 30,
    
    
    Service by
    
    
    Income
    
    
    Foot
    
    
    Payments
    
    
    as of April 30,Location
    
    Acres
    
    
    Building(s)
    
    
    2005
    
    
    Company
    
    
    2005
    
    
    2005(1)
    
    
    2005(2)
    
    
    2005(3)1075 W. Jackson Street
    
    
    7.3
    
    
    
    92,120
    
    
    
    100
    
    
    
    1980, 1992
    
    
    $
    484,528
    
    
    $
    5.26
    
    
    $
    405,114
    
    
    $
    2,142,245Morton, IL(4)2500 Airport Thruway
    
    
    8.0
    
    
    
    87,543
    
    
    
    100
    
    
    
    1980, 1988
    
    
    
    441,286
    
    
    
    5.04
    
    
    
    391,229
    
    
    
    1,083,104Columbus, GA(4)(5)8106 Blanding Blvd.
    
    
    18.8
    
    
    
    174,220
    
    
    
    96
    
    
    
    1999
    
    
    
    1,600,752
    
    
    
    9.57
    
    
    
    709,300
    
    
    
    7,689,706Jacksonville, FL(6)
  (1)
    
    Calculated by dividing rental income by leased square feet in building, as of April 30, 2005.(2)
    
    Includes principal and interest.(3)
    
    The Companys liability for repayment is limited by exculpatory provisions to its
interest in the respective mortgaged properties.(4)
    
    Land is leased, not owned.(5)
    
    The center in Columbus, Georgia, is owned by Abrams-Columbus Limited Partnership,
in which Abrams Properties, Inc. serves as
general partner and owns an 80% interest.(6)
    
    Originally developed by third parties in 1985. The Companys former shopping centers located in Cincinnati, Ohio, and Jackson, Michigan,
were sold at gains in February 2005 and April 2005, respectively. These properties are not
included above. ABRAMS INDUSTRIES 3




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The two centers located in Morton, Illinois, and Columbus, Georgia, are leased
exclusively to Kmart. The Kmart lease in Columbus, Georgia, expires in 2008 and Kmart has ten
five-year renewal options. The Kmart lease in Morton, Illinois, expires in 2016 and Kmart has eight
five-year renewal options. Anchor tenant lease terms for the center in Jacksonville, Florida, is
shown in the following table: Lease
    
    
    OptionsAnchor
    
    Square
    
    
    Expiration
    
    
    toTenant(1)
    
    Footage
    
    
    Date
    
    
    RenewHarbor Freight Tools
    
    
    12,500
    
    
    
    2012
    
    
    4 for 5 years eachPublix(2)
    
    
    85,560
    
    
    
    2010
    
    
    6 for 5 years eachOffice Depot
    
    
    22,692
    
    
    
    2008
    
    
    2 for 5 years each
  (1)
    
    A tenant is considered to be an Anchor Tenant if it leases 12,000 square feet or
more for an initial lease term in excess of five years.(2)
    
    Tenant has subleased the premises to Floor and Decor Outlets, but remains liable for the lease
until the expiration date. With the exception of the Kmart lease in Columbus, Georgia, and the Harbor Freight
Tools lease in Jacksonville, Florida, all of the anchor tenant leases and many of the
small shop leases provide for contingent rentals if sales generated by the respective
tenant in the leased space exceed specified amounts. In some cases, contingent rentals
are subject to certain rights of offset for the amounts that the ad valorem taxes
exceed specified amounts. In fiscal 2005, the Company recognized $21,303 in contingent
rent, net of offsets from owned shopping centers, which amounts are included in the
aggregate rentals set forth above. Typically, tenants are responsible for their pro rata share of ad valorem taxes
(subject to the rights of offset against contingent rents mentioned above), insurance
and common area maintenance costs. Kmart has total responsibility for maintenance,
insurance and taxes for the centers in Morton, Illinois, and Columbus, Georgia. OFFICE BUILDINGS The Company, through its Real Estate Segment, owns three office properties in
metropolitan Atlanta, Georgia: the corporate headquarters building located at 1945 The
Exchange, in Atlanta; an office park in Marietta; and a professional medical office
building in Douglasville. The following chart provides pertinent information relating
to the office buildings: Percentage
    
    
    
    
    
    
    
    
    
    Rental
    
    
    
    
    
    Principalof Square
    
    Calendar
    
    
    
    
    
    Income
    
    
    
    
    
    Amount ofLeasable
    
    Footage
    
    Year(s)
    
    
    
    
    
    Per Leased
    
    Debt
    
    DebtSquare
    
    Leased as of
    
    Placed in
    
    Rental
    
    Square
    
    Service
    
    OutstandingFeet in
    
    April 30,
    
    Service by
    
    Income
    
    Foot
    
    Payments
    
    as of April 30,Location
    
    Acres
    
    Building(s)
    
    2005
    
    Company
    
    2005
    
    2005(1)
    
    2005(2)
    
    2005(3)1945 The Exchange
    
    
    3.12
    
    
    
    65,880
    
    
    
    100
    
    
    
    1997
    
    
    $
    1,236,524
    
    
    $
    18.77
    
    
    $
    443,654
    
    
    $
    4,709,928Atlanta, GA(3)1501-1523
    
    
    8.82
    
    
    
    121,476
    
    
    
    69
    
    
    
    1997
    
    
    
    1,336,856
    
    
    
    15.95
    
    
    
    538,925
    
    
    
    5,972,934Johnson Ferry Rd.Marietta, GA(4)4586 Timber Ridge Dr.
    
    
    2.534
    
    
    
    28,400
    
    
    
    100
    
    
    
    2004
    
    
    
    648,635
    
    
    
    22.84
    
    
    
    295,473
    
    
    
    2,886,433Douglasville, GA
  (1)
    
    Calculated by dividing rental income by leased square feet in building, as of April 30, 2005.(2)
    
    Includes principal and interest.(3)
    
    The Companys corporate headquarters building of which the Company leases
approximately 25,928 square feet. Rental income
includes $514,142 of intercompany rent at a competitive rate paid by the Parent Company
and the Energy Facilities and Solutions,
Energy Services and Real Estate Segments. The building was originally developed by third
parties in 1974 and acquired and
re-developed by the Company in 1997.(4)
    
    The Company, through a subsidiary of its Real Estate Segment, is the lessee of
10,661 square feet of space under a master lease
agreement to satisfy a condition required by the lender of which 5,445 square feet has
been leased to third parties as of April 30,
2005. Rental income includes $13,696 of intercompany rent at a competitive rate paid by
the Real Estate Segment. The building was originally developed by third parties in 1980 and 1985. ABRAMS INDUSTRIES 4




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PART I(continued) LEASEBACK SHOPPING CENTERS The Company, through its Real Estate Segment, has a leasehold interest in five shopping centers
that it developed, sold, and leased back under leases expiring from years 2006 to 2014. Each of the
centers is subleased by the Company entirely to Kmart Corporation. The Kmart subleases provide for
contingent rentals if sales exceed specified amounts and contain nine 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 for any ad valorem taxes paid in excess of specified amounts. In fiscal 2005,
the Company recognized $33,059 in contingent rentals, net of offsets, from leaseback shopping
centers, which amounts are included in the aggregate annual rentals set forth below. The Company
has responsibility for structural and roof maintenance of the buildings. The Company also has
responsibility for underground utilities, parking lots and driveways, except for routine upkeep,
which is the responsibility of the subtenant, Kmart. The Companys leases contain exculpatory
provisions, which limit the Companys liability for payments to its interest in the respective
leases. The following chart provides certain information relating to the leaseback shopping centers: Square
    
    Calendar Years
    
    Rental
    
    Rental Income
    
    RentFeet in
    
    Placed in Service
    
    Income
    
    per Square Foot
    
    ExpenseLocation
    
    Acres
    
    Building(s)
    
    by Company
    
    2005
    
    2005(1)
    
    2005Bayonet Point, FL
    
    
    10.8
    
    
    
    109,340
    
    
    
    1976, 1994
    
    
    $
    343,059
    
    
    
    $3.14
    
    
    $
    269,564Orange Park, FL
    
    
    9.4
    
    
    
    84,180
    
    
    
    1976
    
    
    
    264,000
    
    
    
    3.14
    
    
    
    226,796Davenport, IA
    
    
    10.0
    
    
    
    84,180
    
    
    
    1977
    
    
    
    255,308
    
    
    
    3.03
    
    
    
    204,645Jacksonville, FL
    
    
    11.6
    
    
    
    97,032
    
    
    
    1979
    
    
    
    303,419
    
    
    
    3.13
    
    
    
    258,858Richfield, MN
    
    
    5.7
    
    
    
    74,217
    
    
    
    1979
    
    
    
    300,274
    
    
    
    4.05
    
    
    
    241,904
  (1)
    
    Calculated by dividing rental income by square feet in building. The Companys interest in the leaseback shopping center in Minneapolis, Minnesota, was
sold at a gain in September 2004. This leaseback shopping center is not included above. REAL ESTATE HELD FOR FUTURE DEVELOPMENT, LEASE OR SALE The Company, through its Real Estate Segment, owns the following real estate, which is
held for future development, lease or sale: Calendar YearDevelopmentLocation
    
    Acres
    
    Completed
    
    Intended Use(1)Dixie Highway
    
    
    4.7
    
    
    
    1979
    
    
    Retail anchor store and/or shopsLouisville, KYMundy Mill Road
    
    
    5.3
    
    
    
    1987
    
    
    Commercial development pads or up to four outlotsOakwood, GANorth Cleveland Avenue
    
    
    10.6
    
    
    
    1993
    
    
    Four outlots and a site for retail anchor stores or shops(3)North Fort Myers, FLMetropolitan Parkway
    
    
    3.6
    
    
    
    (4
    )
    
    Warehouse, industrial or commercial building, or loft redevelopmentAtlanta, GA(2)
  (1)
    
    Outlot as used herein refers to a small parcel of land platted separately from
the shopping center parcel, which is generally sold
to, leased to, or developed as, a fast-food restaurant, bank, small retail shops, or other
similar use.(2)
    
    Land and building, originally utilized by the Company as a manufacturing and
warehouse facility; owned by AFC Real Estate, Inc.,
formerly known as Abrams Fixture Corporation.(3)
    
    One outlot is currently under contract to be sold at a gain in fiscal 2006. There can be
no assurance that the contract will close.(4)
    
    The Company assembled the property in a series of transactions. The building was
developed by third parties prior to 1960. There is no debt on any of the above properties. The Company will either develop the
properties described above or will continue to hold them for sale or lease to others. For further information on the Companys properties, see Notes 4, 6, 8 and 9 to the
consolidated financial statements, and SCHEDULE IIIREAL ESTATE AND ACCUMULATED
DEPRECIATION. ABRAMS INDUSTRIES 5




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ITEM 3. LEGAL PROCEEDINGS The Company is subject to various legal proceedings and claims that arise in the ordinary
course of business. While the resolution of these matters cannot be predicted with certainty, the
Company believes that the final outcome of these matters will not have a material adverse effect on
the Companys financial position or results of operations. 
 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 Dividends PaidMarket Prices
    
    Per ShareFiscal 2005
    
    Fiscal 2004
    
    Fiscal 2005
    
    Fiscal 2004High
    
    Low
    
    High
    
    LowTrade
    
    Trade
    
    Trade
    
    TradeFirst Quarter
    
    $
    4.50
    
    
    $
    3.76
    
    
    $
    4.05
    
    
    $
    3.46
    
    
    $
    .20
    
    
    $
    .04Second Quarter
    
    
    4.05
    
    
    
    3.57
    
    
    
    4.80
    
    
    
    3.57
    
    
    
    .04
    
    
    
    .04Third Quarter
    
    
    6.80
    
    
    
    3.21
    
    
    
    4.49
    
    
    
    3.30
    
    
    
    .04
    
    
    
    .04Fourth Quarter
    
    
    7.60
    
    
    
    4.04
    
    
    
    4.75
    
    
    
    3.80
    
    
    
    .04
    
    
    
    .04
 The Common Stock of Abrams Industries, Inc. is traded on the NASDAQ National
Market System (Symbol: ABRI). The approximate number of holders of Common Stock was 475
(including shareholders of record and shares held in street name) as June 30, 2005. The
Company did not repurchase any of the shares of its Common Stock during its fiscal year
ended April 30, 2005. The information contained under the heading Equity Compensation Plan in the Companys
definitive proxy materials for its 2005 Annual Meeting of Shareholders will be filed
with the Securities and Exchange Commission under a separate filing, and is hereby
incorporated by reference. On May 26, 2004, an indirect wholly-owned subsidiary of the Company acquired
substantially all of the assets of Building Performance Engineers, Inc. The
consideration included 21,126 newly-issued shares of the Companys Common Stock, par
value $1.00 per share. The issuance of these shares was exempt from registration as a
private placement pursuant to the Securities Act of 1933 and the rules promulgated
thereunder. ABRAMS INDUSTRIES 6




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PART II(continued) 
 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: Years Ended April 30,
    
    2005
    
    2004
    
    2003
    
    2002
    
    2001Net Earnings (Loss)(1)
    
    $
    1,800,358
    
    
    $
    (1,850,126
    )
    
    $
    (1,073,524
    )
    
    $
    811,774
    
    
    $
    676,172Net Earnings (Loss)Continuing Operations
    
    $
    (1,503,773
    )
    
    $
    (2,757,405
    )
    
    $
    (2,209,329
    )
    
    $
    (1,834,746
    )
    
    $
    (2,130,343
    )Net EarningsDiscontinued Operations
    
    $
    3,304,131
    
    
    $
    907,279
    
    
    $
    1,135,805
    
    
    $
    2,646,520
    
    
    $
    2,806,515Net Earnings (Loss) Per Share(1)
    
    $
    .56
    
    
    $
    (.62
    )
    
    $
    (.37
    )
    
    $
    .28
    
    
    $
    .23Net Earnings (Loss) Per Share Continuing Operations
    
    $
    (.47
    )
    
    $
    (.93
    )
    
    $
    (.76
    )
    
    $
    (.63
    )
    
    $
    (.72
    )Net Earnings Per Share Discontinued Operations
    
    $
    1.03
    
    
    $
    .31
    
    
    $
    .39
    
    
    $
    .91
    
    
    $
    .95Consolidated RevenuesContinuing Operations
    
    $
    22,795,356
    
    
    $
    12,382,949
    
    
    $
    10,523,063
    
    
    $
    10,968,909
    
    
    $
    7,363,993Shares Outstanding at Year-End
    
    
    3,209,113
    
    
    
    3,180,340
    
    
    
    2,914,351
    
    
    
    2,909,079
    
    
    
    2,943,303Cash Dividends Paid Per Share
    
    $
    .32
    
    
    $
    .16
    
    
    $
    .16
    
    
    $
    .16
    
    
    $
    .16Shareholders Equity
    
    $
    20,913,411
    
    
    $
    19,997,527
    
    
    $
    21,257,952
    
    
    $
    22,778,876
    
    
    $
    22,505,543Shareholders Equity Per Share
    
    $
    6.52
    
    
    $
    6.29
    
    
    $
    7.29
    
    
    $
    7.83
    
    
    $
    7.65Working Capital
    
    $
    10,450,202
    
    
    $
    7,207,333
    
    
    $
    7,638,091
    
    
    $
    9,875,096
    
    
    $
    11,442,348Depreciation and Amortization Continuing
Operations(2)
    
    $
    1,934,240
    
    
    $
    1,496,764
    
    
    $
    1,402,540
    
    
    $
    2,182,487
    
    
    $
    1,844,898Total Assets
    
    $
    57,067,172
    
    
    $
    61,876,019
    
    
    $
    73,797,098
    
    
    $
    91,784,369
    
    
    $
    97,619,685Income-Producing Properties and Property and
Equipment, net(3)
    
    $
    25,249,872
    
    
    $
    25,473,921
    
    
    $
    22,213,811
    
    
    $
    22,978,183
    
    
    $
    23,338,000Long-Term Debt(4)
    
    $
    25,354,607
    
    
    $
    25,009,560
    
    
    $
    21,154,042
    
    
    $
    21,556,295
    
    
    $
    22,512,334Variable Rate Debt(4)(5)
    
    $
    1,000,000
    
    
    $
    1,000,000
    
    
    $
    
    
    
    $
    4,596,683
    
    
    $
    4,852,919Return on Average Shareholders Equity(1)
    
    
    8.8
    %
    
    
    (9.0
    )%
    
    
    (4.9
    )%
    
    
    3.6
    %
    
    
    3.0
    %
  (1)
    
    Includes continuing operations, discontinued operations and extraordinary items,
if any.(2)
    
    Depreciation and amortization for sold properties have been reclassified as discontinued
operations and, therefore, are not included.(3)
    
    Does not include property held for sale or real estate held for future development or
sale.(4)
    
    Does not include debt associated with discontinued operations.(5)
    
    Includes short-term and long-term debt. 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The Company is organized into three operating segments: Energy and Facilities Solutions,
Energy Services, and Real Estate. The Company continues to seek to add new service offerings.
The Company is pursuing this strategy partially through selective acquisitions. The Company also formerly provided commercial construction services as a general contractor
and reported a fourth operating segment, Construction. The Company made the decision to
discontinue its operations as a general contractor in the fourth quarter of fiscal 2004. In
accordance with SFAS 144, the Construction Segment has been classified as a discontinued
operation and is no longer reported as a separate operating segment, but is reported as
discontinued operations. All amounts in this Annual Report on Form 10-K have been restated so
they are consistent with the current presentation. ABRAMS INDUSTRIES 7




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In RESULTS OF OPERATIONS below, changes in revenues, costs and expenses, and selling,
general and administrative expenses from period to period are analyzed on a segment and
consolidated basis. For net earnings and similar profit information on a consolidated basis,
please see ITEM 6. SELECTED FINANCIAL DATA above or the Companys consolidated financial
statements. Pursuant to SFAS 144, the figures shown in the following charts for all periods
presented do not include Real Estate Segment revenues, cost and expenses, and selling, general and
administrative expenses generated by certain owned income-producing properties which have been
sold; such amounts have been reclassified to discontinued operations. RESULTS OF OPERATIONS REVENUES Revenues from continuing operations for fiscal 2005 were $22,795,356, compared to $12,382,949 and
$10,523,063, for fiscal 2004 and fiscal 2003, respectively. This represents an increase in revenues
of 84% in 2005 and 18% in 2004. Revenues include interest income of $79,587, $8,264, and $36,274,
for 2005, 2004, and 2003, respectively, and other income of $79,854, $122,423, and $65,172, for
2005, 2004, and 2003, respectively. The figures in Chart A below, however, 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. 
 REVENUES FROM CONTINUING OPERATIONS SUMMARY BY SEGMENT 
 CHART A  Years Ended
    
    
    
    
    
    
    
    
    
    Years Ended
    
    IncreaseApril 30,
    
    Increase
    
    April 30,
    
    (Decrease)2005
    
    2004
    
    Amount
    
    Percent
    
    2004
    
    2003
    
    Amount
    
    PercentEnergy and Facilities Solutions(1)
    
    $
    3,487
    
    
    $
    2,962
    
    
    $
    525
    
    
    
    18
    
    
    $
    2,962
    
    
    $
    2,900
    
    
    $
    62
    
    
    
    2Energy Services(2)
    
    
    9,588
    
    
    
    2,602
    
    
    
    6,986
    
    
    NA
    
    
    2,602
    
    
    
    
    
    
    
    2,602
    
    
    NAReal Estate(3)
    
    
    9,561
    
    
    
    6,688
    
    
    
    2,873
    
    
    
    43
    
    
    
    6,688
    
    
    
    7,522
    
    
    
    (834
    )
    
    
    (11
    )Total
    
    $
    22,636
    
    
    $
    12,252
    
    
    $
    10,384
    
    
    
    85
    
    
    $
    12,252
    
    
    $
    10,422
    
    
    $
    1,830
    
    
    
    18
  (1)
    
    Revenues for the Energy and Facilities Solutions Segment increased $525,000 or
18% for fiscal 2005 compared to the same period in fiscal 2004, primarily due to:  a)
    
    an increase in revenues from engineering services and proprietary
web/wireless software products of $630,000 derived
from contributions from the business and assets of iTendant, Inc. and Building
Performance Engineers, Inc., respectively, which were acquired in April 2004 and May 2004, respectively; andb)
    
    a net increase in revenues from existing proprietary software
products of $49,000; 
partially offset by:c)
    
    a decrease in hardware sales of $154,000.  (2)
    
    The Energy Services Segment was formed in December 2003, and therefore, a comparison
of the change between the periods would not be meaningful.(3)
    
    Real estate revenues from continuing operations increased $2,873,000 or 43% for
fiscal 2005 compared to the same period in fiscal 2004, primarily due to:  a)
    
    the sale of the Companys Kmart leaseback interest in a shopping center in
Minneapolis, Minnesota, for $2,250,000 in
October 2004. There were no leaseback sales in fiscal 2004;b)
    
    the sale of an outparcel located in North Fort Myers, Florida, for $515,000
in January 2005. There were no land sales in fiscal 2004;c)
    
    an increase in rental revenues of $591,000 related to the acquisition of the
professional medical office building in Douglasville, Georgia, in
April 2004; 
partially offset by:d)
    
    a decrease in the leaseback income of $202,000 related to the sale mentioned
in (a) above; ande)
    
    a decrease in leaseback income of $128,000 related to another Kmart
leaseback that was assigned by the Company in October 2003 to the fee owner. Real estate revenues from continuing operations decreased $834,000 or 11% for fiscal
2004 compared to the same period in fiscal 2003 primarily due to revenues from sales
of land of $860,000 in fiscal 2003, which resulted from the sale of an outparcel in
Jackson, Michigan, and an outparcel and an anchor store pad in Davenport, Iowa. There
were no sales of land in fiscal 2004. ABRAMS INDUSTRIES 8




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PART II(continued) COST AND EXPENSES: APPLICABLE TO REVENUES As a percentage of total segment revenues (See Chart A), the applicable total segment costs and
expenses applicable to revenues (See Chart B) of $13,624,384 for fiscal 2005, $7,759,903 for fiscal
2004, and $6,340,798 for fiscal 2003, were 60%, 63%, and 61%, respectively. In reviewing Chart B,
the reader should recognize that the volume of revenues generally will affect the amounts and
percentages. 
 COSTS AND EXPENSES: APPLICABLE TO REVENUES FROM CONTINUING OPERATIONS SUMMARY BY SEGMENT 
 CHART B  Percent ofSegment RevenuesYears Ended
    
    For Years EndedApril 30,
    
    April 30,2005
    
    2004
    
    2003
    
    2005
    
    2004
    
    2003Energy and Facilities Solutions(1)
    
    $
    2,026
    
    
    $
    1,630
    
    
    $
    1,573
    
    
    
    58
    
    
    
    55
    
    
    
    54Energy Services(2)
    
    
    6,395
    
    
    
    1,822
    
    
    
    
    
    
    
    67
    
    
    
    70
    
    
    
    Real Estate(3)
    
    
    5,203
    
    
    
    4,308
    
    
    
    4,767
    
    
    
    54
    
    
    
    64
    
    
    
    63Total
    
    $
    13,624
    
    
    $
    7,760
    
    
    $
    6,340
    
    
    
    60
    
    
    
    63
    
    
    
    61
  (1)
    
    The increase in the dollar amount for fiscal 2005 compared to the same period of
fiscal 2004 is directly related to the increase in
revenues. The change in the percentage of costs and expenses applicable to revenues from
continuing operations of the Energy
and Facilities Solutions Segment for all periods presented is primarily the result of a
change in the mix of services and products.(2)
    
    The Energy Services Segment was formed in December 2003.(3)
    
    Costs and expenses from continuing operations increased $895,000 or 21 % for
fiscal 2005 compared to the same period in fiscal 2004, primarily due to:  a)
    
    the cost of sale of real estate of $324,000, related to an outparcel in
North Fort Myers, Florida, in January 2005. There were no land sales in fiscal 2004; andb)
    
    rental operating costs and expenses of $518,000 generated by the
Companys professional medical office building located
in Douglasville, Georgia, which was acquired in April 2004; 
partially offset by:c)
    
    a decrease in lease costs of $143,000 due to the sale of the Companys
Kmart leaseback interest in the shopping center in
Minneapolis, Minnesota.Costs and expenses as a percentage of revenue for 2005 were 54%, compared to 64% in fiscal
2004. The decrease in the percentage of costs and expenses applicable to Real Estate
Segments revenues for fiscal 2005 compared to the same period of fiscal 2004, is
primarily due to the increased revenues of $2,250,000 that resulted from the sale of the
Companys Kmart leaseback interest in the shopping center in Minneapolis, Minnesota; the
cost of the sale was $42,115.Costs and expenses from continuing operations decreased $459,000 or 10% for fiscal 2004
compared to the same period in fiscal 2003, primarily due to:  a)
    
    the cost of sales of real estate of $860,000 in fiscal 2003, resulting
from the sale of an outparcel in Jackson, Michigan, and
an outparcel and an anchor store pad in Davenport, Iowa. There were no sales of land in
fiscal 2004;b)
    
    a decrease in lease costs of $141,000 in fiscal 2004 due to a Kmart
leaseback that was assigned by the Company in October
2003 to the fee owner; andc)
    
    the Company no longer outsourcing asset management responsibilities,
resulting in a decrease in fiscal 2004 asset
management fees in fiscal 2004 of $83,000. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES For fiscal years 2005, 2004, and 2003, selling, general and administrative (SG&A) expenses
from continuing operations (see Chart C) were $9,337,313, $6,600,411, and $5,611,913,
respectively. As a percentage of consolidated revenues from continuing operations, these
expenses were 41%, 54%, and 54% in 2005, 2004, and 2003, respectively. In reviewing Chart C,
the reader should recognize that the volume of revenues generally affects 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. ABRAMS INDUSTRIES 9




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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES FROM CONTINUING OPERATIONS SUMMARY BY SEGMENT 
 CHART C  Percent ofSegment RevenuesYears Ended
    
    For Years EndedApril 30,
    
    April 30,2005
    

2004
    

2003
    
    2005
    
    2004
    
    2003Energy and Facilities Solutions(1)
    
    $
    2,194
    
    
    $
    2,424
    
    
    $
    1,795
    
    
    
    63
    
    
    
    82
    
    
    
    62Energy Services(2)
    
    
    2,221
    
    
    
    788
    
    
    
    
    
    
    
    23
    
    
    
    30
    
    
    
    Real Estate(3)
    
    
    1,407
    
    
    
    862
    
    
    
    835
    
    
    
    15
    
    
    
    13
    
    
    
    11Parent(4)
    
    
    3,516
    
    
    
    2,526
    
    
    
    2,982
    
    
    
    16
    
    
    
    21
    
    
    
    29Total
    
    $
    9,338
    
    
    $
    6,600
    
    
    $
    5,612
    
    
    
    41
    
    
    
    54
    
    
    
    54
  (1)
    
    For fiscal 2005 compared to the same period in fiscal 2004, SG&A expenses decreased
$230,000 or 9%, primarily due to:  a)
    
    Unlike the prior years expense of $267,000, there was no charge to
earnings related to a change in estimated useful life of
one of the Companys proprietary facility management software applications;b)
    
    a decrease in rent expense of $131,000 related to the Energy Facilities and
Solutions Segment moving its main offices to
the Companys corporate headquarters; partially offset by:c)
    
    an increase in bad debt expense related to one customer of $50,000; andd)
    
    an increase in personnel and personnel related costs of $43,000.For fiscal 2004 compared to the same period in 2003, SG&A expenses increased
$629,000 or 35%, primarily due to:  a)
    
    an increase in the number of personnel and other personnel costs;b)
    
    a charge to earnings of $267,000 in 2004 related to the change in the
estimated useful life of one of the Companys
proprietary facility management software applications; andc)
    
    an increase in sales and marketing expenditures.  (2)
    
    The Energy Services Segment was formed in December 2003.(3)
    
    For fiscal 2005 compared to the same period in 2004, SG&A expenses from continuing
operations increased $545,000 or 63%, primarily due to:  a)
    
    an increase in personnel and personnel related costs of $138,000; andb)
    
    an increase of $326,000 related to legal fees and the conclusion of an
arbitration matter involving the Companys former
asset manager in December 2004.On a dollar and percentage basis, SG&A expenses from continuing operations increased
$27,000 or 3% for fiscal 2004 compared to the same period in 2003, primarily due to:  a)
    
    an increase in personnel and personnel related costs of $285,000, due to
the decision to no longer outsource asset management; partially offset by;b)
    
    a decrease in legal and professional fees of $242,000.  (4)
    
    SG&A expenses were lower on a percentage basis for fiscal 2005 compared to the same
period in 2004 primarily due to the increase in consolidated revenues. On a dollar basis, SG&A expenses increased $990,000
or 39% for fiscal 2005 compared to the same period in 2004, primarily due to:  a)
    
    an increase in incentive compensation of $892,000 tied to the successful
achievement of Company-wide earnings and
performance goals;b)
    
    an increase in personnel and other personnel related costs of $107,000;c)
    
    costs of $222,000 that were previously expensed at each of the operating
segments which related to the restructuring of
formerly separate accounting functions to a consolidated shared services accounting
platform for all operating segments. The majority of the costs were previously expensed at the former Construction
Segment; andd)
    
    an increase of $94,000 in consulting fees related to
Sarbanes-Oxley Act of 2002; 
partially offset by:e)
    
    a decrease in legal and tax professional fees of $111,000.On a dollar and percentage basis, SG&A expenses decreased $456,000 or 15% for fiscal
2004, compared to the same period in 2003, primarily due to:  a)
    
    the accrual in fiscal 2003 of an expense of $484,000 related to a
retirement agreement, which replaced the previous
employment agreement of a former officer and director of the Company; andb)
    
    a decrease in personnel and personnel related costs of approximately $117,000. ABRAMS INDUSTRIES 10




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PART II(continued) INTEREST COSTS Interest costs expensed of $2,052,931, $2,279,642, and $2,133,131, in 2005,
2004, and 2003, respectively, are primarily related to debt on real estate.
There was no capitalized interest in any of the years presented. DISCONTINUED OPERATIONS On April 18, 2005, the Company sold its Company-developed shopping center located in Jackson,
Michigan, and recognized a pre-tax gain on sale, net of associated costs, of approximately
$4.1 million. On February 9, 2005, the Company sold its shopping center located in
Cincinnati, Ohio, and recognized a pre-tax gain of approximately $850,000. As a result of
these sales, the Companys financial statements have been prepared with assets, liabilities,
results of operations, cash flows, and the gains from the sales shown as discontinued
operations for all periods presented. During fiscal 2004, the Company made the decision to discontinue its operations as a general
contractor, and pursuant to this decision, all general contracting operating activities have
ceased. The former Construction Segment, as a result, has been classified as a discontinued
operation, and the assets, liabilities, results of operations and cash flows of the Segment
have been reclassified to discontinued operations for all periods presented. LIQUIDITY AND CAPITAL RESOURCES Working capital increased 45% to $10,450,202 at April 30, 2005, compared to $7,207,333 at
April 30, 2004. Operating activities provided cash of $1,194,912, primarily due to the sale
of the Companys Kmart leaseback interest in a shopping center in Minneapolis, Minnesota. The
cash balance at April 30, 2005, did not include temporarily restricted cash of $8,272,399, of
which $3.489 million was released to the Company and converted to cash in May 2005. Investing activities used cash of $9,383,000, primarily due to:  a)
    
    deposit of cash proceeds of $8,272,000 from sales of real estate, which at
April 30, 2005, was temporarily held
in escrow because the Company intended to acquire two additional income-producing
properties, in order to
qualify the sales under the Internal Revenue Code Section 1031 for federal income tax
deferral. The Company
did not complete the acquisition to replace the shopping center located in Cincinnati,
Ohio, within the prescribed
parameters and, therefore, in May 2005, $3,490,000 held in escrow was released to the
Company. In July 2005,
the Company elected not to acquire a replacement property for the shopping center
located in Jackson, Michigan.
The remaining proceeds of $4,782,000 held in escrow will be released to the Company the
earlier of filing the
Companys federal tax return or at the end of the statutory holding period in October 2005.b)
    
    additions to income-producing properties of $581,000;c)
    
    additions to intangibles of $301,000 related to the software development of
the Companys proprietary web/wireless software;d)
    
    additions to property and equipment of $310,000 related to the leasehold
improvements for both the Energy
and Facilities Solutions and Energy Services Segments relocating their main offices to
the Companys corporate headquarters building;partially offset by:e)
    
    proceeds of $515,000 from the sale of real estate held for sale or future development. Financing activities used cash of $4,019,000, primarily due to:  a)
    
    a cash payment of $2,000,000 utilized in the restructuring of the loan
related to the Companys owned shopping
center in Jacksonville, Florida;b)
    
    scheduled principal payments of mortgage notes and other long-term debt of $969,000;
andc)
    
    cash payments of regular and special dividends of $1,026,000. Discontinued operations provided cash of $7,230,000, primarily from:  a)
    
    wind down activities related to the former Construction Segment;b)
    
    proceeds of $8,241,000 from the sales of the Companys former shopping
center located in Cincinnati, Ohio,
and Jackson, Michigan, in February 2005 and April 2005,
respectively; 
partially offset by:c)
    
    a prepayment penalty of $669,000 related to the early extinguishment of
debt as part of the sale of the Company-
owned shopping center in Jackson, Michigan, and the scheduled principal payments of
mortgage notes of $2,402,000 related to the two sales mentioned in (b) above. The Company anticipates that its existing cash balances, equity, line of credit, potential
proceeds from sales of real estate, potential cash flow provided by financing or refinancing
of debt obligations, and cash flow generated from operations will, for the foreseeable
future, provide adequate liquidity and financial flexibility to meet the Companys
needs to fund working capital, capital expenditures, and investment activities. ABRAMS INDUSTRIES 11




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Acquisitions In May 2004, the Company acquired the operating business and assets of Building Performance
Engineers, Inc. for a purchase price of $337,984, in order to expand the Companys capabilities in
energy efficiency engineering and design. The consideration consisted of: 21,126 newly-issued
shares of the Companys Common Stock, with a fair value of $94,906, at the date of the
acquisition; a non-interest bearing note payable in the amount of $150,000 (discounted to
$136,500); and cash of $106,578 (including direct acquisition expenses). Dispositions Of Real Estate Assets On April 18, 2005, the Company closed on the sale of its shopping center located in Jackson,
Michigan, for a sales price of $7.4 million, resulting in a pre-tax gain of approximately $4.1
million. After selling expenses, repayment of mortgage note payable and other
associated costs, the sale generated net cash proceeds of
approximately $4.78 million. The Company
had intended to use proceeds from this sale to acquire an additional
income-producing property and qualify the sale under the Internal Revenue Code Section 1031 for
federal income tax deferral, by placing the proceeds with a third party intermediary. In July 2005,
the Company elected not to acquire a replacement income-producing property. Proceeds of $4.78
million are included in temporarily restricted cash held in escrow at April 30, 2005, in the
Companys accompanying balance sheet and will be released to the Company the earlier of filing the
Companys federal tax return or at the end of the statutory holding period in October 2005. On February 9, 2005, the Company closed on the sale of its shopping center located in Cincinnati,
Ohio, for a sales price of $3.6 million, resulting in a pre-tax gain of approximately $850,000.
After selling expenses, the sale generated net cash proceeds of $3.45 million. The Company had
intended to use the net proceeds from this sale to acquire an additional income-producing property
and qualify for Section 1031 federal income tax deferral by placing the proceeds with a third party
intermediary; however, the Company did not consummate an acquisition of an income-producing property, and the proceeds of approximately $3.49 million were subsequently
released to the Company in May 2005. On January 31, 2004, the Company closed on the sale of one of its outparcels located in North Fort
Myers, Florida, for a sales price of $515,000, resulting in a pre-tax gain of approximately
$191,000. After selling expenses, the sale generated net cash proceeds of approximately $468,000. On September 29, 2004, the Company closed on the sale of its Kmart leaseback interest in a
shopping center in Minneapolis, Minnesota, for a sales price of $2.25 million, resulting in a
pre-tax gain of approximately $2.2 million and net cash proceeds of approximately $2.2 million. Debt Restructuring The Company restructured the loan on the Company-owned shopping center in Jacksonville, Florida.
The Company paid the lender $1.5 million as payment in full of the Additional Interest Agreement,
which was then terminated. The loan principal amount was reduced by $474,042. The newly
restructured loan initial principal amount was $7.8 million; the loan bears interest at 6.125% and
will be amortized until it matures on July 1, 2029, although the loan may be called by the lender
for early repayment any time after July 1, 2011, upon thirteen months prior notice. As a result of
the loan restructuring, the Companys annual debt service payment for the shopping center was
reduced by $299,448. Secured Line Of Credit The Company has a commitment from a bank for a secured line of credit in the amount of $1.5
million, of which a total of $300,000 is restricted to secure a letter of credit described in the
next paragraph. The bank line of credit is secured by the Companys investment in a short-term
securities bond of $2.0 million that matures in April 2006. The Company can borrow an amount not to
exceed 75% of the current market value of the bond. The line of credit bears interest at the prime
rate or LIBOR plus 2%, and has a commitment fee of .375% on any unused portion. The bank line of
credit expires January 31, 2006. As of April 30, 2005, there were no amounts outstanding on this
line of credit. In conjunction with the refinancing of a mortgage on an income-producing property in July 2002,
the Company is required to provide for potential future tenant improvement expenses and lease
commissions through additional collateral, in the form of a letter of credit, in the amount of
$150,000 from July 17, 2002 through July 16, 2005, $300,000 from July 17, 2005 through July 16,
2008, and $450,000 from July 17, 2008 through August 1, 2012. The letter of credit, currently
$300,000, is secured by the bank line of credit, as discussed in the paragraph above. Repurchases Of Common Stock In March 2005, the Companys Board of Directors authorized the repurchase of up to 50,000 shares
of the Companys stock in the twelve-month period beginning March 6, 2005, and ending on March 5,
2006. Any such purchases, if made, could be in the open market at prevailing prices or in
privately negotiated transactions. The Company did not repurchase any shares in the period between
May 1, 2004, and June 30, 2005. ABRAMS INDUSTRIES 12




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##### Table of Contents



PART II(continued) OTHER COMMITMENTS AND CONTINGENCIES The Companys other commitments primarily include operating leases for its leaseback shopping
centers, as described
in ITEM 2. PROPERTIES. The Company has no long-term commitments to purchase building materials or
other supplies. CONTRACTUAL OBLIGATIONS A summary of the Companys contractual obligations at April 30, 2005, are as follows: Payment Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    1 Year
    
    1-3 Years
    
    3-5 Years
    
    5 YearsContractual Obligations
Mortgage notes payable(1)
    
    $
    24,484,350
    
    
    $
    917,161
    
    
    $
    7,725,791
    
    
    $
    1,348,775
    
    
    $
    14,492,623Operating leases(2)
    
    
    3,491,234
    
    
    
    1,176,918
    
    
    
    1,064,493
    
    
    
    667,997
    
    
    
    581,826Other long-term debt
    
    
    2,034,407
    
    
    
    246,989
    
    
    
    512,418
    
    
    
    125,000
    
    
    
    1,150,000Long-term obligations
    
    
    222,000
    
    
    
    96,000
    
    
    
    126,000
    
    
    
    
    
    
    
    Capital lease obligations
    
    
    10,557
    
    
    
    10,557
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    30,242,548
    
    
    $
    2,447,625
    
    
    $
    9,428,702
    
    
    $
    2,141,772
    
    
    $
    16,224,449
  (1)
    
    Regularly scheduled principal amortization payments and final payments
due upon maturity.(2)
    
    Future minimum rental payments on leaseback shopping centers and ground leases. EFFECTS OF INFLATION ON REVENUES AND OPERATING PROFITS The effects of inflation upon the Companys operating results are varied. Inflation in
recent years has been modest and has had minimal effect on the Company. The Energy and Facilities Solutions Segment generally has contracts that are renewed on an
annual basis. At the time of renewal, contract fees may be increased, subject to customer
approval. As inflation impacts the Companys costs, primarily labor, the Company could seek a
price increase for its contracts in order to protect its profit margin. The Energy Services Segment typically engages in contracts of short duration with fixed
prices, which normally will minimize any erosion of its profit margin due to inflation. As
inflation impacts the Companys costs, primarily labor and materials, the Company could seek
a price increase for subsequent contracts to protect its profit margin. In the Real Estate Segment, many of the anchor retail tenant leases are long-term (original
terms over 20 years), with fixed rents, and most retail leases have contingent rent
provisions by which the Company may earn additional rent as a result of increases in tenants
sales over specified targets. In many cases, however, the contingent rent provisions permit
the tenant to offset against contingent rents any increases in the tenants share of ad
valorem taxes above a specified amount. If inflation were to rise, ad valorem taxes would
probably increase as well, which, in turn, could cause a decrease in the contingent rents.
Furthermore, the Company has certain repair obligations, and the costs of repairs generally
increase with inflation. Inflation causes interest rates to rise, which has a positive effect on investment income,
but could have a negative effect on profit margins, because of the increased costs of
contracts and the increase in interest expense on variable rate loans. CRITICAL ACCOUNTING POLICIES A critical accounting policy is one which is both important to the portrayal of a Companys
financial position and results of operations, and requires the Company to make estimates and
assumptions in certain circumstances that affect amounts reported in the accompanying
consolidated financial statements and related notes. In preparing these financial statements,
the Company has made its best estimates and used its best judgments regarding certain amounts
included in the financial statements, giving due consideration to materiality. The
application of these accounting policies involves the exercise of judgment and the use of
assumptions regarding future uncertainties, and as a result, actual results could differ from
those estimates. Management believes that the Companys most critical accounting policies are
discussed and described in Note 2 to the consolidated financial statements, and include: Revenue Recognition Energy and facilities solutions revenues primarily consist of services and product sales.
Revenues are recognized as services are rendered, and depending upon the product type and
customer agreement, product sales are recognized when products are installed or when
products are delivered. ABRAMS INDUSTRIES 13




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Energy services 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.
Original contract prices are adjusted for change orders in the amounts that are reasonably
estimated based on the Companys historical experience. The cumulative effects of changes in
estimated total contract costs and revenues (change orders) are recorded in the period in which the
facts requiring such revisions become known, and are accounted for using the
percentage-of-completion method. At the time it is determined that a contract is expected to 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 retail tenants are required to pay incremental rental amounts, which are contingent on
their store sales. These percentage rents are recognized only if and when earned. Revenue from the sale of real estate is recognized when all of the following has occurred: (a) the
property is transferred to the buyer; (b) the buyers initial and continuing investment is
adequate to demonstrate a commitment to pay for the property; and (c) the buyer has assumed all
future ownership risks of the property. Costs of sales of 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. Income-producing Properties And Property 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 assets. Property and equipment are recorded at cost, and are depreciated for financial reporting purposes
using the straight-line method over the estimated useful lives of the assets. Significant
additions that extend asset lives are capitalized. Normal maintenance and repair costs are
expensed as incurred. Interest and other carrying costs related to real estate assets under
construction are capitalized. Other costs of development and construction of real estate assets
are also capitalized. Capitalization of interest and other carrying costs are discontinued when a
project is substantially completed or if active development ceases. The Company reviews its
long-lived assets for impairment whenever events or changes in circumstances indicate that the
carrying amount or as asset may not be recoverable. Valuation Of Goodwill And Other Intangible Assets Goodwill and intangible assets with indefinite lives are required to be reviewed for impairment on
an annual basis or 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 discounted cash flows expected to be
generated by the asset. The most significant assumptions in the impairment analysis are revenue
growth and discount rate. If an asset is determined 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
estimated fair value. Assets to be disposed of are reported at the lower of their carrying amount
or estimated fair value less costs to sell. 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. Discontinued Operations The Company adopted SFAS 144,
Accounting for the Impairment or Disposal of Long-Lived Assets,
effective May 1, 2002, which requires among other things, that the gains and losses from the
disposition of certain income-producing real estate assets, liabilities, operating results, and
cash flows be reflected as discontinued operations in the financial statements for all periods
presented. Although net earnings is not affected, the Company has reclassified results previously
included in continuing operations to discontinued operations for qualifying dispositions under
SFAS 144. ABRAMS INDUSTRIES 14




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PART II (continued) Recent Accounting Pronouncements In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard
(SFAS) No. 123(R) which replaces SFAS No. 123, Accounting for Stock-Based Compensation,
and supersedes Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees. SFAS No. 123(R) applies to all transactions involving the issuance, by the
Company, of its own equity securities (stock, stock options, or other equity instruments) in
exchange for goods or services, including employee services. It requires that all stock
option awards to employees be expensed by the Company over any related vesting period. As of
the effective date, the Company will apply this standard using the modified prospective
method. Under this method, the Company records compensation expense for all awards it grants
after the date it adopts the standard. In addition, as of the effective date, the Company
will be required to record compensation expense for the unvested portion of the previously
granted awards that remain outstanding at the date of adoption. SFAS No. 123(R) is effective
for the Company as of May 1, 2006. The adoption of this statement is not expected to have a
material effect on the Companys financial position or results of operations. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND RISKS Certain statements contained or incorporated by reference in this Annual Report on
Form 10-K, including without limitation, statements containing the words believes,
anticipates, estimates, expects, plans, 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. Factors relating to general global, national, regional, and local economic conditions,
including international political stability, national defense, homeland security, employment
levels, wage and salary levels, consumer confidence, availability of credit, taxation
policies, the Sarbanes-Oxley Act, SEC reporting requirements, fees paid to vendors in order
to remain in compliance with Sarbanes-Oxley Act and SEC requirements, interest rates,
capital spending, and inflation could negatively impact the Company and its customers,
suppliers, and sources of capital. Any significant negative impact from these factors could
result in material adverse effects on the Companys results of operations and financial
condition. The Company is at risk for many other matters beyond its control, including, but not limited
to: the possible impact, if any, on revenues due to the ultimate disposition of legal
proceedings in which the Company is involved, including matters described in previous SEC
reports; the potential loss of significant customers; co-tenancy provisions in anchor tenant
leases; the Companys ability to sell or refinance its real estate; the possibility of not
achieving projected backlog revenues or not realizing earnings from such revenues; the cost
and availability of insurance; the ability of the Company to attract and retain key
personnel; weather conditions; changes in laws and regulations, including changes in
accounting standards, generally accepted accounting principles, and regulatory requirements
of the SEC and NASDAQ; overall vacancy rates in the markets where the Company leases retail
and office space; overall capital spending trends in the economy; the timing and amount of
earnings recognition related to the possible sale of real estate properties held for sale;
delays in or cancellations of customers orders; the level and volatility of energy prices;
the level and volatility of interest rates; the failure of a subcontractor to perform; and
the deterioration in the financial stability of an anchor tenant, significant subcontractor
or other significant customer. ABRAMS INDUSTRIES 15




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Companys major market risk exposure arises from changes in interest rates and the
resulting impact on variable rate debt instruments. The Company has variable rate debt of $1
million. In addition, the Company has interest rate risk associated with fixed rate debt. The
Companys objectives in interest rate risk management are to limit the negative impact of interest
rates on earnings and cash flows and to lower overall borrowing costs. To achieve its objectives,
the Company borrows at fixed rates when it believes it is in its best interests to do so, and may
enter into derivative financial instruments, such as interest rate swaps and caps, in order to
limit its exposure to interest rate fluctuations. The Company does not enter into derivative or
interest rate transactions for speculative purposes. There were no derivative contracts in effect
at April 30, 2005, or April 30, 2004. The following table summarizes information related to the Companys market risk sensitive debt
instruments as of April 30, 2005: Expected Maturity DateFiscal Year Ending April 30(Dollars in Thousands)
    
    
    
    
    
    EstimatedThere-
    
    
    
    
    
    Fair2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    after
    
    Total
    
    ValueFixed rate debt
    
    $
    1,175
    
    
    
    1,223
    
    
    
    7,015
    
    
    
    704
    
    
    
    770
    
    
    
    14,643
    
    
    $
    25,530
    
    
    $
    27,278Average interest rate
    
    
    7.3
    %
    
    
    7.4
    %
    
    
    7.4
    %
    
    
    7.9
    %
    
    
    7.9
    %
    
    
    8.1
    %Variable rate debt(1)
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    $
    1,000
    
    
    $
    1,000
  (1)
    
    Interest on variable rate debt is based on prime rate plus 1.5%. The estimated fair value of our debt as of April 30, 2005, is based on a discounted
cash flow analysis using current borrowing rates for debt with similar terms and
remaining maturities. Such fair value is subject to changes in interest rates.
Generally, the fair value will increase as interest rates fall and decrease as interest
rates rise. ABRAMS INDUSTRIES 16




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders
Abrams Industries, Inc.: We have audited the accompanying consolidated balance sheets of Abrams Industries, Inc. and
subsidiaries (the Company) as of April 30, 2005, and 2004, and the related consolidated
statements of operations, shareholders equity, and cash flows for each of the three years in
the period ended April 30, 2005. Our audits also included the financial statement schedule
listed in the Index at Item 15. These financial statements and financial statement schedule
are the responsibility of the Companys management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement schedule based on
our audits. We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Companys internal control over financial reporting. Accordingly, we
express no opinion. An audit also 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, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in
all material respects, the financial position of Abrams Industries, Inc. and subsidiaries as
of April 30, 2005, and 2004, and the results of their operations and their cash flows for
each of the three years in the period ended April 30, 2005, in conformity with accounting
principles generally accepted in the United States of America. Also, in our opinion, such
financial statement schedule for 2005, 2004, and 2003 when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein. /s/ Deloitte & Touche LLP Atlanta, Georgia
July 25, 2005 ABRAMS INDUSTRIES 17




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##### Table of Contents



CONSOLIDATED BALANCE SHEETS April 30,2005
    
    2004ASSETSCURRENT ASSETS:Cash and cash equivalents (Notes 3 and 19)
    
    $
    1,402,645
    
    
    $
    6,379,679Temporarily restricted cash held in escrow (Notes 3 and 19)
    
    
    8,272,399
    
    
    
    Short-term investment
    
    
    2,000,000
    
    
    
    200,000Receivables:Trade accounts and notes, net of allowance for doubtful accounts of
$61,301 in 2005, and $48,512 in 2004
    
    
    590,757
    
    
    
    685,496Contracts, net of allowance for doubtful accounts of
$8,500 in 2005, and $0 in 2004, including retained amounts of
$163,104 in 2005, and $52,262 in 2004 (Note 5)
    
    
    2,061,273
    
    
    
    1,063,766Assets of discontinued operations (Note 4)
    
    
    103,632
    
    
    
    4,280,080Costs and earnings in excess of billings (Note 5)
    
    
    312,781
    
    
    
    513,919Deferred income taxes (Note 10)
    
    
    552,953
    
    
    
    623,001Other (Note 2)
    
    
    890,522
    
    
    
    606,460Total current assets
    
    
    16,186,962
    
    
    
    14,352,401INCOME-PRODUCING PROPERTIES, net (Notes 6 and 8)
    
    
    24,413,645
    
    
    
    24,881,247ASSETS OF DISCONTINUED OPERATIONS (Note 4)
    
    
    
    
    
    
    5,056,968PROPERTY AND EQUIPMENT, net (Note 7)
    
    
    836,227
    
    
    
    592,674OTHER ASSETS:Real estate held for future development or sale
    
    
    3,692,731
    
    
    
    3,970,498Intangible assets, net (Note 16)
    
    
    3,164,272
    
    
    
    3,256,021Goodwill (Note 16)
    
    
    5,458,717
    
    
    
    4,998,242Investment held to maturity
    
    
    
    
    
    
    2,000,000Other (Note 2)
    
    
    3,314,618
    
    
    
    2,767,968$
    57,067,172
    
    
    $
    61,876,019LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Trade and subcontractors payables, including retained amounts
of $13,903 in 2005, and $13,254 in 2004
    
    $
    888,397
    
    
    $
    648,676Accrued expenses
    
    
    1,861,348
    
    
    
    2,157,607Accrued incentive compensation
    
    
    1,089,369
    
    
    
    Billings in excess of costs and earnings (Note 5)
    
    
    526,512
    
    
    
    98,439Liabilities of discontinued operations (Note 4)
    
    
    196,427
    
    
    
    3,129,902Current maturities of long-term debt
    
    
    1,174,707
    
    
    
    1,110,444Total current liabilities
    
    
    5,736,760
    
    
    
    7,145,068DEFERRED INCOME TAXES (Note 10)
    
    
    3,460,151
    
    
    
    2,677,141LIABILITIES OF DISCONTINUED OPERATIONS (Note 4)
    
    
    
    
    
    
    2,402,093OTHER LIABILITIES
    
    
    1,602,243
    
    
    
    4,644,630MORTGAGE NOTES PAYABLE, less current maturities (Note 8)
    
    
    23,567,189
    
    
    
    23,107,775OTHER LONG-TERM DEBT, less current maturities (Note 9)
    
    
    1,787,418
    
    
    
    1,901,785Total liabilities
    
    
    36,153,761
    
    
    
    41,878,492COMMITMENTS AND CONTINGENCIES (Notes 8, 9 and 17)SHAREHOLDERS EQUITY (Note 12):Common stock, $1 par value; 5,000,000 shares authorized;
3,357,601 issued and 3,209,113 outstanding in 2005,
3,327,628 issued and 3,180,340 outstanding in 2004,
    
    
    3,357,601
    
    
    
    3,327,628Additional paid-in capital
    
    
    3,067,982
    
    
    
    2,963,874Deferred stock compensation
    
    
    (14,162
    )
    
    
    (26,855
    )Retained earnings
    
    
    15,186,932
    
    
    
    14,412,663Treasury stock (common shares) of 148,488 in 2005, and 147,288 in 2004
    
    
    (684,942
    )
    
    
    (679,783
    )Total shareholders equity
    
    
    20,913,411
    
    
    
    19,997,527$
    57,067,172
    
    
    $
    61,876,019
 See accompanying notes to consolidated financial statements. ABRAMS INDUSTRIES 18




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##### Table of Contents



CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended April 30,2005
    
    2004
    
    2003REVENUES:Energy and facilities solutions
    
    $
    3,486,980
    
    
    $
    2,962,308
    
    
    $
    2,900,191Energy services
    
    
    9,587,875
    
    
    
    2,602,025
    
    
    
    Rental income
    
    
    9,046,060
    
    
    
    6,687,929
    
    
    
    6,661,865Real estate sales
    
    
    515,000
    
    
    
    
    
    
    
    859,561Interest
    
    
    79,587
    
    
    
    8,264
    
    
    
    36,274Other
    
    
    79,854
    
    
    
    122,423
    
    
    
    65,17222,795,356
    
    
    
    12,382,949
    
    
    
    10,523,063COSTS AND EXPENSES:Energy and facilities solutions
    
    
    2,026,179
    
    
    
    1,629,687
    
    
    
    1,573,426Energy services
    
    
    6,395,380
    
    
    
    1,821,869
    
    
    
    Rental property operating expenses, excluding interest
    
    
    4,878,446
    
    
    
    4,308,347
    
    
    
    4,471,559Cost of real estate sold
    
    
    324,379
    
    
    
    
    
    
    
    295,81313,624,384
    
    
    
    7,759,903
    
    
    
    6,340,798Selling, general and administrative
    
    
    9,337,313
    
    
    
    6,600,411
    
    
    
    5,611,913Loss on extinguishment of debt
    
    
    218,071
    
    
    
    
    
    
    
    Interest costs incurred
    
    
    2,052,931
    
    
    
    2,279,642
    
    
    
    2,133,13125,232,699
    
    
    
    16,639,956
    
    
    
    14,085,842LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
    
    
    (2,437,343
    )
    
    
    (4,257,007
    )
    
    
    (3,562,779
    )INCOME TAX BENEFIT (Note 10):Current
    
    
    
    
    
    
    
    
    
    
    (171,907
    )Deferred
    
    
    (933,570
    )
    
    
    (1,499,602
    )
    
    
    (1,181,544
    )(933,570
    )
    
    
    (1,499,602
    )
    
    
    (1,353,451
    )LOSS FROM CONTINUING OPERATIONS
    
    
    (1,503,773
    )
    
    
    (2,757,405
    )
    
    
    (2,209,328
    )DISCONTINUED OPERATIONS (Note 4):Earnings (loss) from discontinued operations, adjusted
for applicable income tax expense (benefit) of $(141,420) in 2005,
$(629,463) in 2004, and $291,864 in 2003
    
    
    (305,840
    )
    
    
    (1,554,644
    )
    
    
    517,818Gain on sale of income-producing real estate
adjusted for applicable income tax expense of
$1,977,390 in 2005, $1,510,307 in 2004, and $372,230 in 2003
    
    
    3,609,971
    
    
    
    2,461,923
    
    
    
    617,986EARNINGS FROM DISCONTINUED OPERATIONS
    
    
    3,304,131
    
    
    
    907,279
    
    
    
    1,135,804NET EARNINGS (LOSS)
    
    $
    1,800,358
    
    
    $
    (1,850,126
    )
    
    $
    (1,073,524
    )NET EARNINGS (LOSS) PER SHARE (Note 13):From continuing operationsbasic and diluted
    
    $
    (.47
    )
    
    $
    (.93
    )
    
    $
    (.76
    )From discontinued operationsbasic and diluted
    
    
    1.03
    
    
    
    .31
    
    
    
    .39Net earnings (loss) per sharebasic and diluted
    
    $
    .56
    
    
    $
    (.62
    )
    
    $
    (.37
    )
 See accompanying notes to consolidated financial statements. ABRAMS INDUSTRIES 19




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CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY Additional
    
    DeferredCommon Shares
    
    Paid-In
    
    Stock
    
    Retained
    
    TreasuryStock
    
    Amount
    
    Capital
    
    Compensation
    
    Earnings
    
    Stock
    
    TotalBALANCES at April 30, 2002
    
    
    3,054,439
    
    
    $
    3,054,439
    
    
    $
    2,135,005
    
    
    $
    (12,744
    )
    
    $
    18,273,853
    
    
    $
    (671,677
    )
    
    $
    22,778,876Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,073,524
    )
    
    
    
    
    
    
    (1,073,524
    )Common stock acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (470
    )
    
    
    (470
    )Common stock issued
    
    
    5,800
    
    
    
    5,800
    
    
    
    18,500
    
    
    
    (24,300
    )
    
    
    
    
    
    
    
    
    
    
    Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,446
    
    
    
    
    
    
    
    (1,800
    )
    
    
    18,646Cash dividends declared $.16 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (465,576
    )
    
    
    (465,576
    )BALANCES at April 30, 2003
    
    
    3,060,239
    
    
    $
    3,060,239
    
    
    $
    2,153,505
    
    
    $
    (16,598
    )
    
    $
    16,734,753
    
    
    $
    (673,947
    )
    
    $
    21,257,952Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,850,126
    )
    
    
    
    
    
    
    (1,850,126
    )Common stock issued
    
    
    267,389
    
    
    
    267,389
    
    
    
    810,369
    
    
    
    (41,700
    )
    
    
    
    
    
    
    
    
    
    
    1,036,058Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,443
    
    
    
    
    
    
    
    (5,836
    )
    
    
    25,607Cash dividends declared $.16 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (471,964
    )
    
    
    
    
    
    
    (471,964
    )BALANCES at April 30, 2004
    
    
    3,327,628
    
    
    $
    3,327,628
    
    
    $
    2,963,874
    
    
    $
    (26,855
    )
    
    $
    14,412,663
    
    
    $
    (679,783
    )
    
    $
    19,997,527Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,800,358
    
    
    
    
    
    
    
    1,800,358Common stock issued
    
    
    29,973
    
    
    
    29,973
    
    
    
    104,108
    
    
    
    (39,175
    )
    
    
    
    
    
    
    
    
    
    
    94,906Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,868
    
    
    
    
    
    
    
    (5,159
    )
    
    
    46,709Cash dividends declared $.32 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,026,089
    )
    
    
    
    
    
    
    (1,026,089
    )BALANCES at April 30, 2005
    
    
    3,357,601
    
    
    $
    3,357,601
    
    
    $
    3,067,982
    
    
    $
    (14,162
    )
    
    $
    15,186,932
    
    
    $
    (684,942
    )
    
    $
    20,913,411
 See accompanying notes to consolidated financial statements. ABRAMS INDUSTRIES 20




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal Year Ended2005
    
    2004
    
    2003Cash flows from operating activities:Net earnings (loss)
    
    $
    1,800,358
    
    
    $
    (1,850,126
    )
    
    $
    (1,073,524
    )Earnings from discontinued operations, net of tax
    
    
    (3,304,131
    )
    
    
    (907,279
    )
    
    
    (1,135,804
    )Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities:Depreciation and amortization
    
    
    1,934,240
    
    
    
    1,496,764
    
    
    
    1,402,540Deferred tax expense (benefit)
    
    
    853,058
    
    
    
    (2,370,942
    )
    
    
    (1,610,654
    )Provision for (recovery of) doubtful accounts
    
    
    21,289
    
    
    
    15,893
    
    
    
    (43,913
    )Gain on sale of real estate
    
    
    (118,499
    )
    
    
    
    
    
    
    (563,748
    )Loss on early extinguishment of debt
    
    
    218,071
    
    
    
    
    
    
    
    Changes in assets and liabilities, net of effect of acquisitions:Receivables, net
    
    
    (924,057
    )
    
    
    46,464
    
    
    
    452,022Costs and earnings in excess of billings
    
    
    201,138
    
    
    
    (385,240
    )
    
    
    Other current assets
    
    
    (284,062
    )
    
    
    (151,553
    )
    
    
    85,895Other assets
    
    
    (546,646
    )
    
    
    (306,145
    )
    
    
    147,431Trade and subcontractors payable
    
    
    198,244
    
    
    
    (110,433
    )
    
    
    79,108Accrued expenses
    
    
    (414,993
    )
    
    
    768,866
    
    
    
    149,395Accrued incentive compensation
    
    
    1,089,369
    
    
    
    
    
    
    
    Billings in excess of costs and earnings
    
    
    428,073
    
    
    
    (157,281
    )
    
    
    Other liabilities
    
    
    43,460
    
    
    
    217,609
    
    
    
    474,758Net cash provided by (used in) operating activities
    
    
    1,194,912
    
    
    
    (3,693,403
    )
    
    
    (1,636,494
    )Cash flows from investing activities:Deposit of proceeds from sale of real estate temporarily held in escrow
    
    
    (8,272,399
    )
    
    
    
    
    
    
    Purchase of held to maturity investments
    
    
    
    
    
    
    (2,200,000
    )
    
    
    Proceeds from maturity of held to maturity investment
    
    
    200,000
    
    
    
    
    
    
    
    Proceeds from sales of real estate and property and equipment
    
    
    515,000
    
    
    
    
    
    
    
    847,203Additions to real estate held for sale or future development
    
    
    
    
    
    
    (17,686
    )
    
    
    Additions to intangible assets, net
    
    
    (605,041
    )
    
    
    244,254
    
    
    
    (277,063
    )Additions to income-producing properties, net
    
    
    (581,456
    )
    
    
    (129,778
    )
    
    
    (258,467
    )Additions to property, equipment, and other, net
    
    
    (469,661
    )
    
    
    (126,896
    )
    
    
    (47,652
    )Acquisitions, net of cash acquired
    
    
    (169,624
    )
    
    
    (3,209,862
    )
    
    
    Repayments received on notes receivable
    
    
    
    
    
    
    66,147
    
    
    
    10,183Net cash (used in) provided by investing activities
    
    
    (9,383,181
    )
    
    
    (5,373,821
    )
    
    
    274,204Cash flows from financing activities:Debt proceeds
    
    
    
    
    
    
    
    
    
    
    4,900,000Mortgage repayment
    
    
    (1,974,042
    )
    
    
    
    
    
    
    (4,544,414
    )Debt repayments
    
    
    (968,798
    )
    
    
    (896,666
    )
    
    
    (862,812
    )Deferred loan costs paid
    
    
    (50,000
    )
    
    
    
    
    
    
    (107,788
    )Repurchase of Common Stock
    
    
    
    
    
    
    
    
    
    
    (470
    )Cash dividends
    
    
    (1,026,089
    )
    
    
    (471,964
    )
    
    
    (465,576
    )Net cash used in financing activities
    
    
    (4,018,929
    )
    
    
    (1,368,630
    )
    
    
    (1,081,060
    )Cash flows from discontinued operations:Operating activities
    
    
    2,061,043
    
    
    
    1,949,852
    
    
    
    (475,072
    )Investing activities
    
    
    8,240,579
    
    
    
    21,226,613
    
    
    
    13,489,901Financing activities
    
    
    (3,071,458
    )
    
    
    (11,518,571
    )
    
    
    (13,325,045
    )Net cash provided by discontinued operations
    
    
    7,230,164
    
    
    
    11,657,894
    
    
    
    (310,216
    )Net increase (decrease) in cash and cash equivalents
    
    
    (4,977,034
    )
    
    
    1,222,040
    
    
    
    (2,753,566
    )Cash and cash equivalents at beginning of year
    
    
    6,379,679
    
    
    
    5,157,639
    
    
    
    7,911,205Cash and cash equivalents at end of year
    
    $
    1,402,645
    
    
    $
    6,379,679
    
    
    $
    5,157,639Supplemental disclosure of noncash financing activities:Issuance of Common Stock under Stock Award Plan
    
    $
    39,175
    
    
    $
    41,700
    
    
    $
    24,300Supplemental schedule of cash flow information:Cash paid during the year for interest
    
    $
    1,996,986
    
    
    $
    2,457,694
    
    
    $
    2,967,042Cash paid (refunded) during the year for income taxes, net
    
    $
    58,488
    
    
    $
    (186,094
    )
    
    $
    (351,871
    )
 See accompanying notes to consolidated financial statements. ABRAMS INDUSTRIES 21




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS APRIL 30, 2005, 2004, AND 2003  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 (i) provides
energy engineering
and analytical consulting services and develops, implements and supports facility management
software applications; (ii) implements energy savings lighting programs and provides other
energy services including facility related improvements that reduce energy and operating
costs; and (iii) engages in real estate investment and development. The Company also
formerly provided commercial construction services as a general contractor. The Companys
wholly-owned subsidiaries include Servidyne Systems, LLC, (the Energy and Facilities
Solutions Segment); The Wheatstone Energy Group, LLC, (the Energy Services Segment); and
Abrams Properties, Inc. and subsidiaries, and AFC Real Estate, Inc. and its subsidiary (the
Real Estate Segment).  2
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Principles of consolidation and basis or 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 accounting principles generally
accepted in the United States of America requires the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities, 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) Revenue recognition Energy and facilities solutions revenues primarily consist of services and product sales.
Revenues are recognized as services are rendered, and depending upon the product type and
customer agreement, product sales are recognized either when products are delivered or when
products are installed. Energy services 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. Original contract prices are adjusted for change orders in the amounts that
are reasonably estimated based on the Companys historical experience. The cumulative
effects of changes in estimated total contract costs and revenues (change orders) are
recorded in the period in which the facts requiring such revisions become known, and are
accounted for using the percentage-of-completion method. At the time it is determined that a
contract is expected to 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 as partial reimbursements of property
operating and common area expenses, which are recognized when earned. In addition, certain
retail tenants are required to pay incremental rental amounts, which are contingent on
their store sales. These percentage rents are recognized only if and when earned. Revenue from the sale of real estate is recognized when all of the following has occurred:
(a) the property is transferred to the buyer; (b) the buyers initial and continuing
investment is adequate to demonstrate a commitment to pay for the property; and (c) the
buyer has assumed all future ownership risks of the property. 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. ABRAMS INDUSTRIES  22




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##### Table of Contents



(d) Cash and cash equivalents and short-term investments Cash and cash equivalents include money market funds and other highly liquid financial
instruments, but excludes cash
temporarily restricted. The Company considers all highly liquid financial instruments with
original maturities of three
months or less to be cash equivalents. The Company considers financial instruments with
original maturities of three
months to one year to be a short-term investment. The Company has classified all short-term
investments as held
to maturity. (e) Temporarily restricted cash held in escrow Temporarily restricted cash held in escrow includes proceeds from the sale of real estate
which the Company elects to be deposited into an escrow account in order to fund
acquisitions of income-producing properties through a tax deferred Section 1031 exchange. If
the Company elects or does not complete such acquisition, then the funds are converted to
cash and cash equivalents. (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. (g) Income-producing properties and property 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 and equipment are recorded at cost, and are 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 real estate assets under construction are capitalized. Other costs of development
and construction of real estate assets are also capitalized. Capitalization of interest and
other carrying costs are discontinued when a project is substantially completed or if active
development ceases. (h) Real estate held for future development or sale Real estate held for future development or sale is carried at the lower of cost or fair value
less costs to sell. (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 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 undiscounted cash flows expected to be generated by the
asset. If an asset is determined 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 costs to sell. As of April 30, 2005, the Company does not believe that any of its
long-lived assets are impaired. (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. ABRAMS INDUSTRIES  23




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##### Table of Contents



(l) Capitalized computer software Software
development is accounted for in accordance with SFAS 86, Accounting for the Costs of
Computer Software to Be Sold, Leased, or Otherwise Marketed. This Statement specifies that costs
incurred internally in creating a computer software product shall be charged to expense when
incurred as research and development until technological feasibility has been established for the
product. Technological feasibility is established upon completion of a detail program design or, in
its absence, completion of a working model. Thereafter, all software production costs shall be
capitalized and subsequently reported at the lower of unamortized cost or net realizable value.
Capitalized costs are amortized based on current and future revenue for each product with an annual
minimum equal to the straight-line amortization over the remaining estimated economic life of the
product. (m) Goodwill and other intangible assets Intangible assets primarily consist of trademarks, computer software, customer relationships,
proprietary facility management software applications, lease costs, and deferred loan costs. The
trademarks are unamortized intangible assets as they have indefinite lives. However, the computer
software, proprietary facility management software applications, lease costs, and deferred loan
costs are amortized using the straight-line method over the following estimated useful lives: Computer software
    
    3 yearsProprietary facility management software applications
    
    5 yearsCustomer relationships
    
    5 yearsLease costs
    
    Over the term of the leaseLoan costs
    
    Over the term of the loan
 The Company tested goodwill and other intangibles assets, related to its Energy and Facilities
Solutions Segment and its Energy Services Segment, with indefinite useful lives for impairment, as
required by SFAS 142, utilizing expected present value of future cash flows. The analysis did not
result in an impairment for fiscal 2005. As of April 30, 2005, the Company does not believe any of
its goodwill or other intangible assets are impaired. (n) Derivative instruments and hedging activities The Company accounts for derivative and hedging activities, if any, in accordance with SFAS 133,
Accounting for Derivative Instruments and Hedging Activities, as amended. Under SFAS 133,
derivative instruments are recognized in the balance sheet at fair value, and changes in the fair
value of such instruments are recognized currently in earnings unless specific hedge accounting
criteria are met. At April 30, 2005, and 2004, the Company had no derivative instruments. (o) Discontinued operations The Company adopted SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
effective May 1, 2002, which requires among other things, that the gains and losses from the
disposition of certain income-producing real estate historical assets, liabilities, operating
results, and cash flows be reflected as discontinued operations in the financial statements for
all periods presented. Although net earnings are not affected, the Company has reclassified
results previously included in continuing operations to discontinued operations for qualifying
dispositions under SFAS 144. ABRAMS INDUSTRIES  24




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##### Table of Contents



(p) Other current assets Other current assets consisted of the following as of April 30, 2005, and April 30, 2004: 2005
    
    2004Inventory
    
    $
    313,813
    
    
    $
    66,331Prepaid real estate taxes
    
    
    196,568
    
    
    
    181,851Prepaid rent
    
    
    106,997
    
    
    
    149,704Prepaid insurance
    
    
    82,168
    
    
    
    124,443Deposits
    
    
    38,320
    
    
    
    15,803Prepaid consulting
    
    
    25,000
    
    
    
    25,000Other
    
    
    127,656
    
    
    
    43,328$
    890,522
    
    
    $
    606,460
 (q) Other assets Other assets consisted of the following as of April 30, 2005, and April 30, 2004: 2005
    
    2004Cash surrender value of life insurance
    
    $
    1,428,753
    
    
    $
    1,259,874Deferred compensation plans
    
    
    1,370,144
    
    
    
    1,265,211Straight-line rent
    
    
    492,221
    
    
    
    242,882Other
    
    
    23,500
    
    
    
    $
    3,314,618
    
    
    $
    2,767,967
 (r) Recent accounting pronouncement In December 2004, the Financial Accounting Standards Board issued SFAS 123(R) which
replaces SFAS 123, Accounting for Stock-Based Compensation, and supersedes Accounting
Principles Board Opinion 25, Accounting for Stock Issued to
Employees. SFAS 23(R) applies
to all transactions involving the issuance, by the Company, of its own equity securities
(stock, stock options, or other equity instruments) in exchange for goods or services,
including employee services. It requires that all stock option awards to employees be
expensed by the Company over any related vesting period. As of the effective date, the
Company will apply this standard using the modified prospective method. Under this method,
the Company records compensation expense for all awards it grants after the date it adopts
the standard. In addition, as of the effective date, the Company will be required to record
compensation expense for the unvested portion of the previously granted awards that remain
outstanding at the date of adoption. SFAS 123(R) is effective for the Company as of May 1,
2006. The adoption of this statement is not expected to have a material effect on the
Companys financial position or results of operations. ABRAMS INDUSTRIES  25




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##### Table of Contents



(s) Stock compensation For purposes of the pro forma disclosures required by SFAS 123, the Company has computed the value
of all stock and
stock option awards granted during fiscal 2005, 2004, and 2003, using the Black-Scholes
option-pricing model. If the Company had accounted for its stock-based compensation awards in accordance with SFAS 123,
results would have been as follows for the years ended April 30: 2005
    
    2004
    
    2003Net earnings (loss), as reported
    
    $
    1,800,358
    
    
    $
    (1,850,126
    )
    
    $
    (1,073,524
    )Deduct:
Total stock-based compensation expense as determined under fair value based
method for all awards, net of related tax effects
    
    
    (75,272
    )
    
    
    (151,986
    )
    
    
    (165,411
    )Add: Forfeitures, net of related tax effects
    
    
    50,760
    
    
    
    127,936
    
    
    
    2,064Pro forma net earnings (loss)
    
    $
    1,775,846
    
    
    $
    (1,874,176
    )
    
    $
    (1,236,871
    )Net earnings (loss) per share:Basic and dilutedas reported
    
    $
    .56
    
    
    $
    (.62
    )
    
    $
    (.37
    )Basic and dilutedpro forma
    
    $
    .54
    
    
    $
    (.63
    )
    
    $
    (.42
    )
 A
summary of the options activity for the fiscal years ended April 30 is as follows: 2005
    
    2004
    
    2003Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedOptions
    
    Average
    
    Options
    
    Average
    
    Options
    
    Averageto Purchase
    
    Exercise
    
    to Purchase
    
    Exercise
    
    to Purchase
    
    ExerciseShares
    
    Price
    
    Shares
    
    Price
    
    Shares
    
    PriceOutstanding at beginning of year
    
    
    657,590
    
    
    $
    5.09
    
    
    
    741,884
    
    
    $
    4.88
    
    
    
    150,250
    
    
    $
    4.00Granted
    
    
    156,900
    
    
    
    5.33
    
    
    
    166,000
    
    
    
    5.10
    
    
    
    609,000
    
    
    
    5.10Forfeited
    
    
    (97,976
    )
    
    
    5.14
    
    
    
    (250,294
    )
    
    
    4.47
    
    
    
    (17,366
    )
    
    
    5.08Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at end of year
    
    
    716,514
    
    
    
    5.13
    
    
    
    657,590
    
    
    
    5.09
    
    
    
    741,884
    
    
    
    4.88Vested at end of year
    
    
    453,264
    
    
    $
    5.07
    
    
    
    295,592
    
    
    $
    5.07
    
    
    
    74,759
    
    
    $
    4.00
 None of the vested stock options were in-the-money as of April 30, 2005 and 2004.
All of the vested stock options were in-the-money and exercisable at April 30, 2003. A summary of information about all stock options outstanding as of April 30, 2005, is as follows: Weighted AverageNumber of
    
    RemainingOutstanding
    
    ContractualExercise Price
    
    Options
    

Life
(Years)$4.00
    
    
    6,590
    
    
    
    5.99$5.10
    
    
    618,450
    
    
    
    7.14$5.30
    
    
    68,000
    
    
    
    9.90$6.00
    
    
    23,474
    
    
    
    9.12
 The fair value for each option grant was estimated on the grant date using the Black-Scholes
option-pricing model with the following weighted average assumptions: 2005
    
    2004
    
    2003Expected life (years)
    
    
    10
    
    
    
    10
    
    
    
    9.4Dividend yield
    
    
    3.86
    %
    
    
    4.01
    %
    
    
    3.68
    %Expected stock price volatility
    
    
    26
    %
    
    
    32
    %
    
    
    33
    %Risk-free interest rate
    
    
    4.45
    %
    
    
    4.51
    %
    
    
    4.47
    %
 Using these assumptions, the weighted average fair value per share of options granted is $0.99,
$0.92, and $1.19, for 2005, 2004, and 2003, respectively. ABRAMS INDUSTRIES  26




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3
    
    TEMPORARILY RESTRICTED CASH HELD IN ESCROW Temporarily restricted cash held in escrow is comprised of proceeds from the sale of real
estate which the Company
elected to be deposited into an escrow account in order to fund acquisitions of income-producing
properties through a
tax deferred Section 1031 exchange. If the Company elects or is unable to complete such
acquisition, then the funds
are released to the Company and converted to cash and cash equivalents.  4
    
    DISCONTINUED OPERATIONS The Company is in the business of creating long-term value by periodically realizing
gains through the sale of existing real estate assets, and then redeploying its capital by
reinvesting the proceeds from such sales. SFAS 144, Accounting for the Impairment or Disposal
of Long-Lived Assets requires, among other things, that the operating results of certain
income-producing assets, which have been sold, be included in discontinued operations in the
statements of operations for all periods presented. The Company classifies an asset as a
current asset held for sale when the asset is under a binding sales contract with minimal
contingencies and the buyer is materially at risk if the buyer fails to complete the
transaction. However, each potential transaction is evaluated based on its separate facts and
circumstances. Pursuant to this standard, as of April 30, 2005, the Company had no current
assets that were classified as held for disposition or sale. CONSTRUCTION SEGMENT During its fiscal year ended April 30, 2004, the Company made the decision to discontinue
its operations as a general contractor, and pursuant to this decision, all general
contracting operating activities have ceased. The former Construction Segment has been
classified as a discontinued operation. REAL ESTATE SALES OF INCOME-PRODUCING PROPERTIES On April 18, 2005, the Company sold its shopping center located in Jackson, Michigan, and
recognized a pre-tax gain of approximately $4.1 million. On February 9, 2005, the Company
sold its shopping center located in Cincinnati, Ohio, and recognized a pre-tax gain of
approximately $850,000. On March 12, 2004, the Company sold its shopping center located in
North Fort Myers, Florida, and recognized a pre-tax gain of approximately $4.0 million. On
June 28, 2002, the Company sold its shopping center located in Englewood, Florida, and
recognized a pre-tax gain of approximately $1.0 million. ABRAMS INDUSTRIES  27




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As a result of these transactions, the Companys financial statements have been prepared
with the assets, liabilities, results of operations, cash flows, and the gains from the sales shown
as discontinued operations. All historical statements have been restated in accordance with SFAS
144. Summarized financial information for discontinued operations for the fiscal years ended April
30 is as follows: 2005
    
    2004
    
    2003REVENUES:Construction
    
    $
    145,513
    
    
    $
    25,502,080
    
    
    $
    59,537,763Real estate
    
    
    1,247,653
    
    
    
    3,762,127
    
    
    
    4,363,695Total revenues
    
    
    1,393,166
    
    
    
    29,264,207
    
    
    
    63,901,458COSTS AND EXPENSES:Construction
    
    
    114,734
    
    
    
    25,093,339
    
    
    
    57,278,712Rental property operating expenses, including depreciation and interest
    
    
    904,969
    
    
    
    2,747,659
    
    
    
    3,386,659Construction selling, general & administrative
    
    
    151,357
    
    
    
    3,607,316
    
    
    
    2,426,405Loss on early extinguishment of debt
    
    
    669,366
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    1,840,426
    
    
    
    31,448,314
    
    
    
    63,091,776Earnings (loss) from discontinued operations
    
    
    (447,260
    )
    
    
    (2,184,107
    )
    
    
    809,682Income tax expense (benefit)
    
    
    (141,420
    )
    
    
    (629,463
    )
    
    
    291,864Earnings (loss) from discontinued operations, net of tax
    
    
    (305,840
    )
    
    
    (1,554,644
    )
    
    
    517,818Gain on sale of real estate assets
    
    
    5,587,361
    
    
    
    3,972,230
    
    
    
    990,216Income tax expense
    
    
    1,977,390
    
    
    
    1,510,307
    
    
    
    372,230Gain on sale of real estate assets, net of tax
    
    
    3,609,971
    
    
    
    2,461,923
    
    
    
    617,986Earnings from discontinued operations, net of tax
    
    $
    3,304,131
    
    
    $
    907,279
    
    
    $
    1,135,804
 Balances atAssets of discontinued operations
    
    April 30, 2005
    
    April 30, 2004Receivables
    
    $
    100,477
    
    
    $
    3,745,533Costs and earnings in excess of billings
    
    
    
    
    
    
    347,021Other current assets
    
    
    3,155
    
    
    
    187,526Income-producing properties
    
    
    
    
    
    
    4,746,930Property and equipment
    
    
    
    
    
    
    13,293Intangible assets
    
    
    
    
    
    
    271,701Other assets
    
    
    
    
    
    
    25,044$
    103,632
    
    
    $
    9,337,048
 Balances atLiabilities of discontinued operations
    
    April 30, 2005
    
    April 30, 2004Trade and subcontractors payables
    
    $
    74,150
    
    
    $
    2,278,355Accrued expenses
    
    
    122,277
    
    
    
    559,279Billings in excess of cost and earnings
    
    
    
    
    
    
    110,043Current maturities of long-term debt
    
    
    
    
    
    
    182,225Mortgage notes payable
    
    
    
    
    
    
    2,402,093$
    196,427
    
    
    $
    5,531,995
 ABRAMS INDUSTRIES  28




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5
    
    CONTRACTS IN PROGRESS Assets and liabilities that are 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: Costs and earnings in excess of billings:
    2005
    2004Accumulated costs and earnings
    
    $
    411,692
    
    
    $
    1,675,096Amounts billed
    
    
    98,911
    
    
    
    1,161,177$
    312,781
    
    
    $
    513,919Billings in excess of costs and earnings:Amounts billed
    
    $
    5,208,720
    
    
    $
    425,096Accumulated costs and earnings
    
    
    4,682,208
    
    
    
    326,657$
    526,512
    
    
    $
    98,439
  6
    
    INCOME-PRODUCING PROPERTIES Income-producing properties and their estimated useful lives at April 30 were as follows: Estimateduseful lives
    
    2005
    
    2004Land
    
    
    N/A
    
    
    $
    6,956,719
    
    
    $
    6,956,719Buildings and improvements
    
    7-39 years
    
    
    27,435,901
    
    
    
    26,946,394$
    34,392,620
    
    
    $
    33,903,113Lessaccumulated depreciation and amortization
    
    
    
    
    
    
    9,978,975
    
    
    
    9,021,866$
    24,413,645
    
    
    $
    24,881,247
 Depreciation expense from continuing operations for the years ended April 30, 2005, 2004,
and 2003, was $1,035,454, $838,204, and $854,835, respectively.  7
    
    PROPERTY AND EQUIPMENT The major components of property and equipment and their estimated useful lives at April
30 were as follows: Estimateduseful lives
    
    2005
    
    2004Buildings and improvements
    
    3-39 years
    
    $
    531,983
    
    
    $
    254,796Equipment
    
    3-10 years
    
    
    1,054,656
    
    
    
    974,173Vehicles
    
    3-5 years
    
    
    150,501
    
    
    
    203,884$
    1,737,140
    
    
    $
    1,432,853Lessaccumulated depreciation
    
    
    
    
    
    
    900,913
    
    
    
    840,179$
    836,227
    
    
    $
    592,674
 Depreciation expense from continuing operations for the years ended April 30, 2005, 2004,
and 2003, was $161,741, $173,601, and $156,395, respectively. ABRAMS INDUSTRIES  29




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8
    
    MORTGAGE NOTES PAYABLE AND LEASES As of April 30, 2005, the Company owned three shopping centers, two office buildings, an office
park, and a former manufacturing and warehouse facility. Of the owned properties, all of the
shopping centers and the office properties were pledged as collateral on related mortgage notes
payable. Exculpatory provisions of the mortgage notes limit the Companys liability for repayment
to its interest in the respective mortgaged properties. As of April 30, 2005, Kmart was a tenant in two of the three Company-owned shopping centers. The
owned shopping centers are leased to tenants for terms expiring on various dates from fiscal years
2006 to 2017, while leases on the office properties expire from fiscal years 2006 to 2013. The
Company also leases five shopping centers under leaseback arrangements expiring on various dates
between fiscal years 2007 to 2015. The Companys leases contain exculpatory provisions that limit
the Companys liability for payment to its interest in the respective leases. All of the leaseback
shopping centers are subleased to the Kmart Corporation. The terms of the subleases either are the
same as, or may be extended to correspond to, the leaseback periods. All leases are operating leases. The owned shopping center leases typically require that the
tenants make fixed rental payments over a five to 25 year period, and may provide for renewal
options and for contingent rentals if the tenants sales volume in the leased space exceeds a
predetermined amount. In most cases, the shopping center leases provide that the tenant bear its
share of the cost of insurance, repairs, maintenance, and taxes. Base rental revenues recognized from owned shopping centers and office properties in 2005, 2004,
and 2003, were approximately $4,665,000, $4,309,000, and $4,155,000, respectively. Base rental
revenues recognized from leaseback shopping centers in 2005, 2004, and 2003, were approximately
$1,574,000, $1,904,000, and $2,031,000, respectively. Contingent rental revenues on all shopping
centers in 2005, 2004, and 2003, were approximately $54,000, $138,000, and $181,000, respectively. Approximate future minimum annual rental receipts from all rental properties are as follows: Year ending April 30,
    
    Owned
    
    Leaseback2006
    
    $

    4,653,000
    
    
    $
    1,433,0002007
    
    
    4,290,000
    
    
    
    844,0002008
    
    
    3,669,000
    
    
    
    604,0002009
    
    
    2,147,000
    
    
    
    604,0002010
    
    
    1,849,000
    
    
    
    479,000Thereafter
    
    
    3,595,000
    
    
    
    1,239,000$
    20,203,000
    
    
    $
    5,203,000
 The expected future minimum principal and interest payments on mortgage notes
payable for the owned rental properties, and the approximate future minimum rentals
expected to be paid on the leaseback centers, are as follows: Owned Rental Properties
    
    LeasebackMortgage Payments
    
    CentersYear ending April 30,
    
    Principal
    
    Interest
    
    Payments2006
    
    $
    917,161
    
    
    $
    1,768,958
    
    
    $
    1,177,0002007
    
    
    988,362
    
    
    
    1,696,057
    
    
    
    641,0002008
    
    
    6,737,429
    
    
    
    1,476,566
    
    
    
    423,0002009
    
    
    664,268
    
    
    
    1,120,926
    
    
    
    384,0002010
    
    
    684,507
    
    
    
    1,067,930
    
    
    
    284,000Thereafter
    
    
    14,492,623
    
    
    
    3,992,398
    
    
    
    582,000$
    24,484,350
    
    
    $
    11,122,835
    
    
    $
    3,491,000
 The mortgage notes payable are due at various dates between January 1, 2008, and
July 1, 2029, and bear interest at rates ranging from 6.125% to 9.25%. At April 30,
2005, the weighted average rate for all outstanding debt was 7.2%, including other
long-term debt and credit facilities (see Note 9). On July 8, 2004, the Company
restructured the loan on the Companys owned shopping center in Jacksonville, Florida.
The Company paid the lender $1.5 million as payment in full of the Additional Interest
Agreement, which was then terminated. The loan principal amount was reduced by
$474,042. The restructured initial loan principal amount was $7.8 million; the loan
bears interest at 6.125% and will be amortized until it matures on July 1, 2029,
although the loan may be called by the lender for early repayment any time after July
1, 2011, upon thirteen months prior notice. ABRAMS INDUSTRIES  30




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##### Table of Contents



Management has determined that the restructuring of the loan mentioned above was a material
modification of the original loan, and as a result, the Company recognized an expense relating to
the early extinguishment of debt in the amount of $218,071, as shown on the accompanying statement
of operations. In conjunction with the restructured loan, the Company recorded $50,000 in deferred
loan costs to be amortized over the estimated life of the restructured loan.  9
    
    OTHER LONG-TERM DEBT AND CREDIT FACILITIES Other long-term debt at April 30 was as follows: 2005
    
    2004Note payable bearing interest at the prime rate plus 1.5% (7.25% at
April 30, 2005); interest only payments due monthly; matures December
18, 2011; secured by all general assets of The Wheatstone Energy
Group, LLC
    
    $
    1,000,000
    
    
    $
    1,000,000Note payable bearing interest at 6.0%; interest due annually on
January 31, and principal payments due in installments as defined in
the agreement commencing on January 31, 2006; matures on January 31,
2008
    
    
    516,000
    
    
    
    516,000Note payable bearing interest at 6.8%; interest due annually on
December 31, beginning December 31, 2004, and principal payments due
annually in installments as defined in the agreement commencing on
December 19, 2008; matures on December 19, 2011
    
    
    295,000
    
    
    
    295,000Note payable, net of discount ($5,250 at April 30, 2005), with an
imputed interest rate of 6.0%; principal payments due in two equal
installments on May 26, 2005, and May 26, 2006
    
    
    144,750
    
    
    
    Note payable, net of discount ($3,332 at April 30, 2005), with an
imputed interest rate of 6.0%; principal payments due annually in
installments as defined in the agreement, commencing on December 26,
2004; matures on December 26, 2006
    
    
    61,668
    
    
    
    79,000Capital lease obligation; monthly payments of $3,578 through July 2005
    
    
    10,557
    
    
    
    53,495Various notes payables with interest rates ranging from 8.3% to
10.75%; maturity dates ranging from September 2005 to November 2005
    
    
    16,989
    
    
    
    48,083Total other long-term debt
    
    
    2,044,964
    
    
    
    1,991,578Less current maturities
    

    257,546
    
    
    
    89,793Total other long-term debt, less current maturities
    
    $
    1,787,418
    
    
    $
    1,901,785
 The future minimum principal payments due on other long-term debt are as follows: Fiscal year ending April 30,2006
    
$
    257,5462007
    
    
    234,4182008
    
    
    278,0002009
    
    
    40,0002010
    
    
    85,000Thereafter
    
    
    1,150,000Total
    
    $
    2,044,964
 At April 30, 2005, the Company had commitments from a bank for a secured line of
credit totaling $1.5 million, of which a total of $150,000 was restricted at April 30, 2005,
as it secures a letter of credit described in the next paragraph. The bank line of credit is
secured by the Companys investment in a short-term securities bond of $2 million that
matures in April 2006, which is recorded on the accompanying balance sheet. The Company can
borrow an amount not to exceed 75% of the current market value of the bond, which was
approximately $1,920,000 as of April 30, 2005. The line of credit bears interest at the
prime rate or LIBOR plus 2%, and has a commitment fee of 0.375% on any unused portion. The
line of credit expires on January 31, 2006. At April 30, 2005, no amounts were outstanding
under the line of credit. In conjunction with terms of a real estate loan, the Company is required to provide for
potential future tenant improvement costs and lease commissions at that property through
additional collateral, in the form of a letter of credit in the amount of $150,000 from July
17, 2002 through July 16, 2005, $300,000 from July 17, 2005 through July 16, 2008, and
$450,000 from July 17, 2008 through August 1, 2012. The letter of credit is secured by the
bank line of credit, as discussed in the previous paragraph. ABRAMS INDUSTRIES  31




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##### Table of Contents



10
    
    INCOME TAXES The benefit for income taxes from continuing operations consists of the following: Current
    
    Deferred
    
    TotalYear ended April 30, 2005Federal
    
    $
    
    
    
    $
    (789,615
    )
    
    $
    (789,615
    )State and local
    
    
    
    
    
    
    (143,955
    )
    
    
    (143,955
    )$
    
    
    
    $
    (933,570
    )
    
    $
    (933,570
    )Year ended April 30, 2004Federal
    
    $
    
    
    
    $
    (1,262,823
    )
    
    $
    (1,262,823
    )State and local
    
    
    
    
    
    
    (236,779
    )
    
    
    (236,779
    )$
    
    
    
    $
    (1,499,602
    )
    
    $
    (1,499,602
    )Year ended April 30, 2003Federal
    
    $
    (171,907
    )
    
    $
    (1,002,336
    )
    
    $
    (1,174,243
    )State and local
    
    
    
    
    
    
    (179,208
    )
    
    
    (179,208
    )$
    (171,907
    )
    
    $
    (1,181,544
    )
    
    $
    (1,353,451
    )
 Total income tax benefits from continuing operations recognized in the
consolidated statements of operations differs from the amounts computed by applying the
federal income tax rate of 34% to pre-tax loss, as a result of the following: 2005
    
    2004
    
    2003Computed expected benefit
    
    $
    (828,697
    )
    
    $
    (1,447,875
    )
    
    $
    (1,211,345
    )Decrease in income taxes resulting from:State and local income taxes, net of federal income tax benefit
    
    
    (97,494
    )
    
    
    (170,280
    )
    
    
    (141,086
    )Valuation allowance
    
    
    (46,667
    )
    
    
    118,553
    
    
    
    Other
    
    
    39,288
    
    
    
    
    
    
    
    (1,020
    )$
    (933,570
    )
    
    $
    (1,499,602
    )
    
    $
    (1,353,451
    )
 The tax effect of the 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: 2005
    
    2004Deferred income tax assets:Items not currently deductible for tax purposes:Net operating loss carryforwards, federal and state(1)
    
    $
    2,335,982
    
    
    $
    2,296,430Valuation allowance
    
    
    (236,098
    )
    
    
    (282,765
    )Income-producing properties and property and equipment, principally
because of differences in depreciation and capitalized interest
    
    
    893,838
    
    
    
    799,357Capitalized costs
    
    
    96,003
    
    
    
    96,261Accrued directors fees
    
    
    166,480
    
    
    
    115,110Bad debt reserve
    
    
    62,889
    
    
    
    212,769Deferred compensation plan
    
    
    439,286
    
    
    
    473,846Compensated absences
    
    
    56,876
    
    
    
    52,009Other accrued expenses
    
    
    460,279
    
    
    
    363,892Other
    
    
    378,874
    
    
    
    309,920Gross deferred income tax assets
    
    $
    4,654,409
    
    
    $
    4,436,829Deferred income tax liabilities:Income-producing properties and property and equipment, principally
because of differences in depreciation and capitalized interest
    
    
    778,165
    
    
    
    1,202,766Gain on real estate sales structured as tax-deferred like-kind exchanges
    
    
    6,594,993
    
    
    
    5,179,395Other
    
    
    188,449
    
    
    
    108,808Gross deferred income tax liability
    
    $
    7,561,607
    
    
    $
    6,490,969Net deferred income tax liability
    
    $
    2,907,198
    
    
    $
    2,054,140
  (1)
    
    The federal net operating loss carryforwards expire in various years after fiscal 2015.
The majority of the state operating loss carryforwards expire in various years after
fiscal 2010. Valuation allowance against deferred tax assets at April 30, 2005, and April 30,
2004, was $236,098 and $282,765, respectively. The valuation allowance reduces tax
deferred tax assets to an amount that represents managements best estimate of the
amount of such deferred tax assets that more likely than not will be realized. ABRAMS INDUSTRIES  32




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##### Table of Contents



11
    
    401(K) PLAN The Company has a 401 (k) plan (the Plan) which covers the majority of its employees.
Pursuant to the provisions of the Plan, eligible employees may make salary deferral (before tax)
contributions of up to 100% of their total compensation per plan year, not to exceed a specified
maximum annual contribution as determined by the Internal Revenue Service. The Plan also includes
provisions that authorize the Company to make discretionary contributions. Such contributions, if
made, are allocated among all eligible employees as determined under the Plan. The trustee under
the Plan invests the assets of each participants account, as directed by the participant. The Plan
assets do not include any stock of the Company. Funded employer contributions to the Plan for 2005,
2004, and 2003, were approximately $49,000, $54,000, and $18,000, respectively. The net assets in
the Plan, which is administered by an independent trustee, were approximately $4,755,000,
$5,060,000, and $8,204,000, at April 30, 2005, 2004, and 2003, respectively. In conjunction with
the acquisition of the assets of Servidyne Systems, Inc. in fiscal 2002, the Company assumed a 401
(k) plan (the Servidyne Plan), which covered substantially all employees of the Energy and
Facilities Solutions Segment at that time. Under the provisions of the Servidyne Plan, participants
could contribute up to 100% of their compensation per plan year, not to exceed a specified maximum
contribution, as determined by the Internal Revenue Service. The Company could also make
discretionary contributions, and did make contributions of approximately $19,500 in fiscal 2003.
The Servidyne Plan was frozen as of January 1, 2003, and no more employee or employer contributions
were funded after that date. All employees of the Energy and Facilities Solutions Segment are
eligible to participate in the Companys 401 (k) plan as described above.  12
    
    SHAREHOLDERS EQUITY In August 2000, the shareholders approved the 2000 Stock Award Plan (the Award Plan).
The Award Plan permits the grant of incentive and non-qualified stock options,
non-restricted, restricted and performance stock awards, and stock appreciation rights to
directors, employees, independent contractors, advisors, or consultants to the Company, as
determined by the Compensation Committee of the Board of Directors. The term and vesting
requirements for each award are determined by the Compensation Committee, but in no event
may the term exceed ten years. Incentive Stock Options under the Award Plan provide for the
purchase of the Companys Common Stock at not less than fair market value on the date the
option is issued. The total number of shares originally available for grant under the Award
Plan was 1,000,000 shares. During fiscal years 2005, 2004 and 2003, the Company granted
restricted stock awards totaling 9,200, 10,000 and 5,800, respectively. The weighted average
fair value of the restricted stock award granted was $4.40, $4.17, and $4.19 in 2005, 2004
and 2003, respectively. During fiscal years 2005, 2004, and 2003, forfeitures of restricted shares, which were not
vested, totaled 600 shares, 1,400 shares, and 400 shares, respectively. The Company recognizes compensation expense ratably over the vesting period. Stock award
compensation expense for the years ended April 30, 2005, 2004, and 2003, was $46,709,
$25,607, and $18,176, respectively. As of April 30, 2005, after forfeitures during the year,
there were 12,700 shares outstanding under restricted stock award grants that were not yet
vested. The Company issued 40,000 stock warrants, with an exercise price of $5.10, to an unrelated
third party in December 2003, of which none have been exercised as of April 30, 2005. In February 2003 and March 2004, the Companys Board of Directors authorized the repurchase
of up to 200,000 shares of Common Stock during the twelve-month period. In February 2005,
the Companys Board of Directors authorized the repurchase of up to 50,000 shares of Common
Stock during the twelve-month period, commencing on March 6, 2005, and ending on March 5,
2006. During fiscal 2003, the Company repurchased 128 shares of Common Stock. There were no shares repurchased during fiscal 2005 or fiscal 2004. ABRAMS INDUSTRIES  33




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##### Table of Contents



13
    
    NET EARNINGS (LOSS) PER SHARE Earnings per share are calculated in accordance with SFAS 128, Earnings Per Share, which
requires dual presentation of basic and diluted earnings per share on the face of the income
statement for all entities with complex capital structures. Basic and diluted weighted average
share differences result from dilutive common stock options and stock warrants. Basic earnings per
share are computed by dividing net earnings by the weighted average shares outstanding during the
reporting period. Dilutive potential common shares are calculated in accordance with the treasury
stock method, which assumes that the proceeds from the exercise of all options would be used to
repurchase common shares at the current market value. The number of shares remaining after the
exercise proceeds were exhausted represents the potentially dilutive effect of the options. For the
fiscal year, the dilutive number of common shares were 557 in 2005, 0 in 2004, and 8,728 in 2003.
Since the Company had losses from continuing operations for all periods presented, all stock
equivalents were antidilutive during these periods, and are therefore excluded from weighted
average shares outstanding. The following tables set forth the computations of basic and diluted net earnings (loss) per share: For the year ended April 30, 2005Earnings (loss)
    
    Shares
    
    Per share(numerator)
    
    (denominator)
    
    amountBasic EPSloss per share from continuing operations
    
    $
    (1,503,773
    )
    
    
    3,205,076
    
    
    $
    (.47
    )Basic EPSearnings per share from discontinued
operations
    
    
    3,304,131
    
    
    
    3,205,076
    
    
    
    1.03Effect of dilutive securities
    
    
    
    
    
    
    
    
    
    
    Diluted EPSearnings per share
    
    $
    1,800,358
    
    
    
    3,205,076
    
    
    $
    .56
 For the year ended April 30, 2004Earnings (loss)
    
    Shares
    
    Per share(numerator)
    
    (denominator)
    
    amountBasic EPSloss per share from continuing operations
    
    $
    (2,757,405
    )
    
    
    2,971,172
    
    
    $
    (.93
    )Basic EPSearnings per share from discontinued
operationsEffect of dilutive securities
    
    
    907,279
    
    
    
    2,971,172
    
    0.31
    
    
    
    Diluted EPSloss per share
    
    $
    (1,850,126
    )
    
    
    2,971,172
    
    
    $
    (.62
    )
 For the year ended April 30, 2003Earnings (loss)
    
    Shares
    
    Per share(numerator)
    
    (denominator)
    
    amountBasic EPS
loss per share from continuing operations
    
    $
    (2,209,328
    )
    
    
    2,910,475
    
    
    $
    (.76
    )Basic EPS
earnings per share from discontinued operations
    
    
    1,135,804
    
    
    
    2,910,475
    
    
    
    0.39Effect of dilutive securities
    
    
    
    
    
    
    
    
    
    
    Diluted EPS
loss per share
    
    $
    (1,073,524
    )
    
    
    2,910,475
    
    
    $
    (.37
    )
 ABRAMS INDUSTRIES  34




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##### Table of Contents



14
    
    OPERATING SEGMENTS The Company had three operating segments at April 30, 2005: Energy and Facilities
Solutions, Energy Services, and Real Estate. The Energy and Facilities Solutions Segment
assists its customer base of energy services companies and multi-site owners and operators of
commercial office, hospitality, gaming, retail, education, industrial, multi-family, government,
and health care buildings in improving facility operating performance, reducing energy
consumption, and lowering ownership and operating costs, while improving the level of service and
comfort for building occupants, through its: (1) energy efficiency engineering and analytical
consulting services, including energy surveys and audits, facility studies, utility monitoring
services, building qualification for the EPAs ENERGY STAR® and LEED® certifications, HVAC
retrofit design and energy simulations and modeling; and (2) facility management software
applications, including its iTendant platform using Web and wireless technologies. The primary
focus for the Energy and Facilities Solutions Segment is the continental United States, although
it does business internationally as well. The Energy Services Segment provides turnkey
implementation of energy saving lighting programs and energy related services that reduce energy
consumption and operating costs to commercial, industrial, retail, government, education, and
institutional facilities. The primary focus for the Energy Services Segment is the continental
United States. The Real Estate Segment is involved in the investment and development of shopping
centers and office properties in the Southeast and Midwest. The operating segments are managed separately and maintain separate personnel, due to the
differing services offered by each segment, except for a shared services accounting
platform. Management of each of the segments evaluates and monitors the performance of the
respective segment primarily based on the earnings or losses consistent with the Companys long-term strategic objectives. The
significant accounting policies utilized by the operating segments are the same as those
summarized in Note 2 to the accompanying financial statements of the Company. 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. The Company derived revenues from direct transactions with customers aggregating more than 10% of consolidated
revenues from continuing operations as follows: 2005
    
    2004
    
    2003Kmart Corporation
    
    21
    %
    
    
    24
    %
    
    
    30
    %Customer 2
    
    12
    %
    
    
    NA
    
    
    
    NACustomer 3
    
    10
    %
    
    
    NA
    
    
    
    NA
 Revenues from Kmart Corporation were generated entirely from the Real Estate Segment and
revenues from Customer 2 and 3 were generated entirely from the Energy Services Segment.
Revenues from Customer 2 and 3 were less than 10% of consolidated revenues in 2004 and 2003. Net earnings (loss) represent total revenues less operating expenses, including depreciation
and interest, income taxes, and discontinued operations. Selling, general and
administrative, and interest costs, deducted in the computation of net earnings (loss) of
each segment, represent the actual costs incurred by that segment. ABRAMS INDUSTRIES  35




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##### Table of Contents



Segment assets are those that are used in the operations of each segment, including
receivables due from other segments and assets from discontinued operations. The Parent Companys
assets are primarily its investment in subsidiaries, cash and cash equivalents, the cash surrender
value of life insurance, receivables, and assets related to deferred compensation plans. Liquid
assets attributable to the Companys former Construction Segments discontinued operations are also
included in the Parent Companys assets in 2005, 2004, and 2003. Energyand Facilities
    
    Energy
    
    RealSolutions
    
    Services (1)
    
    Estate (2)
    
    Parent
    
    Eliminations
    
    Consolidated2005Revenues from unaffiliated
customers
    
    $
    3,486,980
    
    
    $
    9,587,875
    
    
    $
    9,561,060
    
    
    $
    
    
    
    $
    
    
    
    $
    22,635,915Interest and other income
    
    
    
    
    
    
    17,615
    
    
    
    350,215
    
    
    
    29,781
    
    
    
    (238,170
    )
    
    
    159,441Intersegment revenue
    
    
    14,867
    
    
    
    
    
    
    
    500,736
    
    
    
    
    
    
    
    (515,603
    )
    
    
    Total revenues from
continuing operations
    
    $
    3,501,847
    
    
    $
    9,605,490
    
    
    $
    10,412,011
    
    
    $
    29,781
    
    
    $
    (753,773
    )
    
    $
    22,795,356Net earnings (loss) (3)
    
    $
    (570,909
    )
    
    $
    294,505
    
    
    $
    4,030,540
    
    
    $
    (2,832,509
    )
    
    $
    963,847
    
    
    $
    1,885,474Segment assets
    
    $
    4,825,361
    
    
    $
    7,015,713
    
    
    $
    45,976,925
    
    
    $
    22,153,647
    
    
    $
    (22,904,474
    )
    
    $
    57,067,172Goodwill (4)
    
    $
    2,286,901
    
    
    $
    3,171,816
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5,458,717Interest expense (4)
    
    $
    8,222
    
    
    $
    144,186
    
    
    $
    1,920,556
    
    
    $
    215,695
    
    
    $
    (235,728
    )
    
    $
    2,052,931Depreciation and amortization (4)
    
    $
    342,887
    
    
    $
    127,138
    
    
    $
    1,326,135
    
    
    $
    138,080
    
    
    $
    
    
    
    $
    1,934,240Capital expenditures (4)
    
    $
    76,984
    
    
    $
    55,289
    
    
    $
    581,456
    
    
    $
    337,388
    
    
    $
    
    
    
    $
    1,051,117
 Energyand Facilities
    
    Energy
    
    RealSolutions
    
    Services (1)
    
    Estate (2)
    
    Parent
    
    Eliminations
    
    Consolidated2004Revenues from unaffiliated
customers
    
    $
    2,962,308
    
    
    $
    2,602,025
    
    
    $
    6,687,929
    
    
    $
    
    
    
    $
    
    
    
    $
    12,252,262Interest and other income
    
    
    
    
    
    
    13,445
    
    
    
    89,457
    
    
    
    27,785
    
    
    
    
    
    
    
    130,687Intersegment revenue
    
    
    13,600
    
    
    
    32,044
    
    
    
    470,008
    
    
    
    3,076
    
    
    
    (518,728
    )
    
    
    Total revenues from
continuing operations
    
    $
    2,975,908
    
    
    $
    2,647,514
    
    
    $
    7,247,394
    
    
    $
    30,861
    
    
    $
    (518,728
    )
    
    $
    12,382,949Net earnings (loss) (3)
    
    $
    (677,062
    )
    
    $
    (39,621
    )
    
    $
    2,836,016
    
    
    $
    (2,530,192
    )
    
    $
    745,104
    
    
    $
    334,245Segment assets
    
    $
    4,842,959
    
    
    $
    5,746,891
    
    
    $
    45,935,012
    
    
    $
    27,401,519
    
    
    $
    (22,050,362
    )
    
    $
    61,876,019Goodwill (4)
    
    $
    1,963,248
    
    
    $
    3,034,994
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    4,998,242Interest expense (4)
    
    $
    1,491
    
    
    $
    44,750
    
    
    $
    2,215,856
    
    
    $
    17,545
    
    
    $
    
    
    
    $
    2,279,642Depreciation and amortization (4)
    
    $
    229,772
    
    
    $
    45,374
    
    
    $
    1,074,428
    
    
    $
    147,190
    
    
    $
    
    
    
    $
    1,496,764Capital expenditures (4)
    
    $
    18,233
    
    
    $
    9,282
    
    
    $
    129,778
    
    
    $
    99,381
    
    
    $
    
    
    
    $
    256,674
 Energyand Facilities
    
    Energy
    
    RealSolutions
    
    Services (1)
    
    Estate (2)
    
    Parent
    
    Eliminations
    
    Consolidated2003Revenues from unaffiliated customers
    
    $
    2,900,191
    
    
    $
    
    
    
    $
    7,521,426
    
    
    $
    
    
    
    $
    
    
    
    $
    10,421,761Interest and other income
    
    
    
    
    
    
    
    
    
    
    85,410
    
    
    
    22,342
    
    
    
    (6,306
    )
    
    
    101,446Intersegment revenue
    
    
    
    
    
    
    
    
    
    
    449,549
    
    
    
    
    
    
    
    (449,549
    )
    
    
    Total revenues from continuing
operations
    
    $
    2,900,191
    
    
    $
    
    
    
    $
    8,056,385
    
    
    $
    22,342
    
    
    $
    (455,855
    )
    
    $
    10,523,063Net earnings (loss)(3)
    
    $
    (352,852
    )
    
    $
    
    
    
    $
    1,064,529
    
    
    $
    (2,863,435
    )
    
    $
    1,163,588
    
    
    $
    (988,170
    )Segment assets
    
    $
    3,624,372
    
    
    $
    
    
    
    $
    54,413,919
    
    
    $
    28,116,713
    
    
    $
    (12,357,906
    )
    
    $
    73,797,098Goodwill(4)
    
    $
    1,741,831
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,741,831Interest expense(4)
    
    $
    7,912
    
    
    $
    
    
    
    $
    2,113,932
    
    
    $
    11,287
    
    
    $
    
    
    
    $
    2,133,131Depreciation and amortization(4)
    
    $
    222,155
    
    
    $
    
    
    
    $
    997,534
    
    
    $
    182,851
    
    
    $
    
    
    
    $
    1,402,540Capital expenditures(4)
    
    $
    31,810
    
    
    $
    
    
    
    $
    258,467
    
    
    $
    15,842
    
    
    $
    
    
    
    $
    306,119
  (1)
    
    The Energy Services Segment was formed in December 2003.(2)
    
    The Company is in the business of creating long-term value by periodically
realizing gains through the sale of income-producing
properties and, therefore, pursuant to SFAS 144, the Real Estate Segments net
earnings includes discontinued operations from
the sales of income-producing properties.(3)
    
    The Company has changed its measure of profit or loss previously disclosed from
net earnings (loss) from continuing operations
before income taxes to net earnings (loss). The chief financial decision maker uses
this measurement to analyze each segments
operating performance.(4)
    
    Does not include amounts associated with discontinued operations. ABRAMS INDUSTRIES  36




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##### Table of Contents



The following is a reconciliation of Segment net earnings shown in the table above to consolidated net earnings on the statement of operations: For the year ended April 30,2005
    
    2004
    
    2003Consolidated Segment net earnings (loss)
    
    $
    1,885,474
    
    
    $
    334,245
    
    
    $
    (988,170
    )Discontinued Construction Segment net loss
    
    
    (170,761
    )
    
    
    (3,177,382
    )
    
    
    (1,117,730
    )Eliminations related to Construction Segment
    
    
    85,645
    
    
    
    993,011
    
    
    
    1,032,376Total consolidated net earnings (loss)
    
    $
    1,800,358
    
    
    $
    (1,850,126
    )
    
    $
    (1,073,524
    )
 15 ACQUISITIONS AND DISPOSITIONS Acquisition of Building Performance Engineers, Inc. On May 26, 2004, an indirect wholly-owned subsidiary of the Company, acquired the operating
business and assets of Building Performance Engineers, Inc. (BPE) for a purchase price of
$337,984, in order to expand the Companys capabilities in energy efficiency engineering and
design. The consideration consisted of 21,126 newly-issued shares of the Companys Common Stock,
with a fair value of $94,906 at the date of acquisition, a note payable in the amount of $136,500,
and cash of $106,578 (including direct acquisition expenses). The amount and type of consideration
was determined by negotiation among the parties. The goodwill has been assigned to the Energy and Facilities Solutions Segment. The acquired assets and the results of operations have been included
in the Companys financial statements since the date of acquisition. Acquisition of Itendant, Inc. On April 16, 2004, Servidyne Systems, LLC, a wholly-owned subsidiary of the Company, acquired
substantially all of the assets and assumed certain liabilities of iTendant, Inc. (iTEN) for a
purchase price of approximately $1.3 million. The consideration consisted of 123,547 newly-issued
shares of the Companys Common Stock, with a fair value of $525,075, the payment of $500,000 cash,
and the assumption of approximately $170,000 of iTENs liabilities. Additional contingent
consideration is provided for based on future operating goals and performance. Consideration was
determined by negotiation among the parties. Acquisition of Prestley Mill Forest Medical Office Building On April 5, 2004, Prestley Mill, LLC, a wholly-owned subsidiary of the Company, acquired a
professional medical office building located in Douglasville, Georgia. The Company used available
cash and assumed a mortgage note payable to purchase the asset for approximately $4.4 million,
including the costs associated with completing the transaction. Acquisition of The Wheatstone Energy Group, Inc. On December 19, 2003, The Wheatstone Energy Group, LLC, an indirect wholly-owned subsidiary of
the Company, acquired substantially all of the assets and assumed certain liabilities of The
Wheatstone Energy Group, Inc. (TWEG) for a purchase price of approximately $4.9 million. The
consideration consisted of 23,842 newly-issued shares of the Companys Common Stock, with a fair
value of $89,645, the payment of approximately $1.4 million to certain trade creditors of TWEG from
available cash, and the assumption of approximately $2.9 million of TWEGs liabilities. Also in
connection with the transaction, the Company issued 110,000 newly-issued shares of the Companys
Common Stock, with a fair value of $424,380, and a warrant to purchase an additional 40,000 shares
of the Companys Common Stock at an exercise price of $5.10 per share, with a fair value of
approximately $36,800 determined using the Black-Scholes option-pricing model, to one lender of
TWEG. The amount and type of consideration was determined by negotiation among the parties. The trademark and goodwill are not subject to amortization; however, the amount assigned to the
trademark and goodwill is deductible for tax purposes. The goodwill amount has been assigned to the
Energy Services Segment. ABRAMS INDUSTRIES   37




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##### Table of Contents



The following table summarizes the final estimated fair values of the assets acquired and liabilities
assumed at the date of each acquisition for the fiscal years as follows: 2005
    
    2004BPE
    
    iTEN
    
    Prestley Mill
    
    TWEG
    
    Estimated Useful LifeCurrent assets
    
    $
    
    
    
    $
    64,599
    
    
    $
    
    
    
    $
    933,982Property, furniture and equipment
    
    
    8,727
    
    
    
    22,560
    
    
    
    
    
    
    
    253,493
    
    
    Various (2-5 years)Land
    
    
    
    
    
    
    
    
    
    
    609,000
    
    
    
    
    
    
    IndefiniteBuilding
    
    
    
    
    
    
    
    
    
    
    2,555,975
    
    
    
    
    
    
    39 yearsTenant improvements
    
    
    
    
    
    
    
    
    
    
    725,592
    
    
    
    
    
    
    Over life of leaseLease costs
    
    
    
    
    
    
    
    
    
    
    470,833
    
    
    
    
    
    
    Over life of leaseCustomer relationships
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218,000
    
    
    5 yearsTrademarks
    
    
    
    
    
    
    106,399
    
    
    
    
    
    
    
    280,000
    
    
    IndefiniteNon-competes
    
    
    16,222
    
    
    
    7,247
    
    
    
    
    
    
    
    3,000
    
    
    2 yearsComputer software
    
    
    
    
    
    
    854,879
    
    
    
    
    
    
    
    42,438
    
    
    3-5 yearsGoodwill
    
    
    313,035
    
    
    
    228,240
    
    
    
    
    
    
    
    3,171,816
    
    
    IndefiniteTotal assets acquired
    
    
    337,984
    
    
    
    1,283,924
    
    
    
    4,361,400
    
    
    
    4,902,729Current liabilities
    
    
    
    
    
    
    174,136
    
    
    
    
    
    
    
    1,032,404Debt
    
    
    
    
    
    
    
    
    
    
    2,941,469
    
    
    
    1,890,000Total liabilities acquired
    
    
    
    
    
    
    174,136
    
    
    
    2,941,469
    
    
    
    2,922,404Net assets acquired
    
    $
    337,984
    
    
    $
    1,109,788
    
    
    $
    1,419,931
    
    
    $
    1,980,325
 There were no acquisitions in fiscal 2003. The assets, liabilities, and results of operations have been
included in the Company's financial statements since the date of each acquisition. Sale of Outparcel On January 31, 2005, the Company closed on the sale of one of its outparcels located
in North Fort Myers, Florida, for a sales price of $515,000, resulting in
a pre-tax gain of approximately $191,000. After selling expenses, the sale generated net cash proceeds of approximately $468,000. Sale of Kmart Leaseback Interest On September 29, 2004, the Company closed on the sale of its
Kmart leaseback interest in a shopping center in Minneapolis, Minnesota, for a sales price
of $2.25 million, resulting in a pre-tax gain of $2.2 million and net cash proceeds of approximately $2.2 million. ABRAMS INDUSTRIES   38




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##### Table of Contents



16 GOODWILL AND OTHER INTANGIBLE ASSETS The gross carrying amounts
and accumulated amortization for all of the Company's intangible
assets are as follows: April 30, 2005Gross Carrying
    
    AccumulatedAmount
    
    AmortizationAmortized intangible assets:Proprietary customers software solutions
    
    $
    1,698,896
    
    
    $
    590,042Computer software
    
    
    409,197
    
    
    
    364,127Real estate lease costs
    
    
    1,575,950
    
    
    
    718,881Customer relationships
    
    
    218,000
    
    
    
    58,133Deferred loan costs
    
    
    751,547
    
    
    
    505,125Other
    
    
    55,609
    
    
    
    17,326$
    4,709,199
    
    
    $
    2,253,634Unamortized intangible assets:Trademark
    
    $
    708,707
    
    
    $
    
 April 30, 2004Gross Carrying
    
    AccumulatedAmount
    
    AmortizationAmortized intangible assets:Proprietary customers software solutions
    
    $
    1,284,586
    
    
    $
    296,638Computer software
    
    
    384,276
    
    
    
    311,821Real estate lease costs
    
    
    1,495,214
    
    
    
    597,640Customer relationships
    
    
    218,000
    
    
    
    14,533Deferred loan costs
    
    
    864,570
    
    
    
    503,443Other
    
    
    39,033
    
    
    
    9,099$
    4,285,679
    
    
    $
    1,733,174Unamortized intangible assets:Trademark
    
    $
    703,516
    
    
    $
    
 Aggregate amortization expense for all amortized intangible assets from continuing operations For the year ended April 30, 2005
    
    $
    654,370For the year ended April 30, 2004
    
    
    424,671For the year ended April 30, 2003
    
    
    454,037
 Estimated amortization expense for all amortized intangible assets for the fiscal year ended April 30, 2006
    
    $
    547,630April 30, 2007
    
    
    508,987April 30, 2008
    
    
    451,171April 30, 2009
    
    
    349,977April 30, 2010
    
    
    186,839
 In fiscal 2004, the Company changed the estimated useful life of one of its proprietary
facility management software applications resulting in a charge to earnings of approximately $267,000. This expense is recorded
in selling, general and administrative expenses in the accompanying statement of operations for the Energy and
Facilities Solutions Segment for that fiscal year. The Energy and Facilities Solutions Segment has capitalized $403,995, $9,212 and $74,472 on the
development of proprietary facility management software applications in fiscal 2005, 2004 and 2003, respectively. ABRAMS INDUSTRIES   39




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##### Table of Contents



The changes in the carrying amount of goodwill are as follows: Balance as of April 30, 2003
    
    $
    1,741,831Goodwill acquired during the year
    
    
    3,256,411Balance as of April 30, 2004
    
    
    4,998,242Goodwill acquired and adjustments during the year
    
    
    460,475Balance as of April 30, 2005
    
    $
    5,458,717
 Goodwill increased $460,475 from April 30, 2004, due to: (1) $313,035 from the acquisition of
Building Performance Engineers, Inc. (see Note 15. Acquisitions and Dispositions); and (2) $147,440 in purchase price
adjustments from prior acquisitions. 17 COMMITMENTS AND CONTINGENCIES The Company is subject to various legal proceedings and claims that arise in the ordinary
course of business. While the
resolution of these matters cannot be predicted with certainty, the Company believes that the final
outcome of these
matters will not have a material adverse effect on the Companys financial position or results of
operations. Effective April 30, 2003, the Company terminated an employment agreement and entered into a new
retirement
agreement with a former officer and director of the Company. Beginning May 1, 2003, the new
agreement required the
Company to pay a retirement benefit of approximately $87,000 through August 19, 2003, and
approximately $100,000
per year thereafter for a term of four years ending on August 19, 2007. In addition, the Company
will also continue to
provide certain medical insurance benefits through the term of the retirement agreement. The new
agreement provided
that the retirees stock options expire no later than August 19, 2004. The retirement agreement
would terminate early,
in the event of the death of the retiree. 18 QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarterly financial information for the fiscal years ended April 30, 2005, and 2004 (dollars in
thousands, except per share amounts): Fiscal year ended April 30, 2005First Quarter
    
    Second Quarter
    
    Third Quarter
    
    Fourth QuarterTotal revenues from continuing operations
    
    $
    4,626
    
    
    $
    6,906
    
    
    $
    5,445
    
    
    $
    5,818Gross profit from continuing operations
    
    
    1,389
    
    
    
    3,699
    
    
    
    1,863
    
    
    
    2,219Net (loss) earnings
    
    
    (1,105
    )
    
    
    521
    
    
    
    (248
    )
    
    
    2,633Net (loss) earnings per share - basic and diluted
    
    
    (.34
    )
    
    
    .16
    
    
    
    (.08
    )
    
    
    .82
 Fiscal year ended April 30, 2004First Quarter
    
    Second Quarter
    
    Third Quarter
    
    Fourth QuarterTotal revenues from continuing operations
    
    $
    2,386
    
    
    $
    2,388
    
    
    $
    2,879
    
    
    $
    4,729Gross profit from continuing operations
    
    
    902
    
    
    
    867
    
    
    
    1,092
    
    
    
    1,762Net earnings (loss)
    
    
    (948
    )
    
    
    (1,057
    )
    
    
    (883
    )
    
    
    1,038Net earnings (loss) per share - basic and diluted
    
    
    (.33
    )
    
    
    (.36
    )
    
    
    (.30
    )
    
    
    .34
 19 SUBSEQUENT EVENT The Company elected to deposit funds into an escrow account in order to fund acquisitions of
income-producing properties
for tax deferred Section 1031 exchanges. In May 2005, the Company did not complete the acquisition
for the shopping
center located in Cincinnati, Ohio, that was sold and, as a result, approximately $3,490,000 in temporarily
restricted cash held in escrow
at April 30, 2005, was released to the Company and converted to cash. In July 2005, the Company
elected not to acquire
a replacement income-producing property for the shopping center located in Jackson, Michigan, that was sold. The
remaining proceeds
of approximately $4,782,000 held in escrow at April 30, 2005, will be released to the Company the
earlier of filing the
Companys federal tax return or at the end of the statutory holding period in October 2005. ABRAMS INDUSTRIES   40




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##### Table of Contents



SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
April 30, 2005 CostsCapitalizedSubsequentInitial Cost to Company
    
    to AcquisitionBuilding andDescription
    
    Encumbrances
    
    Land
    
    Improvements
    
    ImprovementsINCOME-PRODUCING PROPERTIES:Kmart - Morton, IL
    
    $
    2,142,245
    
    
    $
    18,005
    
    
    $
    2,767,764
    
    
    $
    Kmart - Columbus, GA
    
    
    1,083,104
    
    
    
    11,710
    
    
    
    2,356,920
    
    
    
    10,078Leaseback Shopping Center - Davenport, IA
    
    
    
    
    
    
    
    
    
    
    2,150
    
    
    
    193,261Leaseback Shopping Center - Jacksonville, FL
    
    
    
    
    
    
    
    
    
    
    42,151
    
    
    
    Leaseback Shopping Center - Orange Park, FL
    
    
    
    
    
    
    
    
    
    
    127,487
    
    
    
    35,731Office Building - Atlanta, GA
    
    
    4,709,928
    
    
    
    660,000
    
    
    
    4,338,102
    
    
    
    844,802Office Building - Douglasville, GA
    
    
    2,886,433
    
    
    
    609,000
    
    
    
    3,238,235
    
    
    
    108,612Office Park - Marietta, GA
    
    
    5,972,934
    
    
    
    1,750,000
    
    
    
    6,417,275
    
    
    
    1,237,275Shopping Center - Jacksonville, FL
    
    
    7,689,706
    
    
    
    3,908,004
    
    
    
    5,170,420
    
    
    
    306,66824,484,350
    
    
    
    6,956,719
    
    
    
    24,460,504
    
    
    
    2,736,427REAL ESTATE HELD FOR FUTURE DEVELOPMENT OR SALE:Land - Louisville, KY
    
    
    
    
    
    
    80,011
    
    
    
    
    
    
    
    Land - Oakwood, GA
    
    
    
    
    
    
    234,089
    
    
    
    
    
    
    
    543,330Land - North Ft. Myers
    
    
    
    
    
    
    2,133,936
    
    
    
    
    
    
    
    363,012Land and Building - Atlanta, GA(4)
    
    
    
    
    
    
    92,226
    
    
    
    722,033
    
    
    
    
    
    
    
    2,540,262
    
    
    
    722,033
    
    
    
    906,342$
    24,484,350
    
    
    $
    9,496,981
    
    
    $
    25,182,537
    
    
    $
    3,642,769
 Reconciliations of total real estate carrying value and accumulated depreciation for the three
years ended April 30, are as follows: Real Estate
    
    Accumulated Depreciation2005
    
    2004
    
    2003
    
    2005
    
    2004
    
    2003BALANCE AT BEGINNING OF YEAR
    
    $
    45,509,783
    
    
    $
    64,516,511
    
    
    $
    80,707,855
    
    
    $
    11,911,108
    
    
    $
    15,784,645
    
    
    $
    19,449,160ADDITIONS DURING YEARReal estate
    
    
    621,296
    
    
    
    4,940,289
    (7)
    
    
    260,929
    
    
    
    
    
    
    
    
    
    
    
    Depreciation from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,035,454
    
    
    
    838,204
    
    
    
    854,835Depreciation from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97,934
    
    
    
    764,281Transfers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    621,296
    
    
    
    4,940,289
    
    
    
    260,929
    
    
    
    1,035,454
    
    
    
    936,138
    
    
    
    1,619,116DEDUCTIONS DURING YEARAccumulated depreciation on
properties sold or transferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,475,037
    (6)
    
    
    4,809,675
    (8)
    
    
    5,283,631
    (9)Carrying value of real estate
sold, transferred, or retired
    
    
    7,553,178
    (6)
    
    
    23,947,017
    (8)
    
    
    16,452,273
    (9)
    
    
    
    
    
    
    
    
    
    
    7,553,178
    
    
    
    23,947,017
    
    
    
    16,452,273
    
    
    
    2,475,037
    
    
    
    4,809,675
    
    
    
    5,283,631BALANCE AT CLOSE OF YEAR
    
    $
    38,577,901
    
    
    $
    45,509,783
    
    
    $
    64,516,511
    
    
    $
    10,471,525
    
    
    $
    11,911,108
    
    
    $
    15,784,645
 ABRAMS INDUSTRIES   41




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Life on WhichGross Amounts at Which
    
    
    
    
    
    
    
    
    
    
    
    
    
    DepreciationCarried at Close of Year
    
    
    
    
    
    
    
    
    
    
    
    
    
    In LatestBuilding
    
    
    
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    
    
    
    Earningsand
    
    Capitalized
    
    
    
    
    
    Accumulated
    
    Date(s) of
    
    Date
    
    StatementLand
    
    Improvements
    
    Interest
    
    Total(1)
    
    Depreciation
    
    Construction
    
    Acquired
    
    Is Computed$       18,005
    
    $
    2,767,764
    
    
    $
    
    
    
    $
    2,785,769
    
    
    $
    2,767,842
    
    
    
    1980, 1992
    
    
    
    
    
    
    25 years11,710
    
    
    2,366,998
    
    
    
    238,970
    
    
    
    2,617,678
    
    
    
    2,558,659
    
    
    
    1980, 1988
    
    
    
    
    
    
    25 years
    
    
    195,411
    
    
    
    
    
    
    
    195,411
    
    
    
    187,005
    
    
    
    1995
    
    
    
    
    
    
    7 years
    
    
    42,151
    
    
    
    
    
    
    
    42,151
    
    
    
    21,075
    
    
    
    1994
    
    
    
    
    
    
    25 years
    
    
    163,218
    
    
    
    
    
    
    
    163,218
    
    
    
    163,218
    
    
    
    1995
    
    
    
    
    
    
    7 years660,000
    
    
    5,182,904
    
    
    
    
    
    
    
    5,842,904
    
    
    
    1,412,910
    
    
    
    1974, 1997
    (2)
    
    
    1997
    
    
    39 years609,000
    
    
    3,346,847
    
    
    
    
    
    
    
    3,955,847
    
    
    
    235,573
    
    
    
    2000
    (3)
    
    
    2004
    
    
    39 years1,750,000
    
    
    7,654,550
    
    
    
    
    
    
    
    9,404,550
    
    
    
    1,836,279
    
    
    
    1980, 1985
    (3)
    
    
    1997
    
    
    39 years3,908,004
    
    
    5,477,088
    
    
    
    
    
    
    
    9,385,092
    
    
    
    796,414
    
    
    
    1985
    (3)
    
    
    1999
    
    
    39 years6,956,719
    
    
    27,196,931
    
    
    
    238,970
    
    
    
    34,392,620
    
    
    
    9,978,97580,011
    
    
    
    
    
    
    
    
    
    
    80,011
    
    
    
    
    
    
    
    
    
    
    
    1979
    
    
    
    
    777,419
    
    
    
    
    
    
    16,644
    
    
    
    794,063
    
    
    
    
    
    
    
    
    
    
    
    1987
    
    
    
    
    2,496,948
    
    
    
    
    
    
    
    
    
    
    2,496,948
    
    
    
    
    
    
    
    
    
    
    
    1993
    
    
    
    
    92,226
    
    
    722,033
    
    
    
    
    
    
    
    814,259
    
    
    
    492,550
    
    
    
    (5
    )
    
    
    1960, 1968
    
    
    
    
    3,446,604
    
    
    722,033
    
    
    
    16,644
    
    
    
    4,185,281
    
    
    
    492,550$10,403,323
    
    $
    27,918,964
    
    
    $
    255,614
    
    
    $
    38,577,901
    
    
    $
    10,471,525
 (1) The aggregated cost for land and building and improvements for federal income tax purposes at April 30, 2005, is $25,978,816. (2) Developed by others in 1974, redeveloped by the Company in 1997. (3) Developed by others. (4) Vacant; former manufacturing facility. (5) Original building constructed by others prior to 1960. (6) Primarily represents the sale of a shopping center in Cincinnati, Ohio, and Jackson, Michigan (7) Primarily represents the acquisition of the professional medical office building in Douglasville, Georgia. (8) Primarily represents the sale of a shopping center in North Fort Myers, Florida. (9) Primarily represents the sale of a shopping center in Englewood, Florida. ABRAMS INDUSTRIES   42




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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT AUDITORS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Management has evaluated the Companys disclosure and controls and procedures as defined by
Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period
covered by this report.
This evaluation was carried out with the participation of the Companys Chief Executive Officer and
Chief Financial
Officer. No system of controls, no matter how well designed and operated, can provide absolute
assurance that the
objectives of the system controls are met, and no evaluation of controls can provide absolute
assurance that the
system of controls has operated effectively in all cases. The Companys disclosure controls and
procedures, however,
are designed to provide reasonable assurance that the objectives of disclosure controls and
procedures are met. Based on managements evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the
Companys disclosure controls and procedures were effective as of the end of the period covered by
this report to
provide reasonable assurance that the objectives of disclosure controls and procedures are met. There was no change in the Companys internal control over financial reporting that occurred during
the Companys
fourth fiscal quarter for its fiscal year ended April 30, 2005, which has materially affected, or
is reasonably likely to
materially affect, the Companys internal control over financial reporting. 
 PART III ITEMS 10-14 The information required by Part III of this Form 10-K will be included in the Companys
definitive proxy materials for its
2005 Annual Meeting of Shareholders, to be filed with Securities and Exchange Commission, under the
headings
Election of Directors, Meetings and Committees of the Board of Directors, Nomination of
Directors, Principal
Holders of the Companys Securities and Holdings by Executive Officers and Directors, Section 16A
Beneficial
Ownership Reporting Compliance, Compensation of Executive Officers, Equity Compensation Plan,
Compensation
of Directors, Information Concerning the Companys Independent Auditor, and Corporate
Governance and
Communicating with the Board, and is hereby incorporated herein by reference. Information related
to Executive
Officers of the Company is included in Item 1 of this report. For purposes of determining the aggregate market value of the Companys voting stock held by
nonaffiliates, shares
beneficially owned 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. ABRAMS INDUSTRIES   43




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PART IV ITEM 15. 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 Registered Public Accounting Firm Consolidated Balance Sheets at April 30, 2005, and 2004 Consolidated Statements of Operations for the Years Ended April 30, 2005, 2004, and 2003 Consolidated Statements of Shareholders Equity for the Years Ended April 30, 2005, 2004, and 2003 Consolidated Statements of Cash Flows for the Years Ended April 30, 2005, 2004, and 2003 Notes to Consolidated Financial Statements 2. Financial Statement Schedules: Schedule IIIReal Estate and Accumulated Depreciation 3. Exhibits: Exhibit No. 3a. Articles of Incorporation(1) 3b. Restated Bylaws(2), Amendments to Bylaws(5) 10a. Directors Deferred Compensation Plan(3)# 10b. Edward M. Abrams Split Dollar Life Insurance Agreements dated July 29, 1991(4)# 10c. Edward M. Abrams Employment Agreement dated November 18, 1998 (6)# 10d. 2000 Stock Award Plan (7)# 10f. Alan R. Abrams Split Dollar Life Insurance Agreement dated May 31, 2001(8)# 10g. J. Andrew Abrams Split Dollar Life Insurance Agreement dated May 31, 2001(8)# 10h. Edward M. Abrams Retirement Agreement dated July 22, 2003(9)# 21. List of the Companys Subsidiaries 23a. Consent of Deloitte & Touche LLP 31.1 Certification of the CEO 31.2 Certification of the CFO 32.1 Section 906 Certification of the CEO 32.2 Section 906 Certification of the CFO 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-K for the year ended April 30, 1991. (4) This exhibit is incorporated by reference to the Companys Form 10-K for the year ended April 30, 1993. (5) This exhibit is incorporated by reference to the Companys Form 10-K for the year ended April 30, 1998. (6) This exhibit is incorporated by reference to the Companys Form 10-K for the year ended April 30, 1999. (7) This exhibit is incorporated by reference to the Companys Form S-8 filed September 29, 2000. (8) This exhibit is incorporated by reference to the Companys Form 10-K for the year ended April 30, 2001. (9) This exhibit is incorporated by reference to the Companys Form 10-K for the year ended April 30, 2003. # Management compensatory plan or arrangement. (B) Reports on Form 8-K: See Current Reports on Form 8-K, filed April 22, 2005, reporting dispositions pursuant to Items 2 and 7 thereof. (C) The Company hereby files as exhibits to this Annual Report on Form 10-K the exhibits set forth in Item 15(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 15(A)2 hereof. ABRAMS INDUSTRIES   44




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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 25, 2005
    By:
    /s/ Alan R. AbramsAlan R. AbramsChief 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 25, 2005
    /s/ Alan R. AbramsAlan R. AbramsCo-Chairman of the Board of
Directors,
Chief Executive OfficerDated: July 25, 2005
    /s/ J. Andrew AbramsJ. Andrew AbramsCo-Chairman of the Board of DirectorsDated: July 25, 2005
    /s/ David L. AbramsDavid L. AbramsDirectorDated: July 25, 2005
    /s/ Samuel E. AllenSamuel E. AllenDirectorDated: July 25, 2005
    /s/ Gilbert L. DanielsonGilbert L. DanielsonDirectorDated: July 25, 2005
    /s/ Melinda S. GarrettMelinda S. GarrettDirectorDated: July 25, 2005
    /s/ Robert T. McWhinney, Jr.Robert T. McWhinney, Jr.DirectorDated: July 25, 2005
    /s/ Mark J. ThomasMark J. ThomasChief Financial OfficerDated: July 25, 2005
    /s/ Felker W. Ward, Jr.Felker W. Ward, Jr.Director ABRAMS INDUSTRIES   45