U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended July 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-1684
Gyrodyne Company of America, Inc.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
New York 11-1688021
---------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
17 Flowerfield, Suite 15, St. James, N.Y. 11780
-------------------------------------------------
(Address of principal executive offices)
(516) 584-5400
---------------------------
(Issuer's telephone number)
N/A
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes. .X . No. . .
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12,13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes. . No. . .
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 988,908 Common $1 P.V. as of
JULY 31, 1995
INDEX TO QUARTERLY REPORT
QUARTER ENDED JULY 31, 1995
Seq.
Form 10-QSB Cover
Index to Form 10-QSB
Consolidated Balance Sheet
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Footnotes to Financial Statements
Management's Discussion and Analysis or Plan of Operation
Part II - Other Information
Signatures
GYRODYNE COMPANY OF AMERICA, INC. 10-QSB
AND SUBSIDIARIES Part 1
CONSOLIDATED BALANCE SHEET Item 1 (a) (1)
(UNAUDITED)
<TABLE>
<CAPTION>
July 31, 1995
ASSETS (NOTE 1)
CURRENT ASSETS:
<S> <C>
Cash and cash equivalents $196,448
Short-term investments 202,957
Accounts receivable, less allowance for
doubtful accounts of $6,000 (Note 3) 109,369
Prepaid expenses and other current assets 332,940
--------
Total current assets 841,714
INVESTMENT IN CITRUS GROVE PARTNERSHIP 1,453,104
PROPERTY, PLANT AND EQUIPMENT-NET (Note 5) 1,637,489
PREPAID PENSION COSTS (Note 2) 1,848,715
OTHER ASSETS (Note 8) 230,335
----------
TOTAL ASSETS $6,011,357
==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C>
Accounts payable and accrued expenses $177,218
Loans payable - short term portion (Note 6) 120,000
Income taxes payable 0
--------
Total Current Liabilities 297,218
--------
LONG TERM LIABILITIES
Loans payable - long term portion (Note 6) 290,000
DEFERRED INCOME TAXES 1,128,000
<CAPTION>
STOCKHOLDERS' EQUITY:
<S> <C>
Common stock, par value $1 per share
authorized 2,000,000 shares, 1,531,086 shares
issued at July 31, 1995 (including 542,178
shares held in treasury) 1,531,086
Capital in excess of par value (Note 1) 6,094,252
Retained earnings (Note 1) (210,991)
----------
7,414,347
Less cost of shares of common stock
held in treasury (Note 1) (3,118,208)
----------
Total stockholders' equity 4,296,139
----------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $6,011,357
===========
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
GYRODYNE COMPANY OF AMERICA, INC. 10-QSB
AND SUBSIDIARIES Part 1
CONSOLIDATED STATEMENTS OF INCOME Item 1 (a) (2)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
July 31, July 31,
REVENUE: 1995 1994
<S> <C> <C>
Rental income $450,357 $405,049
--------- ---------
Total Revenue from Operations 450,357 405,049
--------- ---------
COSTS AND EXPENSES:
Cost of maintaining rental property 319,332 309,695
Aerospace net expense 18,603 18,330
General and administrative 158,276 175,981
--------- --------
Total costs and expenses 496,211 504,006
--------- --------
GROSS OPERATING MARGIN (45,854) (98,957)
OTHER INCOME AND EXPENSES:
Equity in earnings of Citrus Grove Partnership (132,000) (27,022)
Equity in earnings of Oil and Gas (Note 4) 5,458 (29,952)
Gain on sale of Gas Investments (Note 4) 172,176 0
Interest & Dividend Income 4,134 8,246
Pension Income (Note 2) 1,919 24,860
Interest Expense (10,869) (11,047)
Miscellaneous Income\(Expense) (47) (891)
--------- --------
Total Other Income\(Expense) 40,771 (35,806)
--------- --------
Income before income tax provision (5,083) (134,763)
INCOME TAX PROVISION:
Current taxes (Note 7) 0 (53,478)
Deferred taxes 0 0
-------- ---------
Total tax provision 0 (53,478)
-------- ---------
NET INCOME (LOSS) ($5,083) ($81,285)
========= =========
WEIGHTED AVG. NO. OF COMMON
SHARES OUTSTANDING 988,908 988,908
========= =========
PER SHARE INFORMATION:
Earnings per share of common stock ($0.01) ($0.08)
========= =========
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
GYRODYNE COMPANY OF AMERICA, INC. 10-QSB
AND SUBSIDIARIES Part 1
CONSOLIDATED STATEMENT OF CASH FLOWS Item 1 (a) (3)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31, JULY 31,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net earnings ($5,083) ($81,285)
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization of oil
and gas investments 2,995 34,232
Depreciation and amortization of
plant and equipment 15,243 16,256
Pension (income) (1,919) (24,860)
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (25,505) (2,976)
Prepaid expenses and other assets (165,500) (163,891)
Other assets 39,813 315
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (68,549) 63,882
Taxes payable 0 0
--------- --------
Total adjustments (203,422) (77,042)
--------- --------
Net cash (used)/provided by operating activities (208,505) (158,327)
<CAPTION>
CASH FLOWS FROM INVESTING ACTIVITIES:
<S> <C> <C>
Decrease in short term investments 97,969 525
Decrease in oil and gas investments 119,742 0
Increase in oil and gas investments 0 (10,228)
Decrease in citrus grove investments 132,000 27,022
Increase in property, plant and equipment (100,188) (6,573)
-------- -------
Net cash (used)/provided by investment activities 249,523 10,746
-------- -------
<CAPTION>
CASH FLOWS FROM FINANCING ACTIVITIES:
<S> <C> <C>
New borrowings 0 0
Repayment of debt (30,000) (30,000)
-------- --------
Net cash from financing activities (30,000) (30,000)
-------- --------
Net increase (decrease) in cash and cash
equivalents 11,018 (177,581)
Cash and cash equivalents at beginning of year 185,430 759,678
--------- --------
Cash and cash equivalents at end of period $196,448 $582,097
========= ========
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
10-QSB
Part 1
Item 1 (a) (4)
FOOTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The interim statements furnished reflect all adjustments which are, in the
opinion of management, necessary to present a fair statement of the financial
position and results of operations for the three month periods ended July 31,
1995 and July 31, 1994. The financial statements should be read in conjunction
with the summary of significant accounting policies and notes to financial
statements included in the Company's Form 10-KSB for the fiscal year ended
April 30, 1995. The results of operations for the three month periods ended
July 31, 1995 and 1994 are not necessarily indicative of the results to be
expected for the full year.
2. The application of FASB 87 resulted in the Company's recognition, on the
basis of annual Actuarial reports, of $1,919 of net periodic pension income for
the quarter ended July 31, 1995 and $24,860 for the first three months of
Fiscal Year 1995. The decrease in income from period to period is a result of
the Pension Plan restructuring and lower actuarial interest rate assumptions.
The revised plan calls for increased benefits to current and retired employees
3. At April 30, 1995, $6,000 had been provided as a reasonable reserve for
uncollectible accounts receivable. This reserve has not changed during the
first quarter of FY 1996.
4. As anticipated, the Company completed the sale of its Gas investments in
July. The sale price of $284,000 was reduced by payables still outstanding on
these wells, which resulted in net proceeds to the Company of $201,000. The
effect on the Profit and Loss Statement from this transaction is highlighted
below.
<TABLE>
<CAPTION>
First Quarter Ended
July 31,
1995 1994
<S> <C> <C>
Sales of Oil & Gas $59,265 $95,122
-------- --------
Expenses:
Operating expenses 42,874 90,842
Depreciation (A) 313 12,994
Amortization of intangible drilling cost (A) 10,620 21,238
-------- --------
Total operating expenses 53,807 125,074
-------- --------
Income \ (Loss) from operations $5,458 ($29,952)
======== ========
Revenue from sale of gas investments 283,980 0
Net investment in gas 111,804 0
-------- --------
Gain on sale of gas investments $172,176 $0
======== ========
</TABLE>
(A) prior year quarter includes depreciation and amortization of assets sold in
the current year
5. Property, Plant and Equipment increased $100,000 in the first three months
primarily due to capitalization of renovation costs to Building #7 South for a
new tenant whose occupancy starts in September. Due to a delay in securing
additional financing, these costs were financed internally. The estimated cost
of the total renovation will be approximately $500,000. The Company is
currently negotiating long term financing for this project.
6. In January 1994, the Company borrowed $600,000 from a bank to replenish
the working capital spent on reception center improvements. This 5 year term
loan will be repaid from Flowerfield Reception Center rental income and is
secured by two different tenant's leases and rents. The annualized rent for
both tenants totals approximately $573,000. The total balance of this loan as
of July 31, 1995 is $410,000. As proposed by the Company, the remaining
balance on this term loan will be consolidated into the long term financing
indicated in Footnote 5. above.
7. The provisions for current taxes and prior year taxes is based on a full
year forecast of taxable income pro-rated over the entire year. In the case
of losses, an estimated refund is calculated to offset a pre-tax loss. During
the current year, the Company is estimating a taxable gain based on projected
revenues. This in no way effects the Company's taxable loss for FY 1995 for
which a refund of approximately $170,000 is anticipated in FY 1996.
8. Included in "Other Assets" at July 31, 1995 is $200,000 of restricted cash
which is being held as collateral for the irrevocable letter of credit given to
the seller of the land purchased in October 1994. The letter of credit is to
insure that Gyrodyne performs certain land improvements before October 5, 1996.
Also included in this category is the remaining equity in the oil well
investment of $17,103.
9. On August 6, 1995 Officers and key employees exercised 10 restricted
incentive stock awards and options totaling 11,643 shares. These restricted
options and awards had been granted by the Board of Directors on August 6,
1994. On August 26, 1995 the Board of Directors granted 11 additional
restricted stock options or awards to 11 key employees and Officers totaling
25,750 shares, no portion of which can be exercised before August 26, 1996 or
sold before August 26, 1997.
10-QSB
Part 1
Item 2
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(a) Not Applicable
(b) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Total Revenues from Operations for the three month period were $45,000 higher
than the same period last year reflecting an increase in the occupancy rate of
4% from year-to-year. In addition, higher rates based on COLA increases and
lease renewals also contributed to the increase.
As a result of the Company's continued cost control efforts, overall operating
expenses for real estate operations decreased $8,000 in the period to period
three month comparison. Expenditures for building maintenance and professional
services were keep to a minimum yielding quarter to quarter savings of $30,000.
Offsetting these economies were above average costs for air conditioning and
vehicular repairs. The heat wave in July not only bumped up the annual volume
of early season air conditioning repairs but took its toll on the company's
grounds equipment.
For Aerospace, manning and spending have remained at last year's levels,
however, with a shift in emphasis. With the completion of a reorganization and
computerization of the Company's helicopter assets last year, the Company has
embarked on a refurbishment program which will yield three flyable demonstrator
vehicles. It is the Company's intent to capitalize on the current interest
shown both here and abroad in the model QH-50 drone. The Company is actively
negotiating the sale of air vehicles with a customer; however, in Management's
opinion, any arrangement, while beneficial, will not have a significant effect
on the Aerospace assets.
Effective January 1, 1995, Callery-Judge Grove adopted a Fiscal Year for
financial reporting purposes in order to better match revenues and expenses to
the natural growing and harvesting season. The Fiscal Year cycle will begin
October 1 annually and end September 30th. The first reporting year will be a
short year of only nine months. Based on information previously received, the
Grove management is projecting, for the Grove as whole, a $2,900,000 tax loss
for the short Fiscal Year ending September 30, 1995. For the current quarter,
Gyrodyne has accrued a $132,000 loss for our 17 1/2 % share in the Grove.
The current loss is a result of severe weather conditions reported in more
detail in the Company's 10KSB. The water soaked crop of 1994 led to a reduced
packout in 1995 which in turn resulted in the current losses. This turn of
events masked the increased producing acreage that came on line this year.
Additionally, the Grove packing plant is now slated to begin operation in
September 1995. Once fully on-line, Grove operations will benefit from sharply
reduced transportation costs, improved scheduling flexibility, and much tighter
quality control. Future results from the Grove are projected to show
significant improvement in output as the maturation of replanted acreage yields
more harvestable fruit.
As anticipated in the 10KSB, the Company, in July, arranged for the sale of its
gas interests for a total of approximately $284,000.. After netting
outstanding obligations, the company received cash of 10-QSB approximately
$201,000. The Company still owns interests in oil wells which provide a net
cash flow of approximately $75,000 to $100,000 a year.
As a result of a land purchase for cash in October of 1994, Interest and
dividend income for the current three month period is lower than the prior
period due to a reduced portfolio. Lower Pension income for the comparable
period is the result of revisions to the defined benefit pension plan and the
lowering, by the U. S. Government, of actuarial interest rate assumptions for
pension plans. The scheduled pay down of the Company's term loan lead to lower
interest expense in the current quarter reflecting a reduced principal amount
outstanding.
The current ratio for the period ended July 31, 1995 increased to 2.83:1 from
1.88:1 at April 30, 1995 and down from 3.32:1 at July 31, 1994. The increase
from April 30, 1995 is due to the sale of the gas properties while the decrease
from July 31, 1994 reflects the purchase, for cash, of approximately 5 net
acres of land contiguous with the Flowerfield property.
For the three month period ending July 31, 1995, the Company is reporting a
pre-tax and after tax loss of $5,083. Excluding the gain on the sale of the gas
properties, the operating loss is lower than originally anticipated by
management. On the basis of current estimates, Management is projecting a
return to profitability in the fourth quarter of FY 1996.
Part II Other Information
Items 1 thru 4 are not applicable to the May 1, 1995 thru July 31, 1995 period.
Item 5. Other Information
At the August 26, 1995 Board of Directors meeting the Board of Directors
selected October 27, 1995 at 11:30 AM, at the Company's Flowerfield Complex, as
the time and site for the next Annual Meeting of Stockholders. In addition, The
Board also approved a revision to the Pension Plan which provided for
additional payment choices as permitted by ERISA and the IRS. Further, a
resolution was approved providing that the payment of outside Director's fees
are to be solely in Company stock rather than in cash .
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required - None
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GYRODYNE COMPANY OF AMERICA, INC.
(Registrant)
Date: September 14, 1995
SGD/ Dimitri P. Papadakos
-----------------------------------------
President and Principal Executive Officer
Date: September 14, 1995
SGD/ Joseph L. Dorn
----------------------------
Treasurer, Secretary and
Principle Accounting Officer
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] APR-30-1996
[PERIOD-END] JUL-31-1995
[CASH] 196,448
[SECURITIES] 202,957
[RECEIVABLES] 115,369
[ALLOWANCES] (6,000)
[INVENTORY] 0
[CURRENT-ASSETS] 841,714
[PP&E] 4,856,596
[DEPRECIATION] 3,219,107
[TOTAL-ASSETS] 6,011,357
[CURRENT-LIABILITIES] 297,218
[BONDS] 290,000
[COMMON] 1,531,086
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 2,765,053
[TOTAL-LIABILITY-AND-EQUITY] 6,011,357
[SALES] 450,357
[TOTAL-REVENUES] 450,357
[CGS] 0
[TOTAL-COSTS] 337,935
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 10,869
[INCOME-PRETAX] (5,083)
[INCOME-TAX] 0
[INCOME-CONTINUING] (5,083)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (5,083)
[EPS-PRIMARY] (.01)
[EPS-DILUTED] (.01)
</TABLE>
