SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended April 30, 1995.
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _____ to _____
Commission file number 0-1684
Gyrodyne Company of America, Inc.
- ------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 11-1688021
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17 Flowerfield, Suite 15
St. James, N.Y. 11780-1550
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 584-5400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
COMMON $1 P.V.
- ----------------
(Title of Class)
Indicate by check mark 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 month (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for past 90 days. Yes_X_ No ___
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-B is not contained in this
form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ X ]
Issuer's revenues for its most recent fiscal year were $1,667,067
The aggregate market value of the voting stock held by
non-affiliates, computed by reference to the average bid and
asked prices of such stock as of July 14, 1995 was
approximately $ 8,082,922.
The number of shares outstanding of each of the issuer's classes
of common equity, as of July 14, 1995 was: 988,908 Common $1 P.V.
DOCUMENTS INCORPORATED BY REFERENCE
The Proxy statement to be filed pursuant to regulation 14A is incorporated
herein by reference
INDEX TO FORM 10KSB
FISCAL YEAR 1995
ITEM #
PART I
1 -Business
2 -Properties
3 -Legal Proceedings
4 -Submission of Matters to a Vote of Security Holders
PART II
5 -Market for Registrants Common Stock and Related Stockholders Matters
6 -Management's Discussion and Analysis of Financial Position and Results of
Operations
7 -Financial Statements and Supplementary Data
Independent Auditors' Reports
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statement of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
8 -Disagreements on Accounting and Financial Data
PART III
9 -Directors of Registrant
10 -Compensation of Executive Officers and Directors
11 -Security Ownership of Certain Beneficial Owners and Management
12 -Certain Relationships and Transactions
13 -Exhibits, Financial Statement Schedules, and Reports on Form 8K
Signatures
PART I
Item 1. Business
(a) General Development of Business.
Incorporated in New York in August 1946, Gyrodyne for the next
25 years was primarily engaged in design, testing, development
and production of coaxial helicopters. Substantially all work
was conducted for the U.S. Navy, with a small procurement by the
Japanese Maritime Self-Defense Force. During that period,
Gyrodyne manufactured and sold approximately 800 coaxial
helicopters from its first small one-man helicopter, dubbed
Rotorcycle, through its remotely piloted models QH-50A through
QH-50D, with total sales amounting to approximately
$200,000,000.00.
There are four principal helicopter designs which have been
developed and produced in the United States: the most common is
the tail rotor design, more popularly known as the single rotor
design, which has one main rotor and a small tail rotor; the
tandem rotor design, which has two rotors, one in the front and
one in the rear of the aircraft; the syncropter design which has
two intermeshing rotors, one located on each side of the
aircraft; and the coaxial design which has two rotors mounted
one above the other on a single axis and rotating in opposite
directions.
The unique aspect of the Corporation's technology was the
utilization of an adjustable vertical plate, called a tip brake,
at the tip end of each blade. The tip brake solved numerous
directional control problems associated with the coaxial design
which had discouraged other manufacturers from pursing this
technology. The primary patent expired in 1975. A new patent
was issued to the Company in 1993 for a retractable tip brake
which could be incorporated in an advanced blade design.
Internationally there are other coaxial configurations being
produced or which have demonstrated viability during flight
tests. The most notable is the Russian company, Kamov, which
has numerous models including their noted skycrane. All their
current offerings are substantially larger than the Company's
QH-50 series vehicle. On the other end of the spectrum is
Canadair, a Canadian firm, which has developed a miniature
version coaxial which is smaller than the Company's QH-50 or
Rotorcycle platforms. Neither the Russians nor the Canadians
utilize the Company's tip brake technology. In Management's
opinion, given the differing approaches utilized by various
coaxial manufactures, the Company's patent will not have a
significant impact on future results.
Following the sharp reduction of its helicopter manufacturing
business by 1972, and the total elimination of it by 1975
(except for providing spare parts to the Japanese), the Company
began subdividing and renting out its idle manufacturing
facilities in order to derive income.
As a result of efforts during the 1980's, the Company negotiated
two multi-phased licensing agreements which cover both
evaluation and manufacturing stages of its QH-50 helicopters and
derivatives. Dornier, GmbH, a subsidiary of Daimler-Benz AG,
Friedrichshafen, Germany, was awarded a license (1986) for the
European NATO countries while Israel Aircraft Industries
Ltd./Technologies Division (IAI), Ben-Gurion International
Airport, Israel received a license (1987) for Israel.
The Dornier agreement was signed on December 2, 1986, and the
IAI agreement was signed on May 6, 1987. The agreements provide
for Gyrodyne to furnish Dornier and IAI with technical
assistance and technical data in order for them to evaluate the
suitability of the Gyrodyne helicopter for their various
applications. It is anticipated that, if the evaluations
provide favorable results, final licensing agreements will be
signed whereby Gyrodyne will provide additional technical and
manufacturing data to enable said companies to produce the
remotely piloted Gyrodyne helicopter as modified for specific
applications.
It was initially anticipated that the evaluation phase of each
contract would last approximately two and one half to three
years. Numerous extended delays have been encountered by each
licensee with respect to the promulgation of air vehicle
requirements by each licensee's respective government, securing
incremental development funding, and attracting third party
customers. Each licensee has opted to market the basic QH-50
configured platform with modern customized electronics and
updated software. Each version of the QH-50 is capable of
handling varied mission requirements and/or integrating various
payloads such as sensors, radars, armaments, and communications
gear.
For the evaluation phase, the Company received fees of $500,000.
Should both the final agreements be signed, additional fees of
about $3 million can be anticipated, plus an initial royalty of
about $15,000 per vehicle produced. The licensing agreements
would remain in effect in perpetuity. The primary sales
territories for Dornier are the NATO European nations and for
IAI, Israel. To cover uncommitted territories, there is the
possibility that additional licensing agreements may be signed
in the future or the current agreements broadened to encompass
new areas. All licenses are subject to the approval of the U.S.
Department of State.
Gyrodyne has continued to provide technical support during
on-going deliberations, extended the evaluation phase of the
agreement, and submitted various proposals to Dornier GmbH. The
Company continues to await a final determination, tentatively
due in CY95, by the German Ministry of Defense with respect to
the funding milestones of its anticipated program.
The Company has submitted a proposal to supply technical and
support services to IAI in response to an IAI quote request. As
with Dornier, Gyrodyne has provided maximum prime contractor
flexibility by extending the trigger dates of its license
agreements in the event the licensee desires to manufacture the
QH-50 platform or, as an alternate, to utilize Gyrodyne as a
subcontractor. An additional proposal for the fabrication of
QH-50 platforms was provided to IAI during FY94 but to date
IAI's customer has not made a decision as to the purchase.
At the present time, there are two active U.S. military
programs, one Army and one Navy, utilizing the QH-50 platforms.
A Company sponsored engineering and production team visited Army
and Navy bases to better assess the military's requirements
regarding their continued use of the QH-50. As a result of these
visits, several queries for technical and product support were
received and have resulted in several small sales to the prime
contractor responsible for maintenance of the QH-50's at the
military installations. The company has also held discussions
with a U.S. company about forming a joint venture to sell
Helicopters to the U.S. Government.
Gyrodyne Petroleum, Inc. (GPI) was incorporated in Delaware in
1965 with the primary purpose of diversifying away from total
dependency on aerospace. In 1966, Flowerfield Properties, Inc.
(FPI) was incorporated in New York to manage investments in
marketable securities and to participate in a citrus grove
limited partnership in Florida.
At present, the oil and gas assets of the Company's subsidiary
Gyrodyne Petroleum, Inc. comprise a relatively small portion of
the assets of Gyrodyne Company. The gas slant well investment
which the Company made in the prior fiscal year developed water
saturation problems which led the operators to cap this well.
This led to a current fiscal year write off on Gyrodyne's books
of $153,964.
Continuing losses from gas production prompted the company to
sell its gas assets. GPI's declination with respect to
participation in new drilling ceded not only current but future
income from the affected properties in accordance with payout
conventions. In addition, several tracts were being operated at
a loss in order to maintain mineral rights. The Company has
reached agreements for net sale of these assets in excess of two
hundred thousand dollars. These funds will be used to increase
Working Capital.
The Company's FPI subsidiary is no longer actively managing a
securities portfolio but continues to maintain a substantial
investment in the Callery-Judge Grove in Florida through a
limited partnership interest. As a limited partner, Gyrodyne
has no voice in the management of the Grove, but rather as an
investor, monitors the Grove's progress. In 1995 the Company
signed an amendment to the Partnership agreement which extends
the life of the Partnership from 1999 to 2019, in addition, it
provides greater flexibility to the General Partner in such
areas as financing, cash distribution and bonuses.
As noted in previous reports, the Grove decided to build its own
packing plant, which is scheduled for completion in August of
1995. The plant completion coincides with the completion of its
major replanting program which was begun in CY 1987. This
replanting program will help to ensure increasing citrus
production well into the next century as new resets commence
bearing commercially harvestable fruit (four to five years after
planting). The combination of denser tree plantings along with
improved irrigation will greatly increase fruit yields per acre.
The Grove Manager has reported that, on a trees per acre basis
for grapefruit only, in 1972 average tree density was 116.16
trees per acre and, in 1991, 151.25 or a 30% increase. Current
resets of 13 blocks yielded a new tree count of 176,985 citrus
trees replacing 117,607 old sets for an approximate 51%
increase. It is anticipated by the Grove Manager that field box
packout of harvested fruit will closely follow increased tree
planting density figures.
The Grove has repositioned its product mix away from the
commodity juice market and into premium table fruit.
Additionally, it has phased in a successful direct marketing
program aimed at charities and institutional clients; has
increased harvestable fruit through the use of technologically
advanced agricultural techniques, and has further developed the
Callery-Judge brand label, thereby reducing dependence on other
direct marketers.
Augmenting its own allocation to the not-for-profit Ocean Spray
cooperative, the Grove purchased a substantial allotment from
another grower. The advantage of this purchase is that the
price paid for fruit solids by Ocean Spray is much higher than
the open market price.
Results for the Grove in CY 1994 were disappointing due to
weather conditions which effected the crop adversely. Hurricane
Gordon and a tropical depression completely curtailed harvesting
for four weeks at the height of the picking season. The
excessive amount of rain during the growing season, 101 plus
inches vs. a normal 53 inches rain fall, led to poor quality
fruit which reduced the overall packout. The Grove had estimated
500,000 boxes but came in with 295,000 boxes, a 40% reduction.
The Company owns a 326 acre site on the north shore of Long
Island. Located adjacent to the State University of New York
(SUNY) at Stony Brook, the site is the single largest
undeveloped privately owned industrially zoned parcel in the
township of Smithtown. Prevailing economic and political
considerations will determine in part the pace at which
development will proceed. Within the past year, the Company has
become more aggressive in developing a strategy to expand its
income base in real estate operations. As an example, the
Company, during the current fiscal year, completed the purchase
of 5 additional acres contiguous to its 321 acre parcel. This
addition will be developed in the future as an additional road
outlet from the Company's property.
At the beginning of the year the Company had available for rent
a contiguous suite in excess of 20,000 sq ft which is atypical
of the size of most rental units which run 500 to 3,000 sq ft.
The Company has since signed a multi year lease with a
children's day care center which will reduce this available
space by 11,630 sqft. The renovation of this suite should be
complete for occupancy by September 1995. For the remaining
space various renovation and subdivision scenarios are being
considered.
The overall development of the 326 acre parcel is still the
primary focus of the Company. The Phase I environmental audit
was completed during the prior fiscal year with a preliminary
Phase II initiated. In an on-going effort to continue progress
on the road-bridge link with the State University of New York at
Stony Brook, New York State has granted Gyrodyne a $25,000.00
award for the road link feasibility study.
<TABLE>
(b) Financial Information Relating to Business Segments
<CAPTION>
Year Ended Year Ended
April 30, April 30,
1995 1994
------------ -----------
<S> <C> <C>
Rental Income $ 1,667,067 $ 1,495,952
Helicopter Income 0 114,595
Less: Rental costs and expenses 1,167,325 1,172,028
Helicopter cost of sales 0 106,148
Net Aerospace expense 61,262 153,017
----------- -----------
Operating Income $ 438,480 $ 179,354
=========== ===========
Other Income/(Loss):
Citrus Grove Income $ (322,643) $ (108,088)
Oil and Gas Income (Notes 1, 2, & 3) (172,477) (19,524)
Other Income (Net) (Notes 4 & 5) (425) 117,345
---------- ----------
Total Other Income $ (495,545) $ (10,267)
=========== ===========
Identifiable Assets at Net Carrying Value
Real Estate Fixed Assets (Note 6) $ 1,552,544 $ 1,156,468
=========== ===========
<FN>
Note 1 - All inter-company transactions have been eliminated.
Note 2 - All company activity was within the United States of America.
Note 3 - See note number 3 of "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS"
Note 4 - See Other Income discussion in Item 6 "Other Income"
Note 5 - See the Other Income section of "CONSOLIDATED STATEMENTS OF INCOME"
Note 6 - See note number 2 of "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS"
</FN>
</TABLE>
(c) Business Segments
The Business Segments in the financial statements reflect the
Unconsolidated real estate, aerospace and investment activities
of Gyrodyne Company of America, Inc. The oil and gas activity
of Gyrodyne Petroleum, Inc. and Flowerfield Properties, Inc.'s
Citrus Grove income are both carried as investment income on the
consolidated statements of income under the heading "Other Income."
(1) Real Estate
The Company owns approximately 326 acres of land at St. James,
New York, which is primarily zoned for light industry. The
property is located on the North Shore of Long Island
approximately 50 miles east of New York City. The property,
surrounded by residential areas, is located adjacent to the
campus of the State University of New York at Stony Brook which
is a major research center, and is seven miles north of the Long
Island Expressway. The property is not located near the
transportation hub.
There are approximately 210,000 square feet of buildings
suitable for renovation as office, engineering, manufacturing
and warehouse space. There are approximately five miles of
improved roads and approximately ten acres of paved parking
areas. Rental unit sizes range from 300 square feet to 20,000
square feet, with the 1,000 square foot units being most
numerous. Where practical, separate utilities have been
provided for each suite. Given the location and size of rental
units, the industrial park attracts small start-up companies
that are not dependent on extensive material or product handling.
The average age of all the buildings is nearly thirty-five
years, and the facilities are undergoing continuous maintenance
repair cycles for roofs, paved areas, and building exteriors.
Almost all available space has been subdivided and is available
for rent, except for approximately 20,000 square feet which has
been reserved for Company use. Of the 185,000 gross square
footage available for rent, approximately 15,000 square feet
comprise common areas such as hallways, foyers and rest rooms.
The Company currently maintains a $10 million dollar liability
umbrella policy and has selectively insured certain buildings
and rent receipts predicated on an analysis of risk, exposure,
and loss history. Of the five large non-contiguous industrial
buildings: two, are constructed of pre-fabricated metal panels;
two, of cement blocks with metal deck roofing; and one, clay
brick and stucco with a gabled wood roof. One of the block
buildings has an in-place sprinkler system which is currently
functional but not recognized for insurance purposes.
Occupancies in all but the metal buildings are considered low
hazard, and in view thereof, it is Management's opinion that the
premises are adequately insured.
(2) Oil and Gas
Gyrodyne Petroleum, Inc. was established primarily to invest in
oil and gas interests as a limited partner investor. Beginning
in 1965, the initial major partners were Apache Oil and Austral
Oil Company. During 1976 all Apache Oil joint venture working
interests were disposed of. In April 1978 Austral Oil Company,
Inc. sold its assets to the Superior Oil Company. As of
September 28, 1984, Superior Oil Company was merged into Mobil
Oil Corporation. Mobil thereby became the managing partner. As
of January 31, 1988, Mobil Oil Corporation, then our general
partner, divested itself of its interest in Rulison Field,
Colorado. Four non-affiliated firms acquired individual leases
and became the operators for our now segmented Rulison Field
interest. In 1991 Parker and Parsley purchased Mobil's entire
interest in Ackerly Field, Texas, and in 1992, Meridian Oil Inc.
acquired Mobil's entire interest in the Basin Dakota Field, New
Mexico and became operator of GPI's working interest. The fields
in which GPI had a net working interest are indicated below:
<TABLE>
<CAPTION>
Name of Field Location County/State % Avg. Net
Gross Acreage Revenue Interest
<S> <C> <C>
Ackerly Dawson, Texas 4.5%
6,540 Acres
Rulison Garfield and Mesa, Colorado 19.0%
14,360 Acres
Basin Dakota San Juan Co, New Mexico 2.5%
2,880 Acres
</TABLE>
[FN]
In July 1995, the Company sold its interests in the Rulison and
Basin Dakota assets. For a further discussion refer to PART I,
Item 1. Business, (a) General Development of Business
</FN.
(3) Citrus Grove
The Company, through its wholly owned subsidiary, Flowerfield
Properties Inc., holds a 17 1/2% interest in the 3,664 acre
Callery-Judge Citrus Grove (a limited partnership) located 16
miles west of Palm Beach, Florida. This limited partnership was
formed in 1964 and since inception has maintained its books and
records on a calendar year basis. Starting January 1, 1995 the
Grove is switching to a fiscal year ending September 30. The
first fiscal year will be a short year ending September 30, 1995.
On an historic basis, the Grove continues to remain an
attractive investment. From its inception in 1965, the net worth
of the Grove Partnership, based on its appraised value, has
increased approximately $37.6 million while cash distributions
to the partners have amounted to $31 million. The $68.6 million
"value added" is on a base investment of $5.5 million. At the
formation of the Partnership, the Company's interest was 20%,
however, as provided in the Agreement, upon payout of each
limited partner's initial equity participation, the General
Partner was granted a 12.5% share of Grove earnings and equity
thus effectively reducing the Company's share of the Partnership
to 17.5%. During calendar year 1976, the Grove realized its
first profit from operations and by 1981 the Limited Partners
had recouped their original cash investment. To date Gyrodyne's
subsidiary Flowerfield Properties Inc. has received, in cash,
five times its $1.1 million original investment.
The cumulative difference between Grove income and its
distribution of cash to Partners has been retained by the Grove
for working capital and expansion purposes. Income taxes are
paid by the Partners on total income in the year earned.
Company cash receipts from Grove profits during the last five
calendar years are as follows:
<TABLE>
<CAPTION>
Calendar Cash
Year Ended Distributions
December 31, Received
<C> <C>
1990 $637,000
1991 $294,000
1992 $0
1993 $0
1994 $0
</TABLE>
As indicated above, since 1991 the Company has not receive any
cash distributions. Gyrodyne's apportioned loss for the Fiscal
Year ended April 30, 1994 was $322,643 compared to a loss of
$108,088 for the prior fiscal year. The current year's
operating loss, was mainly due to unproductive replanted
acreage, a poor grapefruit crop, and severe weather conditions.
The operating loss for CY 1994 resulted from a continued decline
in fresh fruit prices for bulk sales through normal commercial
domestic and export channels. Mitigating this decline somewhat
is the Grove's increasing direct sales segment of its product
mix. Clearly direct sales are a stable source of revenue and a
high margin performer. Over the past several years, Grove
management has increased this segment of their product mix.
The shift to a fiscal year based on the natural growing season
should eliminate much of the estimation problem endemic to the
straddle of two calendar years. The Grove Manager is
forecasting continued losses for the short fiscal year 1995
with a turnaround expected in fiscal year 1996 starting October
1, 1995. The Groves' aggressive replanting of trees utilizing
higher density plantings on an in-fill basis and for whole
blocks coupled with improved irrigation methods will start to
show results in the next growing season. It should be noted
that, depending on variety, tree yields become commercially
harvestable four to five years after planting, reach peak
maturity at ten years of age, and have a productive life cycle
of approximately twenty-five years. By eliminating
commodity-type citrus varieties and tree stocks that are easily
susceptible to disease, the Grove will not only move towards
higher priced premium products but can anticipate greater fruit
yields.
It was projected that the Grove would continue to have a net
attrition in productive trees until the first crop of replanted
trees comes of fruit bearing age. At that juncture, and
annually thereafter, the Grove will show an increase in the
percent of productive acreage. Since 1990 29.9% or 1,095.23
acres of the Grove has been reset to new varieties.
Even though recent results were depressed, the overall physical
condition of the Grove is excellent. Additional productive
capacity attributable to both replanting and higher tree
densities per acre, a fully operational packing plant, an
upscale shift in fruit mix, direct sales efforts, and the
continuing franchise of the Indian River Basin designation
portend a substantial turnaround in results.
<TABLE>
10 YEAR HISTORY OF PRODUCTIVE CAPACITY
<CAPTION>
CALENDAR YEAR TOTAL ACRES OUT PERCENT
OF PRODUCTION PRODUCTIVE
<C> <C> <C>
1985 41.32 98.9
1986 41.32 98.9
1987 63.79 98.3
1988* 1,006.74 72.4
1989* 1,006.74 72.4
1990 969.43 73.5
1991 982.29 73.1
1992 1,058.72 71.0
1993 1,353.53 62.0
1994 1,028.82 71.8
<FN>
*1988 and 1989 are averaged together
</FN>
</TABLE>
An independent appraisal as of December 31, 1994 made by
Messrs.. Thomas H. Pinel, MAI, Realtor, Chairman and Thomas H.
Pinel Jr. of Pinel & Carpenter, Inc. of Orlando, Florida,
valued the Grove at $46,255,000. The Grove is appraised in the
1994 Appraisal as a single operating entity used for
agricultural purposes. According to the Grove's appraiser, the
value of any single undivided interest in the Grove would be
materially less than the value of the interest's proportionate
share of the (net) value of the entire Grove. The 1994
Appraisal does not value the land and improvements for real
estate purposes or based on the liquidating values of other
Grove assets. According to the Grove's appraiser, the total of
such values would be less than the value of the Grove's assets
as integral parts of a commercial citrus grove. This appraisal
does not include the estimated sales value of fruit on the trees
which is provided by the Grove Manager and incorporated in the
total evaluation. Including the value of the fruit and
deducting the Grove's total liabilities the December 31,1994 net
asset value of the Grove is $43,887,000. At December 31, 1993
the net asset value was $41,447,000.
The Grove Manager calculates the value of the fruit on the trees
by utilizing the industry standard formula of 66 2/3% of the
estimated market value of current fruit on the trees. The 17
1/2% interest of Flowerfield Properties, Inc. in the net asset
value of the Citrus Grove as a whole is worth approximately $7.7
million.
The higher 1994 net asset value, approximately 6% over 1993, is
a reflection of the replanting program which concentrated on
denser tree spacing and higher value fruit varieties. In
addition the Groves' affiliation and ownership in Ocean Spray
had a positive effect on the Grove's value. Conversely, the
value of those groves strictly in grapefruit and without a
national affiliation declined in value due to the decline in
grapefruit market prices.
<TABLE>
FLOWERFIELD PROPERTIES, INC.
Value of 17 1/2% Limited Partnership Interest in Callery-Judge Grove
at December 31,
<CAPTION>
(In Thousands)
1994 1993
<S> <C> <C>
Net Asset Value $ 7,680 $ 7,253
<FN>
No value is attributed to organization and deferred debt expense.
</FN>
</TABLE>
As provided by the original partnership agreement executed in
1965, the Company was committed to an additional investment, on
demand, of $110,000. In the revised partnership agreement
effective January 1, 1995 this call provision was eliminated.
Item 2. Properties
(a) Real Estate Properties
Gyrodyne Company of America, Inc. (Consolidated) owns
approximately 326 acres located on the North Shore of Suffolk
County, Long Island, New York just west of the State University
of New York at Stony Brook. The Company currently has
approximately 210,000 square feet of industrial building space
and maintains its corporate office and manufacturing facilities
on site. In 1994 approximately 5 acres of land adjacent to the
Company's property were purchased.
The property is bisected by the town lines of Smithtown and
Brookhaven Townships. The buildings and approximately 144 acres
are located in the town of St. James, Township of Smithtown, and
the contiguous balance of approximately 182 acres is located in
the town of Stony Brook, Township of Brookhaven.
<TABLE>
The approximately 326 acres of land are zoned for use as shown
below:
Approximate Acreage
<CAPTION>
Township Total Light Industry Residential
and/or Buffer
<S> <C> <C> <C>
Smithtown 144 120 24
Brookhaven 182 173 9
---- ---- ----
Total 326 293 33
==== ==== ====
</TABLE>
All of the acreage is contiguous. However, the Port Jefferson
Branch of the Long Island Railroad runs through the property,
with 78.5 acres lying to the north of the Railroad, and the
balance to the south.
The approximately 326 acres of land are carried on the Company's
books at cost in the amount of $670,129, while the 210,000
square feet of space are carried at a depreciated cost of
$785,689. At the current time, the property and buildings that
are used by the Real Estate segment of the business are entirely
without financial encumbrances.
The property was originally purchased in 1951 for use as a
manufacturing facility and to provide sufficient space for
flight tests. Dating back to 1909, the original Flowerfield
parcel encompassed approximately 1,000 acres coming to eminence
in the 1920's as a noted flower bulb farm. One notable feature
of the property was that it had a Long Island Railroad train
station, designated as the Flowerfield Station, which had been
built along the LIRR right of way. The station was torn down in
the late nineteen-fifties, however the property's name continues
in use today having been accepted by the post office in lieu of
a street address. The Company's official address is:
Gyrodyne Company of America, Inc.
17 Flowerfield Suite 15
St. James, New York 11780-1551
In response to the loss of its helicopter business, in 1972 the
Company began subdividing and leasing its industrial buildings
in order to derive income. In FY95 eighty three tenants occupied
154,787 square feet and leased approximately fifteen acres of
land and parking lots. A more detailed discussion on operating
results and proposed improvements follows in Item 6.
Item 3. Legal Proceedings
The Corporation is named as a defendant in a number of legal
proceedings arising in the normal course of business.
Management, after reviewing all actions and proceedings pending
against or involving the Corporation considers that the
aggregate loss, if any, resulting from the final outcome of
these proceedings will not be material.
None of the Corporation's subsidiaries is party to, nor is any
subsidiary-owned property subject to, any material pending legal
proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to the vote of security holders during
the fourth quarter of either Fiscal Year 1994 or 1995.
PART II
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters.
(a) Price Range of Common Stock
The Company's Common Stock $1 P.V. (symbol: "GYRO") is traded
in the NASDAQ Small-Cap Market. Set forth below are the high
and low bid and asked prices as reported by NASDAQ for the
periods indicated. Such prices reflect inter-dealer quotations,
without retail mark-up, mark-down or commission and do not
necessarily reflect actual transactions.
<TABLE>
<CAPTION>
Quarter Ended* Bid Price Bid Price Asked Price Asked Price
Fiscal 1994 Low High Low High
<S> <C> <C> <C> <C>
July 31, 1993 $13.43 $13.71 $14.29 $14.86
October 31, 1993 $13.14 $13.71 $14.86 $15.14
January 31, 1994 $12.29 $12.57 $14.00 $14.29
April 30, 1994 $10.86 $11.14 $12.57 $12.57
Fiscal 1995
July 31, 1994 $9.14 $10.29 $10.00 $11.57
October 31, 1994 $9.43 $10.57 $10.00 $12.14
January 31, 1995 $10.57 $11.00 $11.43 $12.50
April 30, 1995 $11.00 $13.50 $12.50 $15.00
<FN>
* Quotations prior to January 20, 1995 have been adjusted for
the 7 for 4 stock split effective on that date.
</FN>
</TABLE>
(b) Approximate Number of Equity Security Holders, including
shares held in Street name by brokers.
Number of Record Holders
Title of Class as of July 14, 1995
----------------------------- ------------------------
Common Stock, $1.00 Par Value 2,500
(c) There were no dividends declared in the current fiscal year
or the prior fiscal year..
Item 6 Management's Discussion and Analysis of Financial Condition
and Results of Operation.
Total revenue for the fiscal year ended April 30, 1995 increased
$57,000 to $1,667,000 from the previous year's $1,610,000.
Excluding the remainder of the Helicopter blade sales, which
took place in May of 1993, the revenue increase would have been
$171,000. The primary factor contributing to the revenue
increase were additional tenants and higher rentals based on
renewal of leases. The May 1, 1994 vacancy rate of 20% fell to
18% as of April 30, 1995.
Real Estate
Although cyclical, the Company's real estate operation has
established trends over the past two decades. Over the past
decade the compound rate of increase for revenue and expenses
has almost doubled the compound rate increase for inflation
Approximately 7% for revenue and expenses vs. 3.6% for
inflation. Even though revenue has been increasing at double the
inflation rate expenses have also kept pace with this percentage
increase leaving margins flat. Large increases in uncontrollable
expenses such as real estate taxes, professional fees and
electricity have offset the benefit of higher revenues. The
Company's tax certiorari proceeding with the town of Smithtown
was successful yielding a refund of $19,000 which was received
in FY 1995. Aging facilities have necessitated the engagement of
additional maintenance staff and continuous reliance on outside
contractors, which is reflected in salaries and outside
services.
Operating margin for FY95 has increased to 30% up 8% from the
10 year low of 22% experienced in FY94. This margin is still 1%
below the 10 year average of 31%. The higher Flowerfield
occupancy rate and more favorable lease renewal rental rates
combined with reduced expenses produced the 8% jump in gross
margin.
<TABLE>
Selected Real Estate Operations Statistics
<CAPTION>
Fiscal Operating Occupancy Nominal
Year $ Revenue $ Expenses $ Margin Rate in Pct. $ Rate per sqft*
<S> <C> <C> <C> <C> <C>
1992 1,528,901 987,227 541,674 87.4 9.94
1993 1,422,326 1,036,221 386,105 79.7 9.82
1994 1,495,952 1,172,028 323,924 80.0 9.77
1995 1,667,067 1,167,325 499,742 82.0 10.15
<FN>
*exclusive of land rentals
</FN>
</TABLE>
Mirroring the caution precipitated by the recession, most small
businesses still request short term leases. The average square
footage of tenants whose leases expire within twelve months is
less than 1,100 sqft. The Company's exposure to short term
market rental rate conditions is reflected in the accompanying
table.
<TABLE>
Lease Summary
<CAPTION>
Balance of # of Total Relative pct Relative pct Approximate
time remaining Tenants square of total of total dollar value
on lease rented space dollar value of rentals
<S> <C> <C> <C> <C> <C>
Up to 1 year 73 77,219 50.5% 41.9% $ 699,000
From 1 to 2 yrs 6 7,770 5.1% 3.8% 63,000
from 2 to 5 yrs 4 67,798 44.4% 54.3% 905,000
---- ------ ------- ------- ---------
Total 83 152,787 100.0% 100.0% $1,667,000
==== ====== ======= ======= =========
In a competitive environment, short leases provide greater
leverage for the tenant, however, the pickup in activity in FY
1995 reflects an increase in new tenants and an increase in
renewals, thus reducing the turnover rate on short term leases.
This trend, should continue into FY 1996. Recently a long term
lease, commencing September 1, 1995, has been signed with a Day
Care Center for 11,630 square feet, which will further increase
the occupancy rate. Pressure on the operating margins in FY 1996
will continue due to the expenses associated with the
refurbishment of vacant facilities.
In FY 1995 three tenants individually exceeded 10% of total
rental income representing an aggregate 50% with one tenant
exceeding 20%. Correspondingly, in FY 1994, three tenants each
exceeded 10% of total rental income for a 45% aggregate total.
The leases of these major tenants all contain periodic cost of
living escalators as well as various pass-throughs increases for
such things as real estate taxes, security, and building
insurance. For tenants with stand alone buildings, certain
pass-throughs do not apply because the associated service costs
are fully assumed by the tenants.
Management is forecasting a modest increase in rent revenues for
FY96 however expenses are anticipated to rise more sharply led
by salaries and outside services while real estate taxes and
utility costs should remain relatively constant. Work will
continue on mandated infrastructure improvements which include:
</TABLE>
<TABLE>
Mandated Infrastructure Improvements
<CAPTION>
Project(s) Agency or Mandate Projected Completion
<S> <C> <C>
Industrial building Suffolk County Department On-going
public water backflow of Health, Suffolk County,
prevention New York
Inspection, maintenance N.Y.S. Department of On-going
and/or removal of Enviromental Control (DEC)
in-ground oil tanks
Handicap access to Americans With Disabilities On-going
facilities Act
Hazardous material Environmental Protection On-going
disposal Agency (EPA)
</TABLE>
It is currently estimated that costs associated for compliance
with government regulations will cumulatively approach $150,000
over the next few years. It must be noted that there may be
additional compliance costs in the event that proposed
approaches to various projects are modified or nullified by
pending changes in regulations or adverse administrative
interpretations.
Additionally, expenses related to the development of a master
plan for Flowerfield will increase as efforts intensify with the
completion of the Phase I Environmental Assessment. Management
anticipates additional expenses for the current year for the
development of a comprehensive Master Plan and Generic
Environmental Impact Statement (GEIS) that will be suitable for
presentation to the community and submittable to town and county
planning authorities.
Although Long Island's real estate market is less than robust,
Gyrodyne has witnessed a marked increase in rental activity
within the past several months. The Company's occupancy rate
has edged up two percentage points over last year and rental
inquiries remain strong. The pick up in activity however is
mainly in smaller spaces of approximately 1,000 square feet or
less. The Company has also been successful in retaining a high
percentage of tenants whose leases were up for renewal.
Currently, this is being done without resorting to concessions
which were necessary last year.
Helicopter Division
With the sharp reduction of proposal preparation costs,
Aerospace expenses for FY 1995 were significantly lower than FY
1994. The continuing effort by the German Ministry of Defense
to fund a development program, Israel Aircraft's efforts to
market integrated systems utilizing the QH-50 platform, and
continuing utilization by the U.S. Military of QH-50's in
inventory together have established a viable market for the
Company's on-going efforts. On its own initiative, the Company
has rebuilt three QH-50 platforms from inventory which are
slated for use as demonstrators and market development projects.
Prospective sales of platforms and spare parts will amortize
funds expended on marketing and the maintenance of facilities
and inventory.
Further, the Company has tentatively agreed to sell two QH-50
air vehicles to Dornier GmbH to be used for flight
demonstrations. The program provides prospects for further
sales of equipment and/or proprietary rights. In addition,
negotiations are continuing with a licensee and a U.S. company
to form a joint venture in order to sell vehicles to the U.S.
Government.
The Grove
The Callery-Judge Grove loss for the period ended April 30, 1995
was $322,643 as compared to a loss of $108,088 recorded in FY
1994. A more detailed discussion of FY 1995 and FY 1994 results
and the economic outlook of the Grove over the next few years is
presented as part of Item 1(c)(3).
Other Income
Interest and dividend income increased over the previous
reporting period by $4,000. Higher interest rates more than
offset the decline in the amount of funds available for
investment. Investment Funds were diminished in FY 1995
primarily due to payments for the land purchase and Real Estate
taxes. The continuing financing of capital improvements will
cause the liquidation of temporary investments with a probable
reduction of interest income in FY 1996.
In 1990, the Company adopted the method of "Employers'
Accounting for Pensions" prescribed by the Financial Accounting
Standards Board ("FASB") Statement No. 87. The application of
FASB 87 resulted in recognition of approximately $8,000 of net
periodic pension income for the year ended April 30, 1995
compared to approximately $99,000 for the year ended April 30,
1994. The large decrease in 1995 over 1994 reflects the
restructuring of the plan which increased benefits for prior and
current plan members.
General and Administrative Expenses
On a consolidated basis for the year ended April 30, 1995,
General and Administrative expense was $725,772 versus $795,039
for the year ended April 30, 1994. A detailed analysis is
presented under General and Administrative (G&A) Segments.
For analysis purposes, the Company has divided General and
Administrative Expenses into four expense pools: 1)
Remuneration, which includes all compensation expenses related
to executive and support staff; 2) Corporate Governance, which
includes all expenses related to the Board of Directors and its
subcommittees, maintenance of stockholder records and NASDAQ
listing requirements, and long range strategic planning; 3)
Overhead, corporate overhead expenses for accounting services,
depreciation, maintenance, utility charges, insurance, etc., and
4) Special Projects, expenses related to the Master Plan for the
Flowerfield property, acquisitions, and consulting expenses for
project advisement. The FY 1994 expenses have been adjusted to
maintain compatibility with FY 1995 results. Certain items which
were carried in the "Other Income and Expense" category in FY
1994 have been reclassified to G&A for the current years report.
<TABLE>
G&A Segments
<CAPTION>
G&A Expenses FY94 FY95
<S> <C> <C>
Remuneration $493,909 $499,396
Corporate Governance $90,102 $79,730
Overhead $165,748 $146,646
Special Projects $45,280 0
-------- --------
Total $795,039 $725,772
======== ========
</TABLE>
The FY 1995 Remuneration expense is slightly higher than in FY
1994. The 1% rise is mainly a function of normal salary
increases. Corporate Governance are lower than the prior year
due to a reduction in legal expenses. Partially offsetting this
saving were higher Directors expenses due to more frequent
meetings, and higher stockholder expenses due to the stock
split.
Overhead expense decreased $19,000, mainly due to lower expenses
in several categories namely, Outside Accounting, Supplies, and
Dues and Memberships. The reductions were in those areas which
are controllable by management. Offsetting these items was an
increase in insurance premiums, primarily for Officers and
Directors insurance. It is anticipated that Overhead expenses
will remain flat in FY96. For the past fiscal year, Special
Projects spending was zero as all projects were deferrable.
Expenditures for Special Projects will resume in FY 1996 as the
Company's cash position improves based on several pending
transactions.
Results from Operations
After giving effect for the stock split, results from operations
after taxes were a loss of ($0.57) per share for the period
ended April 30, 1995, versus a loss of ($0.38) for the prior
year. The non-operating items effecting the current year loss
were, the large Citrus Grove loss, the gas well write off, and
the reduction of Pension income.
The pre-tax loss of $783,000 generated an income tax credit of
$220,000. The FY 1995 tax basis loss of $846,964 will result in
a net operating loss carry forward.
Liquidity and Capital Reserves
The Company's cash position declined $600,000 during the year as
a result of purchasing five acres of property adjacent and
contiguous with Flowerfield. Additionally cash on hand
reflected the reduction in the Reception Center loan at year end
to a balance of $440,000.
In order to replenish working capital and to secure funds for a
major renovation, the Company is seeking an alternate funding
arrangement which will pay off the old loan, supply funds for
proposed building renovations, and increase working capital. Our
current lender has agreed to this loan and is in the process of
working out the terms with the Company.
Additional funds for real estate projects will continue to
squeeze working capital in FY 96. This pressure will be
alleviated by the restructuring of the Company's debt financing,
the sale of two helicopters, and the sale of the Company's gas
well interests.
Liquidity for the 3-5 year time horizon will increase as
projected Grove cash distributions are received, the elimination
of the Gas losses provides net Oil income, and improved real
estate operations reflect the addition of new tenants.
Effects of Inflation
It is the Company's policy to have multi-year leases contain
cost pass-through provisions for increases in real estate taxes
and fuel costs, as applicable, and insurance, cartage and
security guards fees. The balance of the Company's operations,
including rental rates, as well as its income from the Grove and
petroleum are subject to free market forces.
Item 7 Financial Statements and Supplementary Data
See following pages.
AUDITORS LETTER
Independent Auditors' Report
Board of Directors and Shareholders
Gyrodyne Company of America, Inc.
St. James, New York
We have audited the accompanying consolidated balance sheet
of Gyrodyne Company of America, Inc. and Subsidiaries as of
April 30, 1995 and the related consolidated statements of
income, stockholders' equity and cash flows for each of the
two years in the period then ended. These consolidated
financial statements arc the responsibility of the
Company's management. Our responsibility is to express an
opinion on these Consolidated financial statements based
on our audits. We did not audit the financial statements of
the Callery-Judge Grove, a limited partnership in which the
Company has a 17.5% equity interest, which statements
reflect net losses of $(1,211,081) and $(373,859) for the
years ended December 31,1994 and 1993 and the Company has
recorded its proportionate share of such loss in its
consolidated income statements. These statements have been
audited by other auditors whose report has been furnished
to us and our opinion, insofar as it relates to reported
income from this investment in 1995 and 1994, is based
solely on the report of the other auditors.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, based upon our audits and the report of
other auditors with respect to the Callery-Judge Grove as
described above, the consolidated financial statements
referred to above present fairly, in all material respects,
the consolidated financial position of Gyrodyne Company of
America, Inc. and Subsidiaries as of April 30, 1995 and the
results of their operations and their cash flows for each of
the two years in the period ended April 30, 1995, in
conformity with generally accepted accounting principles.
SGD/ HOLTZ RUBENSTEIN & CO., LLP
Melville, New York
June 9, 1995
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
APRIL 30, 1995
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 185,430
Short-term investments 300,926
Accounts receivable, less allowance
for doubtful accounts of $6,000 83,865
Prepaid expenses and other current assets 209,456
---------
Total current assets 779,677
INVESTMENT IN OIL AND GAS PROPERTIES (Note 3) 139,840
INVESTMENT IN CITRUS GROVE PARTNERSHIP (Note 4) 1,585,104
PROPERTY, PLANT AND EQUIPMENT (Note 2) 1,552,544
PREPAID PENSION COSTS (Note 7) 1,846,796
OTHER ASSETS (Note 8) 253,045
----------
$ 6,157,006
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 245,768
Current portion of long term debt (Note 12) 120,000
Income taxes payable - Deferred (Note 6) 48,000
---------
Total current liabilities 413,768
LONG TERM DEBT (Note 12) 320,000
DEFERRED INCOME TAXES (Note 6) 1,080,000
COMMITMENTS (Notes 13 & 15)
STOCKHOLDERS' EQUITY: (Notes 10 & 11)
Common Stock par value $1 per share
authorized 2,000,000 shares, 1,531,086
shares issued (including 542,178 shares
held in treasury) 1,531,086
Capital in excess of par value 6,094,251
Deficit (163,891)
----------
7,461,446
Less cost of shares of common stock
held in treasury (3,118,208)
----------
4,343,238
----------
$ 6,157,006
===========
See notes to consolidated financial statements
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended April 30,
---------------------------
1995 1994
<S> <C> <C>
REVENUE:
Rental Income (Note 5) $ 1,667,067 $ 1,495,952
Helicopter Income 0 114,593
--------- ---------
1,667,067 1,610,545
--------- ---------
COSTS AND EXPENSES:
Cost of maintaining rental property 1,167,325 1,172,028
Helicopter cost of sales 0 106,148
Aerospace expense, net 61,262 153,017
General and administrative 725,772 795,039
--------- ---------
1,954,359 2,226,232
Gross Operating Income/(Loss) (287,292) (615,687)
OTHER INCOME AND (EXPENSES:)
Equity in (loss) of Citrus Grove
Partnership (Note 4) (322,643) (108,088)
Equity in (loss) of oil and gas
investment (Note 3) (172,477) (19,524)
Interest & dividend income 37,258 33,252
Pension income (Note 7) 7,678 99,439
Interest expense (45,361) (15,346)
---------- ---------
(495,545) (10,267)
---------- ---------
LOSS BEFORE INCOME TAX BENEFIT (782,837) (625,954)
INCOME TAX BENEFIT (Note 6) (219,777) (249,511)
---------- ----------
NET LOSS $ (563,060) $ (376,443)
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING (Note 10) 988,908 988,908
========== ==========
LOSS PER SHARE $ (0.57) $ (0.38)
======== ========
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
TWO YEARS ENDED APRIL 30, 1995
<CAPTION>
Common Stock Treasury Stock
------------------------ Capital in Retained ---------------------------------------
Par Excess of Earnings/
Shares Value Par Value (Deficit) Shares Cost Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance April 30, 1993 1,107,268 $ 1,107,268 $ 6,310,225 $ 1,047,180 553,258 $ (3,181,944) $ 5,282,729
2% Stock Dividend 207,844 (271,568) (11,080) 63,736 12
Net (Loss) (376,443) (376,443)
--------- ----------- ----------- ---------- ------- ------------ -----------
Balance April 30, 1994 1,107,268 $ 1,107,268 $ 6,518,069 $ 399,169 542,178 $ (3,118,208) $ 4,906,298
--------- ----------- ----------- ---------- ------- ------------ -----------
Stock split (7 for 4) 423,818 423,818 (423,818) 0
Net (loss) (563,060) (563,060)
--------- ---------- ----------- ---------- ------- ----------- -----------
Balance April 30, 1995 1,531,086 $ 1,531,086 $ 6,094,251 $ (163,891) 542,178 $ (3,118,208) $ 4,343,238
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED APRIL 30,
----------------------------
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (563,060) $ (376,443)
---------- ----------
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization of oil
and gas investments 118,468 121,035
Depreciation and amortization of plant
and equipment 62,000 54,678
Loss on abandoned wells 153,964 0
Deferred income tax provision (benefit) (28,204) 77,204
Pension (income) (7,678) (99,439)
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 14,111 215,476
Inventories 0 86,860
Prepaid expenses and other 169,621 (324,782)
Other assets (199,348) (2,191)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (34,438) (100,235)
--------- --------
Total adjustments 248,496 28,606
--------- --------
Net cash used in operating activities (314,564) (347,837)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in short term government securities 93 589,423
Increase in oil and gas investments (4,344) (217,399)
Decrease in Citrus Grove investment 322,643 108,088
Increase in Fixed Assets (458,076) (317,690)
--------- ---------
Net cash (used)/provided by investment activities (139,684) 162,422
--------- ---------
CASH FLOWS (USED)/PROVIDED BY FINANCING ACTIVITIES:
New borrowings 0 600,000
Repayment of debt (120,000) (40,000)
-------- ---------
Net cash from borrowings (120,000) 560,000
Sale of fractional shares 0 12
--------- --------
Net cash from financing activities (120,000) 560,012
Net (decrease)/increase in cash and cash equivalents (574,248) 374,597
Cash and cash equivalents at beginning of year 759,678 385,081
--------- --------
Cash and cash equivalents at end of period $ 185,430 $ 759,678
========== ==========
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1995, AND 1994
1. Summary of Significant Accounting Policies:
a. Description of business
Gyrodyne Company of America, Inc. and Subsidiaries (the
"Company") is primarily a lessor of industrial and commercial
real estate to unrelated diversified entities located in Long
Island, New York. The Company also has investments in a citrus
grove partnership and in oil and gas properties. Prior to 1975,
the Company's primary business was the design, testing,
development and production of coaxial helicopters. Although the
Company can not be considered an active airframe manufacturer,
it is involved in certain licensing agreements that, if
exercised, would enable the licensees to produce the Gyrodyne
coaxial helicopter.
b. Principles of consolidation
The accompanying consolidated financial statements
include the accounts of Gyrodyne Company of America, Inc.
("GCA") and its wholly-owned subsidiaries. All intercompany
balances and transactions have been eliminated.
c. Investments
The Company accounts for its oil and gas and citrus
grove investments under the equity method. Its investment in
the oil and gas properties represents the Company's
proportionate share of drilling costs. Tangible assets are
depreciated using the 200% declining balance method with a 5
year class life and intangible assets are amortized using the
straight-line method over a twelve year period.
d. Depreciation and amortization
Substantially all property, plant and equipment is
depreciated using accelerated methods over the estimated useful
lives of the related assets.
e. Statement of cash flows
For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. Short
term investments consist of U.S. Government treasury bills and
notes stated at cost, which approximates market. These
investments mature within the year.
f. Reclassifications
Certain reclassifications have been made in the 1994
financial statements to conform to the presentation used in 1995.
g. Earnings per share
Earnings per common share are based on the weighted
average number of common shares outstanding during the year.
2. Property, Plant and Equipment:
<TABLE>
Property, plant and equipment as of April 30, 1995 consists
of the following:
<CAPTION>
Estimated Allowance Net
Lives Cost for Deprec. Assets
<S> <C> <C> <C> <C>
Land - $ 670,129 $ 0 $ 670,129
Buildings and improvements 20-33 3,724,025 2,938,336 785,689
Machinery & Equipment and
Furniture & Fixtures 3-10 362,254 265,528 96,726
--------- --------- --------
Total $4,756,408 $3,203,864 $1,552,544
========== ========== ==========
</TABLE>
Substantially all buildings and improvements are held
for lease. Approximately half of Tenant leases are for one or
two years. Certain leases serve as collateral for the Company's
outstanding bank debt.
On October 5, 1994 the Company purchased an adjacent
parcel of land for $499,900. In connection with this purchase ,
the Company delivered an irrevocable letter of credit to the
seller in the amount of $200,000 to secure the performance of
certain land improvements by the Company. The Company has until
October 5, 1996 to perform these improvements.
3. Investment in Oil and Gas Properties:
<TABLE>
The results of operations from the Company's investment
in oil and gas properties are summarized as follows:
<CAPTION>
Year ended
April 30,
------------------------------
1995 1994
<S> <C> <C>
Sales of oil and gas $ 265,147 $ 298,610
--------- ---------
Oil and gas production expenses 165,192 197,099
Amortization expense 82,043 111,698
Depreciation expense 36,425 9,337
Abandoned well costs 153,964 0
--------- ---------
437,624 318,134
--------- ---------
(Loss) before income tax $ (172,477) $ (19,524)
========= =========
</TABLE>
In 1994 the Company invested approximately $160,000 as a
limited partner in a developmental drilling project adjacent to
existing wells in operation. During 1995, the well operators
determined that the project was not economically viable and
plugged and abandoned the well. As a result, the Company has
written off the unamortized balance of its investment of
$153,964 as a charge to current year operations.
Subsequent to year end, the Company entered into a contract
to sell its gas well interests in Colorado and New Mexico,
having a net book value of $92,269 at April 30, 1995, for a
gross selling price of $287,000.
4. Investment in Citrus Grove Partnership:
The Company has a 17-1/2% limited partnership interest in
The Callery-Judge Grove, which owns and operates a 3,664 acre
citrus grove in Palm Beach County, Florida. Summarized
financial position and results of operations of the Grove, on a
calendar year basis, are presented below.
<TABLE>
Callery Judge Grove
Balance Sheets
- -------------------
($000)
<CAPTION>
December 31,
--------------------------------
ASSETS 1994 1993
<S> <C> <C>
Current assets $ 9,805 $ 5,136
Property, plant and equipment 17,934 15,330
Less accumulated depreciation (6,067) (5,843)
Investments 1,081 442
Other assets 843 142
-------- --------
Total assets $ 23,596 $ 15,207
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities 1,299 1,134
Capital lease obligations, less current portion 71 126
Notes Payable, less current portion 12,017 2,527
Partners' capital 10,209 11,420
-------- --------
Total liabilities and partners' capital $ 23,596 $ 15,207
======== ========
</TABLE>
<TABLE>
Callery Judge Grove
Statements of Operations
- ------------------------
($000 )
<CAPTION>
Year ended
December 31,
-----------------------------------
1994 1993
<S> <C> <C>
Revenue from fruit sales $ 9,671 $ 14,000
Operating expenses (10,973) (14,406)
Other income (expense) (189) 32
-------- --------
Loss before extraordinary gain (1,491) (374)
Extraordinary gain on early
extinguishment of debt 280 0
------- --------
Grove Net Loss $ (1,211) $ (374)
========= ========
Gyrodyne share @ 17.5% $ (212) $ (65)
Reverse 1/1/94 - 4/30/94 accrual (A) 91 48
Accrue 1/1/95 - 4/30/95 (A) (202) (91)
========= =======
Gyrodyne loss $ (323) $ (108)
<FN>
(A) To account for timing difference of Grove calendar year
vs. Gyrodyne fiscal year.
Effective January 1, 1995 the Grove has elected to switch to a
Fiscal Year ending September 30, 1995. The change is being made
in order to conform to the natural growing season. The first
Fiscal year will be a short year of only nine months.
</FN>
</TABLE>
5. Major Customers
For the year ended April 30, 1995 rental income from
three customers represented 20%, 14% and 12% of rentals
respectively.
For the year ended April 30, 1994 rental income from
three customers represented 19%, 14% and 12% of rentals
respectively.
6. Income Tax Provision (Benefit)
<TABLE>
The provision (benefit) for income taxes is comprised of
the following:
<CAPTION>
Year ended
April 30,
---------------------------------------
1995 1994
<S> <C> <C>
Current:
Federal $ (202,020) $ (331,633)
State 10,447 4,918
--------- ---------
(191,573) (326,715)
Deferred:
Federal (31,548) 62,548
State 3,344 14,656
---------- --------
(28,204) 77,204
$ (219,777) $ (249,511)
</TABLE>
The Company files on a consolidated basis for Federal income
and Florida State franchise tax purposes and separately for New
York State franchise tax purposes.
<TABLE>
Deferred income taxes are comprised of the following elements:
<CAPTION>
April 30,
Deferred tax liabilities: 1995
<S> <C>
Pension income $765,000
Amortization of intangible drilling costs 47,000
Capitalization of Citrus Grove costs 423,000
---------
Total deferred tax liabilities 1,235,000
---------
Deferred tax assets:
Tax loss carry forwards 214,000
Valuation allowance for deferred tax assets (107,000)
----------
Total deferred tax assets 107,000
----------
Net deferred income taxes $1,128,000
===========
</TABLE>
7. Retirement Plans:
The Company has a noncontributory defined benefit pension
plan covering substantially all of its employees. The benefits
are based on years of service and the employee's average annual
compensation during the highest five consecutive years of
service. Annual contributions to the plan are at least equal to
the minimum amount, if any, required by the Employee Retirement
Income Security Act of 1974 but no greater than the maximum
amount that can be deducted for federal income tax purposes.
Contributions are intended to provide not only for benefits
attributed to service to date but also those expected to be
earned in the future. Due to the overfunded status of the plan,
no contributions have been made for each of the two years in the
period ended April 30, 1995
<TABLE>
Net periodic pension income consists of the following
components:
<CAPTION>
Years ended April 30,
----------------------------------
1995 1994
<S> <C> <C>
Service cost $ (120,846) $ (101,007)
Interest costs (213,885) (205,443)
Expected return on market
related value of assets 237,713 327,813
Net Amortization 104,696 78,076
---------- ----------
Pension income $ 7,678 $ 99,439
<CAPTION>
The plan's funded status is as follows:
1995 1994
-------------- ---------------
Actuarial present value of benefit
obligations:
<S> <C> <C>
Accumulated benefit obligation:
-vested $ (2,033,159) $ (2,072,424)
- non vested (191,679) (195,381)
------------ ------------
- total $ (2,224,838) $ (2,267,805)
Projected benefit obligation $ (2,688,978) $ (2,692,623)
Market related value of plan
assets, primarily U.S.bonds
and the Company's stock 3,802,575 3,903,238
Unrecognized net transition asset (1,143,260) (1,306,582)
Unrecognized prior service cost 840,348 913,086
Unrecognized net loss 1,036,111 1,022,000
----------- ------------
Prepaid pension cost $ 1,846,796 $ 1,839,119
=========== ============
</TABLE>
Assumption used in accounting for the Company's defined benefit
pension plan are as follows:
Discount rate 8.0%
Rate of increase in compensation 8.0%
Expected long-term rate of return on plan
assets 8.0%
8. Other Assets: -Restricted Cash
Included in Other Assets at April 30, 1995 is $200,000 of
restricted cash which is being held as collateral for the
irrevocable letter of credit as discussed in Note 2.
9. Technology transfer agreements
The Company is a party to an agreement, as amended, with
a foreign aircraft manufacturer whereby the Company will provide
technological documentation and assistance related to
helicopters. The agreement consists of an evaluation phase at
no charge with an option to purchase the technology by December
6, 1995. In the event the option is exercised, the Company will
receive a $2,000,000 fee and future royalties based on sales
using the technology.
In May 1987, the Company entered into a second agreement
with another foreign aircraft manufacturer whereby the Company
will provide technological documentation and assistance related
to helicopters. The agreement consists of an evaluation phase
for which a $500,000 fee was received and contains an option to
purchase the technology through November 6, 1995. In the event
the option is exercised, the Company will receive a $1,000,000
fee and future royalties based on sales using the technology.
10. Stock split
The Board of Directors on December 9, 1994 authorized a 7
for 4 Stock split effected in the form of a stock dividend on
January 20, 1995 to Stockholders of record as of January 6,
1995. The $1 par value per share remains the same and $423,818
was transferred from the Capital in Excess of Par value to
Common Stock. Total shares outstanding increased from 565,090 to
988,908. Net loss per share for prior periods have been adjusted
for the January 1995 seven for four stock split.
11. Stock Options
In October 1993 the Company adopted a Stock Incentive
Plan (the "Plan") which provides that incentives may be granted
to employees and others who render services to the Company. The
Plan provides for the granting of incentives in the form of
stock awards, options and incentive stock options ("ISO's) with
or without appreciation rights. Under the terms of the Plan,
options (other than ISO's) granted provide for the purchase of
common stock at a price determined by a committee of the Board
of Directors. The purchase price of ISO's to persons who own
more than 10% of the total combined voting power of all classes
of stock of the Company is equal to 110% of the fair market
value of the common stock on date of grant. The purchase price
of ISO's granted to all other persons is the fair market value
on the date of grant.
Under terms of the Plan, adjusted for the stock split,
discussed in Note 10, options to purchase no more than 262,500
shares of common stock may be granted, with 17,500 shares
reserved and available for restricted stock awards. At the
Committee's discretion, options expire at any time up to five
years from date of grant. The maximum number of shares that may
be granted in any fiscal year may not exceed 35,000 shares.
There were no shares granted during the year ended April 30,
1994. In 1995 the following options and grants (adjusted for the
stock split) were granted and remain outstanding at April 30,
1995.
<TABLE>
Options/Sar Grants in Fiscal Year 1995
<CAPTION>
Number of
Securities
Underlying Exercise
Options/SARs Price Expiration
Name Granted (#) Per Share Date
- ---------------------- ------------ --------- ----------
<S> <C> <C> <C>
Dimitri Papadakos, CEO 17,500 9.89 08/06/99
<FN>
In addition, during fiscal year 1995 stock awards were
granted to Peter Pitsiokos, Vice President and Joseph Dorn,
Treasurer/Secretary in the amount 1,750 and 3,500 shares
respectfully. Shares vest ratably over a three year period, or
in the case of Mr. Dorn's award the earlier of the three year
period or upon retirement. The Company will charge the value of
these shares ratably to operations over the vesting period.
</FN>
</TABLE>
12. Long Term Debt
In 1994 the Company secured a $600,000 five year monthly
installment bank loan maturing December 1998 with interest at
the bank's prime rate plus 1%, with a floor of 7% and a ceiling
of 10%. At April 30, 1995 the bank's prime rate was 9.0%. The
loan repayment is secured by the assignment of two tenant's
leases and rents. The principal balance of the loan at April 30,
1995 was $440,000. The remainder of the principal will be paid
as follows:
Fiscal Year 1996 120,000
Fiscal Year 1997 120,000
Fiscal Year 1998 120,000
Fiscal Year 1999 80,000
-------
$ 440,000
13. Off Balance Sheet Risk and Concentration of Credit
a. Credit risk
Financial instruments which potentially subject the
Company to concentrations of credit risk consist principally of
cash and cash equivalents, short-term investments and long-term
investments. The Company places its temporary cash investments
with high credit quality financial institutions and, by policy,
limits the amount of credit exposure in any one financial
institution. At April 30, 1995 the Company held U.S. Government
securities of $300,926 and $185,430 in cash. The Company is
effected by the health of the Oil and Gas industry and the
Citrus industry due to its investments therein. Management does
not believe significant credit risk exists at April 30, 1995.
<TABLE>
14. Supplementary Information - "Statement of Cash Flows":
<CAPTION>
Year ended
April 30,
------------------------------
1995 1994
<S> <C> <C>
Cash paid during the year for:
- - Interest $ 45,361 $ 15,346
- - Income taxes (State) $ 3,942 $ 10,260
</TABLE>
15. Employment Contracts
On July 15, 1993 effective as of June 28, 1993, the Board
of Directors through its' compensation committee entered into a
restrictive five year employment contract with the President and
CEO, at a salary of $110,000 per year subject to annual
cost-of-living increases plus certain benefits. The contract
also contains a provision not to compete during the term of the
contract or for a period of two years following termination. In
case of employee's death or total incapacitation during the
contract period, the contract provides for compensation to
continue for the unexpired term of the employment period or any
renewal period. In case of termination as a result of change in
control, merger, change in make-up of Board of Directors or
discharge of employee by the company for any reason other than
death or incapacitation, his salary and all other ancillary
benefits to which the employee is entitled, shall be paid for a
period of five full years to the employee or in case of death,
to his estate. On June 18, 1994 the Board of Directors extended
the contract one year to expire July 15, 1999.
Item 8 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
In connection with the audits for the three most recent years,
there have been no disagreements with Holtz Rubenstein & Co.
LLP, on any matter of accounting principles or practices,
financial statement disclosures, or auditing scope or procedure.
PART III
Item 9 Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the Exchange Act.
(a) The following table lists the name, ages and positions of
all directors and executive officers and all persons nominated
or chosen to become such. Each director serves for a period of
one year. The one year term of office to which directors are
elected ends with the next Annual Meeting of Stockholders or
when their successors are elected and qualified.
<TABLE>
<CAPTION>
Name & Principal Occupation
or Employment Age First Became a Director
- --------------------------- -------- ------------------------
<S> <C> <C>
Dimitri P. Papadakos 50 1968 to 1976
President, CEO and 1992
Director of the Company
Peter Pitsiokos 35 ---
Vice President & General
Counsel of the Company
Joseph L. Dorn 80 1992
Secretary / Treasurer
and Director of the Company
Nicholas Xanthaky 84 1948
Professor Emeritus Economics
Salem State College
Director of the Company
Robert H. Beyer 62 1977
Sr. Inertial Guidance
Engineer, Naval Air Systems
Command Director of the Company
Nicholas Goudes 74 1992
Owner and Operator of Sharon
View Country Club
Director of the Company
Peter P. Papadakos 32 1993
Secretary / Treasurer and
Director, Sa-Tu Corporation
Director of the Company
</TABLE>
(b) Business Experience
Dimitri P. Papadakos, age 50, was appointed to the Board of
Directors on April 25, 1992. He was elected CEO and President
on May 30, 1992. He is also President and Director of all the
Company's subsidiaries. Mr. Dimitri P. Papadakos is the son of
Peter J. Papadakos, deceased founder of Gyrodyne. He was
previously a Director of Gyrodyne from 1968 to 1976 and served
with the U.S. Air Force from 1967-1971. He was employed by
Gyrodyne from 1972-1976 and served as Vice President of
Flowerfield Properties, Inc. and Secretary of Gyrodyne
Petroleum, Inc. In 1981, he rejoined Gyrodyne Company as
Director of Real Estate Operations. In 1983, he became Assistant
Secretary of the Gyrodyne Company and in 1988 became Vice
President. In April 1992 he was appointed to the Board of
Directors of the Company and on May 30, 1992 was elected CEO and
President. From 1976-1981 Mr. Papadakos was Administrative
Director of the Seiskaya Organization, a private arts group.
Mr. Papadakos holds graduate degrees in both business and
communications from New York Institute of Technology.
Peter Pitsiokos, age 35, was elected to serve as Vice President
on November 28, 1992, and had served as Assistant Secretary and
General Counsel since joining Gyrodyne Company of America, Inc.,
earlier in 1992. Mr. Pitsiokos was formerly the Executive
Assistant District Attorney in Suffolk County, New York. He
also served as the Assistant Director of Economic Development
and the Director of Water Resources in the Town of Brookhaven.
He was elected to the Three Village School District Board of
Education in 1978, and served from 1978 to 1981. He was an
associate attorney with the law firm Fragomen, Delrey & Bensen,
New York, New York, from 1984 to 1987. He attended Northwestern
University Law School, Villanova University Law School and the
State University of New York at Stony Brook.
Joseph L. Dorn, age 80 has been Secretary and Treasurer of the
Company since May 1992. He is also Secretary and Treasurer of
all the Company's subsidiaries. Mr. Dorn joined the Company in
1951 as Comptroller and in 1965 was elected Secretary and
Assistant Treasurer. At the same time he was elected Secretary
and Treasurer of all the Company's subsidiaries. In April 1992
he was appointed to the Board of Directors of the Company and on
May 30, 1992 he was promoted to Treasurer from Assistant
Treasurer. Prior to joining Gyrodyne he worked for the
Securities and Exchange Commission and the United States Navy
Cost Office, both in Washington D.C. Mr. Dorn is a Certified
Public Accountant of the State of New York and is a graduate of
Georgetown University, Washington D.C.
Nicholas Xanthaky, age 84, has been a Director since 1948. He is
presently Professor Emeritus - Economics at Salem State College,
Salem, Massachusetts, from which he also has received an
honorary Doctorate. When he retired, he was Associate Professor
of Economics. From 1977 to June 1993 he was Treasurer of the
Salem State College Foundation. He is also a Director of all of
Gyrodyne's subsidiaries, and, from 1951 to 1956, he was employed
by Gyrodyne in various positions, including Secretary and
Treasurer.
Robert Beyer, age 62, has been a Director of the company since
November 28, 1977. He is also a Director of the Company's
subsidiaries. He held the rank of Captain in the United States
Naval Reserve and last served on active duty from September 1976
to October 1977. Mr. Beyer is presently a senior inertial
guidance systems engineer for the Naval Air Systems Command. Mr.
Beyer was employed by Gyrodyne from 1962-1973 as a Technical
Representative for the company's remotely piloted helicopters
and was stationed in Japan from 1963 to 1970.
Nicholas T. Goudes, age 74, was appointed to the Board of
Directors on November 28, 1992. He was previously employed by
Gyrodyne from 1950 to 1955 and served as a member of the finance
committee. Between 1953 & 1957 he was a Director and Vice
President of Flowerfield Realty, Inc. and Helicopter Securities,
Inc. In 1957 Mr. Goudes moved to Charlotte, North Carolina
where he was a Director and Secretary/Treasurer of Piedmont
Enterprises, a recreational and food service company. In 1958
he founded the Sharon View Country Club, a private recreational
club, which he currently owns and operates today. From 1987 to
1991 Mr. Goudes served as a Director of North Carolina State
University Foundation.
Peter P. Papadakos, age 32, was appointed to the Board of
Directors on October 30, 1993, increasing the board to six
members. Mr. Papadakos is the son of the late Chairman and
founder of Gyrodyne Company of America, Inc. He currently
resides in Reno, Nevada and is Secetary/Treasurer and Board
member of the Sa-Tu Corporation of Nevada. He was previously
employed by Gyrodyne Company of America from August 1986 thru
July 1987 in the capacity of Assistant to the President and
specialized in assembling a technical data package in
conjunction with the Company's foreign licensing agreements. Mr.
Papadakos holds a Bachelor of Science degree from the University
of Nevada at Reno.
(c) Compliance with Section 16(a) of the Exchange Act
A review of all Forms 3 & 4 filed with the Registrant indicates
that none of the executive officers or directors were late in
filing any required Forms 3 or Forms 4 with the Securities and
Exchange Commission for fiscal year 1994. A review of prior
year filings indicates that no 10% holder of Gyrodyne Common
Stock $1 P.V. failed to file timely reports.
Item 10 Executive Compensation
(a) Executive Compensation
During the fiscal year ended April 30, 1995 one executive
received remuneration in excess of $100,000 in such capacity.
The Chief Executive Officer's remuneration is specified below:
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation
<CAPTION>
Long term Compensation
Annual Compensation Awards Pay outs
Name and ---------------------------- --------------------------------- -------
Principal Position Year Salary Bonus Other Annual Restricted Securities Underlying LTIP All Other
($) ($) Compensation stock Options/SARs Payout Compensation
($) award ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dimitri P. Papadakos
President & CEO 1995 112,122 0 (A) 0 17,500 0
President & CEO 1994 106,539 0 0 0 0
President & CEO 1993 86,346 0 0 0 0
</TABLE>
(A) The Registrant has concluded that aggregate amounts of
personal benefits to any of the current executives does not
exceed the lesser of $50,000 or 10% of compensation and bonuses
reported above for the named executive officers, and that the
information set forth in tabular form above is not rendered
materially misleading by virtues of the omission of such
personal benefits.
(B) As of Fiscal Year ended April 30, 1995 and as of July 14,
1995, none of the officers or directors received or were
entitled to any long term compensation payments. The options
granted to Officers during Fiscal Year 1995 are listed in
footnote 13 of "Footnotes to the Financial Statements". As of
July 14, 1995 of none of these options have been exercised or
canceled.
(b) Compensation of Directors
Effective September 1, 1992 the Directors annual fee is $7,500
per year with reimbursement for travel and Company business
related expenses. The Company continued its policy which states
that Directors who are also employees of the Company do not
receive any additional compensation for their service as
Directors. There was no additional compensation paid by the
Company to any Director for Fiscal Years 1995 or 1994.
(c) Employment Contracts
(c-1) On July 15, 1993 effective as of June 28, 1993, the Board
of Directors by their compensation committee entered into a
restrictive five year employment contract with Dimitri P.
Papadakos as President and CEO, at a salary of $110,000 per year
subject to annual cost-of-living increases commencing July 1,
1994 based on the Consumer Price Index in effect for the month
of May preceding the July 1 in question for all Urban Consumers
for the New York, New York and Northeastern New Jersey Region
(all items) published by the Bureau of Labor Statistics, United
States Department of Labor. He will be eligible for all
benefits offered to other executive employees. The company is
providing a $1,000,000 24-hour worldwide travel accident policy
and a $250,000 group travel accident policy with his estate as
beneficiary. The company will also provide the employee with an
automobile and will cover all operating costs associated
therewith. The contract also contains a provision not to
compete during the term of the contract or for a period of two
years following termination. In case of employee's death or
total incapacitation during the contract period, the contract
provides for compensation to continue for the unexpired term of
the employment period or any renewal period. In case of
termination as a result of change in control, merger, change in
make-up of Board of Directors or discharge of employee by
company for any reason other than death or incapacitation, his
salary and all other ancillary benefits to which the employee is
entitled, shall be paid for a period of five full years to the
employee or in case of death, to his estate. During Fiscal Year
1995 Mr. Papadakos received an annualized cost of living
increase of $2,503.
Item 11 Security Ownership of Certain Beneficial Owners and Management
(a) The following table sets forth as of June 15, 1995 those
persons or entities known by the Company to be Beneficial Owners
of more than 5% of the Company's Common Stock $1 P.V., its only
equity security.
<TABLE>
<CAPTION>
Type of Number of Percent of
Name and Address Ownership shares owned Class
- ------------------------ ---------------- -------------- -----------
<S> <C> <C> <C>
Gyrodyne Company of
America, Inc.
St. James, NY 11780 Beneficial 78,345 7.92
Polk Bros. Foundation
420 No. Wabash Ave
Chicago, IL 60611 Beneficial 91,848 9.29
Estate of
Peter J. Papadakos
c/o Chase Manhattan Bank,
NA(TTEE)
1211 Ave of the Americas
New York, NY 10036 Beneficial 369,920 37.41
</TABLE>
(A) As Gyrodyne has the authority to direct the Chase
Manhattan Bank & Trust Co., the Trustee of the Gyrodyne Pension
Plan, to vote the securities of the Company held by the Pension
Fund, Gyrodyne Company of America, Inc. has been listed above as
the beneficial owner of the 78,345 shares held by the Chase
Manhattan Bank and Trust Co. as Trustee for the Gyrodyne Pension
Fund.
(b) In addition, the following table as of June 15, 1995
includes the outstanding voting securities beneficially owned
by the executive officers and the directors, and the number of
shares owned by directors and executive officers as a group.
<TABLE>
<CAPTION>
Name & Principal Occupation Share of stock Pct. of Common
or Employment Beneficially Owned Stock Owned
- -------------------------------- ------------------ -------------
<S> <C> <C>
Dimitri P. Papadakos 12,573 (A) 1.27
President, CEO
and Director of the Company
Peter Pitsiokos 0 (D) (B)
Vice President & General
Counsel of the Company
Joseph L. Dorn 504 (B)
Secretary / Treasurer
and Director of the Company
Nicholas Xanthaky 5,844 (B)
Professor Emeritus Economics,
Salem State College
Director of the Company
Robert H. Beyer 2,170 (C) (B)
Sr. Inertial Guidance Engineer,
Naval Air Systems Command
Director of the Company
Nicholas Goudes 681 (B)
Owner and Operator of
Sharon View Country Club
Director of the Company
Peter P. Papadakos 1,537 (E) (B)
Secretary/Treasurer
Sa-Tu Corporation
Director of the Company
All Directors and Executive
Officers as a Group (7 persons) 23,309 2.36
</TABLE>
(A) Does not include his wife's and adult
children's ownership of 10,826 Shares in which he denies
beneficial interest.
(B) Less than 1%.
(C) Does not include his wife's ownership of 1,638 shares in
which he denies any beneficial interest.
(D) Does not include wife's and minor children's ownership of
187 shares in which he denies any beneficial interest.
(E) Does not include wife's ownership of 14 shares in which he
denies any beneficial interest. Peter P. Papadakos is custodian
f/b/o Alexander Peter-Jee Papadakos, who owns directly and
beneficially 1,458 shares in which his father, Peter P.
Papadakos denies any beneficial interest.
Item 12 Certain Relationships and Related Transactions
(a) Transactions with Management and Others
No officer or director or security holder named in answer to
Item 12 or any relative or spouse of the foregoing persons had
any direct or indirect interest in any transaction involving the
Company or its subsidiaries which exceeded $60,000.
(b) Certain Business Relationships
There were no material business relationships between the
Company and its subsidiaries and the directors, their spouses,
relatives, or affiliated business interests.
(c) Indebtedness of Management
No loans were made to any officer, director, or any member of
their immediate families during the fiscal year just ended. Nor
were any amounts due and owing the Company or its subsidiaries
from those parties at fiscal year end.
Item 13 Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) Financial Statements
(1) Independent Auditors' Reports
(2) Consolidated Balance Sheet April 30, 1995
(3) Consolidated Statements of Income for the Two Years
Ended April 30, 1995.
(4) Consolidated Statements of Cash Flows for the Two
Years Ended April 30, 1995
(5) Consolidated Statement of Stockholder's Equity
for Two Years Ended April 30, 1995
(6) Notes to Consolidated Financial Statements
(7) Schedules
(a) The information required by the following
schedules has been included in the financial
statements, is not applicable, or not required.
Schedule I, II, III, IV, V, VI, VII, VIII, IX,
X, XI, X11 and XIII.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
last quarter of FY 1995.
(c) Exhibits
No. 99 - Additional Exhibit
Callery Judge Grove Financial Statements As of December 31,
1994, 1993, and 1992 together with Report of independent
Certified Public Accountants.
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of Callery Judge Grove:
We have audited the accompanying balance sheets of Callery Judge
Grove (a New York limited partnership) as of December 31, 1994,
1993 and 1992, and the related statements of operations, changes
in partners' capital and cash flows for the years then ended.
These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes 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 financial statements referred to above
present fairly, in all material respects, the financial position
of Callery Judge Grove as of December 31, 1994, 1993 and 1992,
and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted
accounting principles.
As explained in Note 2 to the financial statements, the
Partnership changed its method of accounting for certain grove
replanting and cultural care costs effective January 1, 1992.
SGD/ Arthur Andersen LLP
Tampa, Florida,
January 20, 1995
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.
GYRODYNE COMPANY OF AMERICA, INC.
SGD/ Dimitri P. Papadakos
- --------------------------
Dimitri P. Papadakos, President, Director and Principal
Executive Officer
Date: July 27, 1995
SGD/ Joseph L. Dorn
- -------------------------
Joseph L. Dorn, Secretary, Treasurer, Director and Principal
Financial Officer
Date: July 27, 1995
SGD/ John A. Rohrs
_______________________
John A. Rohrs, Controller
Date: July 27, 1995
********************
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following on
behalf of the Registrant and in the capacities and on the dates
indicated.
SGD/ Joseph L. Dorn
- ---------------------
Nicholas Xanthaky*, Director
Date: July 27, 1995
SGD/ Joseph L. Dorn
- ---------------------
Robert H. Beyer*, Director
Date: July 27, 1995
SGD/ Joseph L. Dorn
- ---------------------
Nicholas T. Goudes*, Director
Date: July 27, 1995
*by power of attorney
BOARD OF DIRECTORS
Dimitri P. Papadakos President and CEO
Joseph L. Dorn Treasurer and Secretary
Nicholas Xanthaky Professor Emeritus, Economics
Salem State College
Robert H. Beyer Senior Inertial Guidance
Systems Engineer
Naval Air Systems Command
Nicholas T. Goudes Owner, Sharon View Country Club
Peter P. Papadakos Secretary/Treasurer, Sa-Tu Corporation
OFFICERS
Dimitri P. Papadakos President and CEO
Peter Pitsiokos Vice President and General Counsel
Joseph L. Dorn Treasurer and Secretary
AUDITORS
HOLTZ RUBENSTEIN & COMPANY, LLP
125 Baylis Road
Melville, New York 11747
TRANSFER AGENT AND REGISTRAR
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
