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, 1997
[ ] 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
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(State or other jurisdiction of incorporation or organization)
11-1688021
- ---------------------------------
(IRS Employer Identification No.)
7 Flowerfield, Suite 28, St. James, N.Y. 11780
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(Address of principal executive offices)
(516) 584-5400
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(Issuer's telephone number)
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(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:
1,036,732 Common $1 P.V. as of JULY 31, 1997
- ---------------------------------------------
INDEX TO QUARTERLY REPORT
QUARTER ENDED JULY 31, 1997
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.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
10-QSB
Part 1
Item 1 (a) (1)
July 31, 1997
ASSETS (NOTE 1)
CURRENT ASSETS:
Cash and cash equivalents $780,625
Accounts receivable, less allowance for
doubtful accounts of $6,000 (Note 3) 74,249
Prepaid expenses and other current assets 211,025
---------
Total current assets 1,065,899
INVESTMENT IN CITRUS GROVE PARTNERSHIP 1,585,104
PROPERTY, PLANT AND EQUIPMENT-NET (Note 5) 2,547,115
PREPAID PENSION COSTS (Note 2) 1,644,939
OTHER ASSETS 9,700
---------
TOTAL ASSETS $6,852,757
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $282,982
Loans payable - short term portion (Note 6) 70,000
---------
Total Current Liabilities 352,982
LONG TERM LIABILITIES
Loans payable - long term portion (Note 6) 865,736
DEFERRED INCOME TAXES 1,028,000
STOCKHOLDERS' EQUITY:
Common stock, par value $1 per share
authorized 4,000,000 shares, 1,531,086 shares
issued at July 31, 1997 (including 493,657 shares
held in treasury) 1,531,086
Capital in excess of par value (Note 1) 6,438,028
Deficit (Note 1) (498,724)
---------
7,470,390
Less cost of shares of common stock
held in treasury (Note 1) (2,864,351)
---------
Total stockholders' equity 4,606,039
---------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $6,852,757
==========
See notes to consolidated financial statements
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
10-QSB
Part 1
Item 1 (a) (2)
Three Months Ended
July 31, July 31,
REVENUE: 1997 1996
Rental income $524,725 $489,244
Aerospace income 40,000 6,000
-------- --------
Total Revenue from Operations 564,725 495,244
-------- --------
COSTS AND EXPENSES:
Cost of maintaining rental property 339,844 375,054
Aerospace expense 25,853 25,617
General and administrative 297,162 221,947
-------- --------
Total costs and expenses 662,859 622,618
-------- --------
GROSS OPERATING LOSS (98,134) (127,374)
======== ========
OTHER INCOME AND EXPENSES:
Gain on Oil and Gas Investment (Note 4) 12,505 29,626
Interest & Dividend Income 8,410 9,947
Pension Expense (Note 2) (25,000) (9,523)
Interest Expense (25,195) (26,393)
-------- --------
Total Other Income\(Expense) (29,280) 3,657
-------- --------
(Loss) before income tax (127,414) (123,717)
Income tax Benefit (Note 7) (53,139) (49,708)
-------- --------
NET (LOSS) ($74,275) ($74,009)
======== ========
WEIGHTED AVG. NO. OF COMMON
SHARES OUTSTANDING 1,032,478 1,000,551
========= =========
PER SHARE INFORMATION:
(Loss) per share of common stock ($0.07) ($0.07)
========= =========
See notes to consolidated financial statements
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
10-QSB
Part 1
Item 1 (a) (3)
THREE MONTHS ENDED
JULY 31, JULY 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) ($74,275) ($74,008)
Adjustments to reconcile net (loss)/earnings to
net cash provided by/(used) in operating activities:
Depreciation and amortization of plant and equipment 27,142 24,204
Pension expense/(income) 25,000 9,523
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 16,823 349,655
Prepaid expenses and other assets (160,334) 6,400
Other assets 6,731 (17,539)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 31,893 (141,534)
-------- -------
Total adjustments (52,745) 230,709
-------- -------
Net cash (used)/provided by operating activities (127,020) 156,701
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in property, plant and equipment (18,305) (135,670)
-------- -------
Net cash (used) in/provided by investment activities (18,305) (135,670)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock option exercise 36,127 0
Repayment of debt (19,187) (18,080)
-------- -------
Net cash provided by/(used in) financing activities 16,940 (18,080)
-------- -------
Net (decrease)/increase in cash and cash equivalents (128,385) 2,951
Cash and cash equivalents at beginning of period 909,010 713,228
-------- -------
Cash and cash equivalents at end of period $780,625 $716,179
======== ========
See notes to consolidated financial statements
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,
1997 and July 31, 1996. 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, 1997. The results of operations for the three month periods ended July 31,
1997 and 1996 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 $25,000 net periodic pension expense for
the quarter ended July 31, 1997 and $9,523 of pension expense for the same
period of Fiscal Year 1996. The projected full year expense for FY 1998 is
currently $100,000 vs. $82,080 for FY 1997. The expense increase from period to
period is a result of the Pension Plan restructuring. The revised plan calls
for increased benefits to current and retired employees
3. At April 30, 1997, $6,000 had been provided as a reasonable reserve for
uncollectible accounts receivable. This reserve has not changed during the
first quarter of FY 1998.
4. Proceeds from the sale of oil decreased in the current quarter as a result
of a $3 a barrel price decline from the previous year. Operating expenses
increased in the current quarter by $12,000 over the previous year as a result
of nonrecurring costs associated with the repair of the oil wells. The effect on
the Profit and Loss Statement from this transaction is highlighted below.
First Quarter Ended
July 31,
1997 1996
Sales of Oil $47,805 $53,624
Operating expenses 35,300 23,998
------- -------
Income from operations $12,505 $29,626
======= =======
5. Property, Plant and Equipment increased $18,300 in the first three months
as a result of the capitalization of engineering and legal expenses related to
the development of the Flowerfield property.
6. In the second quarter of FY 1996 the company secured a $1,050,000 ten year
monthly installment loan maturing in October 2005. The proceeds were used to
pay off the balance of the prior loan and to finance the renovation of a portion
of Building #7. The loan has a fixed principle payment each month of $5,833.33
and interest at a floating rate at 2% above the prime rate and is secured by the
assignment of rents and a first collateral mortgage on Building #7 which is
situated on six and one half acres in St. James NY. The loan is also secured by
the guarantees of Gyrodyne Petroleum Inc. and Flowerfield Properties Inc. The
principle balance of the loan at July 31, 1997 was $927,500. The remainder of
the principle will be paid as follows:
Fiscal Year 1998 $52,500
Fiscal Year 1999 70,000
Fiscal Year 2000 70,000
Fiscal Year 2001 70,000
Fiscal Year 2002 70,000
Thereafter till October 2005 595,000
--------
927,500
Vehicle term loan bearing 10.9%
interest maturing August 1999 8,236
--------
935,736
less current portion 70,000
--------
Long term debt $865,736
========
7. The provisions for current taxes and prior year taxes is based on a full
year forecast of taxable income prorated over the entire year. In the case of
losses, an estimated benefit is calculated to offset a pretax loss.
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
The strength of the local economy during the first fiscal quarter of 1998
contributed to improved operating results for the real estate operation. Both
occupancy and rental rates edged upward.
As of July 1997, the Company made additional progress towards implementing its
long term corporate strategy. Following adoption by the Board of Directors of
Management's Master Plan for the development of Flowerfield, the Company
garnered several letters of intent from substantial developers for various
aspects of the Flowerfield project. In some cases, as these projects have
become more clearly delineated, verbal negotiations have been reduced to
contract form. Although substantial agreement has been reached in many
instances, the final outcome of any specific negotiation cannot be guaranteed.
The Company's Master Plan strategy is a flexible customer driven development
that provides for a mixture of industrial, office, service, captive retail and
living units. Final densities will be determined by the municipal authorities
of the respective townships based on contributing factors such as traffic,
effluent discharge, noise and sound pollution and community input. Initial
response to the Company's public presentations has been quite receptive.
Pre-submittal conferences with town and county officials have revalidated the
Company's mixed use approach to development.
In addition to the active pursuit of end users, Management is currently
developing infrastructure cost estimates required for project allocation and
financing purposes. The execution of any final agreements is dependent on the
completion of these studies. It is anticipated that working estimates will be
available during the second fiscal quarter.
The Company's operating expenses for real estate would have remained
essentially the same in the period to period three month comparison except for
inclusion of nonrecurring expense credits of $33,000 recorded in the building
maintenance account. These credits were the result of the receipt of a deposit
on contracted for leasehold improvements, amounting to $20,000, as well as
$13,000 material and labor billed to a tenant for a fueling facility
installation.
General and Administrative expense increased by $75,000 over the prior
corresponding period. Compensation attributable to stock option exercise
resulted in a $28,000 charge to earnings, directors fees increased $13,000 due
to timing differences in the current year's meeting schedule and the Company
recognized additional costs related to the increase in directors from 6 to 9.
During the current quarter, the Company obtained summary judgments for
possession against tenants in the amount of $29,000. If levies based on the
judgments are collected in the future, the Company will recognize any funds
obtained from those judgments as income.
Aerospace income increased $34,000 in the current year as a result of the
sale of one Y-RON helicopter to Aviodyne U.S.A. under a joint venture
agreement.
In 1997, the Callery-Judge Grove changed its financial reporting year from a
December 31 calendar year to a June 30 fiscal year. The initial reporting
period is a truncated transition fiscal year, January 1, 1997 to June 30,
1997. The Grove recently released its pro forma earnings for the current fiscal
year ended June 30, 1997 indicating a loss of approximately $2.5MM. Restated to
reflect the change over to a fiscal year, cumulative losses for the past three
years totaled approximately $7.3MM. Prospects for a good crop for FY98 are
promising with pre-harvest estimates set at 950,000 boxes vs. 857,000 and
770,000 the two previous years. It is anticipated that fruit quality of the
packout should also improve. Additionally, the Grove has realized approximately
$2.8MM in capital gains on land sales during the past three years offsetting
expenses related to the development of the property. A shopping center project,
slated to begin in the early fall, is reportedly on schedule.
The current ratio for the period ended July 31, 1997 decreased to 3.02:1 from
3.54:1 at April 30, 1997 and down from 4.46:1 at July 31, 1996. For the
three month period ending July 31, 1997, the Company is reporting an after
tax loss of ($74,275) or ($.07) per share as compared to an after tax loss of
($74,009) or ($.07) per share for the same period last year. Results from
operations for the current quarter are not necessarily indicative of nor
should they be used to project full year results.
10-QSB
Part II
Item 1-6
Part II Other Information
Items 1 thru 4 are not applicable to the May 1, 1997 thru July 31, 1997 period.
Item 5. Other Information
At the July 19, 1997 Board of Directors meeting the Board of Directors
selected October 31, 1997 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 renewed the contract of Mr. Dimitri P. Papadakos for 5 (five) years
along with an annual increase of $5,200.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required - None
(b) Reports on Form 8-K - None were filed by the company for the first
quarter of FY 1998.
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 12, 1997
SGD/ Dimitri P. Papadakos
- -------------------------
Dimitri P. Papadakos
President, Treasurer and Principal Executive Officer
Date: September 12, 1997
SGD/ Frank D'Alessandro
- ------------------------
Frank D'Alessandro
Controller
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> JUL-31-1997
<CASH> 780,625
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<RECEIVABLES> 80,249
<ALLOWANCES> (6,000)
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<PP&E> 5,964,062
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0
0
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<OTHER-SE> 3,074,953
<TOTAL-LIABILITY-AND-EQUITY> 6,852,757
<SALES> 564,725
<TOTAL-REVENUES> 585,640
<CGS> 0
<TOTAL-COSTS> 687,859
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (25,195)
<INCOME-PRETAX> (127,414)
<INCOME-TAX> (53,139)
<INCOME-CONTINUING> (74,275)
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<EXTRAORDINARY> 0
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