US 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, 2000
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|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ___________________ to ____________________
Commission file number 0-1684
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Gyrodyne Company of America, Inc.
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(Exact name of small business issuer as specified in its charter)
New York 11-1688021
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
102 Flowerfield, St. James, N.Y. 11780
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(Address of principal executive offices)
(631) 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: 1,117,583 Common $1 P.V. as of August
31, 2000
<PAGE>
INDEX TO QUARTERLY REPORT
QUARTER ENDED JULY 31, 2000
Seq. Page
Form 10-QSB Cover 1
Index to Form 10-QSB 2
Consolidated Balance Sheet 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Footnotes to Consolidated Financial Statements 6
Management's Discussion and Analysis or Plan of Operation 7
Part II - Other Information 8
Signatures 8
Seq. Page 2
<PAGE>
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS July 31,
2000
----
<S> <C>
REAL ESTATE
Rental property:
Land $ 4,746
Building and improvements 4,645,857
Machinery and equipment 334,626
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4,985,229
Less accumulated depreciation 3,499,085
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1,486,144
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Land held for development:
Land 803,592
Land development costs 1,281,417
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2,085,009
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Total real estate, net 3,571,153
CASH AND CASH EQUIVALENTS 1,130,065
RENT RECEIVABLE, net of allowance for doubtful accounts of $26,548 92,786
PREPAID EXPENSES AND OTHER ASSETS 209,403
INVESTMENT IN CITRUS GROVE PARTNERSHIP 1,585,104
PREPAID PENSION COSTS 1,675,537
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$ 8,264,048
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses $ 209,264
Tenant security deposits payable 235,258
Loans payable 782,765
Deferred income taxes 874,543
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Total liabilities 2,101,830
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STOCKHOLDERS' EQUITY:
Common stock, $1 par value; authorized 4,000,000 shares;
1,531,086 shares issued and outstanding 1,531,086
Additional paid-in capital 7,545,360
Deficit (535,967)
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8,540,479
Less cost of shares of common stock held in treasury (2,378,261)
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Total stockholders' equity 6,162,218
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$ 8,264,048
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</TABLE>
See notes to consolidated financial statements
Seq. Page 3
<PAGE>
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
July 31,
--------
2000 1999
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REVENUE FROM RENTAL PROPERTY $ 624,782 $ 593,958
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RENTAL PROPERTY EXPENSES:
Real estate taxes 99,064 91,593
Operating and maintenance 172,701 249,322
Interest expense 16,835 17,848
Depreciation 24,974 27,012
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313,574 385,775
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INCOME FROM RENTAL PROPERTY 311,208 208,183
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GENERAL AND ADMINISTRATIVE 255,685 266,838
TERMINATION COST 2,115 16,096
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257,800 282,934
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INCOME (LOSS) FROM OPERATIONS 53,408 (74,751)
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OTHER INCOME (EXPENSE):
Aerospace (expense), net 0 (12,530)
Income from oil investment, net 0 37,991
Interest income 10,450 8,574
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10,450 34,035
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INCOME (LOSS) BEFORE INCOME TAX 63,858 (40,716)
PROVISION (BENEFIT) FOR INCOME TAXES 27,918 (14,821)
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NET INCOME (LOSS) $ 35,940 $ (25,895)
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NET INCOME (LOSS) PER COMMON SHARE:
Basic $ 0.03 $ (0.02)
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Diluted $ 0.03 $ (0.02)
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WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Basic 1,117,583 1,092,279
=========== ===========
Diluted 1,126,445 1,092,279
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See notes to consolidated financial statements
Seq. Page 4
<PAGE>
GYRODYNE COMPANY OF AMERICA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
July 31,
--------
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 35,940 $ (25,895)
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Adjustments to reconcile net income (loss) to
net cash (used in) operating activities:
Depreciation and amortization 24,974 27,012
Bad debt expense 3,000 3,000
Deferred income tax (benefit) 25,543 (17,473)
Non-cash compensation 0 24,021
Pension (income) (9,206) (13,839)
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (15,558) (34,564)
Prepaid expenses and other assets (94,258) (138,001)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (182,009) 20,813
Tenant security deposits 7,199 6,912
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Total adjustments (240,315) (122,119)
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Net cash (used in) operating activities (204,375) (148,014)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (72,361) (51,699)
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Net cash (used in) investment activities (72,361) (51,699)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans payable (14,123) (12,856)
Proceeds from exercise of stock options 0 39,486
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Net cash (used in) provided by financing activities (14,123) 26,630
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Net (decrease) in cash and cash equivalents (290,859) (173,083)
Cash and cash equivalents at beginning of period 1,420,924 1,329,155
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Cash and cash equivalents at end of period $ 1,130,065 $ 1,156,072
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</TABLE>
See notes to consolidated financial statements
Seq. Page 5
<PAGE>
FOOTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Quarterly Presentations:
The accompanying quarterly financial statements have been prepared in conformity
with generally accepted accounting principles. The financial statements of the
Registrant included herein have been prepared by the Registrant pursuant to the
rules and regulations of the Securities and Exchange Commission and, in the
opinion of management, reflect all adjustments which are necessary to present
fairly the results for the three month periods ended July 31, 2000, and 1999.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations; however,
management believes that the disclosures are adequate to make the information
presented not misleading.
This report should be read in conjunction with the financial statements and
footnotes therein included in the audited annual report on Form 10-KSB as of
April 30, 2000.
The results of operations for the three month periods ended July 31, 2000, and
1999 are not necessarily indicative of the results to be expected for the full
year.
2. Principle 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.
3. Earnings Per Share:
Basic earnings per common share is computed by dividing the net income (loss) by
the weighted average number of shares of common stock outstanding during the
period. Dilutive earnings per share give effect to stock options and warrants
which are considered to be dilutive common stock equivalents. Treasury shares
have been excluded from the weighted average number of shares.
The following is a reconciliation of the weighted average shares:
Three Months Ended
July 31,
2000 1999
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Basic 1,117,583 1,092,279
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Effect of dilutive securities 8,862 0
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Diluted 1,126,445 1,092,279
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4. Income Taxes:
Deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.
5. Reclassification:
The current and prior year quarterly results from the Consolidated Statements of
Operations reflect a separation of termination costs from general and
administrative.
Seq. Page 6
<PAGE>
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
Results for the first quarter ending July 31, 2000 reflect net income totaling
$35,940 as compared to a net loss of $25,895 for the same period last year.
Increased revenues from rental property in conjunction with reductions in rental
property expenses and in general and administrative expenses contributed to a
$128,159 improvement in income from operations.
Revenue from rental property amounted to $624,782 for the period and was $30,824
or 5% over last year's total of $593,958. Complimenting this improvement was a
reduction in rental property expenses which totaled $313,574 and $385,775,
respectively, for the first quarter of fiscal 2001 and 2000. In addition to an
ongoing focus on cost containment, timing differences in accomplishing certain
maintenance work during this quarter have accounted for the $72,201 or 19%
improvement. Major contributing factors include reductions of $7,335 in salaries
and benefits, $30,944 in building and ground maintenance, $13,972 in expenses
associated with the fairgrounds operation, $6,849 in utilities and fuel and
$12,522 in vehicle and equipment maintenance. Various other cost savings were
also recognized during the period and were offset by a like amount increase of
$7,471 in real estate taxes. As a result, income from rental property amounted
to $311,208, a 49% increase of $103,025 over the prior year results of $208,183.
As noted above, general and administrative expenses were also reduced for the
quarter and totaled $257,800 compared to $282,934 for the same period last year.
Among the major contributing factors, there were decreases of $13,981 in costs
associated with the termination of the former President and CEO, $15,298 in
salaries and benefits and $18,931 in Directors' fees and corporate governance
matters which were partially offset by increases of $5,751 in accounting fees,
$5,042 in fees and outside services, and $10,185 in insurance premium costs.
Other income amounted to $10,450 and $34,035 in the first quarter of fiscal 2001
and 2000, respectively. The major portion of this decrease reflects the
Company's sale and transfer of its oil and aerospace assets between reporting
periods which account for $25,461 of the $23,585 difference; the remainder being
$1,876 of increased interest income.
As of July 31, 2000, Marriott Senior Living Services, Inc. (MSLS) announced it
was terminating their long term lease agreement to construct an assisted living
facility on the Company's Flowerfield property. The Termination Agreement calls
for the Company to receive a $150,000 fee as consideration for costs associated
with the rezoning of a ten-acre site to accommodate the MSLS facility. Those
funds, plus $13,285 in interest, were received in August and partially offset by
approximately $76,000 in related expenses. While this development reduces our
cash flow projections, it does not alter the current focus and scope of our
expectations for the 326 acre Flowerfield property. That focus is clearly to
unlock the value of Flowerfield and convert it into shareholder value in a
timely fashion by expanding the scope of alternatives and considerations to
achieve those goals.
Subsequent to the quarter closing, the Callery-Judge Grove announced a capital
call to support its operations. As a 12.74% limited partner in the Grove, our
contribution would have been $382,051. The Board of Directors elected not to
participate, opting rather to support the Company's own efforts and operations.
This decision will result in some dilution to our investment in the Grove
Limited Partnership.
Seq. Page 7
<PAGE>
Part II Other Information
Items 1 through 5 are not applicable to the May 1, 2000, through July 31, 2000,
period.
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 2001.
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 13, 2000 SGD/ Stephen V. Maroney
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Stephen V. Maroney
President, Chief Executive Officer and
Treasurer
Date: September 13, 2000 SGD/ Frank D'Alessandro
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Frank D'Alessandro
Controller
Seq. Page 8
