gyrodyne_10q-033110.htm
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
[X] QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
quarterly period ended March 31,
2010
OR
[
] 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 incorporation or organization) |
(I.R.S. Employer
Identification No.) |
1 Flowerfield, Suite 24, St.
James, NY 11780
(Address
and Zip Code of principal executive offices)
(631)
584-5400
(Registrant’s
telephone number, including area code)
(Former
name, former address and former fiscal year, if changed since last
report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No ___
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files). Yes___ No___
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (CHECK ONE):
Large
accelerated filer
|
o |
Accelerated
filer
|
o |
Non-accelerated
filer
|
o |
Smaller
reporting company
|
x |
(Do
not check if a smaller reporting company)
|
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes __ No X
On May
10, 2010, 1,290,039 shares of the Registrant’s common stock, par value $1.00 per
share, were outstanding.
INDEX TO
QUARTERLY REPORT OF GYRODYNE COMPANY OF AMERICA, INC.
QUARTER
ENDED MARCH 31, 2010
|
Seq.
Page |
Form
10-Q Cover
|
1
|
|
|
Index
to Form 10-Q
|
2
|
|
|
PART
I - FINANCIAL INFORMATION
|
3
|
|
|
Item
1. Financial Statements.
|
3
|
|
|
Consolidated
Balance Sheets as of March 31, 2010 (unaudited) and December
31, 2009 |
3
|
|
|
Consolidated
Statements of Operations
|
4
|
|
|
Consolidated
Statements of Comprehensive Income (Loss)
|
5
|
|
|
Consolidated
Statements of Cash Flows
|
6
|
|
|
Notes
to Consolidated Financial Statements
|
7
|
|
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations.
|
13
|
|
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk. |
18 |
|
|
Item
4T. Controls and Procedures.
|
18
|
|
|
PART
II - OTHER INFORMATION
|
19
|
|
|
Item
1. Legal Proceedings.
|
19
|
|
|
Item
6. Exhibits.
|
19
|
|
|
SIGNATURES
|
20
|
|
|
EXHIBIT
INDEX |
21 |
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements.
GYRODYNE COMPANY OF AMERICA,
INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
ASSETS
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
|
|
REAL
ESTATE
|
|
|
|
|
|
|
Rental
property:
|
|
|
|
|
|
|
Land
|
|
$ |
5,079,017 |
|
|
$ |
5,079,017 |
|
Building
and improvements
|
|
|
30,731,179 |
|
|
|
30,612,143 |
|
Machinery
and equipment
|
|
|
280,636 |
|
|
|
277,072 |
|
|
|
|
36,090,832 |
|
|
|
35,968,232 |
|
Less
accumulated depreciation
|
|
|
3,898,050 |
|
|
|
3,701,200 |
|
|
|
|
32,192,782 |
|
|
|
32,267,032 |
|
Land
held for development:
|
|
|
|
|
|
|
|
|
Land
|
|
|
558,466 |
|
|
|
558,466 |
|
Land
development costs
|
|
|
1,391,477 |
|
|
|
1,366,963 |
|
|
|
|
1,949,943 |
|
|
|
1,925,429 |
|
Total
real estate, net
|
|
|
34,142,725 |
|
|
|
34,192,461 |
|
|
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents
|
|
|
715,441 |
|
|
|
868,786 |
|
Investments
|
|
|
- |
|
|
|
203,000 |
|
Rent
Receivable, net of allowance for doubtful accounts of $97,000 |
|
|
|
|
|
|
|
|
and
$92,000, respectively
|
|
|
73,729 |
|
|
|
83,918 |
|
Deferred
Rent Receivable
|
|
|
58,359 |
|
|
|
59,922 |
|
Prepaid
Expenses and Other Assets
|
|
|
826,986 |
|
|
|
696,918 |
|
Total
Assets
|
|
$ |
35,817,240 |
|
|
$ |
36,105,005 |
|
LIABILITIES AND STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
821,464 |
|
|
$ |
995,665 |
|
Accrued
liabilities
|
|
|
376,716 |
|
|
|
298,120 |
|
Deferred
rent liability
|
|
|
139,111 |
|
|
|
53,348 |
|
Tenant
security deposits payable
|
|
|
484,851 |
|
|
|
474,210 |
|
Mortgages
payable
|
|
|
18,049,752 |
|
|
|
18,164,266 |
|
Deferred
income taxes
|
|
|
1,206,000 |
|
|
|
1,206,000 |
|
Pension
liability
|
|
|
337,113 |
|
|
|
279,655 |
|
Other
liabilities
|
|
|
194,481 |
|
|
|
- |
|
Total
Liabilities
|
|
|
21,609,488 |
|
|
|
21,471,264 |
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY:
|
|
|
|
|
|
|
|
|
Common
stock, $1 par value; authorized 4,000,000 shares;
1,531,247
|
|
|
|
|
|
|
|
|
shares
issued; 1,290,039 shares outstanding, respectively
|
|
|
1,531,247 |
|
|
|
1,531,247 |
|
Additional
paid-in capital
|
|
|
7,978,234 |
|
|
|
7,978,234 |
|
Accumulated
other comprehensive loss
|
|
|
(1,501,162 |
) |
|
|
(1,306,681 |
) |
Balance
of undistributed income other than gain or loss on sales of
properties
|
|
|
7,737,130 |
|
|
|
7,968,638 |
|
|
|
|
15,745,449 |
|
|
|
16,171,438 |
|
Less
cost of shares of common stock held in treasury; 241,208
|
|
|
(1,537,697 |
) |
|
|
(1,537,697 |
) |
Total
Stockholders’ Equity
|
|
|
14,207,752 |
|
|
|
14,633,741 |
|
Total
Liabilities and Stockholders’ Equity
|
|
$ |
35,817,240 |
|
|
$ |
36,105,005 |
|
See
notes to consolidated financial statements
GYRODYNE COMPANY OF AMERICA,
INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
Three
Months Ended
|
|
|
|
March
31,
|
|
|
|
2010
|
|
|
2009
|
|
Revenues
|
|
|
|
|
|
|
Rental
income
|
|
$ |
1,186,816 |
|
|
$ |
820,241 |
|
Rental
income – tenant reimbursements
|
|
|
160,503 |
|
|
|
129,302 |
|
Total
|
|
|
1,347,319 |
|
|
|
949,543 |
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Rental
expenses
|
|
|
586,681 |
|
|
|
426,699 |
|
General
and administrative expenses
|
|
|
534,433 |
|
|
|
628,413 |
|
Condemnation
expense
|
|
|
- |
|
|
|
222,909 |
|
Depreciation
|
|
|
196,850 |
|
|
|
113,900 |
|
Total
|
|
|
1,317,964 |
|
|
|
1,391,921 |
|
|
|
|
|
|
|
|
|
|
Other
Income (Expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
1,211 |
|
|
|
94,893 |
|
Realized
gain on marketable securities
|
|
|
- |
|
|
|
123,442 |
|
Interest
expense
|
|
|
(262,074 |
) |
|
|
(161,369 |
) |
Total
|
|
|
(260,863 |
) |
|
|
56,966 |
|
|
|
|
|
|
|
|
|
|
Loss
Before Benefit for Income Taxes
|
|
|
(231,508 |
) |
|
|
(385,412 |
) |
Benefit
for Income Taxes
|
|
|
- |
|
|
|
(4,127,000 |
) |
Net
(Loss) Income
|
|
$ |
(231,508 |
) |
|
$ |
3,741,588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Loss) Income Per Common Share:
|
|
|
|
|
|
|
|
|
Basic
and Diluted
|
|
$ |
(0.18 |
) |
|
$ |
2.90 |
|
|
|
|
|
|
|
|
|
|
Weighted
Average Number Of Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
and Diluted
|
|
|
1,290,039 |
|
|
|
1,290,039 |
|
See notes to
consolidated financial statements
GYRODYNE COMPANY
OF AMERICA, INC.
AND
SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
|
|
Three
Months Ended March
31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income
|
|
$ |
(231,508 |
) |
|
$ |
3,741,588 |
|
Other
Comprehensive loss:
|
|
|
|
|
|
|
|
|
Changes
in Unrealized loss on interest rate swap
|
|
|
(194,481 |
) |
|
|
- |
|
Other
Comprehensive loss
|
|
|
(194,481 |
) |
|
|
- |
|
Net
(loss) income
|
|
$ |
(425,989 |
) |
|
$ |
3,741,588 |
|
See notes to
consolidated financial statements
GYRODYNE COMPANY OF AMERICA,
INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
Three
Months Ended
March
31,
|
|
|
|
2010
|
|
|
2009
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net
(loss) income
|
|
$ |
(231,508 |
) |
|
$ |
3,741,588 |
|
Adjustments
to reconcile net (loss) income to net |
|
|
|
|
|
|
|
|
cash
used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
203,694 |
|
|
|
120,848 |
|
Bad
debt expense
|
|
|
6,000 |
|
|
|
6,000 |
|
Net
periodic pension benefit cost
|
|
|
57,458 |
|
|
|
71,546 |
|
Realized
gain on marketable securities
|
|
|
- |
|
|
|
(123,442 |
) |
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase)
decrease in assets:
|
|
|
|
|
|
|
|
|
Rent
receivable
|
|
|
4,189 |
|
|
|
(1,952 |
) |
Deferred
rent receivable
|
|
|
1,563 |
|
|
|
- |
|
Interest
receivable
|
|
|
- |
|
|
|
29,324 |
|
Prepaid
expenses and other assets
|
|
|
(135,431 |
) |
|
|
(32,598 |
) |
(Decrease)
increase in liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(174,201 |
) |
|
|
156,259 |
|
Accrued
liabilities
|
|
|
78,596 |
|
|
|
47,510 |
|
Deferred
rent liability
|
|
|
85,763 |
|
|
|
- |
|
Deferred
income taxes
|
|
|
- |
|
|
|
(4,127,000 |
) |
Pension
liability
|
|
|
- |
|
|
|
(100,000 |
) |
Tenant
security deposits
|
|
|
10,641 |
|
|
|
67,262 |
|
Total
adjustments
|
|
|
138,272 |
|
|
|
(3,886,243 |
) |
Net
cash used in operating activities
|
|
|
(93,236 |
) |
|
|
(144,655 |
) |
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase
of medical office buildings
|
|
|
- |
|
|
|
(13,022,966 |
) |
Costs
associated with property, plant and equipment
|
|
|
(124,081 |
) |
|
|
(621,980 |
) |
Proceeds
from sale of marketable securities
|
|
|
- |
|
|
|
6,805,800 |
|
Land
development costs
|
|
|
(24,514 |
) |
|
|
(54,109 |
) |
Proceeds
(investment) in interest bearing time deposits
|
|
|
203,000 |
|
|
|
(200,000 |
) |
Principal
repayments on investment in marketable securities
|
|
|
- |
|
|
|
29,748 |
|
Net
cash provided by (used in) investment activities
|
|
|
54,405 |
|
|
|
(7,063,507 |
) |
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds
from mortgage
|
|
|
- |
|
|
|
8,000,000 |
|
Principal
payments on mortgages
|
|
|
(114,514 |
) |
|
|
(75,076 |
) |
Loan
origination fees paid
|
|
|
- |
|
|
|
(129,124 |
) |
Net
cash (used in) provided by financing activities
|
|
|
(114,514 |
) |
|
|
7,795,800 |
|
|
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents
|
|
|
(153,345 |
) |
|
|
587,638 |
|
Cash
and cash equivalents at beginning of period
|
|
|
868,786 |
|
|
|
1,205,893 |
|
Cash
and cash equivalents at end of period
|
|
$ |
715,441 |
|
|
$ |
1,793,531 |
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information:
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$ |
262,074 |
|
|
$ |
161,369 |
|
See
notes to consolidated financial statements
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
1. The
Company:
Gyrodyne
Company of America, Inc. (“Gyrodyne” or the “Company”) is a
self-managed and self-administered real estate investment trust (“REIT”) formed
under the laws of the State of New York. The Company operates
primarily in one segment. The Company’s primary business is the
investment in and the acquisition, ownership and management of a geographically
diverse portfolio of medical office, industrial and development of industrial
and residential properties. Substantially all of the Company’s
properties are subject to net leases in which the tenant must reimburse Gyrodyne
for a portion of or all or substantially all of the costs and/ or cost increases
for utilities, insurance, repairs and maintenance, and real estate
taxes.
As of
March 31, 2010 the Company had 100% ownership in three medical office parks
comprising approximately 130,000 rentable square feet and a multitenant
industrial park comprising 127,062 rentable square feet. In addition,
the Company has 68 acres of property located in St James, New York, 10 of which
are utilized by the industrial park and the balance remains
undeveloped. Furthermore, the Company has a 9.99% limited partnership
interest in an undeveloped Florida property “the Grove”.
The
Company has qualified, and expects to continue to qualify as a REIT under
Section 856(c)(1) of the Internal Revenue Code of 1986 as amended (the
“Code”). Accordingly, the Company generally will not be subject to
federal and state income tax, provided that distributions to its shareholders
equal at least 90% of its REIT taxable income as defined under the
Code. The Company is permitted to participate in certain activities
from which it was previously precluded in order to maintain its qualifications
as a REIT; however these activities must be conducted in an entity which elected
to be treated as a taxable REIT subsidiary (“TRS”) under the
Code. The Company owns a 9.99% limited partnership interest in
Callery Judge Grove, L. P. (the “Grove”) which owns a 3,700+ acre citrus grove
in Palm Beach County, Florida.
2. Basis
of Quarterly Presentations:
The
accompanying quarterly financial statements have been prepared in conformity
with accounting principles generally accepted in the United States
(“GAAP”). The financial statements of the Company included herein
have been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission (“SEC”) and, in the opinion of management,
reflect all adjustments which are necessary to present fairly the results for
the three-month periods ended March 31, 2010 and 2009.
Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with GAAP 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 audited financial statements and
footnotes therein included in the Annual Report on Form 10-K for the year ended
December 31, 2009.
The
results of operations for the three month period ended March 31, 2010 are not
necessarily indicative of the results to be expected for the full
year.
3. Principle
of Consolidation:
The
accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All intercompany balances
and transactions have been eliminated in consolidation.
4. Investment
in Marketable Securities:
The
Company’s marketable securities consisted of debt securities classified as
available-for-sale and are reported at fair value, with the unrealized gains and
losses excluded from operating results and reported as a separate component of
stockholders' equity net of the related tax effect. These debt securities
consist of hybrid mortgage-backed securities fully guaranteed by agencies of the
U.S. Government and are managed by and held in an account with a major financial
institution. During the quarter ended March 31, 2010, the Company
did not hold any marketable securities.
5. Earnings
per Share:
Basic
earnings per common share are computed by dividing net income 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. Basic income (loss) per common share was computed by
dividing net income (loss) by the weighted average number of shares of common
stock outstanding. Treasury shares have been excluded from the
weighted average number of shares. As of March 20, 2007, all outstanding stock
options were either exercised or expired.
6. 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.
7. Mortgages
Payable:
Mortgages
payable is comprised of the following:
|
|
March
31,
|
|
|
December
31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Mortgage
payable - Port Jefferson Professional Park (a)
|
|
$ |
5,299,296 |
|
|
$ |
5,323,205 |
|
Mortgage
payable - Cortlandt Medical Center (b)
|
|
|
4,882,500 |
|
|
|
4,935,000 |
|
Mortgage
payable – Fairfax Medical Center (c)
|
|
|
7,867,956 |
|
|
|
7,906,061 |
|
Total
|
|
$ |
18,049,752 |
|
|
$ |
18,164,266 |
|
(a) In
June 2007, in connection with the purchase of ten office buildings in the Port
Jefferson Professional Park (the “Port Jefferson Buildings”) in Port Jefferson
Station, New York, the Company assumed a $5,551,191 mortgage payable to a bank
(the “Mortgage”). The Mortgage bears interest at 5.75% through February 1, 2012
and adjusts to the higher of 5.75% or 275 basis points in excess of the Federal
Home Loan Bank’s five year Fixed Rate Advance thereafter. The Mortgage is
collateralized by the Port Jefferson Buildings and matures on February 1,
2022.
(b) In
June 2008, in connection with the purchase of the Cortlandt Medical Center, the
Company borrowed $5,250,000 from a bank (the “Cortlandt Mortgage”). The
Cortlandt Mortgage originally bore interest at a per annum rate of 225 basis
points above the one month LIBOR rate through maturity on July 1, 2018, subject
to monthly adjustment. The Cortlandt Mortgage is collateralized by the Cortlandt
Medical Center. As part of the terms and conditions of the Cortlandt Mortgage,
the Company exercised an option to enter into an interest rate swap agreement in
November 2008 thereby fixing the interest rate at 5.66% through November 1,
2011. As of March 31, 2010, the fair value of the Interest Rate Swap
is a liability of $194,481, and is presented in Other Liabilities on the balance
sheet.. The estimated effect on the future operating results is
reported in Other Comprehensive Income. Based on the valuation as of
March 31, 2010, approximately $123,000 of the Interest rate swap will be
recognized as interest expense within the next twelve months.
(c) In
March 2009, in connection with the purchase of the Fairfax Medical Center in
Fairfax, Virginia, by Virginia Healthcare Center, LLC (“VHC”), a wholly-owned
subsidiary of the Company, VHC borrowed $8,000,000 from a bank (the “Fairfax
Mortgage”). The Fairfax Mortgage bears interest at 5.875% through April 10, 2014
and thereafter adjusts to the higher of 5.50% or 300 basis points over the
weekly average yield on five-year United States Treasury securities. The Fairfax
Mortgage is collateralized by a Deed of Trust and Security Agreement
establishing a first trust lien upon the land, buildings and improvements as
well as a Collateral Assignment of Leases and Rents and matures on April 10,
2019. The payment of the indebtedness evidenced by the Fairfax Mortgage and the
performance by VHC of its obligations thereunder has been guaranteed by the
Company.
8. Retirement
Plans:
The
Company records net periodic pension benefit cost pro rata throughout the
year. The following table provides the components of net periodic
pension benefit cost for the plan for the three months ended March 31, 2010 and
2009:
|
|
Three
Months Ended March
31,
|
|
|
|
2010
|
|
|
2009
|
|
Pension
Benefits
|
|
|
|
|
|
|
Service
Cost
|
|
$ |
42,093 |
|
|
$ |
34,284 |
|
Interest
Cost
|
|
|
40,208 |
|
|
|
37,218 |
|
Expected
Return on Plan Assets
|
|
|
(47,569 |
) |
|
|
(29,304 |
) |
Amortization
of Actuarial Loss
|
|
|
22,726 |
|
|
|
29,348 |
|
|
|
|
|
|
|
|
|
|
Net
Periodic Benefit Cost After Curtailments and Settlements
|
|
$ |
57,458 |
|
|
$ |
71,546 |
|
During
the three months ended March 31, 2010, the Company did not make any
contributions to the plan. The Company does not have a minimum
required contribution for the December 31, 2010 plan year, and is not expecting
to make a contribution for the related plan year.
9. Commitments
and Contingencies:
Lease revenue
commitments - The approximate future minimum revenues from rental
property under the terms of all noncancellable tenant leases, assuming no new or
renegotiated leases are executed for such premises, are as follows:
Twelve
Months Ending March 31,
|
|
Amount
|
|
|
|
|
|
2011
|
|
$ |
4,097,000 |
|
2012
|
|
|
2,553,000 |
|
2013
|
|
|
1,870,000 |
|
2014
|
|
|
1,585,000 |
|
2015
|
|
|
952,000 |
|
Thereafter
|
|
|
2,191,000 |
|
|
|
$ |
13,248,000 |
|
Employment
agreements – The Company has employment agreements with two officers that
provide for annual salaries aggregating approximately $397,000 and other
benefits in the event of a change in control, termination by the Company without
cause or termination by the officer for good reason (the “Employment
Agreements”). On June 12, 2009, the Company and its two officers mutually agreed
to terminate the automatic extension provisions of the Employment Agreements. As
a result, the term of the Employment Agreements ends on June 12,
2012.
The
Compensation arrangements between the Company and Gary Fitlin, the Company’s
Chief Financial Officer, are set forth in an Offer Letter and a Deferred Bonus
Agreement, each executed on October 22, 2009 (collectively, the “Agreement”)
aggregating $233,000, annually.
10. Revolving Credit
Note:
The
Company's line of credit has a borrowing limit of $1,750,000, bears interest at
the lending institution's prime-lending rate (3.25% at March 31, 2010) plus 1%,
and is subject to certain financial covenants. The line is secured by certain
real estate and expires on June 1, 2011. On April 30, 2010, the Company
negotiated the assignment of the note to a new lender and simultaneously reached
an agreement with the new lender on modifying or eliminating certain covenants
and modifying the interest rate to prime +3.25% with a floor of
6.5%. As of March 31, 2010 and December 31, 2009, $1,750,000 was
available under this agreement and the Company was in compliance with the
financial covenants.
11. Acquisition of
Properties:
Property Purchase – During
January, 2010, the Company entered into a non-binding Purchase and Sale
Agreement (the “Agreement”) with Mark Hittman and Elizabeth
Hittman (the “Seller”) to acquire the land and building, located at
1989 Crompond Road, Cortlandt Manor, New York (the “Property”). The
Property consists of approximately 2,500 square feet of rentable space on 1.6
acres and has a current occupancy rate of 100%. Other than with respect to
the Agreement itself, there is no material relationship between the Company and
the Seller.
The
purchase price for the Property is approximately $720,000, $72,000 of which was
paid and is a non-refundable deposit as of March 31, 2010, and the remainder is
required to be paid at closing. The closing is expected to take place in
the second quarter of 2010 and will result in the Company owning approximately
three acres directly in front of the Cortlandt Medical Center. The Company
expects to finance up to 90% of the purchase price.
12. Recent
Accounting Pronouncements:
In April
2009, the FASB issued ASC 825-10 and ASC 270-10-05-05-1(formerly Staff Position
No. 107-1 and APB 28-1), Interim Disclosures about Fair Value of Financial
Instruments, or FSP FAS 107-1 and APB 28-1. ASC 825-10 and ASC
270-10-05-05-1 amends FAS 107, Disclosures about Fair Value of Financial
Instruments (“FAS No. 107”), to require an entity to provide disclosures about
fair value of financial instruments in interim financial information and amends
APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in
summarized financial information at interim reporting periods. Under ASC 825-10
(formerly FAS 107-1 and APB 28-1), a publicly-traded company shall include
disclosures about the fair value of its financial instruments whenever it issues
summarized financial information for interim reporting periods. In addition,
entities must disclose, in the body or in the accompanying notes of its
summarized financial information for interim reporting periods and in its
financial statements for annual reporting periods, the fair value of all
financial instruments for which it is practicable to estimate that value,
whether recognized or not recognized in the statement of financial position, as
required by ASC 825-10 and ASC 270-05-05-1 (formerly FAS No. 107, FSP FAS 107-1
and APB 28-1) are effective for interim and annual reporting periods ending
after June 15, 2009. The Company adopted this pronouncement on July 1,
2009. The adoption did not have a material effect on the Company’s
financial position or results of operations.
In April
2009, the FASB issued ASC 320-10-65-1 (formerly Staff Position No. 115-2 and FAS
124-2), Recognition and Presentation of Other-Than- Temporary Impairments, or
FSP FAS 115-2 and FAS 124-2. ASC 320-10-65-1 (i) changes existing
guidance for determining whether an impairment is other than temporary to debt
securities and (ii) replaces the existing requirement that the entity’s
management assert it has both the intent and ability to hold an impaired
security until recovery with a requirement that management assert: (a) it does
not have the intent to sell the security; and (b) it is more likely than not it
will not have to sell the security before recovery of its cost basis. Under ASC
320-10-65-1, declines in the fair value of held-to-maturity and
available-for-sale securities below their cost that are deemed to be other than
temporary are reflected in earnings as realized losses to the extent the
impairment is related to credit losses. The amount of the impairment related to
other factors is recognized in other comprehensive income. ASC
320-10-65-1 is effective for interim and annual reporting periods ending after
June 15, 2009. The Company adopted this pronouncement on July 1,
2009. The adoption did not have a material effect on the Company’s
financial position or results of operations.
In April
2009, the FASB issued ASC 820-10-65-4 (formerly Staff Position No. FAS 157-4),
Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly. ASC 820-10-65-4 affirms that the objective of fair
value when the market for an asset is not active is the price that would be
received to sell the asset in an orderly transaction, and clarifies and includes
additional factors for determining whether there has been a significant decrease
in market activity for an asset when the market for that asset is not active.
ASC 820-10-65-4 requires an entity to base its conclusion about whether a
transaction was not orderly on the weight of the evidence. ASC 820-10-65-4 also
amended ASC 820-10 (formerly FAS No. 157) to expand certain disclosure
requirements. ASC 820-10-65-4 is effective for interim and annual
reporting periods ending after June 15, 2009, and shall be applied
prospectively. The Company adopted this pronouncement on July 1,
2009. The adoption did not have a material effect on the Company’s
financial position or results of operations.
In April
2009, the FASB issued ASC 805-10, 805-20 and 805-30 (formerly FASB Staff
Position No. 141(R)-1), Accounting for Assets Acquired and Liabilities Assumed
in a Business Combination That Arise from Contingencies, to amend and clarify
ASC 805 (formerly FAS No. 141(R). FSP 141(R)-1). ASC 805-10, 805-20
and 805-30 requires an acquirer to recognize at fair value, at the acquisition
date, an asset acquired or a liability assumed in a business combination that
arises from a contingency if the acquisition-date fair value of that asset or
liability can be determined during the measurement period. If the fair value
cannot be determined during the measurement period, an asset or a liability
shall be recognized at the acquisition date if the asset or liability can be
reasonably estimated and if information available before the end of the
measurement period indicates that it is probable that an asset existed or that a
liability had been incurred at the acquisition date. ASC 805-10, 805-20 and
805-30 amends the disclosure requirements of ASC 805 to include business
combinations that occur either during the current reporting period or after the
reporting period but before the financial statements are issued. ASC 805-10,
805-20 and 805-30 are effective for fiscal years beginning after December 15,
2008 and interim periods within those years. The Company adopted this
pronouncement on January 1, 2009. The adoption did not have a
material effect on the Company’s financial position or results of
operations
In May
2009, the FASB issued ASC 855-10 (formerly Statement No. 165, “Subsequent
Events” (“FAS 165”)), which establishes general standards of accounting for, and
requires disclosure of, events that occur after the balance sheet date but
before financial statements are issued or are available to be issued. The
Company adopted the provisions of ASC 855-10 for the quarter ended June 30,
2009. The adoption did not have a material effect on the Company’s
financial position or results of operations.
In June
2009, the FASB issued ASC 105-10 (formerly Statement No. 168 (“FAS168”)), “The
FASB Accounting Standard Codification and the Hierarchy of Generally Accepted
Accounting Principles, a replacement of FASB Statement No. 162” (“FAS162”). ASC
105-10 replaces FAS 162 “The Hierarchy of Generally Accepted Accounting
Principles” and establishes the “FASB Accounting Standard Codification”
(Codification) as a source of authoritative accounting principles recognized by
the FASB to be applied by nongovernmental entities in the preparation of
financial statements in conformity with generally accepted accounting principles
in the United States. The codification does not change current GAAP, but changes
the referencing of financial standards, and is intended to simplify user access
to authoritative GAAP by providing all the authoritative literature related to a
particular topic in one place. All guidance contained in the
Codification carries an equal level of authority. On the effective date of ASC
105-10, the Codification will supersede all then-existing non-SEC accounting and
reporting standards. All other nongrandfathered non-SEC accounting literature
not included in the Codification will become nonauthoritative. ASC 105-10 is
effective for financial statements issued for interim and annual periods ending
after September 15, 2009. The Company adopted this pronouncement for
the quarter ended September 30, 2009. The adoption did not have a
material effect on the Company’s financial position or results of
operations.
In
January 2010, the FASB issued an Accounting Standards Update (“ASU”) 2010-06 –
“Improving Disclosures about Fair Value Measurements” (“ASU
2010-06”). The provisions of ASU 2010-06 amended Topic 820-10, “Fair
Value Measurement and Disclosure”. The amendment requires a
description of any transfers in and out of Level 1 and Level 2 of the fair-value
hierarchy and the reasons for the transfers. The amendment provides
for further disclosure on the valuation techniques and inputs relied upon to
measure fair value for both recurring and non recurring fair value measurements
as they relate to either Level 2 or Level 3 The updates
included conforming amendments to the guidance on disclosures for postretirement
benefit plans. The Company adopted the pronouncement for the quarter
ended March 31, 2010. The adoption did not have a material effect on
the Company’s financial position or results of operations.
In
January 2010, the FASB issued ASU 2010-01, a new accounting standard “Accounting
for Distributions to Shareholders with Components of Stock and
Cash.” The guidance clarifies that the companies should consider the
stock portion of a distribution as a stock issuance and not as a stock
dividend, The new standard is effective for fiscal years and interim
periods ending after December 15, 2009 and should be applied on a retrospective
basis. The Company’s adoption of the new standard did not have a
material effect on the Company’s financial position or results of
operations.
In
February 2010, the FASB issued ASU 2010-09, “Subsequent Events (ASC Topic 855)
Amendments to Certain Recognition and Disclosure requirements”. ASU
2010-09 requires SEC filers to evaluate subsequent events through the date the
financial statements are issued and removes the requirement to disclose a date
in both issued and revised financial statements through which subsequent events
were evaluated. The Company adopted the pronouncement for the
fiscal year and interim periods ending after September 30, 2009. The
adoption did not have a material effect on the Company’s financial position or
results of operations
13.
Fair Value of Financial Instruments:
Assets and Liabilities Measured at
Fair-Value – The Company follows authoritative guidance on fair value
measurements, which defines fair-value, establishes a framework for measuring
fair-value, and expands disclosures about fair-value measurements. The guidance
applies to reported balances that are required or permitted to be measured at
fair-value under existing accounting pronouncements; accordingly, the standard
does not require any new fair-value measurements of reported balances.
The
Company follows authoritative guidance on the fair value option for financial
assets, which permits companies to choose to measure certain financial
instruments and other items at fair-value in order to mitigate volatility in
reported earnings caused by measuring related assets and liabilities
differently. However, we have not elected to measure any additional financial
instruments and other items at fair-value (other than those previously required
under other GAAP rules or standards) under the provisions of this
standard.
The
guidance emphasizes that fair-value is a market-based measurement, not an
entity-specific measurement. Therefore, a fair-value measurement should be
determined based on the assumptions that market participants would use in
pricing the asset or liability. As a basis for considering market participant
assumptions in fair-value measurements, ASC Topic 820 establishes a fair-value
hierarchy that distinguishes between market participant assumptions based on
market data obtained from sources independent of the reporting entity
(observable inputs that are classified within Levels 1 and 2 of the
hierarchy) and the reporting entity’s own assumptions about market participant
assumptions (unobservable inputs classified within Level 3 of the
hierarchy). In instances where the determination of the fair-value measurement
is based on inputs from different levels of the fair-value hierarchy, the level
in the fair-value hierarchy within which the entire fair-value measurement falls
is based on the lowest level input that is significant to the fair-value
measurement in its entirety. Our assessment of the significance of a particular
input to the fair-value measurement in its entirety requires judgment, and
considers factors specific to the asset or liability.
The
following table represents the carrying value and fair value of the Company’s
financial assets and liabilities as of March 31, 2010 and December 31, 2009,
respectively.
|
|
March
31, 2010
|
|
|
December
31, 2009
|
|
Description
|
|
Carrying
Value
|
|
|
Fair
Value
(Level
2)
|
|
|
Carrying
Value
|
|
|
Fair
Value
(Level
2)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
203,000 |
|
|
$ |
203,000 |
|
Other
Liabilities
|
|
$ |
194,481 |
|
|
$ |
194,481 |
|
|
$ |
- |
|
|
$ |
- |
|
The
Company’s investment was in an interest bearing time deposit which matured in
March 2010. Following the maturity, the Company liquidated the
investment to utilize for tenant improvements. Other Liabilities is
comprised of an interest rate Swap agreement which the company entered into in
November 2008 to fix the interest rate at 5.66% through November 1, 2011, for
the underlying mortgage of the Cortlandt Medical Center.
The
Company estimates that fair value approximates carrying value for cash
equivalents, rents receivable, prepaid and other assets, and accounts payable
due to the relatively short maturity of the instruments.
The
Company determined the fair value of its long term debt approximates book
value. The Company based its decision by looking at current rates
available based on the Company’s estimate for nonperformance and liquidity risk,
the Company’s loan to value ratio, the maturity of the debt and the underlying
security of the debt.
Deferred
rent receivables represent the excess of rents recognized over amounts actually
due. Likewise, deferred rent payable represents the excess of rents
received over amounts actually recognized in
revenue. These assets and liabilities have a fair value
that approximates book value as a willing buyer would likely adjust the purchase
price of Gyrodyne by the balance of such assets and liabilities.
The
estimated fair value of the Company's investment in the Callery Judge Grove
property at December 31, 2009, based upon an independent third party appraisal
report, is approximately $17,134,000 without adjustment for minority interest,
lack of marketability discount, or the property related secured debt
facility, based strictly on a pro rata basis of the Company's
ownership percentage. The Grove is a distressed asset operating in a distressed
environment where an orderly transaction is not available. The facts
and circumstances of the Grove make it unreasonable to present a fair value
utilizing a Level 3 methodology, the lowest methodology which allows for broad
assumptions, therefore, in accordance with the exception rules for thinly
traded/lack of marketability of distressed assets under Topic 820,
the Company is not presenting a fair value.
14.
Risk Management – Use of Derivative instruments:
The
Company entered into the Interest Rate Swap agreement on the mortgage of the
Cortlandt Medical Center in November 2008, fixing the interest rate at 5.66%
through November 1, 2011. The fair value of the hedge was $194,481 as
of March 31, 2010.
The
interest rate swap agreement is considered a derivative
instrument. The Company utilized the interest rate swap agreement to
minimize the interest rate exposure. The principal objective of such
arrangement is to limit the risks and/or costs associated with the Company’s
operating structure as well as to hedge the specific transaction. To
date, the Company has only one interest rate swap agreement with the purpose of
hedging against a rise in LIBOR on the mortgage for the Cortlandt Medical
Center. The counter party to the arrangement is the bank which holds
the mortgage for the Cortlandt Medical Center. The Company is
potentially exposed to credit losses in the event of non-performance by the
counterparty. However, the Company does not expect the counterparty
to fail to meet its obligations due to the same party holding both the Mortgage
and the interest rate Swap Agreement. The Company does not hedge
credit or property value market risks through derivative financial
instruments.
The
Company formally assesses both at inception of the hedge, and on an ongoing
basis, whether such derivatives are highly-effective in offsetting changes in
cash flows of the hedged item. If management determines that a
derivative is not highly-effective as a hedge, or if a derivative ceases to be a
highly-effective hedge, the Company will discontinue hedge accounting
prospectively. The related ineffectiveness would be charged to the
Statement of Operations.
The
valuation of these instruments is determined utilizing widely accepted valuation
techniques including discounted cash flow analysis on the expected cash flows
for the derivative. This analysis includes the contractual terms of
the derivative through the maturity date, and utilizes observable market based
inputs including interest rate curves and implied volatilities. The
fair value of the interest rate swap was based on market standard methodology of
netting the discounted future inflows and outflows.
15. Related
Party Transactions:
On April
30, 2010, the Company's then existing lender (the "Bank"), assigned the note and
related mortgage associated with the $1,750,000 line of credit between the Bank
and the Company, to Asia World Marketplace LLC ("AWM"). Paul Lamb, the Company's
Chairman, serves as the Managing Director of AWM. AWM is a client of Lamb &
Barnosky, LLP, which represented AWM in this transaction. Mr. Lamb is a partner
in Lamb & Barnosky, LLP. Simultaneously with the note assignment, the
Company executed and delivered to AWM an amended and restated note, the basic
terms of which include a floating rate of interest equivalent to the prime rate
plus 3.25% with a floor of 6.5% maturing on June 1, 2011. Collateral for the
loan now consists of 35.1 acres of the Flowerfield Industrial Park and its
related rents. The company received other competitive proposals for this funding
and believes the loan with AWM reflects terms as favorable to the Company as
could have been obtained with an independent third-party lender.
16. Reclassifications:
Certain
amounts in the prior year have been reclassified to conform to the
classification used in the current year.
Item
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
When we
use the terms “Gyrodyne,” “the Company,” “we,” “us,” and “our,” we mean Gyrodyne
Company of America, Inc. and all entities owned by us, including
non-consolidated entities, except where it is clear that the term means only the
parent company. References herein to our Quarterly Report are to this
Quarterly Report on Form 10-Q for the quarter ended March 31, 2010.
Forward Looking
Statements. The statements made in this Form 10-Q that are not historical
facts contain “forward-looking information” within the meaning of the Private
Securities Litigation Reform Act of 1995, and Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended,
which can be identified by the use of forward-looking terminology such as “may,”
“will,” “anticipates,” “expects,” “projects,” “estimates,” “believes,” “seeks,”
“could,” “should,” or “continue,” the negative thereof, other variations or
comparable terminology. Important factors, including certain risks
and uncertainties, with respect to such forward-looking statements that could
cause actual results to differ materially from those reflected in such
forward-looking statements include, but are not limited to, the effect of
economic and business conditions, including risks inherent in the real estate
markets of Suffolk and Westchester Counties in New York, Palm Beach County in
Florida and Fairfax County in Virginia, the ability to obtain additional capital
in order to develop the existing real estate, uncertainties associated with the
Company’s litigation against the State of New York for just compensation for the
Flowerfield property taken by eminent domain, and other risks detailed from time
to time in the Company’s SEC reports. These and other matters the Company
discusses in this Quarterly Report, or in the documents it incorporates by
reference into this Report, may cause actual results to differ from those the
Company describes. The Company assumes no obligation to update or revise any
forward-looking information, whether as a result of new information, future
events or otherwise.
Overview:
General: We
are a self-managed and self-administered real estate investment trust formed
under the laws of the State of New York. We operate primarily in one
segment. The Company’s primary business is the investment in and the
acquisition, ownership and management of a geographically diverse portfolio of
medical office, industrial and development of industrial and residential
properties. Substantially all of our properties are subject to net
leases in which the tenant must reimburse Gyrodyne for a portion of or all or
substantially all of the costs and /or cost increases for utilities, insurance,
repairs and maintenance, and real estate taxes. However, certain
leases provide that the Company is responsible for certain operating
expenses.
As of
March 31, 2010 we had 100% ownership in three medical office parks,
comprising approximately 130,000 rentable square feet and a
multitenant industrial park comprising approximately 127,000 rentable square
feet. In addition, the Company has 68 acres of property located in St
James, New York, 10 of which are utilized by the industrial park and the balance
remains undeveloped. Furthermore, the Company has a 9.99% limited
partnership interest in an undeveloped Florida property called “the
Grove”.
Our
revenues and cash flows are generated predominantly from property rent
receipts. As a result, growth in revenues and cash flows is directly
correlated to our ability to (1) re-lease suites that are vacant or may become
vacant at favorable rates, (2) successfully settle the condemnation litigation
lawsuit, (3) expand our existing income producing assets through additional
investment, and (4) acquire additional income-producing real estate
assets.
Global
Credit and Financial Crisis: The continued concerns about the impact
of a widespread and long term global credit and financial crisis have
contributed to market volatility and diminishing expectations for the real
estate industry, including the potential depression in our common stock
price. The continued progression of our condemnation lawsuit has also
added volatility to our common stock price. As a result, our business
continues to be impacted including (1) difficulty obtaining financing to
renovate or expand our current real estate holdings, (2) difficulty in
consummating property acquisitions, (3) increased challenges in re-leasing
space, and (4) potential risks stemming from late rental receipts, tenant
defaults, or bankruptcies.
Health
Care Reform: The Health Care Reform will potentially affect medical
office real estate due to the direct impact on its tenant base. While
the impact is not immediate due to the multi-year phase in period, medical
professionals are reviewing their real estate options which include remaining
status quo, increasing tenant space to address a higher volume of patients as
well as combining practices with other professionals. As a result,
our business could be impacted by factors including (1) difficulty transitioning
doctors to longer term leases, (2) difficulty raising rates, and (3) increased
challenges in re-leasing space.
Business
Strategy: We have focused our business strategy during the current
financial crisis to strike a balance between preserving capital and improving
the market value of our portfolio to meet our long term goal of executing on a
liquidity event or series of liquidity events. Included within this
strategy are the following objectives:
|
·
|
actively
managing our portfolio to improve our net operating income and operating
cash flow from these assets while simultaneously increasing the market
values of the underlying operating
properties;
|
|
·
|
actively
pursuing the re-zoning effort of the Flowerfield property to maximize its
value;
|
|
·
|
employing
cost-saving strategies to reduce our general and administrative expenses;
and
|
|
·
|
diligently
managing the condemnation lawsuit.
|
We
believe these objectives will strengthen our business and enhance the value of
our underlying real estate portfolio.
First Quarter 2010
Transaction Summary
The
following summarizes our significant transactions and other activity during the
three months ended March 31, 2010.
Leasing –
We entered into 17 new leases and lease extensions encompassing
approximately 23,000 square feet and $467,698 in annual
revenue. Furthermore, we had 3 terminations encompassing
2,401 square feet and $41,016 in annual revenue. The Company recognized $52,305
in tenant deferred revenue.
Our
continued focus on re-tenanting vacant space, renewing tenants and transitioning
tenants to longer term leases has resulted in total lease commitments as of
March 31, 2010 and December 31, 2009 of $13,248,000 and $13,137,000,
respectively, an increase of $111,000.
Related Party Transactions
On April
30, 2010, the Company's then existing lender (the "Bank"), assigned the note and
related mortgage associated with the $1,750,000 line of credit between the Bank
and the Company, to Asia World Marketplace LLC ("AWM"). Paul Lamb, the Company's
Chairman, serves as the Managing Director of AWM. AWM is a client of Lamb &
Barnosky, LLP, which represented AWM in this transaction. Mr. Lamb is a partner
in Lamb & Barnosky, LLP. Simultaneously with the note assignment, the
Company executed and delivered to AWM an amended and restated note, the basic
terms of which include a floating rate of interest equivalent to the prime rate
plus 3.25% with a floor of 6.5% maturing on June 1, 2011. Collateral for the
loan now consists of 35.1 acres of the Flowerfield Industrial Park and its
related rents. The company received other competitive proposals for this funding
and believes the loan with AWM reflects terms as favorable to the Company as
could have been obtained with an independent third-party lender.
Critical Accounting
Policies
Management’s
discussion and analysis of financial condition and results of operations is
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America, or GAAP. The consolidated financial statements of the
Company include accounts of the Company and all majority-owned and controlled
subsidiaries. The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions in certain
circumstances that affect amounts reported in the Company's consolidated
financial statements and related notes. In preparing these financial
statements, management has utilized information available including its past
history, industry standards and the current economic environment, among other
factors, in forming its estimates and judgments of certain amounts included in
the consolidated financial statements, giving due consideration to
materiality. On a regular basis, we evaluate our assumptions,
judgments and estimates. However, application of the
critical accounting policies below involves the exercise of judgment and use of
assumptions as to future uncertainties and, as a result, actual results could
differ from these estimates. In addition, other companies may utilize
different estimates, which may impact comparability of the Company's results of
operations to those of companies in similar businesses. We believe
there have been no material changes to the items that we disclosed as our
critical accounting policies under Item 7, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in our annual
report.
Revenue
Recognition
Rental
revenue is recognized on a straight-line basis, which averages minimum rents
over the terms of the leases. The excess of rents recognized over
amounts contractually due, if any, is included in deferred rents receivable on
the Company's balance sheets. Alternatively, rents received in
advance of rents recognized, if any, are included in deferred rent liability on
the Company’s balance sheet Certain leases also provide for tenant
reimbursements of common area maintenance and other operating expenses and real
estate taxes. Ancillary and other property-related income is
recognized in the period earned.
Real
Estate
Rental
real estate assets, including land, buildings and improvements, furniture,
fixtures and equipment are recorded at cost. Tenant improvements,
which are included in buildings and improvements, are also stated at
cost. Expenditures for ordinary maintenance and repairs are expensed
to operations as they are incurred. Renovations and/or replacements,
which improve or extend the life of the asset, are capitalized and depreciated
over their estimated useful lives.
Depreciation
is computed utilizing the straight-line method over the estimated useful life of
ten to thirty-nine years for buildings and improvements and three to twenty
years for machinery and equipment.
The
Company is required to make subjective assessments as to the useful life of its
properties for purposes of determining the amount of depreciation to reflect on
an annual basis with respect to those properties. These assessments
have a direct impact on the Company's net income. Should the Company
lengthen the expected useful life of a particular asset, it would be depreciated
over more years, and result in less depreciation expense and higher annual net
income.
Real
estate held for development is stated at the lower of cost or net realizable
value. In addition to land, land development and construction costs,
real estate held for development includes interest, real estate taxes and
related development and construction overhead costs which are capitalized during
the development and construction period. Net realizable value represents
estimates, based on management’s present plans and intentions, of sale price
less development and disposition cost, assuming that disposition occurs in the
normal course of business.
Long Lived
Assets
On a
periodic basis, management assesses whether there are any indicators that the
value of the real estate properties may be impaired. A property's value is
considered to be impaired if management's estimate of the aggregate future cash
flows (undiscounted and without interest charges) to be generated by the
property is less than the carrying value of the property. Such future
cash flow estimates consider factors such as expected future operating income,
trends and prospects, as well as the effects of demand, competition and other
factors. To the extent impairment occurs, the loss will be measured
as the excess of the carrying amount of the property over the fair value of the
property.
The
Company is required to make subjective assessments as to whether there are
impairments in the value of its real estate properties and other
investments. These assessments have a direct impact on the Company's
net income, since an impairment charge results in an immediate negative
adjustment to net income. In determining impairment, if any, the
Company has adopted ASC 360-10 (formerly Financial Accounting Standards Board
("FASB") Statement No. 144), "Accounting for the Impairment or Disposal of Long
Lived Assets."
Assets and Liabilities
Measured at Fair-Value
On
January 1, 2008, the Company adopted ASC 820-10 (formerly
SFAS No. 157), Fair
Value Measurements (“SFAS No. 157”)), which defines fair value,
establishes a framework for measuring fair value, and expands disclosures about
fair-value measurements. ASC 820-10 applies to reported balances that are
required or permitted to be measured at fair value under existing accounting
pronouncements; accordingly, the standard does not require any new fair value
measurements of reported balances.
On
January 1, 2008, the Company adopted ASC825-10 (formerly
SFAS No. 159), The
Fair Value Option for Financial Assets and Financial Liabilities, which
permits companies to choose to measure certain financial instruments and other
items at fair value in order to mitigate volatility in reported earnings caused
by measuring related assets and liabilities differently. However, the Company
has not elected to measure any additional financial instruments and other items
at fair value (other than those previously required under other GAAP rules or
standards) under the provisions of this standard.
ASC
820-10 emphasizes that fair value is a market-based measurement, not an
entity-specific measurement. Therefore, a fair-value measurement should be
determined based on the assumptions that market participants would use in
pricing the asset or liability. As a basis for considering market participant
assumptions in fair-value measurements, ASC 820-10 establishes a fair-value
hierarchy that distinguishes between market participant assumptions based on
market data obtained from sources independent of the reporting entity
(observable inputs that are classified within Levels 1 and 2 of the
hierarchy) and the reporting entity’s own assumptions about market participant
assumptions (unobservable inputs classified within Level 3 of the
hierarchy).
Level 1
inputs utilize quoted prices (unadjusted) in active markets for identical assets
or liabilities that the Company has the ability to access. Level 2 inputs
are inputs other than quoted prices included in Level 1 that are observable
for the asset or liability, either directly or indirectly. Level 2 inputs
may include quoted prices for similar assets and liabilities in active markets,
as well as inputs that are observable for the asset or liability (other than
quoted prices), such as interest rates, foreign exchange rates, and yield curves
that are observable at commonly quoted intervals. Level 3 inputs are
unobservable inputs for the asset or liability, which are typically based on an
entity’s own assumptions, as there is little, if any, related market activity.
In instances where the determination of the fair-value measurement is based on
inputs from different levels of the fair-value hierarchy, the level in the
fair-value hierarchy within which the entire fair-value measurement falls is
based on the lowest level input that is significant to the fair-value
measurement in its entirety. The Company’s assessment of the significance of a
particular input to the fair-value measurement in its entirety requires
judgment, and considers factors specific to the asset or liability.
The
Company had investments in hybrid mortgage-backed securities, with a AAA
rating fully guaranteed by U.S. government agencies (the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation).
The fair values of mortgage-backed securities originated by
U.S. government agencies are based on a pricing model that incorporates
prepayment speeds and spreads to determine appropriate average life of
mortgage-backed securities. The spreads are sourced from broker/dealer's trade
prices and the new issue market. As the significant inputs used to price the
mortgage-backed securities are observable market inputs, the fair values of
these securities are included in the Level 2 fair value
hierarchy. During the year ended December 31, 2009, the
Company liquidated its remaining investments in these hybrid mortgage backed
securities.
RESULTS
OF OPERATIONS
Three Months Ended
March 31, 2010 compared with the Three Months
Ended March 31, 2009.
Rental
revenues are comprised solely of rental income and amounted to
$1,186,816 and $820,241 for the three months ended March 31, 2010 and
2009, respectively, an increase of $366,575 or 45%. The increase is
primarily comprised of $300,083 attributable to the acquisition of the Fairfax
Medical Center on March 31, 2009 and an increase in net new and renewed lease
rates of approximately $66,493. Approximately $60,000 is from one
tenant in Flowerfield who is occupying space that was vacant during the quarter
ended March 31, 2009.
Tenant
reimbursements represent expenses negotiated, managed and incurred directly by
the Company on behalf of or for the benefit of the tenants. Tenant
reimbursements were $160,503 and $129,302 for the three months ended March 31,
2010 and 2009, respectively, an increase of $31,201 or 24%. The
increase is primarily comprised of $22,788 attributable to the acquisition of
the Fairfax Medical Center on March 31, 2009. The remaining
difference is due to higher billable expenses in 2010 and more aggressive
approach to managing tenant reimbursements.
Rental
expenses for the three months ended March 31, 2010 and 2009 were $586,681 and
$426,699, respectively, an increase of $159,982 or 37%. The
acquisition of the Fairfax Medical Center increased rental expenses by
$124,706. The remaining increase was mainly attributable
to the Cortlandt Manor and Flowerfield properties. The majority of
the increase in expenses at Flowerfield and Cortlandt Manor was attributable to
higher utility expenses and higher maintenance expenses resulting from an
unusually high level of winter storm activity in 2010.
General
and Administrative expenses for the three months ended March 31, 2010 and 2009
were $534,433 and $628,413, respectively, a decrease of $93,980 or
15%. The major contributing factors to the decrease in general and
administrative expenses were a decrease in legal and consulting fees of
approximately $78,000, a decrease in corporate governance and director fees of
approximately $45,000, and a decrease in the pension expense of approximately
$14,000 offset by an increase of approximately $45,000 for compensation and
benefits.
Condemnation
expenses for the three months ended March 31, 2009 were
$222,909. There were no condemnation expenses in 2010. The
condemnation expenses were incurred to support the trial heard in the Court of
Claims in August 2009 and we do not forecast material condemnation expenses in
2010.
Depreciation
for the three months ended March 31, 2010 and 2009 were $196,850 and $113,900,
respectively, an increase of $82,950 or 73%. Approximately $70,346 of
the increase is the result of the acquisition of the Fairfax Medical
Center. The remaining increase of $12,604 is from renovations in the
remaining developed property portfolio.
Interest
income for the three months ended March 31, 2010 and 2009 was $1,211 and
$94,893, respectively, a decrease of $93,683 or 99%. The decrease is
primarily due to the 2009 liquidation of the Company’s remaining
investments in REIT-qualified securities and a redirection of those funds into
real estate acquisitions.
Realized
gain on marketable securities for the three months ended March 31, 2009 was
$123,442. There were no realized gains or losses in marketable
securities in the three months ended March 31, 2010, as a result of the Company
liquidating its investment in hybrid mortgage backed securities during
2009.
Interest
expense for the three months ended March 31, 2010 and 2009 was $262,074 and
$161,369, respectively, an increase of $100,705 or 62%. The increase
is due to the debt incurred to purchase the Fairfax Medical Center.
The
benefit for income tax for the three-month period ended March 31, 2009 of
$4,127,000 was due to the reinvestment of the condemnation proceeds through the
acquisition of the Fairfax Medical Center under Section 1033 of the Internal
Revenue Code. The Company no longer has any deferred tax liabilities
related to the condemnation payment received and therefore does not expect a
deferred tax benefit for 2010.
The
Company is reporting a net (loss) income of $(231,508) and $3,741,588 for the
three months ended March 31, 2010 and 2009, respectively, primarily due to the
impact of the items discussed above.
LIQUIDITY
AND CAPITAL RESOURCES
Cash Flows: We
believe that a main focus of management is to effectively manage our balance
sheet through cash flow management of our tenant leases, maintaining or
improving occupancy, and pursuing and recycling of capital.
The
Company originally received $26.3 million as an advance payment in connection
with the condemnation of 245 acres of the Flowerfield property. The
proceeds were invested in hybrid mortgage-backed securities pending the
identification of REIT-qualified investment properties that would satisfy the
Internal Revenue Code Section 1033 (“IRC 1033”) deferral requirements. In June
2007, the Company acquired the Port Jefferson Professional Park for
approximately $8.9 million. The purchase was a REIT qualified
investment that also met the requirements for tax deferred treatment under IRC
1033. Furthermore, in mid-2008, the Company reinvested $7.0 million
of condemnation proceeds in the purchase of the Cortlandt Medical Center in
Cortlandt Manor, New York, resulting in a tax benefit of $2.8
million.
During
the year ended December 31, 2009, we purchased the Fairfax Medical Center in
Fairfax, Virginia, for $12.9 million. This purchase
completed the reinvestment of the $26.3 million in condemnation
proceeds. The reinvestment resulted in a tax benefit of approximately
$4.1 million.
The
Company believes there is opportunity to increase its cash flows from its
existing property portfolio through renovations and expansions. The
extent to which the Company expands its existing portfolio through renovations,
expansions or acquisitions will be dependant on the economic recovery and the
availability of additional financing at favorable terms.
We
generally finance our operations through existing cash on hand and fund our
acquisitions through a combination of cash on hand and debt. As of
March 31, 2010, the Company had a $1,750,000 revolving credit line with a
bank. The Company negotiated with a new lender to accept assignment
of the credit line effective April 30, 2010 with a modification to the interest
rate to prime +3.25% with a floor of 6.5%. The Company had no
outstanding balance under the line of credit as of March 31,
2010. The Company considers the line of credit to be a temporary
arrangement as it seeks a longer term financing vehicle more suited to its
requirements as an owner/manager of various rental properties. Upon
the closing of the assignment of the line of credit, the Company borrowed
$1,000,000. As of May 17, 2010, the remaining $750,000 balance
of the credit facility is available.
As of
March 31, 2010, the Company had cash and cash equivalents totaling $715,441 and
anticipates having the capacity to fund normal operating, general and
administrative expenses, and its regular debt service requirements.
Net cash
used in operating activities was $93,236 and $144,655 during the three months
ended March 31, 2010 and 2009, respectively. The cash used in operating
activities in the current period was primarily related to a reduction in
accounts payable of $174,201 offset by an increase in deferred rent of
$85,763. The cash used in operating activities in the prior period
was primarily related to a pension plan contribution of $100,000, and prepaid
expenses and other assets of $32,598.
Net cash
provided by (used in) investing activities was $54,405 and $(7,063,507) during
the three months ended March 31, 2010 and 2009, respectively. Cash provided by
investing activities in the current period was primarily from the receipt of
$203,000 resulting from the liquidation of a one year interest bearing time
deposit offset by investments in property, plant and equipment of $124,081 and
land development costs of $24,514. Cash used in investing activities
in the prior period primarily consisted of the purchase of the Fairfax Medical
Center (“FMC”), including deferred acquisition costs, of $13,022,966 and costs
associated with property, plant and equipment of $621,980, partially offset by
the sale of marketable securities of $6,805,800 and principal payments received
on the investment in marketable securities of $29,748. Additionally
during the three months ended March 31, 2009, $200,000 was invested in a one
year interest bearing time deposit and $54,109 was incurred in land development
costs.
Net cash
(used in) provided by financing activities was $(114,514) and $7,795,800 during
the three months ended March 31, 2010 and 2009, respectively. The
Company does not have any interest only mortgages and as a result, during the
three months ended March 31, 2010 and 2009, the Company repaid $114,514 and
$75,076, respectively, of principal on its total mortgage
obligations. The net cash provided by financing activities in the
prior period was primarily the proceeds from the mortgage to purchase the
Fairfax Medical Center.
Beginning
in the second half of 2007, the residential mortgage and capital markets began
showing signs of stress, primarily in the form of escalating default rates on
sub-prime mortgages, declining residential home values and increasing inventory
nationwide. This “
credit
crisis” spread to the broader
commercial credit markets and has reduced the availability of financing and
widened spreads. These factors, coupled with a slowing economy, have reduced the
volume of real estate transactions and increased capitalization rates. Despite
the fact that the Company has invested in medical office buildings, an asset
class that has been less vulnerable, if these conditions continue, our portfolio
may experience lower occupancy and effective rents, which would result in a
corresponding decrease in net income, funds from operations, and cash
flows.
Financings: On March 31,
2009, the Company, through its wholly owned subsidiary Virginia Healthcare
Center, LLC, acquired the Fairfax Medical Center in Fairfax, Virginia (the
“Property”) from Fairfax Medical Center, LLC (the “Seller”). The Property
consists of two office buildings which are situated on 3.5 acres with
approximately 58,000 square feet of rentable space and an occupancy rate of
approximately 84% when acquired. The purchase price was $12,891,000 or
approximately $222 per square foot. There is no material relationship between
the Company and the Seller. Of the $12,891,000 purchase price for the Property,
the Company paid $4,891,000 in cash and received financing in the amount of
$8,000,000 from Virginia Commerce Bank. In addition, $131,966 of costs
associated with the acquisition was capitalized.
LIMITED
PARTNERSHIP INVESTMENT
The
Company owns a 9.99% limited partnership interest in Callery Judge Grove, L. P.
(the “Grove”) which owns a 3,700+ acre citrus grove in Palm Beach County,
Florida. The Company is accounting for the investment under the
equity method. As of March 31, 2010, the carrying value of the Company’s
investment was $0. The Grove had reported to its limited partners that in
October 2009 it received an independent appraisal report of the citrus grove
property which reflects the recent approval to develop 2,996 residential units
and 235,000 square feet of commercial and retail space. Based upon the appraised
value of the citrus grove property, at March 31, 2010, strictly on a pro-rata
basis, the estimated fair value of the Company's interest in the Grove property
would be approximately $17,134,000 without adjustment for minority interest and
lack of marketability discount. The Company cannot predict what, if any, value
it will ultimately realize from this investment.
In
February 2009, the Grove made an offering to its partners to invest additional
funds in the partnership. The offering, or capital call, had a minimum and
maximum aggregate offering amount of $4 million and $6 million, respectively,
and was due to expire on March, 16, 2009. In March 2009, after careful
deliberation, the Company informed the Grove that it would not participate in
the offering. Subsequently, the Company was informed that the offering period
remained open until July 15, 2009. The Company’s non-participation in
the offering diluted its ownership interest to 9.99% from 10.93%.
OFF-BALANCE
SHEET ARRANGEMENTS
The
Company has no off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on its financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to
investors.
Item
3. Quantitative and Qualitative Disclosures About Market Risk.
Not
required for smaller reporting companies.
Item
4T. Controls and Procedures.
The
Company’s management, including the Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”), have evaluated the effectiveness of the Company’s
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of March 31, 2010. Based upon that evaluation, the Company’s
Chief Executive Officer and Chief Financial Officer concluded that the
disclosure controls and procedures were effective, in all material respects, to
ensure that information required to be disclosed in the reports the Company
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission and that information is accumulated and
communicated to the Company’s management, including the CEO and CFO, to allow
timely decisions regarding required disclosure. It should be noted that design
of any system of controls is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions
regardless of how remote.
There
have been no changes in the Company’s internal control over financial reporting
identified in connection with the evaluation required by paragraph (d) of
Exchange Act Rule 13a-15 that occurred during the Company’s last fiscal quarter
that has materially affected, or that is reasonably likely to materially affect,
the Company’s internal control over financial reporting.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings.
Gyrodyne Company of America,
Inc. v. The State University of New York at Stony Brook
On May 1,
2006 the Company commenced litigation in the Court of Claims of the State of New
York seeking just compensation for the 245.5 acres in St. James and Stony Brook,
New York (the “Property”) that were appropriated by the State on November 2,
2005 under the power of eminent domain. On November 10, 2008,
Gyrodyne and the State of New York filed with the Court of Claims their
respective appraisals regarding the value of the Property. As of the November
2005 appropriation date, Gyrodyne’s appraiser has valued the Property at
$125,000,000, based in part upon a separate zoning analysis report that Gyrodyne
also filed with the Court which concluded that there was a high probability the
Property would have been rezoned from light industrial use to a Planned
Development District. The State’s appraiser appraised the Property
using the current light industrial zoning at a fair market value of
$22,450,000.
As the
State's appraisal is $3,865,000 less than the $26,315,000 Advance Payment
already made to Gyrodyne, if the Court of Claims were to adopt the State of New
York’s November 10, 2008 appraisal, the State could recoup the $3,865,000
difference between the Advance Payment and the State of New York’s November 10,
2008 appraisal, including interest already paid on the Advance
Payment.
The
Company believes the State’s appraisal is fundamentally flawed in that it
misapplied the eminent domain law’s requirement that just compensation be
determined based upon the highest and best use and the probability that such use
could have been achieved.
The trial
in the Court of Claims commenced on August 13, 2009 and concluded on August 18,
2009. The Court set November 23, 2009 as the deadline for the parties
to submit post-trial memoranda of law, and both parties filed the documents
accordingly. The Company has not recorded any provision or liability
related to this litigation at March 31, 2010 and December 31, 2009, with the
exception of accounts payable related to professional fees
incurred.
In
addition, in the normal course of business, the Company is a party to various
legal proceedings. After reviewing all actions and proceedings pending against
or involving the Company, management considers the aggregate loss, if any, will
not be material to the Company’s financial statements.
Items 2
through 5 are not applicable to the three months ended March 31,
2010.
Item
6. Exhibits.
|
3.1
|
Restated
Certificate of Incorporation of Gyrodyne Company of America, Inc.
(1)
|
|
|
|
|
3.2
|
Amended
and Restated Bylaws of Gyrodyne Company of America, Inc.
(2)
|
|
|
|
|
4.1
|
Form
of Stock Certificate of Gyrodyne Company of America, Inc.
(4)
|
|
|
|
|
4.2
|
Rights
Agreement, dated as of August 10, 2004, by and between Gyrodyne Company of
America, Inc. and Registrar and Transfer Company, as Rights Agent,
including as Exhibit B the forms of Rights Certificate and of Election to
Purchase. (3)
|
|
|
|
|
10.1
|
Amended
and Restated Incentive Compensation Plan dated as of February 2, 2010.
(5)
|
|
|
|
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
(6) |
|
|
|
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
(6) |
|
|
|
|
32.1
|
CEO
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. (6)
|
|
|
|
|
32.2
|
CFO
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(6)
|
|
(1)
|
Incorporated
herein by reference to the Annual Report on Form 10-KSB/A, filed with the
Securities and Exchange Commission on September 5,
2001.
|
|
|
|
|
(2)
|
Incorporated
herein by reference to Form 8-K, filed with the Securities and Exchange
Commission on June 18, 2008. |
|
|
|
|
(3)
|
Incorporated
herein by reference to Form 8-K, filed with the Securities and Exchange
Commission on August 13, 2004. |
|
|
|
|
(4)
|
Incorporated
herein by reference to the Quarterly Report on Form 10-Q, filed with the
Securities and Exchange Commission
on November 13, 2008.
|
|
|
|
|
(5)
|
Incorporated
herein by reference to Form 8-K, filed with the Securities and Exchange
Commission on February 8, 2010. |
|
|
|
|
(6)
|
Filed
as part of this report.
|
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.
Date:
May 14, 2010
|
/s/ Stephen V. Maroney
|
|
By
Stephen V. Maroney
|
|
President
and Chief Executive Officer
|
Date:
May 14, 2010
|
/s/ Gary Fitlin
|
|
By
Gary Fitlin
|
|
Chief
Financial Officer and Treasurer
|
EXHIBIT
INDEX
|
3.1
|
Restated
Certificate of Incorporation of Gyrodyne Company of America, Inc.
(1)
|
|
|
|
|
3.2
|
Amended
and Restated Bylaws of Gyrodyne Company of America, Inc.
(2)
|
|
|
|
|
4.1
|
Form
of Stock Certificate of Gyrodyne Company of America, Inc.
(4)
|
|
|
|
|
4.2
|
Rights
Agreement, dated as of August 10, 2004, by and between Gyrodyne Company of
America, Inc. and Registrar and Transfer Company, as Rights Agent,
including as Exhibit B the forms of Rights Certificate and of Election to
Purchase. (3)
|
|
|
|
|
10.1
|
Amended
and Restated Incentive Compensation Plan dated as of February 2, 2010.
(5)
|
|
|
|
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
(6) |
|
|
|
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
(6) |
|
|
|
|
32.1
|
CEO
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. (6)
|
|
|
|
|
32.2
|
CFO
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(6)
|
|
(1)
|
Incorporated
herein by reference to the Annual Report on Form 10-KSB/A, filed with the
Securities and Exchange Commission on September 5,
2001.
|
|
|
|
|
(2)
|
Incorporated
herein by reference to Form 8-K, filed with the Securities and Exchange
Commission on June 18, 2008. |
|
|
|
|
(3)
|
Incorporated
herein by reference to Form 8-K, filed with the Securities and Exchange
Commission on August 13, 2004. |
|
|
|
|
(4)
|
Incorporated
herein by reference to the Quarterly Report on Form 10-Q, filed with the
Securities and Exchange Commission
on November 13, 2008.
|
|
|
|
|
(5)
|
Incorporated
herein by reference to Form 8-K, filed with the Securities and Exchange
Commission on February 8, 2010. |
|
|
|
|
(6)
|
Filed
as part of this report.
|
21