|
6. Prepaid Expenses and Other Assets
Prepaid expenses and other assets consisted of the following (in thousands):
|
|
|
June 30,
|
|
December 31,
|
|
|
|
|
2011
|
|
2010
|
|
|
Mortgage and other investing receivables
|
|
$
|
35,649
|
|
$
|
18,870
|
|
|
Investment in KEYW
|
|
19,456
|
|
22,779
|
|
|
Furniture, fixtures and equipment, net
|
|
10,578
|
|
11,504
|
|
|
Construction contract costs incurred in excess of billings
|
|
9,657
|
|
9,372
|
|
|
Prepaid expenses
|
|
8,758
|
|
19,995
|
|
|
Deferred tax asset
|
|
5,676
|
|
276
|
|
|
Other assets
|
|
11,805
|
|
11,100
|
|
|
Prepaid expenses and other assets
|
|
$
|
101,579
|
|
$
|
93,896
|
|
Investment in The KEYW Holding Corporation
Our investment in KEYW reflected above consists of common stock and warrants to purchase additional shares of common stock of KEYW. We owned 2.6 million shares, or approximately 10%, of KEYWs common stock at June 30, 2011 and 3.1 million shares, or approximately 12%, at December 31, 2010. We use the equity method of accounting for our investment in the common stock. The carrying value of our equity method investment in these common shares was $19.1 million at June 30, 2011 and $22.3 million at December 31, 2010. Our investment in these common shares had a fair value of $31.8 million at June 30, 2011 based on the closing price of KEYWs common stock on the NASDAQ Stock Market on that date. In March 2011, we entered into a sales plan that complies with the requirements of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, to sell up to 1.6 million shares of our KEYW common stock in 2011; we completed the sale of 500,000 shares under this plan in the three and six months ended June 30, 2011, resulting in $2.1 million in gain recognized. We subsequently suspended this plan effective June 30, 2011. Our Chief Executive Officer resigned from the Board of Directors of KEYW effective July 1, 2011, at which time we began accounting for our investment in KEYWs common stock as a trading marketable equity security to be reported at fair value, with unrealized gains and losses recognized through earnings.
At June 30, 2011 and December 31, 2010, we owned warrants to purchase 50,000 additional shares of KEYW common stock at an exercise price of $9.25 per share. We account for these warrants as derivatives reported at fair value using the Black-Scholes option-pricing model. The estimated fair value of these warrants was $327,000, or $6.55 per warrant, at June 30, 2011 and $466,000, or $9.32 per warrant, at December 31, 2010.
Mortgage and Other Investing Receivables
Mortgage and other investing receivables consisted of the following (in thousands):
|
|
|
June 30,
|
|
December 31,
|
|
|
|
|
2011
|
|
2010
|
|
|
Mortgage loans receivable
|
|
$
|
25,473
|
|
$
|
14,227
|
|
|
Notes receivable from City of Huntsville
|
|
10,176
|
|
4,643
|
|
|
|
|
$
|
35,649
|
|
$
|
18,870
|
|
Our mortgage loans receivable reflected above consists of three loans secured by properties in the Baltimore/Washington Corridor and Greater Baltimore. Our notes receivable from the City of Huntsville funded infrastructure costs in connection with our LW Redstone Company, LLC joint venture. We do not have an allowance for credit losses in connection with theses receivables at June 30, 2011 or December 31, 2010. The fair value of our mortgage and other investing receivables totaled $35.9 million at June 30, 2011 and $18.8 million at December 31, 2010.
Operating Notes Receivable
We had operating notes receivables due from tenants with terms exceeding one year totaling $595,000 at June 30, 2011 and $655,000 at December 31, 2010. We carried allowances for estimated losses for most of these balances.
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