-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DwIO2mi8rjyV7IwaIpSNpX9MPuCiCcMVEOGGEfgE3bLV0fHrjouTXMxq3uX9YLkU kofe3dfGPusEXONNcRUKOw== 0000729237-96-000040.txt : 19961216 0000729237-96-000040.hdr.sgml : 19961216 ACCESSION NUMBER: 0000729237-96-000040 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961213 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961213 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARKWAY PROPERTIES INC CENTRAL INDEX KEY: 0000729237 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 742123597 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11533 FILM NUMBER: 96680595 BUSINESS ADDRESS: STREET 1: 300 ONE JACKSON PL STREET 2: 188 E CAPITOL ST STE 300 CITY: JACKSON STATE: MS ZIP: 39225-2728 BUSINESS PHONE: 6019484091 MAIL ADDRESS: STREET 1: P O BOX 22728 STREET 2: P O BOX 22728 CITY: JACKSON STATE: MS ZIP: 39201 FORMER COMPANY: FORMER CONFORMED NAME: PARKWAY CO DATE OF NAME CHANGE: 19951018 8-K/A 1 ------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 8-K/A AMENDMENT TO FORM 8-K Filed Pursuant to THE SECURITIES EXCHANGE ACT OF 1934 PARKWAY PROPERTIES, INC. ----------------------------------- (Exact name of registrant as specified in its charter) AMENDMENT NO. 1 The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Form 8-K filed October 15, 1996 as set forth in the pages attached hereto: Item 7. Financial Statements and Exhibits Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. Date: December 13, 1996 PARKWAY PROPERTIES, INC. By /s/ Sarah P. Clark ----------------------- Sarah P. Clark Vice President, Chief Financial Officer, Treasurer and Secretary FORM 8-K/A PARKWAY PROPERTIES, INC. Item 7. Financial Statements and Exhibits. (a) Financial Statements The following combined audited financial statement of the BB&T Financial Center Building for the twelve months ended December 31, 1995 are attached hereto. Page ---- Report of Independent Auditors 3 Combined Statement of Rental Revenue and Direct Operating Expenses 4 Notes to Combined Statement of Rental Revenue and Direct Operating Expenses 5 (b) Pro Forma Consolidated Financial Statements The following unaudited Pro Forma Consolidated Financial Statements are attached hereto. PARKWAY PROPERTIES, INC. Page ---- Pro Forma Consolidated Financial Statements (Unaudited) 7 Pro Forma Consolidated Balance Sheet (Unaudited) - As of September 30, 1996 8 Pro Forma Consolidated Statement of Income (Unaudited) - For the Twelve Months Ended December 31, 1995 9 Pro Forma Consolidated Statement of Income (Unaudited) - For the Nine Months Ended September 30, 1996 10 Notes to Pro Forma Consolidated Financial Statements (Unaudited) 11 Report of Independent Auditors The Board of Directors Parkway Properties, Inc. We have audited the accompanying statement of rental revenue and direct operating expenses of BB&T Financial Center for the year ended December 31, 1995. This statement is the responsibility of management. Our responsibility is to express an opinion on this statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of rental revenue and direct operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amount and disclosures in the statement. An audit includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Form 8-K/A of Parkway Properties, Inc. as described in Note 2, and is not intended to be a complete presentation of the BB&T Financial Center's revenue and expenses. In our opinion, the statement of rental revenue and direct operating expenses referred to above presents fairly, in all material respects, the rental revenue and direct operating expenses described in Note 2 of the BB&T Financial Center for the year ended December 31, 1995, in conformity with generally accepted accounting principles. We have compiled the accompanying statement of rental revenue and direct operating expenses of BB&T Financial Center for the nine months ended September 30, 1996 in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of the financial statement information that is the representation of management. We have not audited or reviewed the statement of rental revenue and direct operating expenses of the BB&T Financial Center for the nine months ended September 30, 1996 and, accordingly, do not express an opinion or any other form of assurance on them. Jackson, Mississippi /s/ Ernst & Young LLP December 9, 1996 BB&T Financial Center Statement of Rental Revenue and Direct Operating Expenses Year ended Nine months ended December 31, 1995 September 30, 1996 ----------------- ------------------ (unaudited) Rental revenue: Minimum rents (Note 1)....... $2,737,375 $2,097,937 Reimbursed charges........... 1,237,289 954,722 Other income.................. 24,259 19,343 ---------- ---------- 3,998,923 3,072,002 ---------- ---------- Direct operating expenses (Note 2): Utilities................... 307,846 254,333 Real estate taxes........... 282,710 212,033 Management fees (Note 3).... 104,602 91,796 Janitorial services and supplies............... 167,890 127,015 Maintenance services and supplies............... 259,422 137,815 Security services........... 75,377 53,776 Insurance................... 27,256 22,309 Legal and professional fees....................... 16,118 1,469 Administrative and miscellaneous expenses..... 136,811 154,101 ---------- ---------- 1,378,032 1,054,647 ---------- ---------- Excess of rental revenue over direct operating expenses.... $2,620,891 $2,017,355 ========== ========== See accompanying notes. BB&T Financial Center Notes to Statement of Rental Revenue and Direct Operating Expenses 1. Organization and Significant Accounting Policies Description of Property Parkway Carolina, Inc. a wholly-owned subsidiary of Parkway Properties, Inc. (the "Company"), acquired the BB&T Financial Center (the "Building") effective September 30, 1996 from an unrelated party. The Building is a 19-story Class A office building located in Winston-Salem, North Carolina with approximately 239,000 (unaudited) square feet of leasable area. Rental Income Minimum rents from leases are accounted for ratably over the term of each lease. Tenant reimbursements are recognized as income as the applicable services are rendered or expenses incurred. The future minimum rents and scheduled reimbursed charges on non- cancelable operating leases at December 31, 1995 are as follows: Year Amount -------------------------------- 1996 $ 3,975,000 1997 3,910,000 1998 3,996,000 1999 3,926,000 2000 3,842,000 Thereafter 28,795,000 ----------- $48,444,000 =========== Two tenants, whose leases expire June 30, 2005 and December 31, 2012, accounted for approximately 75% of 1995 rental revenue. BB&T Financial Center Notes to Statement of Rental Revenue and Direct Operating Expenses (continued) 2. Basis of Accounting The accompanying statement of rental revenue and direct operating expenses is presented on the accrual basis. The statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired. Accordingly, the statement excludes certain expenses not comparable to the proposed future operations of the Building such as depreciation and mortgage interest expense. Management is not aware of any material factors relating to the Building that would cause the reported financial information not to be necessarily indicative of future operating results. 3. Management Fees Management fees of 3% of revenues received from the operations of the Building were paid to an unrelated management company. PARKWAY PROPERTIES, INC. Pro Forma Consolidated Financial Statements (Unaudited) The following unaudited pro forma consolidated balance sheet as of September 30, 1996 and pro forma consolidated statements of income of Parkway Properties, Inc. ("Parkway") as of December 31, 1995 and September 30, 1996 give effect to the September 30, 1996 purchase of the BB&T Financial Center. The pro forma consolidated financial statements have been prepared by management of Parkway based upon the historical financial statements of Parkway and the adjustments and assumptions in the accompanying notes to the pro forma consolidated financial statements. The pro forma consolidated balance sheet sets forth the effect of Parkway's purchase of the BB&T Financial Center on its purchase date of September 30, 1996. No pro forma adjustments were needed due to the September 30th purchase date. The pro forma consolidated statements of income set forth the effects of Parkway's purchase of the BB&T Financial Center, Falls Pointe and Roswell North Buildings and the Cherokee Business Center, the 8381 and 8391 Courthouse Road Buildings as well as the July 31, 1995 purchase of Mtel Centre', the October 2, 1995 purchase of the IBM Building, the December 19, 1995 purchase of the Waterstone Building and the April 15, 1996 purchase of the 400 North Belt and Woodbranch Buildings as if these transactions had been consummated on January 1, 1995. The pro forma consolidated statements of income also set forth the effect of the May 31, 1996 sale of 157 mortgage loans and the placement of non-recourse mortgage debt on recently acquired properties as if the transactions occurred January 1, 1995. These pro forma consolidated financial statements may not be indicative of the results that actually would have occurred if the purchases, sale and/or financings had been in effect on the dates indicated or which may be obtained in the future. The pro forma consolidated financial statements should be read in conjunction with the financial statements and notes of Parkway included in its annual report on Form 1O-KSB for the period ended December 31, 1995. PARKWAY PROPERTIES, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1996 (Unaudited) Parkway Pro Forma(2) Parkway Historical Adjustments Pro Forma ---------- ----------- --------- (In thousands) Assets Real estate related investments Office buildings.............$129,507 $ - $129,507 Accumulated depreciation..... (8,671) - (8,671) -------- -------- -------- 120,836 - 120,836 Real estate held for sale Land....................... 8,206 - 8,206 Operating properties....... 3,928 - 3,928 Mortgage loans............... 6,173 - 6,173 Real estate securities....... 507 - 507 Real estate partnerships and corporate joint venture.... 312 - 312 -------- -------- -------- 139,962 - 139,962 Interest and rents receivable and other assets............. 3,865 - 3,865 Cash and cash equivalents...... 134 - 134 -------- -------- -------- $143,961 $ - $143,961 ======== ======== ======== Liabilities Notes payable to banks.........$ 6,836 $ - $ 6,836 Mortgage notes payable without recourse..................... 53,452 - 53,452 Mortgage notes payable on wrap mortgages.................... 4,470 - 4,470 Accounts payable and other liabilities.................. 5,999 - 5,999 -------- -------- -------- 70,757 - 70,757 -------- -------- -------- Shareholders' Equity Preferred stock, $.001 par value, 576,000 shares authorized, 576,000 shares issued in 1996............... 1 1 Common stock, $.001 par value, 69,424,000 shares authorized, 3,636,421 shares issued...... 3 - 3 Additional paid-in capital..... 51,924 - 51,924 Retained earnings.............. 21,061 - 21,061 -------- -------- -------- 72,989 - 72,989 Unrealized gain on securities.. 215 - 215 -------- -------- -------- 73,204 - 73,204 -------- -------- -------- $143,961 $ - $143,961 ======== ======== ======== PARKWAY PROPERTIES, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED 12/31/95 (Unaudited) Parkway Pro Forma Parkway Historical Adjustments Pro Forma ---------- ----------- --------- (In thousands, except per share data) Revenues Income from real estate properties.......................$ 8,941 $16,149 (a)$25,090 Interest on mortgage loans......... 1,421 (896)(e) 525 Management company income.......... 1,041 - 1,041 Equity in earnings Real estate companies............ 135 - 135 Real estate partnerships and corporate joint venture........ 116 - 116 Interest on investments............ 167 - 167 Dividend income.................... 601 - 601 Deferred gains and other income.... 345 - 345 Gain on real estate and mortgage loans............... 6,552 - 6,552 Gain on securities................. 4,314 - 4,314 ------- ------- ------- 23,633 15,253 38,886 ------- ------- ------- Expenses Real estate owned Operating expense................ 4,876 7,508 (a) 12,384 Interest expense................. 2,230 2,240 (c) 4,470 Depreciation and amortization.... 1,331 1,922 (a) 3,253 Minority interest................ (100) - (100) Interest expense Notes payable to banks........... 156 391 (e) 547 Notes payable on wrap mortgages.. 135 - 135 Management company expenses........ 804 - 804 Other expenses..................... 2,299 - 2,299 ------- ------- ------- 11,731 12,061 23,792 ------- ------- ------- Income before taxes................ 11,902 3,192 15,094 Income tax provision............... 82 - (4) 82 ------- ------- ------- Net income.........................$11,820 $ 3,192 $15,012 ======= ======= ======= Net income per share...............$ 4.24 $ 3.82 ======= ======= Weighted average shares outstanding...................... 2,787 3,927 ======= ======= PARKWAY PROPERTIES, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED 9/30/96 (Unaudited) Parkway Pro Forma Parkway Historical Adjustments Pro Forma ---------- ----------- --------- (In thousands, except per share data) Revenues Income from real estate properties...................... $13,559 $ 6,186 (b) $19,745 Management company income......... 537 - 537 Interest on mortgage loans........ 1,435 (438)(f) 997 Equity in earnings: Real estate partnerships and corporate joint venture....... 121 - 121 Gain on securities................ 304 - 304 Interest on investments........... 471 - 471 Deferred gains and other income... 91 - 91 Dividend income................... 118 - 118 Gain on real estate and mortgage loans........................... 5,863 - 5,863 ------- ------- ------- 22,499 5,748 28,247 ------- ------- ------- Expenses Real estate owned: Operating expense............... 6,570 2,525 (b) 9,095 Interest expense................ 2,390 608 (d) 2,998 Depreciation and amortization... 1,591 797 (b) 2,388 Minority interest............... (12) - (12) Interest expense: Notes payable to banks.......... 95 315 (f) 410 Notes payable on wrap mortgages. 340 - 340 Management company expenses....... 483 - 483 Other expenses.................... 2,198 - 2,198 ------- ------- ------- 13,655 4,245 17,900 ------- ------- ------- Income before taxes............... 8,844 1,503 10,347 Income tax provision.............. 23 - (4) 23 ------- ------- ------- Net income........................ $ 8,821 $ 1,503 $10,324 ======= ======= ======= Net income per share.............. $ 2.54 $ 2.48 ======= ======= Weighted average shares outstanding 3,474 4,169 ======= ======= PARKWAY PROPERTIES, INC. Notes to Pro Forma Consolidated Financial Statements (Unaudited) 1. On September 30, 1996, Parkway Carolina, Inc., a wholly- owned subsidiary of Parkway Properties, Inc. ("Parkway" or the "Company") purchased the BB&T Financial Center for $24,500,000 from an unrelated party. This building consists f approximately 239,000 net rentable square feet. 2. No pro forma adjustments were needed to the Consolidated Balance Sheet as of September 30, 1996 due to the September 30, 1996 purchase date. 3. The pro forma adjustments to the Consolidated Statements of Income for the twelve months ended December 31, 1995 and the nine months ended September 30, 1996 include the September 30, 1996 purchase of the BB&T Financial Center, August 9, 1996 purchase of the Falls Pointe and Roswell North Buildings, the July 31, 1995 purchase of Mtel Centre', the October 2, 1995 purchase of the IBM Building, the December 19, 1995 purchase of the Waterstone Building and the April 15, 1996 purchase of the 400 North Belt and Woodbranch Buildings. In addition, the adjustments include the July 9, 1996 purchase of the Cherokee Business Center and the 8381 and 8391 Courthouse Road Buildings, the May 31, 1996 sale of 157 mortgage loans and the placement of non-recourse mortgage financing on certain recent property acquisitions. These pro forma adjustments are detailed below by property for the twelve months ended December 31, 1995 and nine months ended September 30, 1996. The effect on income and expenses from real estate properties due to the above purchases are as follows: (a) For the twelve months ended December 31, 1995: Revenue Expenses ----------- --------------------------- Income From Real Estate Owned Real Estate Operating Depreciation Properties Expense Expense ----------- ------------ ------------ Mtel Centre' $ 2,420,000 $ 1,442,000 $ 177,000 IBM Building 959,000 449,000 102,000 Waterstone 1,183,000 499,000 181,000 400 North Belt & Woodbranch 3,470,000 1,970,000 347,000 Cherokee & Courthouse Road Bldgs. 1,848,000 841,000 249,000 Falls Pointe & Roswell North 2,270,000 929,000 315,000 BB&T Financial Center 3,999,000 1,378,000 551,000 ----------- ----------- ----------- $16,149,000 $ 7,508,000 $ 1,922,000 =========== =========== =========== (b) For the nine months ended September 30, 1996: Revenue Expenses ----------- --------------------------- Income From Real Estate Owned Real Estate Operating Depreciation Properties Expense Expense ----------- ------------ ------------ 400 North Belt & Woodbranch $ 1,036,000 $ 551,000 $ 102,000 Cherokee & Courthouse Road Bldgs. 917,000 480,000 124,000 Falls Pointe & Roswell North 1,161,000 439,000 158,000 BB&T Financial Center 3,072,000 1,055,000 413,000 ----------- ----------- ----------- $ 6,186,000 $ 2,525,000 $ 797,000 =========== =========== =========== Depreciation is provided by the straight-line method over the estimated useful lives of the buildings (40 years). Pro forma interest expense on real estate owned reflects the non-recourse debt placed on the buildings at the actual amounts and rates by property as if placed January 1, 1995 is as follows: Property/Placement Twelve Months Nine Months Date/Rate Debt 12/31/95 (c) 9/30/96 (d) ------------------ ----------- ------------- ----------- Mtel Centre 12/95 7.75% $11,000,000 $ 595,000 $ - IBM Building 2/96 7.78% 4,800,000 370,000 41,000 Waterstone 6/96 8.00% 5,620,000 450,000 185,000 400 North Belt & Woodbranch 7/96 8.25% 10,000,000 825,000 382,000 ---------- ---------- $2,240,000 $ 608,000 ========== ========== The January 1, 1995 pro forma effect of the sale of 157 mortgage loans on May 31, 1996 is as follows: Twelve Months Nine Months 12/31/95 (e) 9/30/96 (f) ------------- ----------- Interest Income: Mortgage loans $ (896,000) $ (438,000) The pro forma effect of the purchase of the BB&T Financial Center on interest expense on notes payable to banks is as follows: Interest Expense: Notes payable to banks $ 547,000 $ 410,000 4. No additional income tax expenses were provided because of the Company's net operating loss carryover. 5. All per share information for the twelve months ended December 31, 1995 has been restated to reflect a 3 for 2 common stock split effected as a dividend of one share for every two shares outstanding on April 30, 1996 as well as the June 14,1996 private placement of 1,140,000 shares as if both transactions had occurred January 1, 1995. -----END PRIVACY-ENHANCED MESSAGE-----