10KSB40
1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB
TRANSITION REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from July 1, 1994 to December 31, 1994
Commission File Number 0-12505
THE PARKWAY COMPANY
(Name of small business issuer in its charter)
Texas 74-2123597
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
300 One Jackson Place 39201
188 East Capitol Street (Zip Code)
Jackson, Mississippi
(Address of principal executive offices)
Issuers's telephone number: (601)948-4091
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $1.00 Par Value
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
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Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form, and
no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. ( X )
Revenues for the transition period ended December 31,
1994 were $5,462,000.
The aggregate market value of the voting stock held by
non-affiliates of the Registrant as of March 24, 1995 was
$19,028,000.
The number of shares outstanding in the issuer's class of
common stock as of March 24, 1995 was 1,563,308.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1995 Annual
Meeting of Shareholders are incorporated by reference
into Part III.
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PART I
Item 1. Description of Business
Original Organization
The Parkway Company ("Parkway" or the "Company") was created in
1971 under the Texas Real Estate Investment Trust Act and operated
under the name Texas First Mortgage Real Estate Investment Trust
("TFMR"). From its inception through June 30, 1974, TFMR operated
as a qualified real estate investment trust ("REIT") under the
Internal Revenue Code of 1954, as amended ("Code"). TFMR
terminated its qualification as a REIT under the Code for fiscal
years ending after 1974. Although for federal income tax purposes
TFMR was an association taxable as a corporation, under Texas law
it was still a business trust meeting the requirements of the Texas
Real Estate Investment Trust Act. TFMR was reorganized and
converted into a Texas corporation known as The Parkway Company on
January 7, 1981.
Investment Strategy
Parkway intends to invest in a variety of real estate-related
opportunistic investments. These investments will include
acquiring equity positions in private or publicly traded companies
which may or may not result in mergers or acquisitions. The
Company will also invest directly in real property in the form of
equity ownership or mortgages and will avoid investments directly
in real property that would result in a minority interest. The
Company will seek investments where the expertise of the Parkway
staff can add value. Parkway will take advantage of its liquidity,
financial strength and management experience in adding value to
these acquisitions, and in doing so will seek to maximize its
shareholders value.
A fundamental component of Parkway's business strategy is the
investigation of possible mergers or acquisitions of other real
estate companies to increase its asset base and, thereby, its
ability to compete with larger real estate investors for attractive
real estate opportunities. This was carried out in the past
through the acquisition of GNB in August 1979 and Sugar Creek
Corporation in March 1980, mergers of the NOVA Real Estate
Investment Trust in June 1983 and Highlands National, Inc. in April
1986 and the acquisition of EastPark Realty Trust in April 1990.
Most recently, this was accomplished through the mergers of First
Continental Real Estate Investment Trust ("First Continental" or
"FCREIT") effective May 10, 1994 and Congress Street Properties,
Inc. ("Congress Street") effective November 29, 1994. The Company
has a proposed merger with EB, Inc. ("EB") that is subject to the
approval of both Parkway and EB shareholders at meetings scheduled
for April 27, 1995. The recent and proposed mergers mentioned
above are discussed more thoroughly elsewhere in this report.
Administration
Parkway operated under an expense-sharing agreement with
certain affiliated companies from 1980 through December 31, 1994.
The expense-sharing agreement provided that the participating
companies have common officers, facilities and personnel, and the
costs of these were shared among the participants. The costs of
the common facilities and personnel were initially paid by the
company administering the agreement and then allocated monthly to
other participating companies in accordance with the agreement.
Certain costs which the common officers believed to be particularly
attributable to each member company were not shared. These non-
allocable costs included, but were not limited to, directors' fees,
legal, audit and stock transfer expenses, stationery and items of
similar nature.
Congress Street, a Delaware corporation engaged in the real
estate business, administered the agreement through November 29,
1994, its merger date with Parkway Congress Corporation ("Parkway
Congress"), a wholly-owned subsidiary of Parkway. The agreement
was administered by Parkway Congress during the month of December
1994. Participants of this expense sharing agreement were:
Parkway; Congress Street; Eastover Corporation ("Eastover"), a
Louisiana REIT; and EastGroup Properties ("EastGroup"), a Maryland
REIT. EB, a Mississippi corporation engaged in the real estate
business, had a separate administrative agreement with Congress
Street which allowed EB to participate in the expense-sharing
agreement on the same basis as the companies which were parties to
the expense-sharing arrangement.
The expense-sharing agreement called for the common costs to be
paid by the administrator of the agreement. The other participants
paid an annual fee (on a monthly basis) of one half of one percent
of their assets which were publicly-traded securities. After these
fees, any profits from Eastover Realty Corporation ("Eastover
Realty"), a wholly-owned subsidiary of Congress Street, and
administrative fees from certain other companies were subtracted
from the total common costs, the remaining common costs were
allocated monthly to the participants in proportion to their assets
other than publicly-traded securities, based on their balance
sheets as contained in their most recent SEC filings. The
administrator of the agreement received no fees for the
administration of this expense-sharing agreement.
As a result of Parkway's past participation in the expense-
sharing agreement, the Company had no employees. All personnel
required for Parkway's affairs, including Parkway's officers,
received their salaries from the administering company, a portion
of which was reimbursed by Parkway and other participants in the
agreement. For the month of December 1994, Parkway, through
Parkway Congress, its wholly-owned subsidiary, administered the
expense-sharing agreement. As administrator, Parkway had 31
employees, including its salaried officers which were allocated
among the participants in the agreement and 45 employees which were
reimbursed by other entities and not allocated under the agreement.
In connection with the business combinations involving the
expense-sharing participants (i.e., Congress Street merged with a
wholly-owned subsidiary of Parkway on November 29, 1994, EB is
combining with Parkway and Eastover combined with EastGroup on
December 22, 1994), the above described expense-sharing
arrangements terminated on December 31, 1994. Since that date,
Parkway and EastGroup each have their own respective officers and
employees, who do not serve as officers or employees of the other
company, except for Leland R. Speed, who continues to serve as the
chief executive officer of both companies, and a small number of
clerical and support staff employees. Certain officers of Parkway
continue to serve as officers of EB, and EB pays Parkway a monthly
administrative fee based on EB's average monthly share of the
common costs for the last quarter of 1994.
Description of Operations
Parkway is currently engaged in the management and sale of its
existing real estate properties and mortgage loan portfolio as well
as seeking new investments that meet the criteria set forth in the
investment strategy. Effective November 29, 1994, Parkway, through
Eastover Realty, a wholly-owned subsidiary acquired in the merger
with Congress Street, is also involved in the management of
commercial and multi-family residential properties for which it
receives management fees. Eastover Realty also performs leasing
and brokerage services on a commission basis.
Item 2. Description of Properties
The operations of the Company are conducted from approximately
12,100 square feet of office space located at 188 East Capitol
Street, 300 One Jackson Place, Jackson, Mississippi. The space is
owned by One Jackson Place, Ltd., an affiliate of Parkway, and is
leased by Parkway at market rental rates. The Company also leases
1,006 square feet of office space in Houston, Texas.
In addition to owning real estate directly, Parkway also
invests in real estate indirectly through its ownership of
securities of entities involved primarily in real estate
activities. During the six months ended December 31, 1994, Parkway
used the equity method of accounting for its investment in the
securities of EB, EastGroup and Congress Street (until its merger
into Parkway on November 29, 1994). Below is a description of
these investees.
EB, Inc. On March 1, 1993, as part of a plan approved at a
special shareholders meeting on February 10, 1993, Eastover Bank
for Savings (which was a Mississippi-chartered savings bank,
insured by the Federal Deposit Insurance Corporation) changed its
charter and name to EB, Inc. and sold its banking assets to
Sunburst Bank, Mississippi ("Sunburst"), a wholly-owned subsidiary
of Grenada Sunburst System Corporation ("Grenada Sunburst")
pursuant to a "Purchase and Assumption Agreement" dated July 22,
1992. EB retained the assets which were not sold to Sunburst and
received 438,889 shares of Grenada Sunburst stock, which were
valued at the fair market value on March 1, 1993, as quoted on the
National Association of Securities Dealers Automated Quotation
System ("NASDAQ"). The retained assets consist principally of
loans and real estate owned. EB is currently involved in the
management, operation and disposition of the retained assets.
EB recognized a gain on sale of banking assets to Sunburst of
$4,992,000 which was calculated as follows (dollars in thousands):
Liabilities assumed by Sunburst $ 408,700
Value of stock received
(FMV of $22.625 per share) 9,930
Cash received 100
---------
$ 418,730
Less:
Basis of assets sold (396,383)
Loans made to EB (12,317)
Write off of deferred charges (4,025)
Costs of sale (1,013)
---------
Gain $ 4,992
=========
The Company's share of this gain was $1,030,000 and was
recorded through equity in earnings as Income on sale of
discontinued operations.
Effective December 31, 1994, Grenada Sunburst merged into Union
Planters Corporation ("UPC"). The terms of the merger called for
1.453 shares of UPC to be issued for each share of Grenada Sunburst
owned. EB received 637,705 shares of UPC in exchange for the
438,889 shares of Grenada Sunburst previously owned.
During the year ended June 30, 1994, the Company purchased
453,471 shares of EB, Inc.'s outstanding shares and received
221,784 shares through the dissolution of AllMiss Capital
Corporation ("AllMiss"), a 95% owned subsidiary of Parkway, which
increased its ownership in EB to 51.5%. On November 29, 1994, the
Company received an additional 11,673 shares of EB from the merger
of Congress Street into a wholly owned subsidiary of Parkway,
further increasing its ownership in EB to 52.3%. Under the
Mississippi Control Share Statue, certain of the shares of EB may
not be voted by the Company until (i) shareholders of EB approve
voting rights for the shares or (ii) three years after the
shareholders of EB fail to approve voting rights for the shares.
Although the Company's ownership is equal to 52.3%, the Company
does not have a majority voting interest and continues to record
this investment on the equity method of accounting until majority
voting interest is obtained.
On July 27, 1994, Parkway and EB jointly announced that their
Boards of Directors had agreed in principle to a merger of EB and
a wholly-owned subsidiary of Parkway. EB shareholders would
receive $17.25 for each EB share consisting of cash of $8 per share
and shares of Parkway with a value of $9.25 based on a defined
formula. The merger is subject to the approval of both Parkway and
EB shareholders at meetings scheduled for April 27, 1995.
EastGroup. EastGroup Properties is an equity real estate
investment trust which owns a balanced portfolio of industrial
facilities and apartment complexes along with selected office
buildings. Geographically, the trust is concentrated in the major
market areas of the southeastern and southwestern United States
with a special emphasis in the states of Florida and Texas.
Congress Street. Effective November 29, 1994, Congress Street
merged into Parkway Congress Corporation, a wholly-owned subsidiary
of Parkway. Congress Street shareholders received .29 shares of
Parkway for each Congress Street share owned. Prior to the merger,
Congress Street owned 37% of the outstanding shares of Parkway.
Details of the merger are discussed further under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations".
Description of Real Estate and Operating Data.
One Jackson Place. This is the only property owned by the
Company in which its carrying value exceeds ten percent of the
Company's total assets. This 14-story office building was 100%
leased at March 24, 1995 and competes with other office buildings
in downtown Jackson, Mississippi. Parkway has a 73.125% effective
interest in the building through its general partnership interest
in One Place Partners, a Mississippi general partnership.
Parkway's 73.125% ownership includes the 35% ownership acquired in
the merger with Congress Street on November 29, 1994. One Place
Partners has a general partnership interest in Jackson Place
Investments, a Texas general partnership, equivalent to 73.125% of
this office building. Because the Company has majority voting
control over the building, the operations of the building have been
consolidated in the financial statements of the Company.
One Jackson Place has a total rentable area of 217,991 square
feet with the average effective annual rental per square foot of
$17.16. At December 31, 1994, two tenants occupied ten percent or
more of the rentable square footage of the building. One tenant
occupies 22,721 square feet of office space, or 10.42% of the
rentable square footage, and provides legal services, primarily to
corporate clients. This lease expires in June 1997 and is at a
market rental rate. A second tenant occupies 27,415 square feet of
office space, or 12.58% of the rentable square footage, and
provides services in the communications industry. This lease also
expires in June 1997 and is at a market rental rate. The principal
tenants in the building are professional services firms, including
communications, legal, accounting, advertising and investment
brokerage firms.
Leases expiring
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Year ending Minimum Percentage of
December 31 Number Square feet Annual rents Gross annual rents
----------- ------ ----------- ------------ ------------------
1995 1 11,961 $ 227,000 5.92%
1996 13 75,243 1,413,000 36.87%
1997 6 64,644 1,129,000 29.46%
1998 5 23,608 392,000 10.22%
1999 1 2,743 41,000 1.07%
2000 2 20,707 367,000 9.57%
2001 1 15,248 263,000 6.89%
Depreciation is computed using the straight-line method over
their estimated useful lives. Below is a schedule of the estimated
useful lives and federal tax basis of the One Jackson Place office
building.
Life Tax Basis
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Land - $1,798,969
Building and improvements 40 yrs. 7,411,487
Equipment, furniture and fixtures 5 yrs. 22,674
Tenant improvements 10 yrs. 2,974,772
Real estate taxes paid for 1994 and 1993 were $360,000.
Subsequent to December 31, 1994, the Company entered into a
non-binding letter of intent to sell the One Jackson Place office
building to an unrelated party. No contract has been signed
related to the sale and the prospective purchaser has no money at
risk in the transaction. The willingness of the prospective
purchaser to acquire the office building is subject to a number of
conditions, including the assumption by the purchaser of the
existing $22,404,000 mortgage on the office building and the
extension of the maturity date of the mortgage from August 1, 1999
to May 31, 2002 at no cost to the purchaser.
Description of Real Estate and Operating Data.
The following is a description of other major parcels of real
estate and real estate investments that are owned by Parkway at
December 31, 1994 which do not exceed ten percent of total assets.
Unless otherwise indicated, Parkway or a wholly-owned subsidiary of
Parkway has title in fee simple to the properties listed below.
Office Buildings and Retail Center:
Cascade III. Cascade III is a two-story office building
located in Worthington, a suburb of Columbus, Ohio. The building
was completed in 1978 and contains a total of 24,900 square feet.
The office building was 100% leased at December 31, 1994.
Corporate Square East. This 84,436 square foot office center
is located on 8.75 acres in suburban Indianapolis, Indiana. The
center, which was completed in 1964, was 87% leased at December 31,
1994.
Corporate Square West. This office center consists of 95,917
square feet of rentable office space located in Indianapolis,
Indiana. The center, which was completed in 1970, consists of four
"L" shaped one-story buildings located on 9.5 acres. The center
was 99% leased at December 31, 1994, and is subject to a $423,000
non-recourse first mortgage at December 31, 1994.
West Office Building. This 21,900 square foot single story
office building is located in Houston, Texas. This building,
completed in 1984, was 100% leased to one tenant at December 31,
1994 and was acquired through the merger with First Continental.
Plantation Village Shopping Center. This shopping center
consists of 57,525 square feet of rentable retail space and is
located in Lake Jackson, Texas. At December 31, 1994, the center
was 44% leased and was acquired through the merger with First
Continental.
Motel:
American Inn North. American Inn North is a discount motel
located in northeastern Indianapolis, Indiana. The motel, which
was completed in 1975, is comprised of 19 buildings on a 9.3 acre
site. The motel is comprised of 235 rentable efficiency units with
kitchenettes. Parkway allocated value to the land only on this
asset with no value assigned to the buildings. The motel is
currently operating at an average occupancy of 68.9%.
Other Real Estate Investments:
Highlands Falls. This property is owned and developed by Golf
Properties, Inc. ("GPI"), a North Carolina corporation that is
65.45% owned by Parkway. Lots surround a member-owned country club
that includes an 18-hole golf course. At December 31, 1994, GPI
had 35 developed lots, 83 equity memberships and 127 social
memberships in the country club available for sale. During the six
months ended December 31, 1994, 12 lots were sold for a total of
$578,000.
Wink Office Building. This 32,000 square foot office/warehouse
building located in New Orleans, Louisiana, is owned by the Wink-
Parkway Partnership, a partnership that is owned 50% by each
Parkway and Wink Engineering. At December 31, 1994, the building
was 100% leased, of which Wink Engineering occupied 96% on a 15
year net lease. This 50% ownership was purchased by the Company on
June 15, 1994. The investment is accounted for on the equity
method of accounting as an investment in real estate partnership.
Silver Hollow Townhomes. The Company owns 15 townhomes in a
240 unit project located in West Houston. These units are 2
bedrooms, 2-1/2 baths with an average of 1,450 square feet per
unit. This property was acquired through the merger of First
Continental. The property was 100% leased at December 31, 1994.
Bullard Road. This property consists of 80 acres of
undeveloped commercial land in New Orleans, Louisiana purchased in
December 1990. The property is being held for sale.
Sugar Creek. Parkway owns one 15.4 acre and one 5.45 acre
commercial tract in Sugar Creek Center, a mixed use commercial
development comprised of landscaped tracts with streets and
utilities located in Sugar Land, Texas (southwest of Houston).
These parcels are being held for sale. The 15.4 acres at Sugar
Creek Center are subject to a mortgage with a principal balance of
$490,000 at December 31, 1994. In November 1994, the Company sold
3.25 acres of this investment (exclusive of acreage mentioned
above) for $485,000, resulting in a gain of $148,000. These
parcels are being actively marketed for sale.
Sugar Land Triangle. This property consists of 9 tracts
totalling 29.27 acres located in Sugar Land, Texas. Parkway
originally owned a 50% undivided interest in this property which it
acquired in the merger with First Continental in May 1994. On
September 2, 1994, the Company purchased the remaining 50% interest
in this property from the Resolution Trust Corporation. This
property is being actively marketed for sale. On December 21,
1994, Parkway entered into a purchase and sale agreement to sell a
substantial portion of the Sugarland Triangle Land to The Woodmont
Corporation, a Texas corporation. The purchase price for the 23
acres is approximately $6,400,000 in cash, net of closing costs.
The agreement, as amended, gives an additional review period
through June 21, 1995 subject to the payment of certain non-
refundable fees.
Greenbush. This property consists of a 162 acre undeveloped
tract located in Katy, Texas, approximately 27 miles west of the
downtown Houston area. This property was acquired through the
First Continental merger and is being held for sale.
Stonehenge. This patio home subdivision is located in west
Houston and was developed in the early 1970's. It originally
consisted of 163 patio lots. The Company acquired 62 lots through
the merger with First Continental. During the six months ended
December 31, 1994, 19 lots were sold at an average price of $15,000
per lot. The remaining 43 lots are held for sale.
Kelly Land. This 23 acre tract of undeveloped land east of
Atlanta, Georgia was sold in November 1994 for $375,000, resulting
in a gain for financial reporting purposes of $12,000.
It is the opinion of the Company's management that the
individual properties owned are adequately covered by insurance.
The Company currently has no plans for renovation, improvement or
development of any of its real estate properties, beyond that
required for the maintenance of the property and tenant
improvements required to obtain new tenants.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
On December 8, 1994, the Company held its Annual Meeting of
Shareholders. At the Annual Meeting, Daniel C. Arnold, H. C.
Bailey, Jr., George R. Farish, B. Pat Green, Jr., Sidney W. Lassen,
Joe F. Lynch, C. Herbert Magruder, W. Lincoln Mossop and Leland R.
Speed were elected directors of the Company, each to serve until
the 1995 Annual Meeting. The following is a summary of the voting
for directors:
Nominee Vote For Votes Withheld
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Mr. Arnold 1,230,749 9,143
Mr. Bailey, Jr. 1,231,207 8,685
Mr. Farish 1,231,273 8,619
Mr. Green, Jr. 1,231,273 8,619
Mr. Lassen 1,231,118 8,774
Mr. Lynch 1,230,699 9,193
Dr. Magruder 1,231,194 8,698
Mr. Mossop 1,231,266 8,626
Mr. Speed 1,230,951 8,941
Other matters voted upon at the meeting are described below.
Vote For Vote Against Abstain Non-Vote
---------- ------------ ------- --------
1. Approve the 1994
Stock Option Plan 1,047,940 31,340 31,163 129,449
2. Amend the 1991
Directors Stock
Option Plan 1,062,452 31,627 16,364 129,449
3. Approve Ernst &
Young as indepen-
dent auditors 1,232,630 4,105 3,157 -
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's common stock, $1.00 par value, is traded in the
over-the-counter market and is listed on the NASDAQ National Market
System under the symbol PKWY. The number of record holders of the
Company's common stock at March 24, 1995, was 5,205.
The following table sets forth, for the periods indicated, the
high and low bid prices per share of the Company's common stock as
reported by NASDAQ and the per share distributions declared during
each quarter.
Six Months Ended Twelve Months Ended
December 31, 1994 June 30, 1994
-------------------------- --------------------------
Distri- Distri-
Qtr. Ended High Low butions High Low butions
---------- -------- ------- ------- -------- ------- -------
Sept. 30 $14 1/2 $12 $ .16 $ 11 1/2 $ 9 1/4 $ .15
Dec. 31 15 1/2 13 - 14 3/4 11 .15
Mar. 31 N/A N/A N/A 13 1/2 11 1/2 .15
June 30 N/A N/A N/A 13 1/4 11 .15
----- -----
$ .16 $ .60
===== =====
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Financial Condition
Assets of the Company increased from $59,735,000 at June 30,
1994 to $61,062,000 at December 31, 1994, a net increase of
$1,327,000. Liabilities increased $818,000 to $28,824,000 during
the same period. Book value per share increased from $20.56 at
June 30, 1994 to $20.62 at December 31, 1994.
Effective November 29, 1994, the merger of Congress Street
Properties, Inc. ("Congress Street") with Parkway Congress
Corporation (a wholly owned subsidiary of the Company) was
completed. The increase to net assets is as follows:
Parkway shares reacquired
(567,066 shares)....................... $ 7,939,000
Operating real estate.................. 675,000
Real estate companies.................. 201,000
Mortgage loans......................... 27,000
Cash................................... 42,000
Accounts receivable and other assets... 84,000
Notes payable to bank.................. (27,000)
Accounts payable & other liabilities... (235,000)
-----------
$ 8,706,000
Parkway shares retired at date
of merger (567,066 shares)........... (7,939,000)
-----------
Increase to net assets................. $ 767,000
===========
The Company's purchase price of these assets consisted of:
Common Stock issued (561,086 shares)... $ 7,855,000
Cash in lieu of fractional shares...... 2,000
Merger expenses........................ 90,000
Investment in Congress Street.......... 364,000
Note and interest receivable-affiliate. 395,000
----------
$8,706,000
==========
The financial reporting and income tax accounting may vary
considerably in a business combination. Parkway has historically
used and plans to continue to use, when applicable, the purchase
method of accounting for financial reporting purposes. Because
mergers have such a material impact on Parkway, a brief explanation
of the purchase method of accounting and its effect on Parkway is
set forth below.
For financial reporting purposes, the assets of the company
acquired are assigned new cost basis amounts based on the purchase
price of the assets to Parkway. In general, the purchase price to
Parkway consists of the new shares issued at the market price of
the Parkway stock on the date of the merger plus cash paid, if any,
and the previous investment Parkway has in the company. Since
Parkway stock is selling at a discount to book value and the stocks
acquired are also selling at discounts to book value, the
accounting results in a writedown of the assets acquired from their
book value and also a decrease in book value per share of the
Parkway stock. In some cases, the non current assets,usually real
estate and mortgage loans, are written down as much as 50% to 70%
from their previous book values. As the assets are sold or loans
are collected, income will be recorded to the extent of cash
received less the new written down basis.
For income tax purposes, Parkway typically receives a carryover
basis in the assets purchased which is equal to the tax basis of
those assets prior to the merger. In most cases, this basis is
higher than book basis due to allowance for losses and writedowns
that were recorded for financial reporting purposes but not tax
purposes, so as in the example above assets sold may generate tax
losses.
In summary, if assets from merged companies are sold for their
pre-merger book value, two positive things happen - (1) gains for
financial reporting purposes are recorded and (2) losses for income
tax purposes are recorded. Management believes that Parkway is
positioned to record earnings without creating income tax
liabilities by selling assets of the acquired companies.
The investment in operating real estate increased a net
$507,000 during the six months ended December 31, 1994. This net
increase is due primarily to the merger with Congress Street, in
which the Company acquired a 35% additional interest in One Jackson
Place at a cost basis of $675,000. At December 31, 1994, Parkway
owns an effective 73.125% interest in the One Jackson Place office
building. The net increase in operating real estate also includes
improvements of $190,000, depreciation of $565,000, the foreclosure
of a mortgage loan in the amount of $72,000 and the sale of nine
houses and townhomes with a total basis of $169,000. The net sales
prices on the townhomes and houses totalled $389,000 which included
$109,000 cash and $280,000 in mortgage notes with total gains of
$220,000. Of these gains, $95,000 were realized and $125,000 were
deferred due to inadequate down payments and will be realized using
the installment method of accounting.
During the six months ended December 31, 1994, the Company's
investment in real estate held for sale increased $739,000
primarily due to the purchase of the remaining 50% interest in the
Sugar Land Triangle Land for $1,502,000 and the sale of 21
residential lots and three commercial parcels totalling 30 acres.
The net sales prices totalled $1,138,000 consisting of $1,114,000
cash and $24,000 in mortgage notes. Total gains on the sales were
$348,000. Of this amount, $328,000 was recognized as gains on sale
of real estate and $20,000 was deferred due to inadequate down
payments and will be realized using the installment method of
accounting. Additionally, one mortgage loan with a carrying value
of $31,000 was foreclosed.
The investment in real estate companies increased a net
$372,000 during the six months ended December 31, 1994. The
Company recorded equity in earnings of $681,000, net unrealized
gains of $18,000 and dividends received of $250,000. The Company
also purchased shares of two real estate investment trusts totaling
$399,000 and sold the investment in another real estate investment
trust for $340,000, recognizing a gain of $27,000 on the sale. The
investment in real estate companies decreased a net $163,000 as a
result of the merger with Congress Street. This decrease reflects
the $364,000 investment in Congress Street that was included in the
cost of the Congress Street assets, net of the 11,673 additional
shares of EB acquired in the merger.
Mortgage loans increased a net $121,000 during the six months
ended December 31, 1994. The Company received $310,000 in
principal payments on mortgage loans and made $304,000 in new
mortgage loans to facilitate the sale of real estate. During the
six months ended December 31, 1994, mortgage loans with a basis of
$103,000 were foreclosed, amortization of valuations and deferred
gains of $56,000 was recorded and a gain on the payoff of mortgage
loans of $107,000 was recognized. The Company also acquired a loan
of $27,000 in the merger with Congress Street.
The net decrease in real estate partnerships and corporate
joint ventures for the six months was $133,000. The Company
recorded equity in earnings of real estate partnerships and
corporate joint venture of $195,000 and received distributions of
$328,000.
Notes receivable from affiliates had a net decrease of
$413,000. This included repayments of $49,000 and a decrease of
$364,000 due to the merger of Congress Street.
The increase in notes payable to banks of $523,000 included
advances of $3,714,000 and payments of $3,191,000. The decrease in
mortgage notes payable without recourse was due to scheduled
principal payments.
Deferred gains increased a net $139,000 primarily due to the
sales mentioned previously. These deferred gains will be
recognized as payments are received on the mortgage loans.
Shareholders' equity increased $509,000 during the six month
period as a result of the following factors:
Increase (Decrease)
-------------------
In thousands
Net income........................... $1,005
Dividends declared................... (247)
Adjustment to unrealized
gain on securities................. 18
Shares issued - Congress Street
merger............................. 7,855
Shares retired - Congress Street
merger............................. (7,939)
Stock options exercised.............. (232)
Shares issued in payment of
incentive compensation............. 49
------
$ 509
======
The Company issued 561,086 shares of common stock in the merger
with Congress Street and retired the 567,066 Parkway shares which
were previously owned by Congress Street. The net effect of this
transaction was to decrease the Parkway shares outstanding by 5,980
shares.
RESULTS OF OPERATIONS
Six Months Ended December 31, 1994 Compared to Six Months Ended
December 31, 1993 and Twelve Months Ended June 30, 1994 Compared to
Twelve Months Ended June 30, 1993.
Revenues for the six months ended December 31, 1994 were
$5,462,000 compared to revenues for the six months ended December
31, 1993 of $4,527,000. Revenues were $8,956,000 for the twelve
months ended June 30, 1994 compared to $8,719,000 for the twelve
months ended June 30, 1993.
Operations of real estate properties are summarized below:
Six Months Ended Twelve Months Ended
December 31 June 30
--------------------- -------------------
1994 1993 1994 1993
--------------------- -------------------
(In thousands)
Income from real
estate properties $ 3,683 $ 3,069 $ 6,429 $ 6,019
Real estate
operating expense (1,951) (1,819) (3,760) (3,686)
-------- -------- -------- --------
1,732 1,250 2,669 2,333
Interest expense on
real estate
properties (1,078) (1,207) (2,392) (2,487)
Depreciation and
amortization (565) (496) (1,022) (981)
Minority interest 209 305 542 598
-------- -------- -------- --------
$ 298 $ (148) $ (203) $ (537)
======== ======== ======== ========
The increase in income from real estate properties reflects the
increased occupancy at existing properties, as well as the income
from properties acquired in the May 10, 1994 merger with First
Continental.
Operations of One Place Partners have been recorded through
consolidation for periods shown above and are included in the
preceding table. The effect on the Company's operations related to
One Jackson Place follows:
Six Months Ended Twelve Months Ended
December 31 June 30
-------------------- --------------------
1994 1993 1994 1993
-------------------- --------------------
(In thousands)
Revenues $ 1,762 $ 1,684 $ 3,517 $ 3,317
Operating expenses (678) (716) (1,463) (1,370)
Interest expense (1,036) (1,036) (2,072) (2,076)
Depreciation (459) (440) (887) (870)
Minority interest 209 305 542 598
-------- -------- -------- --------
$ (202) $ (203) $ (363) $ (401)
======== ======== ======== ========
Interest on mortgage loans for the six months ended December
31, 1994 was $283,000 compared to $88,000 for the six months ended
December 31, 1993. The increase in interest on mortgage loans is
primarily due to interest recorded on the mortgage loans received
in the merger with First Continental in May 1994 and subsequent
mortgage loans made in connection with sales of real estate.
Interest on mortgage loans decreased $147,000 for the twelve
months ended June 30, 1994 compared to the twelve months ended June
30, 1993. This decrease is primarily the result of scheduled
maturities and the payoff of the Cedar Park mortgages in fiscal
1993. Interest recorded on the Cedar Park mortgages in fiscal 1993
was $276,000. Interest income on mortgage loans increased during
the same comparative period due to the purchase of loans from
EastGroup in September 1993 and loans acquired in the merger with
First Continental.
The gain on sale of real estate partnership of $280,000 during
the twelve months ended June 30, 1994 represents the sale of the
Company's 22% investment in GV Partners to the 78% partner,
EastGroup Properties. The sales price was $275,000 cash plus the
assumption of 22% of the outstanding mortgage and was based on an
appraisal by an independent third party.
The gain (loss) on real estate and mortgage loans for the six
months ended December 31, 1994 and 1993 and the twelve months ended
June 30, 1994 and 1993 are as follows:
Six Months Ended Twelve Months Ended
December 31 June 30
---------------- -------------------
1994 1993 1994 1993
---------------- -------------------
(In thousands)
Gain on sales of
real estate $ 423 $ - $ 19 $ 1,707
Writedown of real
estate and loans
to fair value - - (132) -
Gain on payoff of
mortgage loans 106 - - 767
------- ------- ------- -------
$ 529 $ - $ (113) $ 2,474
======= ======= ======= =======
During the twelve months ended June 30, 1993, the Company
sold a 247 acre tract of land in Louisville, Kentucky for a gain
of $1,712,000 and recognized deferred gains of $767,000 upon the
payoff of the Cedar Park mortgage loans.
Equity in earnings (losses) of real estate companies consists
of the following:
Six Months Ended Twelve Months Ended
December 31 June 30
---------------- -------------------
1994 1993 1994 1993
---------------- -------------------
(In thousands)
EB, Inc. $ 618 $ 89 $ 337 $ (758)
EastGroup 77 273 443 (2)
Congress Street (14) (37) (67) (64)
FCREIT - - (9) -
------ ------ ------ ------
$ 681 $ 325 $ 704 $ (824)
Plus amounts
recognized as
discontinued
operations from
EB, Inc. - 51 51 1,490
------ ------ ------ ------
$ 681 $ 376 $ 755 $ 666
====== ====== ====== ======
Equity in earnings of real estate partnerships and corporate
joint venture consists of the following:
Six Months Ended Twelve Months Ended
December 31 June 30
---------------- -------------------
1994 1993 1994 1993
---------------- -------------------
(In thousands)
Golf Properties Inc. $ 166 $ 190 $ 233 $ 289
GV Partners - 5 6 30
Wink/PKWY Partnership $ 29 - - -
------ ------ ------ ------
$ 195 $ 195 $ 239 $ 319
====== ====== ====== ======
Gain on securities of $27,000 in the six months ended December
31, 1994, represents the sale of an investment in a real estate
investment trust for $340,000 with a net basis of $313,000. The
gain on securities of $126,000 for the six months ending December
31, 1993 represented the sale of various stock investments.
The gain on securities of $579,000 in the twelve months ended
June 30, 1994 represented the sale of the Company's remaining
investment in Medical Resources Co. of America for $212,000 with a
gain of $104,000, all of the investment in Hotel Investors for
$268,000 with a gain of $125,000, 58,525 shares of EastGroup
Properties, an equity method investee for $1,152,000 with a gain of
$337,000 and other stock investments for $24,000 with gains of
$13,000. Gain on securities of $22,000 in the twelve months ended
June 30, 1993 represented the sale of 11,000 shares of a stock
investment for $37,000 having a net basis of $15,000.
Net income for the six months ending December 31, 1994, was
$1,005,000 ($.65 per share) compared to net income for the six
months ending December 31, 1993, of $841,000 ($.67 per share). Net
income for the twelve months ending June 30, 1994 was $1,303,000
($1.00 per share) compared to net income for the twelve months
ending June 30, 1993 of $2,712,000 ($2.15 per share). Income
before discontinued operations for the twelve months ending June
30, 1994, was $1,252,000 ($.96 per share). Below is a table
showing the effect of gains included in net income.
Six Months Ended Twelve Months Ended
December 31 June 30
---------------- -------------------
1994 1993 1994 1993
---------------- -------------------
(In thousands)
Gain on sale of real
estate partnership $ - $ 280 $ 280 $ -
Gain (loss) on real
estate and mortgage
loans, net 529 - (113) 2,474
Gain on securities 27 126 579 22
------- ----- ------- -------
Gain included in income
before discontinued
operations 556 406 746 2,496
Gain included in discon-
tinued operations - - - 1,030
------- ----- ------- -------
Gains included in net
income 556 $ 406 $ 746 $ 3,526
======= ===== ======= =======
LIQUIDITY AND CAPITAL RESOURCES
Funds provided by operations, mortgage loan payments, bank
borrowings, proceeds from the sales of stock and sales of real
estate investments were the primary sources of funds for the
Company during the six months ended December 31, 1994. Funds
provided by these sources and cash balances were sufficient to
cover repayment of long-term debt, bank debt, dividends paid to
shareholders, improvements to real estate owned properties, the
purchase of real estate investments and the payment of operating
expenses. At December 31, 1994, the Company had available $320,000
in cash and short-term investments. Management believes that funds
generated from operations, borrowings and cash on hand will be
sufficient to cover long and short-term operating cash
requirements.
On July 27, 1994, Parkway and EB jointly announced that their
Boards of Directors had agreed in principle to a merger of EB and
a wholly-owned subsidiary of Parkway. EB shareholders would receive
$17.25 for each EB share consisting of cash of $8 per share and
shares of Parkway with a value of $9.25 based on a defined formula.
The merger is subject to the approval of both Parkway and EB
shareholders at meetings scheduled for April 27, 1995.
The Company has two lines of credit available for use totalling
$6,000,000. One line of credit has a $5,000,000 credit limit,
interest at prime due monthly, an unused line fee of .25% due
quarterly and maturity on June 30, 1995. The second line has a
$1,000,000 credit limit, interest at prime plus .50% due monthly,
an unused line fee of .75% due quarterly and maturity on April 30,
1995. At December 31, 1994, the balance on these lines totalled
$3,664,000 leaving $2,336,000 available for use. These two lines
of credit are secured by certain investments in the securities of
other real estate companies with a market value of $13,991,000 at
December 31, 1994. Management expects to extend these lines of
credit upon their maturity.
Management believes that the balance of funds available on its
lines of credit, along with the cash available from the proposed
merger with EB will be sufficient for the cash requirements of the
proposed merger of approximately $5,527,000. At December 31, 1994,
EB had available $7,517,000 in cash and cash equivalents and Union
Planters Corporation ("UPC") stock with a market value of
$13,312,000.
Item 7. Consolidated Financial Statements
Index to Consolidated Financial Statements
--------------------------------------------
Page
----
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . .22
Consolidated Balance Sheets--
as of December 31, 1994 and June 30, 1994. . . . . . . . . . . . . . .23
Consolidated Statements of Income--
for the six months ended December 31, 1994
and 1993 (unaudited) and twelve months ended
June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . .24
Consolidated Statements of Cash Flows--
for the six months ended December 31, 1994
and 1993 (unaudited) and twelve months ended
June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . .26
Consolidated Statements of Shareholders' Equity--
for the six months ended December 31, 1994
and twelve months ended June 30, 1994. . . . . . . . . . . . . . . . .29
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . .31
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
The Parkway Company
We have audited the accompanying consolidated balance sheets of
The Parkway Company and subsidiaries as of December 31, 1994 and
June 30, 1994 and the related consolidated statements of income,
shareholders' equity, and cash flows for the six months ended
December 31, 1994 and the years ended June 30, 1994 and 1993.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits. The financial statements
of EB, Inc. and EastGroup Properties (investees in which the
Company has a 52.3%, and 2.7% interest, respectively), have been
audited by other auditors whose reports have been furnished to us;
insofar as our opinion on the consolidated financial statements
relates to data included for EB, Inc. for its years ended December
31, 1994, 1993 and 1992; and EastGroup Properties for its years
ended December 31, 1994, 1993 and 1992; it is based in part on
their reports.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and
the reports of other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the reports of other
auditors, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of The Parkway Company and subsidiaries at December 31,
1994 and June 30, 1994, and the consolidated results of their
operations and their cash flows for the six months ended December
31, 1994 and the years ended June 30, 1994 and 1993, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
----------------------
Ernst & Young LLP
Jackson, Mississippi
March 28, 1995
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31 June 30
1994 1994
---------- ---------
Assets
Real estate related investments
Operating real estate (net of
accumulated depreciation of $6,177
at December 31, 1994 and $5,633 at
June 30, 1994)....................... $ 27,907 $ 27,400
Real estate held for sale.............. 11,369 10,630
Real estate companies.................. 15,061 14,689
Mortgage loans......................... 3,603 3,482
Real estate partnerships and corporate
joint venture........................ 889 1,022
-------- --------
58,829 57,223
Notes receivable from affiliates......... - 413
Interest and rents receivable and other
assets................................. 1,486 1,687
Cash and cash equivalents................ 320 217
Restricted cash.......................... 427 195
-------- --------
$ 61,062 $ 59,735
======== ========
Liabilities
Notes payable to banks................... $ 4,154 $ 3,631
Mortgage notes payable without recourse.. 22,827 22,902
Accounts payable and other liabilities... 1,563 1,332
Deferred gain............................ 280 141
-------- --------
28,824 28,006
-------- --------
Shareholders' Equity
Common stock, $1.00 par value, 10,000,000
shares authorized, 1,563,308 shares
issued at December 31, 1994 and
1,542,942 at June 30, 1994............. 1,563 1,543
Additional paid-in capital............... 26,847 27,134
Retained earnings........................ 3,158 2,400
-------- --------
31,568 31,077
Unrealized gain on securities............ 670 652
-------- --------
32,238 31,729
-------- --------
$ 61,062 $ 59,735
======== ========
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Six Months Ended Twelve Months Ended
December 31 June 30
------------------------ ------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
(Audited) (Unaudited) (Audited) (Audited)
Revenues
Income from real estate properties..... $ 3,683 $ 3,069 $ 6,429 $ 6,019
Interest on mortgage loans............. 283 88 265 412
Gain on sale of real estate partnership - 280 280 -
Gain (loss) on real estate and mortgage
loans, net (costs of sales were
$1,072 for the six months ended
December 31, 1994, $573 in fiscal
1994 and $1,001 in fiscal 1993)...... 529 - (113) 2,474
Equity in earnings (losses):
Real estate companies................ 681 325 704 (824)
Real estate partnerships and
corporate joint venture............ 195 195 239 319
Gain on securities..................... 27 126 579 22
Interest on short-term investments..... 18 163 235 240
Dividends, deferred gains and other
income............................... 46 281 338 57
---------- ---------- ---------- ----------
5,462 4,527 8,956 8,719
---------- ---------- ---------- ----------
Expenses
Real estate owned:
Operating expense.................... 1,951 1,819 3,760 3,686
Interest expense..................... 1,078 1,207 2,392 2,487
Depreciation and amortization........ 565 496 1,022 981
Minority interest.................... (209) (302) (542) (598)
Interest expense....................... 140 - - -
Shared general and administrative
expenses............................. 270 173 502 489
Other expenses......................... 662 344 569 449
---------- ---------- ---------- ----------
4,457 3,737 7,703 7,494
---------- ---------- ---------- ----------
Income before income taxes and
discontinued operations.............. 1,005 790 1,253 1,225
Income tax provision................... - - 1 3
---------- ---------- ---------- ----------
Income before discontinued operations.. 1,005 790 1,252 1,222
---------- ---------- ---------- ----------
Equity in earnings from discontinued
operations of equity method investees:
Income from discontinued operations - 51 51 460
Income on sale of discontinued
operations...................... - - - 1,030
---------- ---------- ---------- ----------
- 51 51 1,490
---------- ---------- ---------- ----------
Net income............................. $ 1,005 $ 841 $ 1,303 $ 2,712
========== ========== ========== ==========
Income per share:
From continuing operations........... $ .65 $ .63 $ .96 $ .97
From discontinued operations......... - .04 .04 1.18
---------- ---------- ---------- ----------
Net income......................... $ .65 $ .67 $ 1.00 $ 2.15
========== ========== ========== ==========
Weighted average shares outstanding.... 1,544 1,260 1,300 1,260
========== ========== ========== ==========
Dividends declared per share........... $ .16 $ .30 $ .60 $ .80
========== ========== ========== ==========
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended Twelve Months Ended
December 31 June 30
------------------------ ------------------------
1994 1993 1994 1993
----------- ----------- ----------- -----------
Operating Activities (Audited) (Unaudited) (Audited) (Audited)
Net income.............................. $ 1,005 $ 841 $ 1,303 $ 2,712
Adjustments to reconcile net income to
net cash provided by operating
activities:
Equity in earnings................... (876) (571) (994) (985)
Dividends received................... 250 135 332 261
Distributions from operations of real
estate partnerships and corporate
joint venture...................... 327 445 543 940
Depreciation and amortization........ 565 496 1,022 981
Amortization of discounts, deferred
gains and other.................... (56) (265) (318) (26)
Gain on sale of real estate
partnership........................ - (280) (280) -
(Gain) loss on real estate and
mortgage loans, net................ (529) - 113 (2,474)
Gain on securities................... (27) (126) (579) (22)
Minority interest depreciation....... (233) (266) (535) (525)
--------- --------- --------- ---------
426 409 607 862
Changes in operating assets and
liabilities:
Decrease (increase) in receivables. (277) (27) 46 434
Increase in accounts payable and
accrued expenses................... 763 161 668 595
--------- --------- --------- ---------
Cash provided by operating activities... 912 543 1,321 1,891
--------- --------- --------- ---------
Investing Activities
Payments received on mortgage loans.... 310 72 269 3,659
Purchases of investments in real estate
companies............................ (399) (1,832) (7,468) (33)
Purchase of real estate................ (1,502) (73) (66) -
Purchase of mortgage loans............. - (907) (907) -
Purchase of real estate partnership
interest............................. - - (291) -
Proceeds from sale of investments in
real estate companies................ 340 252 1,656 37
Improvements to real estate owned...... (190) (155) (380) (426)
Proceeds from sale of real estate owned 1,223 - 100 2,559
Proceeds from sale of real estate
partnership owned.................... - 296 296 -
Proceeds from merger of First
Continental (net).................... - - 25 -
Proceeds from merger of Congress
Street (net)......................... (48) - - -
Payments (advances) on notes receivable
from affiliates...................... 49 (55) 135 (43)
(Deposit) release of restricted cash... - - 165 (165)
--------- --------- --------- ---------
Cash provided by (used in) investing
activities............................ (217) (2,402) (6,466) 5,588
--------- --------- --------- ---------
Financing Activities
Principal payments on long-term debt... (102) (946) (867) (258)
Proceeds from long-term financing of
partnership assets................... - - - 631
Proceeds from bank borrowings.......... 3,714 - 6,296 -
Principal payments on bank borrowings.. (3,191) - (5,517) (300)
Payments on note payable to affiliate.. - - (2,274) -
Dividends paid......................... (478) (441) (819) (1,009)
Purchases of treasury shares........... - - - (11)
Stock options exercised................ (535) - (4) -
--------- --------- --------- ---------
Cash used in financing activities....... (592) (1,387) (3,185) (947)
--------- --------- --------- ---------
Increase (decrease) in cash............. 103 (3,246) (8,330) 6,532
Cash and cash equivalents at beginning
of period............................. 217 8,547 8,547 2,015
--------- --------- --------- ---------
Cash and cash equivalents at end of
period................................ $ 320 $ 5,301 $ 217 $ 8,547
========= ========= ========= =========
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
Additional Unrealized
Common Paid-In Retained Treasury Gain (Loss) On
Stock Capital Earnings Shares Securities Total
------- ---------- --------- --------- -------------- --------
Balance,
June 30, 1993. $ 2,333 $ 39,271 $ 1,899 $(16,320) $ - $ 27,183
Net income.... - - 1,303 - - 1,303
Cash dividends
declared
($.60 per
share)...... - - (799) - - (799)
Retirement of
treasury
shares...... (1,073) (15,247) - 16,320 - -
Merger with
First
Continental
Real Estate
Investment
Trust....... 283 3,110 - - - 3,393
Unrealized
gain on
securities.. - - - - 652 652
Stock options
exercised... - - (3) - - (3)
------- -------- -------- -------- --------- --------
Balance,
June 30,1994.. 1,543 27,134 2,400 - 652 31,729
Net income.... - - 1,005 - - 1,005
Cash dividends
declared
($.16 per
share)...... - - (247) - - (247)
Shares issued
in merger
with
Congress
Street...... 561 7,294 - - - 7,855
Shares retired
in merger
with
Congress
Street...... (567) (7,372) - - - (7,939)
Unrealized
gain on
securities.. - - - - 18 18
Stock options
exercised... 23 (255) - - - (232)
Shares issued
in payment
of incentive
compensation 3 46 - - - 49
------- -------- -------- -------- --------- --------
Balance,
Dec. 31, 1994. $ 1,563 $ 26,847 $ 3,158 $ - $ 670 $ 32,328
======= ======== ======== ======== ========= ========
See notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - Summary of Significant Accounting Policies
Principles of consolidation
The consolidated financial statements include the accounts of
The Parkway Company ("Parkway" or "the Company"); Sugar Creek
Center Corporation, Parkway Texas Corporation and Parkway Congress
Corporation, its wholly-owned subsidiaries; and One Place Partners
(a Mississippi general partnership), owned 100% by Parkway and
Parkway Congress Corporation. All significant intercompany
transactions and accounts have been eliminated.
Real estate operations
Gains from sales of real estate are recognized based on the
provisions of Statement of Financial Accounting Standards No. 66
which require upon closing, the transfer of rights of ownership to
the purchaser, receipt from the purchaser of an adequate cash down
payment and adequate continuing investment by the purchaser. If
the requirements for recognizing gains have not been met, the sale
and related costs are recorded, but the gain is deferred and
recognized generally on the installment method of accounting as
collections are received.
Depreciation of buildings and other improvements, including
personal property, is computed using the straight line method over
estimated useful lives of 40 years for buildings and building
improvements and 10 years for personal property. Maintenance and
repair expenses are charged to expense as incurred, while
improvements are capitalized and depreciated in accordance with the
useful lives outlined above.
Revenue on real estate rentals is recognized and accrued as
earned on a pro rata basis over the term of the lease.
Real estate held for sale is carried at the lower of fair value
minus estimated costs to sell or cost. Operating real estate held
for investment is stated at the lower of cost or net realizable
value.
Investments in real estate companies, partnerships and corporate
joint venture
The equity method of accounting is used to account for
investments where the Company has the ability to exercise
significant influence over the operating and financial policies of
the investee but does not have majority voting control. The
Company shares voting control in Golf Properties, Inc. ("GPI") with
a joint venture partner and, accordingly, accounts for its
investment in this corporate joint venture using the equity
method. The Company also shares voting control in the Wink-Parkway
Partnership with a partner and, accordingly, accounts for its
investment using the equity method. All other marketable equity
securities are classified as "available for sale" and are carried
at fair market value with unrealized gains or losses reflected as
a separate component of shareholders' equity. Loss in value of
equity investments that is considered to be an other than temporary
decline is charged to operations.
Interest income recognition
Interest is generally accrued monthly based on the outstanding
loan balances. Recognition of interest income is discontinued
whenever, in the opinion of management, the collectability of such
income becomes doubtful. After a loan is classified as non-
earning, interest is recognized as income when received in cash.
Reclassifications
Certain reclassifications have been made in the June 30, 1994
and 1993 financial statements to conform to the December 31, 1994
classifications.
Cash equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
Business segment
The Company's operations are in the real estate industry.
Change of fiscal year end
The Company changed its fiscal year end from a June 30 (fiscal
year) to a December 31 of as December 31, 1994.
Impact of recently issued accounting standards
In May, 1993, Statement of Financial Accounting Standard (SFAS)
No. 114, "Accounting by Creditors for Impairment of a Loan" was
issued. The statement must be adopted for fiscal years beginning
after December 15, 1994. Management does not expect any material
effect to the Company's financial position or results of operations
from the application of Statement No. 114.
NOTE B - Investments in Real Estate Companies
The Company accounts for certain of its investees as shown
below using the equity method of accounting. The equity method was
used for EastGroup Properties ("EastGroup") through December 31,
1994 because of the presence of three members of EastGroup's
eight-person Board of Trustees who were directors of the Company
and management of the day-to-day business of EastGroup by officers
who were also officers of the Company. Effective December 31,
1994, Parkway and EastGroup no longer share joint officers or
directors, with the exception of the Chairman of the Board and one
other director. Parkway will no longer record EastGroup on the
equity method beginning January 1, 1995, due to its ownership
percentage of 2.7% and the lack of control over its operations.
The equity method was used for Congress Street Properties, Inc.
("Congress Street") through the date of the merger because of the
Company's ownership interest in Congress Street and the presence of
three members of Congress Street's five-person Board of Directors
who were directors of the Company and management of the day-to-day
business of Congress Street by officers who were also officers of
the Company.
Investments in real estate companies consist of the following:
Ownership
Percentage Dec. 31, 1994 June 30, 1994
--------------- ---------------- ----------------
Dec. 31 June 30 Invest- Invest-
1994 1994 ment Market ment Market
------- ------- ------- -------- ------- --------
Equity method (In thousands)
investees:
EB, Inc.... 52.3% 51.5% $13,096 $11,863(b) $12,376 $ 8,971(b)
EastGroup
Properties 2.7% 2.7% 1,600 2,048(b) 1,623 2,175(b)
Congress St
Properties - 10.3% - 378 (a)
------- -------
14,696 14,377
Other securi-
ties at
fair market
value at
Dec. 31,
1994 and
cost at
June 30,
1994...... - 1.3% 366 366(b)(c) 312 324(b)
------- -------
366 312
------- -------
$15,061 $14,689
======= =======
(a) This stock was not quoted on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ")
for the period indicated nor were there any other
reliable market quotations.
(b) The market price of the other securities represents the
closing or bid price at December 31, 1994 and June 30,
1994, respectively, as reported on the exchange in which
the shares are traded or on NASDAQ.
(c) Other securities held at December 31, 1994 have a cost
basis of $399,000.
The Company also owns a 24% interest in Rockwood National
Corporation with a book value of zero and market value of $65,000.
During fiscal 1994, the Company purchased 453,471 shares of EB,
Inc.'s outstanding shares and received 221,784 shares through the
dissolution of AllMiss Capital Corporation ("AllMiss"), a 95% owned
subsidiary of Parkway, which increased its ownership to 51.5%. On
November 29, 1994, the Company received an additional 11,673 shares
of EB, Inc. from the merger with Congress Street increasing its
ownership in EB, Inc. to 52.3%. Under the Mississippi Control
Share Statue, certain of the shares of EB, Inc. may not be voted by
the Company until (i) shareholders of EB, Inc. approve voting
rights for the shares or (ii) three years after the shareholders of
EB, Inc. fail to approve voting rights for the shares. Although
the Company's ownership is equal to 52.3%, the Company does not
have a majority voting interest and continues to record this
investment on the equity method of accounting until majority voting
interest is obtained.
On July 27, 1994, Parkway and EB, Inc. jointly announced that
their Boards of Directors had agreed in principle to a merger of
EB, Inc. and a wholly-owned subsidiary of Parkway. EB, Inc.
shareholders would receive $17.25 for each EB, Inc. share
consisting of cash of $8 per share and shares of Parkway with a
value of $9.25 based on a defined formula. The merger is subject
to the approval of both Parkway and EB, Inc. shareholders at
meetings scheduled for April 27, 1995.
The condensed financial information (unaudited) for EB, Inc.
which is presented below (in thousands) was summarized from the
investees' most currently available financial statements filed with
the Securities and Exchange Commission prior to December 31, 1994.
September 30, 1994
------------------
Assets
Loans.................................. $ 14,480
Real estate held for sale.............. 2,802
Marketable securities.................. 14,154
Cash and short-term investments........ 4,464
Other assets........................... 418
--------
$ 36,318
========
Liabilities and Shareholders' Equity
Accounts payable and accrued expenses.. $ 1,688
Shareholders' equity................... 34,630
--------
$ 36,318
========
Condensed statements of income (unaudited) summarized from EB,
Inc.'s financial statements filed with the Securities and Exchange
Commission for the most recent six months prior to December 31,
1994 and 1993, respectively, and twelve months prior to June 30,
1994 and 1993, respectively, and from which the Company has
recorded its equity in earnings are as follows:
For the Six For the Twelve
Months Ended Months Ended
September 30 March 31
------------------ ------------------
1994 1993 1994 1994
-------- -------- -------- --------
(In thousands)
Revenues............... $ 1,512 $ 1,520 $ 2,650 $ 2,880
Expenses............... (361) (1,218) (1,993) (6,935)
Income tax expense..... - - - (100)
Income from discontinued
operations........... - 242 342 7,174
------- ------- ------- -------
Net income............. $ 1,151 $ 544 $ 999 $ 3,019
======= ======= ======= =======
Equity in earnings
recorded by Parkway...$ 618 $ 74 $ 388 $ 732
======= ======= ======= =======
On March 1, 1993, Eastover Bank for Savings sold its banking
operations to Sunburst Bank, Mississippi. The disposition of the
banking operations have been treated in the financial statements of
EB, Inc. as discontinued operations. Through equity in earnings of
EB, Inc., the Company has recorded income from discontinued
operations of $51,000 and $460,000 in the years ending June 30,
1994 and 1993 respectively.
Condensed statements of income (unaudited) summarized from
EastGroup's financial statements filed with the Securities and
Exchange Commission for the most recent six months prior to
December 31, 1994 and 1993, respectively, and twelve months prior
to June 30, 1994 and 1993, respectively, and from which the Company
has recorded its equity in earnings are as follows:
For the Six For the Twelve
Months Ended Months Ended
September 30 March 31
-------------- --------------
1994 1993 1994 1993
------ ------ ------ ------
(In thousands)
Revenues.............. $12,338 $ 7,701 $17,739 $14,137
Expenses.............. (9,807) (6,800) (15,053) (14,060)
Gain (loss) on
investments......... 2,494 3,530 4,560 (3,598)
------- ------- ------- -------
Net income (loss)..... $ 5,025 $ 4,431 $ 7,246 $(3,521)
======= ======= ======= =======
Equity in earnings
recorded by Parkway. $ 77 $ 273 $ 443 $ (2)
======= ======= ======= =======
Effective November 29, 1994, the merger of Congress Street
Properties, Inc. ("Congress Street") with Parkway Congress
Corporation (a wholly owned subsidiary of the Company) was
completed. The increase to net assets is as follows:
Parkway shares reacquired
(567,066 shares)....................... $ 7,939,000
Operating real estate.................. 675,000
Real estate companies.................. 201,000
Mortgage loans......................... 27,000
Cash................................... 42,000
Accounts receivable and other assets... 84,000
Notes payable to bank.................. (27,000)
Accounts payable & other liabilities... (235,000)
-----------
$ 8,706,000
Parkway shares retired at date
of merger (567,066 shares)........... (7,939,000)
-----------
Increase to net assets................. $ 767,000
===========
The Company's purchase price of these assets consisted of:
Common Stock issued (561,086 shares)... $ 7,855,000
Cash in lieu of fractional shares...... 2,000
Merger expenses........................ 90,000
Investment in Congress Street.......... 364,000
Note and interest receivable-affiliate. 395,000
----------
$8,706,000
==========
The operations of Congress Street subsequent to November 29,
1994 have been included in the accompanying consolidated statement
of income for the six months ending December 31, 1994. Equity in
losses of Congress Street during the six months ended December 31,
1994 and 1993, fiscal 1994 and fiscal 1993 was $14,000, $37,000,
$67,000 and $64,000 respectively. In computing equity in earnings
(losses) to be recorded from the investment in Congress Street, the
equity in earnings (losses) of Parkway that are reflected in the
operations of Congress Street have been eliminated.
The gain on securities of $579,000 during the year ended June
30, 1994 represents the sale of the Company's remaining investment
in Medical Resources Co. of America for $212,000 with a gain of
$104,000, all of the investment in Hotel Investors for $268,000
with a gain of $125,000, 58,525 shares of EastGroup Properties, an
equity method investee for $1,152,000 with a gain of $337,000 and
other stock investments for $24,000 with gains of $13,000.
Certain investments accounted for by the equity method have
been purchased at amounts different from the Company's pro rata
share of the investees' book value as follows:
Investee Amount
-------- --------------
(In thousands)
Equity in excess of cost:
EB, Inc............................ $4,575
EastGroup.......................... 594
The amounts above have been assigned to the investees'
principal assets and are primarily being recognized in operations
as the assets are depreciated or sold.
Effective May 10, 1994, the merger of First Continental Real
Estate Investment Trust ("First Continental" or "FCREIT") with
Parkway Texas Corporation (a wholly owned subsidiary of the
Company) was completed. This merger, which has been accounted for
using the purchase method of accounting, increased the Company's
net assets as follows:
Real estate $4,994,000
Mortgage loans 1,451,000
Interest receivable & other assets 228,000
Cash 195,000
Notes payable to banks (1,912,000)
Accounts payable & other liabilities (158,000)
----------
$4,798,000
==========
The operations of First Continental subsequent to May 10, 1994
have been included in the accompanying consolidated statements of
income for the twelve months ended June 30, 1994 and the six months
ended December 31, 1994. The unaudited pro forma effects of the
Company's acquisition of First Continental as if it had occurred on
July 1, 1992, would be to increase revenues by approximately
$983,000 in fiscal 1994 and $1,911,000 in fiscal 1993 and decrease
net income by $262,000 in fiscal 1994 and $953,000 in fiscal 1993
and decrease income per share by $.32 in fiscal 1994 and $.80 in
fiscal 1993.
NOTE C - Investments in Real Estate, Mortgage Loans, Real Estate
Partnerships And Corporate Joint Venture
The Company's investment in operating real estate includes five
office buildings, one retail center, one motel and 29 townhomes,
patio homes and condominiums. The operating properties represent
71% of the total investment in real estate at December 31, 1994.
The office buildings represent 65% of the investment in real
estate. The motel is located in Indianapolis, Indiana and has a
carrying value of $744,000. The office buildings are located in
Jackson, Mississippi ($20,507,000), Indianapolis, Indiana
($3,027,000), Columbus, Ohio ($1,455,000) and Houston, Texas
($424,000). The retail center is located in Lake Jackson, Texas
and has a carrying value of $1,104,000. All of the operating
properties, with the exception of the motel and townhomes, patio
homes and condominiums are leased to tenants under noncancellable
operating leases with lease terms ranging from six months to ten
years. The location and carrying value of the nonearning developed
and undeveloped land, which is held for sale, is as follows:
Houston, Texas - $7,111,000, New Orleans, Louisiana - $3,799,000,
Atlanta, Georgia - $187,000 and various other locations - $272,000.
The Company classified all of its nonearning real estate, which
has been held for several years, as held for sale as of December
31, 1994 and June 30, 1994. The real estate held for sale is
carried at the lower of fair value minus estimated costs to sell or
cost. At December 31 and June 30, 1994, there was no valuation
allowance related to real estate held for sale. Management
believes that current market conditions are more favorable to allow
them to actively market the properties at prices they consider
appropriate.
The following is a schedule by year of future approximate
minimum rental receipts under noncancelable leases for the office
buildings as of December 31, 1994:
Calendar Year Amount
------------- --------------
(In thousands)
1995 $ 5,294
1996 4,184
1997 1,973
1998 983
1999 684
Subsequently 656
--------
$ 13,774
========
The Company owns a 73.125% effective interest in One Jackson
Place, an office building, through its partnership interest in One
Place Partners. The Company has majority voting control over the
building and has consequently consolidated One Place Partners and
its subsidiaries in its consolidated financial statements since
March 1990. The Company records a reduction in real estate owned
expenses for the minority owner's interest in the losses of One
Jackson Place.
The unpaid balances of mortgage loans, summarized by type of
loan, are as follows:
Type of Loan December 31 June 30
----------- --------
1994 1994
----------- --------
(In thousands)
First Mortgages secured by:
Residential real estate... $ 1,783 $ 1,699
Motels.................... 1,001 1,029
Commercial real estate.... 423 487
Land...................... 303 195
Other..................... 93 72
-------- --------
Total carrying amount of
mortgage loans............ $ 3,603 $ 3,482
======== ========
All loans are earning (performing) loans at December 31, 1994
and June 30, 1994.
Investments in real estate partnerships and corporate joint
venture at December 31 and June 30, 1994, were as follows:
December 31 June 30
Ownership ----------- --------
Percentage 1994 1994
---------- ----------- --------
(In thousands)
Corporate joint venture:
Golf Properties, Inc.
(GPI), Resort development
in Highlands, NC........... 65.45% $ 570 $ 731
Wink-Parkway Partnership;
owns a 100% interest in an
office/warehouse building
in New Orleans, LA......... 50.00% 319 291
------ ------
$ 889 $1,022
====== ======
For the Six For the Twelve
Months Ended Months Ended
December 31 June 30
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
(In thousands)
Real estate sales....... $ 878 $ 809 $ 1,305 $ 1,858
Cost of real estate
sales................. (641) (493) (858) (1,363)
Other income............ 17 17 38 31
General and administra-
tive expenses......... (13) (16) (35) (42)
Other expense........... (62) (86) (190) (236)
------- ------- ------- -------
Net income.............. 179 231 260 248
======= ======= ======= =======
Equity in earnings
recorded by Parkway... 166 190 233 289
======= ======= ======= =======
The investment in GPI, which is accounted for by the equity
method, has been purchased at an amount different from the
Company's pro rata share of the investee's book value. At December
31, 1994, the equity in excess of cost was $195,000. This amount
has been assigned to GPI's principal net assets and is being
recognized in operations as the assets are depreciated or sold.
The equity in earnings recorded by the Company includes $51,000,
$39,000, 65,000 and $132,000 amortization of equity in excess of
cost in the six months ended December 31, 1994 and 1993, fiscal
1994 and fiscal 1993, respectively.
Equity in earnings of GV Partners during fiscal 1994 and 1993
was $6,000 and $30,000, respectively. During fiscal 1994, the
Company sold its 22% investment in GV Partners to its 78% partner,
EastGroup Properties. The sales price was $275,000 cash plus the
assumption of 22% of the outstanding mortgage and was based on an
appraisal by an independent third party. The Company recognized a
gain of $280,000 on the sale.
NOTE D - Notes Payable
A summary of notes payable to banks secured by real estate and
security investments is as follows:
December 31 June 30
1994 1994
----------- -------
Notes Payable to Banks: (In thousands)
Note payable to a bank at prime
(8.5%) due in quarterly
principal payments of $75,000
plus interest; maturing June 1,
1996; secured by real estate
with a carrying value of
$2,551,000...................... $ 490 $ 640
$5,000,000 line of credit with
bank at prime (8.5%) maturing
June 30, 1995; secured by
securities with a carrying value
of $13,096,000.................. 2,664 1,991
$1,000,000 line of credit with
bank at prime plus .50% (9%)
maturing April 30, 1995; secured
by securities with a carrying
value of $1,600,000............. 1,000 1,000
------- -------
$ 4,154 $ 3,631
======= =======
Mortgage Notes Payable without Recourse:
Note payable to an insurance
company at 9.25%; payments of
interest only through April
1996; maturing in 1999; secured
by real estate with a carrying
value of $20,507,000............ $22,404 $22,404
Note payable to an insurance
company at 8.5%; due in monthly
payments of $22,000; maturing
June 1996; secured by real
estate with a carrying value
of $2,414,000................... 423 498
------- -------
$22,827 $22,902
======= =======
The principal maturities of all notes payable for the
succeeding five years as of December 31, 1994 are as follows:
Calendar Year Amount
------------- --------
(In thousands)
1995 $ 4,123
1996 556
1997 165
1998 181
1999 21,956
--------
$ 26,981
========
NOTE F - Income Taxes
The Company accounts for income taxes under the liability
method in accordance with Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes". Deferred
income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes, and (b) operating loss and tax credit carryforwards.
The tax effects of significant items comprising Parkway's net
deferred tax asset as of December 31, 1994 are as follows (in
thousands):
Deferred tax assets:
Differences in book and tax basis of assets......$3,385
Operating loss carryforwards..................... 3,625
------
7,010
Valuation allowance..............................(7,010)
------
Net deferred tax asset...........................$ -
======
An additional $14,350,000 of temporary differences related to
assets acquired in the mergers with First Continental and Congress Street
will be limited during the five year period commencing with the merger
dates, and therefore have not been included in the deferred tax
asset calculation. After the five year periods, the temporary
differences that exist on assets remaining at that time will be
unrestricted and will be included in the deferred tax assets of the
Company.
The valuation allowance for the gross deferred tax assets as of
July 1, 1994 was $7,268,000. The net decrease in the total
valuation allowance for the six months ended December 31, 1994 was
$258,000 and relates primarily to differences in book and tax basis
of securities and real estate sold and mortgage loans collected. At
December 31, 1994, the net deferred tax asset of $7,010,000 is entirely offset
by a valuation allowance because realization of the net deferred
tax asset is not assured.
The following is a reconciliation between the amount reported
for income taxes and the amount computed by multiplying income
before income tax by the statutory federal tax rate of 34%.
December 31 June 30
----------- -------------------
1994 1994 1993
----------- -------- --------
(In thousands)
Income tax expense based
on statutory income tax
rate................... $ 342 $ 443 $ 922
Operating loss carry-
forward for financial
reporting purposes..... (139) (353) (738)
Equity in earnings of
other real estate
companies.............. (203) (90) (184)
-------- -------- --------
Federal regular tax
expense................ - - -
State income tax expense. - 1 3
-------- -------- --------
Income tax expense....... $ - $ 1 $ 3
======== ======== ========
At December 31, 1994, the Company has available net operating
loss carryforwards for federal income tax purposes (June 30 fiscal
year end) of approximately $10,661,000 which expire as follows for
fiscal years ended June 30:
Fiscal Year Amount
----------- --------------
(In thousands)
1995 $ 760
1996 2,296
1998 760
1999 14
2000 57
2001 12
2002 8
2003 300
2004 47
2007 1,052
2008 3,124
2009 1,146
2010 1,085
--------
$ 10,661
========
In addition to these net operating losses, First Continental
had net operating losses of approximately $17,000,000 at the time
of the merger with Parkway. Parkway's utilization of these losses
will be limited to a maximum of approximately $280,000 in any given
year, therefore a majority of these loss carryforwards will be
unavailable for use by the Company. Also in addition to these net
operating losses, Congress Street had net operating losses of
approximately $5,928,000 at the time of its merger with Parkway.
Parkway's utilization of these losses will be limited to a maximum
of approximately $491,000 in any given year, subject to increases
for built-in gains recognized. These loss carryforwards have not
been reflected in the deferred tax asset of Parkway at December 31,
1994.
The Company's income differs for income tax and financial
reporting purposes principally because (1) the timing of the
deduction for the provision for possible losses or writedowns, (2)
the timing of the recognition of gains or losses from the sale of
investments, (3) the timing of the recognition of income or losses
from partnerships, (4) the equity in undistributed earnings of real
estate companies differing from dividends received from those
investments, (5) real estate owned has a different basis for tax
and financial reporting purposes, producing different gains upon
disposition, and (6) mortgage loans have a different basis for tax
and financial reporting purposes, producing different gains upon
collection of these receivables. At December 31, 1994, there was no
deferred federal or state income tax liability due to the
availability of net operating loss carryforwards.
NOTE G - Company Administration and Related Party Transactions
Through December 31, 1994, the Company was a party to an
expense-sharing agreement whereby certain general and
administrative expenses were paid by the administrator of the
agreement and then allocated on a monthly basis among the
participants, as defined. The parties to the expense-sharing
agreement during the periods presented in the accompanying
consolidated statements of income were the Company, Congress
Street, Eastover Corporation and EastGroup Properties. EB, Inc.
had a separate administrative agreement which allowed EB, Inc. to
participate in the expense-sharing agreement on the same basis as
the companies which were parties to the expense-sharing agreement.
In connection with the mergers involving the expense-sharing
participants (i.e., Congress Street merged with a wholly-owned
subsidiary of Parkway on November 29, 1994, EB, Inc. is merging
with Parkway and Eastover combined with EastGroup on December 22,
1994), the expense-sharing arrangements terminated on December 31,
1994. Subsequent to that date, Parkway and EastGroup each have
their own respective officers and employees, who do not serve as
officers or employees of the other company, except for Leland R.
Speed, who continues to serve as the chief executive officer of
both companies, and a small number of clerical and support staff
employees. Certain officers of Parkway continue to serve as
officers of EB, Inc. and EB, Inc. pays Parkway a monthly
administrative fee based on EB, Inc.'s average monthly share of the
common costs for the last quarter of 1994.
Parkway was a party to two loan agreements with Lake Forest,
Inc., a wholly owned subsidiary of Rockwood. Parkway presently
owns 17.4% of the outstanding shares of Rockwood with a zero
carrying value. On June 28, 1994, Parkway repaid its note payable
of $2,274,000, incurred with the purchase of 80 acres of
undeveloped commercial land in 1990, to Lake Forest, Inc. who in
turn repaid its $750,000 note payable to Parkway and the remaining
line of credit with a balance of $167,500 was reworked into two
notes with interest at the prime rate. The first note is for
$117,500 and is a one year note with quarterly interest. The
second note is for $59,000 and is a two year note with interest due
quarterly. The notes are secured by real property in New Orleans,
Louisiana. No additional advances are available under the two loan
agreements.
In connection with the purchase of the 80 acres of undeveloped
commercial land in 1990 mentioned above, Rockwood issued to Parkway
a warrant to purchase 800,000 shares of Rockwood common stock
exercisable at $.375 per share during the period beginning June 17,
1991, and ending December 31, 1995. Parkway has not purchased any
Rockwood common stock under the warrant.
The Company signed an amendment to the One Place Partner's
Partnership Agreement whereby Parkway loaned Congress Street funds
for their portion of capital contributions. This note accrued
interest at prime plus one percent with interest due annually. At
June 30, 1994, $413,000 was outstanding on the loan to Congress
Street. Interest earned on the note for the six months ended
December 31, 1994 and 1993 was $14,000 and $16,000, respectively,
and for the years ended June 30, 1994 and 1993 was $32,000 and
$27,000, respectively. At November 29, 1994, the merger date of
Congress Street into Parkway Congress, the note balance was
$364,000 and was included in Parkway's costs of the Congress Street
net assets.
On January 1, 1994, the Company renewed for one year a note
whereby it agreed to loan up to $100,000 to its affiliate, Eastover
Corporation. This note accrued interest at prime plus 1% with
interest due quarterly. The collateral for this note was a
security interest in shares of EastGroup Properties. Eastover
Corporation merged into EastGroup Properties effective December 22,
1994 at which time there was no balance outstanding on the note.
At June 30, 1994, there was no balance outstanding on the note.
Interest earned on the note for the six months ended December 31,
1994 and 1993 was zero and $2,000, respectively, and for the years
ended June 30, 1994 and 1993 was $2,000 and $7,000, respectively.
In December 1989, the Company transferred 53 mortgage loans to
EastGroup in exchange for 327,981 shares of EastPark Realty Trust
("EastPark") stock. EastPark is a former equity method investee of
the Company. As a result of the exchange with EastGroup, the
Company's ownership increased from 38.6% to 77.2% of the EastPark
stock outstanding. This acquisition of EastPark stock was the
first in a series of transactions that led to the Company's
purchase of 100% of EastPark's assets (subject to its liabilities)
and the subsequent liquidation of EastPark in April 1990.The
Company guaranteed to EastGroup the collection of 100% of the
mortgage loans, and the gain on the transaction of $411,000 was
deferred to be recognized as the contingent liability resulting
from the guarantee was reduced. At September 30, 1993, two of
these mortgages had defaulted and been foreclosed and 35 loans
remained. Parkway purchased the remaining loans and foreclosed
property for a purchase price of $956,000, which represented
EastGroup's book value of those loans on September 30, 1993. The
Company recognized zero and $270,000 of the deferred gain on these
loans during the six months ending December 31, 1994 and fiscal
1994, respectively. The balance of the deferred gain will be
recognized as the loans are repaid.
NOTE H - Accounts Payable and Other Liabilities
December 31 June 30
----------- ---------
1994 1994
----------- ---------
(In thousands)
Accounts payable.......... $ 218 $ 385
Accrued interest payable.. 152 138
Taxes payable, other than
income taxes............ 631 297
Dividends payable......... - 231
Other accrued expenses.... 171 212
Other payables............ 391 69
--------- ---------
$ 1,563 $ 1,332
========= =========
NOTE I - Supplemental Profit and Loss Information
Included in expenses are taxes, principally property taxes, of
$871,000 and $901,000 for the six months ended December 31, 1994
and fiscal 1994, respectively.
NOTE J - Stock Option Plans
The 1994 Stock Option Plan was approved at the fiscal 1994
Annual Shareholders Meeting and was effective September 23, 1994.
The 1994 Stock Option Plan provides for the issuance of an
aggregate of 150,000 Parkway shares ("Shares") to key employees or
officers of the Company and its subsidiaries upon the exercise of
options and upon incentive grants pursuant to the Stock Option
Plan. On July 1 of each year, beginning on July 1, 1995,the number
of Shares available for grant shall automatically increase by one
percent (1%) of the Shares outstanding on such date, provided that
the number of Shares available for grant shall never exceed 12.5%
of the Shares outstanding. On September 23, 1994, the Company
granted 137,250 options to officers and key employees of the
Company. Of the options granted, 104,250 options have an exercise
price of $13.78, the market price of Parkway shares on the date of
grant. The remaining 33,000 options are "premium" options and have
an exercise price of $18.33 per share. The Shares granted under
the 1994 Stock Option Plan were conditioned upon the exercise of
all outstanding options and stock appreciation rights ("SARs")
under the 1991 Incentive Plan before December 31, 1994. Also
pursuant to the approval of the 1994 Stock Option Plan, all
incentive compensation units held by key officers of the Company
were converted into Parkway shares based upon the discounted value
of the amounts due over the remaining term of the incentive
compensation units. As a result, 22,741 Parkway shares were issued
in connection with the exercise of stock options granted under the
1991 Incentive Plan and 3,595 Parkway shares were issued in
connection with the conversion of incentive compensation units
during the six months ended December 31, 1994. The options issued
under the 1994 Stock Option Plan vest over a two year period,
except that the committee of Directors that administers the plan
has agreed that 22,500 options granted to two officers vested
completely upon their termination of employment with the Company in
connection with the termination of the expense-sharing agreement
discussed above. At December 31, 1994, 12,750 shares are available
for grant under the 1994 Stock Option Plan.
Stock option activity for the two years and six months prior to
December 31, 1994 was as follows:
Number Option Price Total Option
of Shares Per Shares Price
--------- --------------- ------------
Outstanding at
June 30, 1992 65,892 $ 345,933
Relinquished (13,496) $5.25 to $5.625 (71,117)
Granted 12,201 $ 5.625 68,631
-------- ------------
Outstanding at
June 30, 1993 64,597 343,447
Exercised (600) $ 5.625 (3,375)
Relinquish (300) $ 5.625 (1,687)
Granted - -
-------- ------------
Outstanding at
June 30, 1994 63,697 338,385
Exercised (63,697) (338,385)
Granted 104,250 $13.78 1,436,565
Granted 33,000 $18.33 604,890
-------- --------- ------------
Outstanding at
Dec. 31, 1994 137,250 $ 2,041,455
======== ============
The compensation expense applicable to the stock appreciation
rights plan totalled $102,000 and $85,000 for the six months ended
December 31, 1994 and 1993, respectively, and $135,000 and $66,000
for the years ended June 30, 1994 and 1993, respectively.
Incentive compensation expense applicable to the incentive
compensation units totalled $69,000 and $9,000 for the six months
ended December 31, 1994 and 1993, respectively, and $21,000 and
$12,000 for the years ended June 30, 1994 and 1993, respectively.
Also approved at the fiscal 1994 Annual Shareholders Meeting
was the 1991 Directors Stock Option Plan, as amended. Under this
plan, options for up to 100,000 shares may be granted to "non-
employee directors". As of December 31, 1994, 57,000 options have
been granted at an option price ranging from $6.00 per share to
$14.00 per share, the market values at date of grant. The total
option price at December 31, 1994 of these options was $544,000.
The 1991 Directors Stock Option Plan, as amended does not carry
stock appreciation rights or incentive compensation units and
options are exercisable in full on the date of grant. At December
31, 1994, there were 43,000 options available for grant under the
1991 Directors Stock Option Plan, as amended.
NOTE K - Litigation
The Company is not presently engaged in any litigation other
than ordinary routine litigation incidental to its business.
Management believes such litigation will not materially affect the
financial position, operations or liquidity of the Company.
NOTE L - Subsequent Events
On July 27, 1994, Parkway and EB, Inc. jointly announced that
their Boards of Directors had agreed in principle to a merger of
EB, Inc. and a wholly-owned subsidiary of Parkway. EB, Inc.
shareholders would receive $17.25 for each EB, Inc. share
consisting of cash of $8 per share and shares of Parkway with a
value of $9.25 based on a defined formula. The merger is subject
to approval of both Parkway and EB, Inc. shareholders at meetings
scheduled for April 27, 1995.
NOTE M - Supplemental Cash Flow Information
Six Months Ended Twelve Months Ended
December 31 June 30
------------------- -------------------
1994 1993 1994 1993
-------- -------- -------- --------
Loans to facilitate sales
of real estate......... $ 304 $ - $ 420 $ -
Loan foreclosures added
to real estate held for
sale................... 31 - - -
Loan foreclosures added
to operating real
estate................. 71 - - -
Interest paid............ 1,204 1,213 2,441 2,491
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons, Compliance with Section 16(a) of the Exchange Act
The Registrant's definitive proxy statement which will be
filed with the Commission pursuant to Regulation 14A within 120
days of the end of Registrant's fiscal year is incorporated herein
by reference.
Item 10. Executive Compensation
The Registrant's definitive proxy statement which will be
filed with the Commission pursuant to Regulation 14A within 120
days of the end of Registrant's fiscal year is incorporated herein
by reference.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The Registrant's definitive proxy statement which will be filed
with the Commission pursuant to Regulation 14A within 120 days of
the end of Registrant's fiscal year is incorporated herein by
reference.
Item 12. Certain Relationships and Related Transactions
The Registrant's definitive proxy statement which will be filed
with the Commission pursuant to Regulation 14A within 120 days of
the end of Registrant's fiscal year is incorporated herein by
reference.
Item 13. Exhibits and Reports on Form 8-K
(a)Exhibits required by Item 601 of Regulation S-B:
(2) Agreement and Plan of Merger among Registrant, Parkway
Texas Corporation, and First Continental Real Estate
Investment Trust, incorporated by reference to Appendix B
to Registrant's Proxy Statement/Prospectus dated April 5,
1994, filed under Rule 424(b) (Registration Number 33-
74822).
(3)(a)Articles of Incorporation (incorporated by reference to
Exhibit 6.1 of Amendment No. 1 to the Registrant's Form
S-14 (No. 2-69138) filed on November 6, 1980).
(b)Amendment to the Articles of Incorporation (incorporated
by reference to Exhibit A of the Registrant's Proxy
Statement dated November 3, 1987).
(c)Bylaws (incorporated by reference to Exhibit 6.2 of
Amendment No. 1 to the Registrant's Form S-14 (No.
2-69138) filed on November 6, 1980).
(d)Amendment to Bylaws, dated December 4, 1986 (incorporated
by reference to Exhibit (3)(c) on the Registrant's 1987
Annual Report on Form 10-K).
(e)Amendment to Bylaws, dated December 4, 1987 incorporated
by reference to Exhibit (3)(e) on the Registrant's 1988
Annual Report on Form 10-K).
(10)(a)1980 Stock Option and Stock Appreciation Rights Plan
(incorporated by reference to Exhibit 4.3 of the
Registrant's Form S-8 (No. 2-91355) filed on May 25,
1984).
(b)1985 Stock Option and Stock Appreciation Rights Plan
(incorporated by reference to Annex 1 in Amendment No. 1
to Highlands-National, Inc.'s Form S-14 (No. 2-96473)
filed on May 4, 1985).
(c)Amendment and Restatement of Expense-sharing Agreement
among Congress Street Properties, Inc., Eastover
Corporation, EastGroup Properties and Registrant dated as
of September 1, 1990, (incorporated by reference to the
Registrant's 1990 Form 10-K).
(d)Registrant's 1994 Stock Option Plan (incorporated by
reference to Registrant's Proxy Statement dated November
8, 1994).
(e)Registrant's 1991 Incentive Plan (incorporated by
reference to the Registrant's proxy statement dated
October 28, 1991).
(f)Registrant's 1991 Directors Stock Option Plan, as amended
(incorporated by reference to the Registrant's proxy
statement dated November 8, 1994).
(g)Promissory Note dated July 14, 1993 of Lake Forest, Inc.
payable to Registrant in the maximum principal amount of
$250,000 (incorporated by reference to the Registrant 1993
Form 10-KSB).
(h)Act of Pledge and Pawn of Collateral Mortgage Note of Lake
Forest, Inc. dated July 14, 1993 (incorporated by
reference to the Registrant's 1993 Form 10-KSB).
(i)Agreement and Plan of Merger among Parkway, Parkway
Acquisition Corp. and EB dated as of October 28, 1994 (as
amended by the First Amendment to the Agreement and Plan
of Merger dated January 26, 1995), incorporated by
reference to Appendix B of the Joint Proxy
Statement/Prospectus filed with the Registration Statement
on Form S-4 of The Parkway Company (No. 33-85950).
Parkway agrees to furnish supplementally to the Commission
upon request a copy of any omitted schedule or exhibit to
the Merger Agreement.
(11)Statement re: Computation of earnings per share, filed
herewith.
(21)Subsidiaries of the small business issuer, filed herewith.
(23)(a)Consent of Ernst & Young LLP, filed herewith.
(b)Report of KPMG Peat Marwick LLP, filed herewith.
(c)Consent of KPMG Peat Marwick LLP, filed herewith.
(d)Report of Deloitte & Touche LLP, filed herewith.
(e)Consent of Deloitte & Touche LLP, filed herewith.
(24)Powers of attorney, filed herewith.
(27)Financial Data Schedule
(28)Agreement of Registrant to furnish the Commission with copies
of instruments defining the rights of holders of long-term
debt (incorporated by reference to Exhibit 28E of the
Registrant's Form S-4 (No. 33-2960) filed with the Commission
on February 3, 1986).
(b)Reports on Form 8-K.
Reporting merger of Congress Street Properties, Inc. with
and into Parkway Congress Corporation, a wholly owned
subsidiary of The Parkway Company. Filed December 14,
1994. The following financial statements of Congress
Street Properties, Inc. were incorporated by reference
therein from the Proxy Statement/Prospectus of Parkway and
Congress Street dated November 9, 1994.
Consolidated Balance Sheets - as of May 31, 1994
(Unaudited) and August 31, 1993
Consolidated Statements of Operations (Unaudited) -
for the three and nine months ended May 31, 1994 and 1993
Consolidated Statements of Cash Flows (Unaudited) -
for the nine months ended May 31, 1994 and 1993
Consolidated Statements of Shareholders' Equity
(Unaudited) - for the nine months ended May 31, 1994 and
1993
Notes to Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets - as of August 31, 1993 and 1992
Consolidated Statements of Operations - for the years ended
August 31, 1993 and 1992
Consolidated Statements of Cash Flows - for the years ended
August 31, 1993 and 1992
Consolidated Statements of Shareholders' Equity - for the
years ended August 31, 1993, 1992 and 1991
Notes to Consolidated Financial Statements
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
THE PARKWAY COMPANY
Registrant
/s/ Leland R. Speed
Leland R. Speed
Chief Executive Officer
March 29, 1995
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
* *
H. C. Bailey, Jr., Director Sidney W. Lassen, Director
March 29, 1995 March 29, 1995
* *
George R. Farish, Director Joe F.Lynch, Director
March 29, 1995 March 29, 1995
* /s/ Leland R. Speed
B. Pat Green, Director Leland R. Speed, Director
March 29, 1995 March 29, 1995
* /s/ Steven G. Rogers
C. Herbert Magruder, M.D., Director Steven G. Rogers, President
March 29, 1995 March 29, 1995
/s/ Regina P. Shows
W. Lincoln Mossop, Jr., Director Regina P. Shows, Controller
March 29, 1995 Principal Accounting Officer
March 29, 1995
/s/ Sarah P. Clark
Daniel C. Arnold, Director Sarah P. Clark, Vice-President
March 29, 1995 Chief Financial Officer and
Secretary
March 29, 1995
*/s/ Sarah P. Clark
By: Sarah P. Clark. Atty-in-Fact
EX-11
2
Exhibit (11) Statement Re: Computation of Per Share Earnings
December 31 June 30
----------- --------------------
1994 1994 1993
----------- -------- --------
(In thousands)
Fully diluted
Average shares
outstanding........... 1,544 1,300 1,260
Net effect of dilutive
stock options- Based
on the treasury stock
method using year-end
market price.......... 37 35 36
-------- -------- --------
TOTAL................... 1,581 1,335 1,296
======== ======== ========
Net income.............. $ 1,005 $ 1,303 $ 2,712
======== ======== ========
Per share amount........ $ .64 $ .98 $ 2.09
======== ======== ========
Note:
The above dilution is less than 3% or anti-dilutive, thus earnings per share
are based on the average shares outstanding.
EX-21
3
Exhibit (21) List of Subsidiaries
Name State
Sugar Creek Center Corporation Texas
Parkway Texas Corporation Mississippi
Parkway Congress Corporation Texas
Subsidiary No. 1, Inc. Virginia
One Place Partners Mississippi
EX-23
4
Exhibit 23(a)
Consent of Independent Auditors
-------------------------------
Board of Directors and Stockholders
The Parkway Company
We consent to the incorporation by reference in the Registration
Statement (Form S-4 No. 33-85950) of The Parkway Company and in the
related Prospectus of our report dated March 28, 1995, with respect
to the consolidated financial statements of The Parkway Company
included in this Annual Report (Form 10-KSB) for the year ended
December 31, 1994.
/s/ Ernst & Young LLP
Jackson, Mississippi --------------------
March 28, 1995 Ernst & Young LLP
Exhibit 23(b)
Independent Auditors' Report
----------------------------
The Trustees and Shareholders
EastGroup Properties:
We have audited the consolidated balance sheets of EastGroup
Properties and subsidiaries (the Company), a Maryland real estate
investment trust, as of December 31, 1994 and 1993, and the related
consolidated statements of operations, changes in shareholders'
equity and cash flows for each of the years in the three-year
period ended December 31, 1994. Such consolidated financial
statements are not presented separately herein. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects,the financial
position of EastGroup Properties and subsidiaries at December 31,
1994 and 1993, and the results of their operations and their cash
flows for each of the years in the three-year period ended December
31, 1994 in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
------------------------
KPMG PEAT MARWICK LLP
Jackson, Mississippi
March 13, 1995
Exhibit 23(c)
Independent Auditors' Consent
-----------------------------
The Trustees and Shareholders
EastGroup Properties:
We consent to the use of our report dated March 13, 1995 on the
consolidated balance sheets of EastGroup Properties and
subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of operations, changes in shareholders'
equity and cash flows for each of the years in the three-year
period ended December 31, 1994 included herein.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG PEAT MARWICK LLP
Jackson, Mississippi
March 29, 1995
Exhibit 23(d)
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
EB, Inc.
Jackson, Mississippi
We have audited the accompanying balance sheets of EB, Inc. as of
December 31, 1994 and 1993 and the related statements of income,
changes in stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of EB, Inc. as of
December 31, 1994 and 1993 and the results of its operations and
its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
As discussed in Note 3 to the financial statements, in 1994, the
Company changed its method of accounting for its investment
securities.
/s/ Deloitte & Touche LLP
Jackson, Mississippi
March 29, 1995
Exhibit 23(e)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of The Parkway Company on Form S-4 (Registration No. 33-
85950) of our report dated March 29, 1995, appearing in the Annual
Report on Form 10-KSB of EB, Inc. for the year ended December 31,
1994, and appearing in the Annual Report on Form 10-KSB of The
Parkway Company for the year ended December 31, 1994, and to the
reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Jackson, Mississippi
March 30, 1995
EX-24
5
Exhibit 24
THE PARKWAY COMPANY
POWER OF ATTORNEY
The undersigned Director of The Parkway Company, a Texas
corporation, hereby constitutes and appoints Sarah P. Clark as the
true and lawful Attorney-in-fact and Agent of the undersigned to
sign on behalf of the undersigned: (a) the Annual Report of the
Company on Form 10-KSB (or such other form as may be required) for
the six month transition period ended December 31, 1994 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any
and all amendments to such Report as may be required to be filed
with the SEC.
/s/ H. C. Bailey, Jr.
------------------------
H. C. Bailey, Jr.
Director
Date: March 29, 1995
Exhibit 24
THE PARKWAY COMPANY
POWER OF ATTORNEY
The undersigned Director of The Parkway Company, a Texas
corporation, hereby constitutes and appoints Sarah P. Clark as the
true and lawful Attorney-in-fact and Agent of the undersigned to
sign on behalf of the undersigned: (a) the Annual Report of the
Company on Form 10-KSB (or such other form as may be required) for
the six month transition period ended December 31, 1994 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any
and all amendments to such Report as may be required to be filed
with the SEC.
/s/ B. Pat Green, Jr.
-----------------------
B. Pat Green, Jr.
Director
Date: March 27, 1995
Exhibit 24
THE PARKWAY COMPANY
POWER OF ATTORNEY
The undersigned Director of The Parkway Company, a Texas
corporation, hereby constitutes and appoints Sarah P. Clark as the
true and lawful Attorney-in-fact and Agent of the undersigned to
sign on behalf of the undersigned: (a) the Annual Report of the
Company on Form 10-KSB (or such other form as may be required) for
the six month transition period ended December 31, 1994 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any
and all amendments to such Report as may be required to be filed
with the SEC.
/s/ George R. Farish
------------------------
George R. Farish
Director
Date: March 28, 1995
Exhibit 24
THE PARKWAY COMPANY
POWER OF ATTORNEY
The undersigned Director of The Parkway Company, a Texas
corporation, hereby constitutes and appoints Sarah P. Clark as the
true and lawful Attorney-in-fact and Agent of the undersigned to
sign on behalf of the undersigned: (a) the Annual Report of the
Company on Form 10-KSB (or such other form as may be required) for
the six month transition period ended December 31, 1994 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any
and all amendments to such Report as may be required to be filed
with the SEC.
/s/ Sidney W. Lassen
---------------------
Sidney W. Lassen
Director
Date: March 28, 1995
Exhibit 24
THE PARKWAY COMPANY
POWER OF ATTORNEY
The undersigned Director of The Parkway Company, a Texas
corporation, hereby constitutes and appoints Sarah P. Clark as the
true and lawful Attorney-in-fact and Agent of the undersigned to
sign on behalf of the undersigned: (a) the Annual Report of the
Company on Form 10-KSB (or such other form as may be required) for
the six month transition period ended December 31, 1994 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any
and all amendments to such Report as may be required to be filed
with the SEC.
/s/ Joe F. Lynch
----------------------
Joe F. Lynch
Director
Date: March 28,1995
Exhibit 24
THE PARKWAY COMPANY
POWER OF ATTORNEY
The undersigned Director of The Parkway Company, a Texas
corporation, hereby constitutes and appoints Sarah P. Clark as the
true and lawful Attorney-in-fact and Agent of the undersigned to
sign on behalf of the undersigned: (a) the Annual Report of the
Company on Form 10-KSB (or such other form as may be required) for
the six month transition period ended December 31, 1994 to be filed
with the Securities and Exchange Commission ("SEC"); and (b) any
and all amendments to such Report as may be required to be filed
with the SEC.
/s/ C. Herbert Magruder, M.D.
-----------------------------
C. Herbert Magruder, M.D.
Director
Date: March 28, 1995
EX-27
6
5
1,000
YEAR
DEC-31-1994
DEC-31-1994
320
15,061
1,481
0
0
0
0
0
61,062
0
22,827
1,563
0
0
30,675
61,062
0
5,462
0
0
3,239
0
1,218
1,005
0
1,005
0
0
0
1,005
.16
.16