-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, aHCYtxZMNFQb8wAVQWYGB57LqD8pQzjc+1GPWgqQ8FGqaPQy4ICwN/31+hhvzWCc fiDFwb8qWmjOD2VeZR+Jsw== 0000729237-95-000021.txt : 19950517 0000729237-95-000021.hdr.sgml : 19950517 ACCESSION NUMBER: 0000729237-95-000021 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950516 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARKWAY CO/TX CENTRAL INDEX KEY: 0000729237 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 742123597 STATE OF INCORPORATION: TX FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-12505 FILM NUMBER: 95540048 BUSINESS ADDRESS: STREET 1: 300 ONE JACKSON PL STREET 2: 188 E CAPITOL ST STE 300 CITY: JACKSON STATE: MS ZIP: 39225-2728 BUSINESS PHONE: 6019484091 MAIL ADDRESS: STREET 1: P O BOX 22728 STREET 2: P O BOX 22728 CITY: JACKSON STATE: MS ZIP: 39201 10QSB/A 1 U. S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 --------------------------------- FORM 10-QSB/A AMENDMENT TO FORM 10-QSB filed Pursuant to THE SECURITIES EXCHANGE ACT OF 1934 THE PARKWAY COMPANY --------------------------------- (Exact name of registrant as specified in its charter) AMENDMENT NO. 1 --------------------------------- The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Form 10-QSB for the quarter ended March 31, 1995 as set forth in the pages attached hereto: Part I Item 1. Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II Item 6. Exhibits Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 15, 1995 THE PARKWAY COMPANY By /s/ Sarah P. Clark Sarah P. Clark Vice-President, Chief Financial Officer, and Secretary THE PARKWAY COMPANY FORM 10-QSB TABLE OF CONTENTS FOR THE QUARTER ENDED MARCH 31, 1995 ----------------------------------------------------- Pages ----- Part I. Financial Information Item 1. Financial Statements Consolidated balance sheet, March 31, 1995 and December 31, 1994 3 Consolidated statements of income for the three months ended March 31, 1995 and 1994 4 Consolidated statements of cash flows for the three months ended March 31, 1995 and 1994 5 Consolidated statements of shareholders' equity for the three months ended March 31, 1995 and 1994 7 Notes to consolidated financial statements 8 Item 2. Management's discussion and analysis of financial condition and results of operations 10 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 15 Signatures Authorized signatures 15 CONSOLIDATED BALANCE SHEETS (In thousands) March 31 December 31 1995 1994 ------------ ----------- (Unaudited) Assets Real estate related investments Operating real estate (net of accumulated depreciation of $6,433 and $6,177)............... $ 27,737 $ 27,907 Real estate held for sale.......... 11,320 11,369 Real estate companies.............. 15,387 15,061 Mortgage loans..................... 3,507 3,603 Real estate partnerships and corporate joint venture.......... 893 889 -------- -------- 58,844 58,829 Interest and rents receivable and other assets....................... 1,411 1,486 Cash and cash equivalents............ 248 320 Restricted cash...................... 150 427 -------- -------- $ 60,653 $ 61,062 ======== ======== Liabilities Notes payable to banks............... $ 4,280 $ 4,154 Mortgage notes payable without recourse........................... 22,789 22,827 Accounts payable and other liabilities........................ 847 1,563 Deferred gain........................ 259 280 -------- -------- 28,175 28,824 -------- -------- Shareholders' Equity Common stock, $1.00 par value, 10,000,000 shares authorized, 1,563,308 shares issued............ 1,563 1,563 Additional paid-in capital........... 26,847 26,847 Retained earnings.................... 2,981 3,158 -------- -------- 31,391 31,568 Unrealized gains on securities....... 1,087 670 -------- -------- 32,478 32,238 -------- -------- $ 60,653 $ 61,062 ======== ======== - ------------------------------------------------------------------ See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31 -------------------- 1995 1994 -------- -------- (In thousands, except per share data) Revenues Income from real estate properties.... $ 1,783 $ 1,560 Management company income............. 235 - Interest on mortgage loans............ 152 54 Equity in earnings (losses): Real estate companies............... 135 109 Real estate partnerships and corporate joint venture........... 17 (28) Gain (loss) on securities............. (24) 337 Interest on investments............... 2 31 Dividends, deferred gains and other income........................ 106 17 Gain (loss) on real estate and mortgage loans...................... 123 (127) -------- -------- 2,529 1,953 -------- -------- Expenses Real estate owned: Operating expense................... 977 935 Interest expense.................... 537 594 Depreciation and amortization....... 281 255 Minority interest................... (37) (143) Interest expense...................... 85 - Management company expenses........... 170 - Shared general and administrative expenses............................ - 125 Other expenses........................ 443 107 -------- -------- 2,456 1,873 -------- -------- Net income............................ $ 73 $ 80 ======== ======== Net income per share.................. $ .05 $ .06 ======== ======== Weighted average shares outstanding... 1,563 1,260 ======== ======== - ------------------------------------------------------------------ See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31 --------------------- 1995 1994 -------- -------- (In thousands) Operating Activities Net income........................... $ 73 $ 80 Adjustments to reconcile net income to net cash provided by operating activities: Equity in earnings.................. (152) (81) Dividends received.................. - 74 Distributions from operations of real estate partnership and corporate joint venture........... 13 (13) Depreciation and amortization....... 281 255 Amortization of discounts, deferred gains and other................... (77) (16) (Gain) loss on real estate and mortgage loans................... (123) 127 (Gain) loss on securities............ 24 (337) Minority interest depreciation...... (52) (136) -------- -------- (13) (47) Changes in operating assets and liabilities: Decrease (increase) in receivables..................... 387 (140) Increase in accounts payable and accrued expenses................ (741) 76 -------- -------- Cash provided by operating activities........................ (367) (111) -------- -------- Investing Activities Payments received on mortgage loans... 155 61 Purchases of investments in real estate companies.................... - (5,636) Purchase of real estate properties.... - (1) Proceeds from sale of real estate owned............................... 161 67 Proceeds from sale of investments in real estate companies............... 203 1,152 Improvements to real estate owned..... (62) (152) Payments (advances) on notes receivable from affiliates.......... - (33) -------- -------- Cash used in investing activities...... 457 (4,542) -------- -------- Financing Activities Principal payments on long-term debt.. (38) (111) Proceeds from bank borrowings......... 1,278 - Principal payments on bank borrowings. (1,152) - Dividends paid........................ (250) (189) -------- -------- Cash provided by (used in) financing activities........................... (162) (300) -------- -------- Decrease in cash....................... (72) (4,953) Cash and cash equivalents at beginning of period............................ 320 5,301 -------- -------- Cash and cash equivalents at end of period............................... $ 248 $ 348 ======== ======== - ------------------------------------------------------------------- See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) Three Months Ended March 31 -------------------- 1995 1994 -------- -------- (In thousands) Common stock, $1.00 par value Balance at beginning of period...... $ 1,563 $ 2,333 Retire treasury shares.............. - (1,073) -------- -------- Balance at end of period............ 1,563 1,260 -------- -------- Additional paid-in capital Balance at beginning of period...... 26,847 39,271 Retire treasury shares.............. - (15,246) -------- -------- Balance at end of period............ 26,847 24,025 -------- -------- Retained Earnings Balance at beginning of period...... 3,158 2,361 Net income.......................... 73 80 Cash dividends declared............. (250) - Exercise stock options.............. - (2) -------- -------- Balance at end of period............ 2,981 2,439 -------- -------- Treasury shares, at cost Balance at beginning of period...... - (16,320) Exercise stock options.............. - 1 Retire treasury shares.............. - 16,319 -------- -------- Balance at end of period............ - - -------- -------- Unrealized gain on securities Balance at beginning of period...... 670 - Unrealized gain on securities....... 417 - -------- -------- Balance at end of period............ 1,087 - -------- -------- Total shareholders' equity............ $ 32,478 $ 27,724 ======== ======== - ------------------------------------------------------------------ See notes to consolidated financial statements Notes to Consolidated Financial Statements (Unaudited) March 31, 1995 (1) Basis of Presentation The accompanying financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The financial statements should be read in conjunction with the annual report and the notes thereto. (2) Reclassifications Certain reclassifications have been made in the 1994 financial statements to conform to the 1995 classifications. The Company changed its fiscal year end from June 30 (fiscal year) to December 31 as of December 31, 1994. (3) Investments in Real Estate Companies Investments in real estate companies consist of the following: Quoted March 31 Market 1995 Investments Value Ownership March 31 March 31 Percentage 1995 1995 (In thousands) Investee Equity method investees: EB,Inc.................. 52.3% $ 13,097 $ 12,148 Non-equity method investees: EastGroup Properties.... 2.7% 2,133 2,133 Other................... 157 157 -------- -------- $ 15,387 $ 14,438 ======== ======== Prior to December 31, 1994, Parkway accounted for its investment in EastGroup using the equity method of accounting because of the presence of three members of Eastgroup's Board of Trustees who were also directors of Parkway and management of the day-to-day business of Parkway by officers who were also officers of Eastgroup. 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 began reporting its investment in EastGroup using the cost method of accounting on January 1, 1995 due to its ownership percentage of 2.7% and the lack of control over its operations. At March 31, 1995, EastGroup Properties had a cost basis of $1,599,000 and the other non-equity method investee had a cost basis of $173,000. The two securities are carried at fair value, resulting in a net unrealized gain of $1,087,000 at March 31, 1995. Condensed unaudited statements of income from which the Company has recorded its equity in earnings for EB, Inc. are as follows: Six Months Ended March 31, 1995 ------------------ (In thousands) Revenues................................. $ 1,129 Expenses................................. (872) -------- Net income............................... $ 257 ======== Equity in earnings recorded by Parkway............................. $ 135 ======== The investment in EB, Inc. has been purchased at an amount $3,943,000 less than the Company's pro-rata share of EB, Inc.'s book value. This amount is being recognized in operations ratably over ten years. (4) Supplemental Cash Flow Information The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. March 31 ----------------------- 1995 1994 ---------- ---------- (In thousands) Cash paid for interest....... $ 612,000 $ 655,000 Cash paid for income taxes... 2,000 19,000 Loans to facilitate sales of real estate............. - 420,000 (5) Subsequent Events On April 27, 1995, the merger of Parkway Acquisition Corporation, a wholly-owned subsidiary of Parkway, with and into EB, Inc. was completed. Under the terms of the merger, EB, Inc. became a wholly- owned subsidiary of Parkway. Shareholders of EB, Inc. received a cash payment in the amount of eight dollars ($8.00) plus sixty-two point three one hundredths (.623) of one share of Parkway common stock for each share of EB, Inc. owned by them. The merger will result in a total of approximately $5,526,000 being disbursed to EB, Inc. shareholders. At March 31, 1995, EB, Inc. had approximately $8,622,000 in cash and cash equivalents available to make these payments. Parkway will issue approximately 430,413 shares of common stock to EB shareholders as a result of the merger. THE PARKWAY COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION - ------------------- (Comments are for the balance sheet dated March 31, 1995 compared to the balance sheet dated December 31, 1994.) Total assets of the Company were $60,653,000 at March 31, 1995, a decrease of $409,000 from December 31, 1994. Liabilities decreased $649,000 to $28,175,000 during the same period. Book value per share increased from $20.62 at December 31, 1994 to $20.78 at March 31, 1995. The investment in operating real estate decreased a net $170,000 during the quarter ended March 31, 1995. This represents primarily depreciation and amortization expense of $281,000 and the sale of one townhome with a basis of $13,000. The real estate held for sale decreased $49,000 due to the sale of seven residential lots and one industrial lot. These sales resulted in a net gain of $99,000 with the Company receiving net cash proceeds of $161,000. The Company made improvements to operating properties of $62,000 during the quarter. The investment in real estate companies increased a net $326,000 during the quarter. The Company recorded equity in earnings of $135,000 and an increase in unrealized gains on securities of $417,000. This was offset by the sale of securities with a cost basis of $226,000. The sale resulted in a loss on securities of $24,000 in the first quarter. Mortgage loans decreased a net $96,000 due to principal payments received of $155,000 net of amortization of valuations of $59,000. The net increase in real estate partnerships and corporate joint venture for the quarter was $4,000. The Company recorded equity in earnings of real estate partnerships and corporate joint venture of $17,000 and received distributions of $13,000. The increase in notes payable to banks of $126,000 included advances of $1,278,000 and payments of $1,152,000. The decrease of $38,000 in mortgage notes payable without recourse was due to scheduled principal payments. The decrease in deferred gains of $21,000 is due to income recognized under the installment method of accounting for sales. Shareholders' equity increased $240,000 during the comparison period as a result of the following factors: Increase (decrease) ------------------- (In thousands) Net income $ 73 Dividends declared (250) Change in unrealized gains 417 ---------- $ 270 ========== RESULTS OF OPERATIONS - --------------------- (Comments are for the three months ended March 31, 1995 compared to the three months ended March 31, 1994.) Operations of real estate properties are summarized below: Three Months Ended March 31 -------------------- 1995 1994 -------- -------- (In thousands) Income from real estate properties... $ 1,783 $ 1,560 Real estate operating expense........ (977) (935) -------- -------- 806 625 Interest expense on real estate properties......................... (537) (594) Depreciation and amortization........ (281) (255) Minority interest.................... 37 143 -------- -------- $ 25 (81) ======== ======== The effect on the Company's operations related to One Jackson Place (which have been included in the numbers above) follows: Three Months Ended March 31 --------------------- 1995 1994 -------- -------- (In thousands) Revenues $ 898 $ 892 Operating expenses (327) (386) Interest expense (518) (518) Depreciation (226) (226) Minority interest income 37 143 -------- -------- Net loss $ (136) $ (95) ======== ======== The increase in interest on mortgage loans of $98,000 is due primarily to $78,000 of interest income recorded on the mortgage loans received in the merger with First Continental Real Estate Investment Trust ("FCREIT"). Also contributing to this increase was interest recorded on a mortgage loan made during the last fiscal year in connection with the sale of real estate. The gain on real estate and mortgage loans of $123,000 is due primarily to the sale of seven residential lots, one industrial lot and one townhome. The above sales had a combined sales price of $170,000 and carrying value of $62,000. The loss on sale of securities of $24,000 is due to the sale of an investment in a real estate investment trust for $202,000 which had a basis of $226,000. Equity in of real estate companies consists of the following: Three Months Ended March 31 --------------------- 1995 1994 -------- -------- (In thousands) EB, Inc. $ 135 $ 22 EastGroup - 111 FCREIT - (9) Congress Street - (15) -------- -------- $ 135 $ 109 ======== ======== Equity in operations of real estate partnerships and corporate joint venture consists of the following: Three Months Ended March 31 --------------------- 1995 1994 -------- -------- (In thousands) Golf Properties, Inc. $ 2 $ (28) Wink/Parkway Partnership 15 - -------- -------- $ 17 $ (28) ======== ======== Interest expense of $85,000 in the quarter ending March 31, 1995 is due to borrowings under bank lines of credit. The Company recorded management company income of $235,000 and management company expenses of $170,000 in 1995 through Eastover Realty, a wholly-owned subsidiary acquired in the November 29, 1994 merger of Congress Street Properties, Inc. into Parkway Congress Corporation ("PCC"), a wholly-owned subsidiary of Parkway. Eastover Realty offers full-service leasing, management, construction and brokerage services. 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. Congress Street Properties, Inc. administered this agreement through the date of its merger into PCC and received no income for the administration of the agreement. The expense-sharing agreement called for the income of Eastover Realty to be netted against the shared expenses before allocation to the participants. This was done through December 31, 1994, the termination date of the agreement. Income of Eastover Realty is now included in the operations of the Company as management company income and expenses. As a result of the termination of the expense-sharing agreement, there were no shared general and administrative expenses in the first quarter of 1995. The increase in other expenses of $336,000 reflects primarily the general and administrative expenses paid previously through the expense-sharing agreement. Additional increases in other expenses were the result of the May 10, 1994 merger of FCREIT. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Funds provided by operations, mortgage loan payments, bank borrowings, proceeds from the sale of stock and sales of real estate investments were the primary sources of funds for the Company during the three months ended March 31, 1995. Funds provided by these sources and cash balances were sufficient to cover repayment of long- term debt and bank debt, dividends paid to shareholders, improvements to real estate properties and the payment of operating expenses. At March 31, 1995, the Company had available $248,000 in cash and short- term investments. Management believes that funds generated from operations, borrowings on lines of credit and cash on hand will be sufficient to cover long and short-term operating cash requirements. On April 27, 1995, the merger of Parkway Acquisition Corporation, a wholly-owned subsidiary of Parkway, with and into EB, Inc. was completed. Under the terms of the merger, EB, Inc. became a wholly- owned subsidiary of Parkway. Shareholders of EB, Inc. received a cash payment in the amount of eight dollars ($8.00) plus sixty-two point three one hundredths (.623) of one share of Parkway common stock for each share of EB, Inc. owned by them. The merger will result in a total of approximately $5,526,000 being disbursed to EB, Inc. shareholders as a result of the merger. At March 31, 1995, EB, Inc. had approximately $8,622,000 in cash and cash equivalents available to make these payments. Parkway will issue approximately 430,413 shares of common stock to EB shareholders. At March 31, 1995, the Company had one line of credit with 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 balance outstanding on this line at March 31, 1995 was $2,865,000. The entire balance outstanding under this line was repaid on April 27, 1995 with funds made available to the Company as a result of the merger of EB, Inc. discussed previously. The Company has obtained a commitment from the lender to renew this line of credit at an amount equal to sixty- five percent of the quoted market value of the pledged securities, not to exceed $10,000,000. The note will be secured by the Company's 637,705 shares of Union Planters Corporation which was also obtained in the merger of EB, Inc. discussed previously. The shares had a quoted market value of $16,899,000 on March 12, 1995. The note will have an interest rate of eight percent (8%) through June 30, 1995, and thereafter the rate will adjust quarterly to a rate of 1.85% above the London Interbank Offered Rate ("LIBOR") quoted for a 90-day period. Interest payments on the note will be due monthly with a final maturity on June 30, 1996. The Company had a second line of credit with a $1,000,000 credit limit, interest at prime plus .5% due monthly and an unused line fee of .75% due quarterly. The Company repaid the $1,000,000 amount outstanding on this note on April 27, 1995 with funds made available to the Company as a result of the merger of EB, Inc. discussed previously. This line of credit matured on April 30, 1995. The Company is negotiating with the lender to extend this line of credit with terms that would be more favorable for the Company. THE PARKWAY COMPANY PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K -------------------------------- Exhibit 27 - Financial Data Scheduled attached hereto. No reports on Form 8-K were filed during the current reporting period. SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATED: May 15, 1995 THE PARKWAY COMPANY /s/ Regina P. Shows Regina P. Shows, CPA Controller /s/ Sarah P. Clark Sarah P. Clark, CPA Vice-President, Chief Financial Officer and Secretary EX-27 2
5 1,000 3-MOS DEC-31-1995 MAR-31-1995 248 15,387 1,411 0 0 0 0 0 60,653 0 22,789 1,563 0 0 30,915 60,653 0 2,229 0 0 1,834 0 622 73 0 73 0 0 0 73 .05 .05
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