-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ON/lKrNUtdLXBZ6Rn6vUJVodqSkAofoy6ZiUPbxDvYciJ8UJsOycc/To/9R4Ie+r ZGf+JiH8K70yXNZ7A1ASUQ== 0000729237-96-000014.txt : 19960701 0000729237-96-000014.hdr.sgml : 19960701 ACCESSION NUMBER: 0000729237-96-000014 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960430 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960628 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARKWAY CO CENTRAL INDEX KEY: 0000729237 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 742123597 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-12505 FILM NUMBER: 96588352 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 8-K/A 1 ------------------ U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 8-K/A AMENDMENT TO FORM 8-K Filed Pursuant to THE SECURITIES EXCHANGE ACT OF 1934 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 8-K filed April 30, 1996 as set forth in the pages attached hereto: Item 7. Financial Statements and Exhibits Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. Date: June 28, 1996 THE PARKWAY COMPANY By /s/ Sarah P. Clark ----------------------- Sarah P. Clark Vice President, Chief Financial Officer and Secretary FORM 8-K/A THE PARKWAY COMPANY Item 7. Financial Statements and Exhibits. (a) Financial Statements The following combined audited financial statement of the Woodbranch and 400 North Belt Office Buildings for the twelve months ended December 31, 1995 are attached hereto. Page ---- Report of Independent Auditors 3 Combined Statement of Rental Revenue and Direct Operating Expenses 4 Notes to Combined Statement of Rental Revenue and Direct Operating Expenses 5 (b) Pro Forma Consolidated Financial Statements The unaudited Pro Forma Consolidated Financial Statements are attached hereto. THE PARKWAY COMPANY Page ---- Pro Forma Consolidated Financial Statements 7 Pro Forma Consolidated Balance Sheet (Unaudited) - As of March 31, 1996 8 Pro Forma Consolidated Statement of Income (Unaudited) - For the Twelve Months Ended December 31, 1995 9 Pro Forma Consolidated Statement of Income (Unaudited) - For the Three Months Ended March 31, 1996 10 Report of Independent Auditors The Board of Directors The Parkway Company We have audited the accompanying combined statement of rental revenue and direct operating expenses of the Woodbranch and 400 North Belt Office Buildings for the year ended December 31, 1995. This statement is the responsibility of management. Our responsibility is to express an opinion on this statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of rental revenue and direct operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amount and disclosures in the statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Form 8-K/A of The Parkway Company as described in Note 2 and is not intended to be a complete presentation of the Woodbranch and 400 North Belt Office Buildings' combined revenue and expenses. In our opinion, the statement of rental revenue and direct operating expenses referred to above presents fairly, in all material respects, the combined rental revenue and direct operating expenses described in Note 2 of the Woodbranch and 400 North Belt Office Buildings for the year ended December 31, 1995, in conformity with generally accepted accounting principles. We have compiled the accompanying combined statement of rental revenue and direct operating expenses of the Woodbranch and 400 North Belt Office Buildings for the three months ended March 31, 1996 in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of the financial statement information that is the representation of management. We have not audited or reviewed the statement of rental revenue and direct operating expenses of the Woodbranch and 400 North Belt Office Buildings for the three months ended March 31, 1996 and, accordingly, do not express an opinion or any other form of assurance on them. /s/ Ernst & Young LLP Jackson, Mississippi June 19, 1996 Woodbranch and 400 North Belt Office Buildings Combined Statement of Rental Revenue and Direct Operating Expenses Year ended Three months ended December 31, 1995 March 31, 1996 ----------------- ------------------ (unaudited) Rental revenue: Minimum rents................ $3,385,133 $871,559 Reimbursed charges and other income................ 85,336 16,103 ---------- -------- 3,470,469 887,662 ---------- -------- Direct operating expenses (Note 2): Utilities.................. 549,317 149,518 Real estate taxes.......... 316,891 79,332 Management fees (Note 3)... 75,495 19,767 Janitorial services and supplies.............. 269,841 63,598 Maintenance services and supplies.............. 174,337 21,721 Salaries................... 207,348 52,156 Security services.......... 146,765 39,890 Insurance.................. 55,927 13,982 Administrative and miscellaneous expenses.... 173,929 32,316 ---------- -------- 1,969,850 472,280 ---------- -------- Excess of rental revenue over direct operating expenses.... $1,500,619 $415,382 ========== ======== See accompanying notes. Woodbranch and 400 North Belt Office Buildings Notes to Combined Statement of Rental Revenue and Direct Operating Expenses 1. Organization and Significant Accounting Policies Description of Property The Parkway Company (the "Company") acquired the Woodbranch and 400 North Belt Office Buildings (the "Buildings") effective April 15, 1996 from an unrelated party. The Buildings are office buildings located in Houston, Texas with approximately 333,000 combined (unaudited) square feet of leasable area. Tenants are principally in the energy and services industries. Rental Income Minimum rents from leases are accounted for ratably over the term of each lease. Rental income from one tenant represents approximately 40 percent of the combined minimum rents. Tenant reimbursements are recognized as income as the applicable services are rendered or expenses incurred. The future minimum rents on non-cancelable operating leases at December 31, 1995 are as follows: Year Amount ------------------------------- 1996 $ 3,407,000 1997 3,070,000 1998 2,597,000 1999 366,000 2000 158,000 Thereafter 364,000 ----------- $ 9,962,000 =========== Woodbranch and 400 North Belt Office Buildings Notes to Combined Statement of Rental Revenue and Direct Operating Expenses (continued) Rental Income (continued) The above amounts do not include tenant reimbursements for utilities, taxes, insurance, and common area maintenance. 2. Basis of Accounting The accompanying combined statement of rental revenue and direct operating expenses is presented on the accrual basis. The statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired. Accordingly, the statement excludes certain expenses not comparable to the proposed future operations of the Buildings such as depreciation and mortgage interest expense. Management is not aware of any material factors relating to the Buildings that would cause the reported financial information not to be necessarily indicative of future operating results. 3. Management Fee Management fees of 2.5% of revenue received from the operations of the Buildings were paid to an unrelated management company. The Parkway Company Pro Forma Consolidated Financial Statements (Unaudited) The following unaudited pro forma consolidated balance sheet as of March 31, 1996 and pro forma consolidated statements of income of The Parkway Company ("Parkway") as of December 31, 1995 and March 31, 1996 give effect to the April 15, 1996 purchase of the Woodbranch and 400 North Belt Office Buildings. The pro forma consolidated financial statements have been prepared by management of Parkway based upon the historical financial statements of Parkway and the adjustments and assumptions in the accompanying notes to the pro forma consolidated financial statements. The pro forma consolidated balance sheet sets forth the effect of Parkway's purchases of the Woodbranch and 400 North Belt Office Buildings as if the purchase had been consummated on March 31, 1996. The pro forma consolidated statements of income set forth the effect of Parkway's purchase of the Woodbranch and 400 North Belt Office Buildings as if these transactions had been consummated on January 1, 1995. These pro forma consolidated financial statements may not be indicative of the results that actually would have occurred if the purchase had been in effect on the dates indicated or which may be obtained in the future. The pro forma consolidated financial statements should be read in conjunction with the financial statements and notes of Parkway included in its annual report on Form 1O-KSB for the period ended December 31, 1995. THE PARKWAY COMPANY AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEET MARCH 31, 1996 (Unaudited) Parkway Pro Forma Parkway Historical Adjustments Pro Forma ---------- ----------- --------- (In thousands) Assets Real estate related investments Office buildings...............$ 66,431 $ 13,900 $ 80,331 Accumulated depreciation....... (7,526) - (7,526) -------- -------- -------- 58,905 13,900 72,805 Real estate held for sale Land......................... 8,386 - 8,386 Operating properties......... 4,773 - 4,773 Mortgage loans................. 11,511 - 11,511 Real estate securities......... 1,993 - 1,993 Real estate partnerships and corporate joint venture...... 672 - 672 -------- -------- -------- 86,240 13,900 100,140 Interest and rents receivable and other assets................... 2,559 - 2,559 Cash and cash equivalents........ 4,245 (4,245) - -------- -------- -------- $ 93,044 $ 9,655 $102,699 ======== ======== ======== Liabilities Mortgage notes payable without recourse.......................$ 33,884 $ - $ 33,884 Mortgage notes payable on wrap mortgages...................... 4,602 - 4,602 Notes payable to banks........... - 9,655 9,655 Accounts payable and other liabilities.................... 4,444 - 4,444 Deferred gain.................... 292 - 292 -------- -------- -------- 43,222 9,655 52,877 -------- -------- -------- Shareholders' Equity Common stock, $1.00 par value, 10,000,000 shares authorized, 3,016,512 in 1996.............. 3,017 - 3,017 Additional paid-in capital....... 31,920 - 31,920 Retained earnings................ 14,175 - 14,175 -------- -------- -------- 49,112 - 49,112 Unrealized gain on securities.... 710 - 710 -------- -------- -------- 49,822 - 49,822 -------- -------- -------- $ 93,044 $ 9,655 $102,699 ======== ======== ======== THE PARKWAY COMPANY AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED 12/31/95 (Unaudited) Parkway Pro Forma Parkway Historical Adjustments Pro Forma ---------- ----------- --------- (In thousands, except per share data) Revenues Income from real estate properties.......................$ 8,941 $ 3,470 $12,411 Interest on mortgage loans......... 1,421 - 1,421 Management company income.......... 1,041 - 1,041 Equity in earnings Real estate companies............ 135 - 135 Real estate partnerships and corporate joint venture........ 116 - 116 Interest on investments............ 167 - 167 Dividend income.................... 601 - 601 Deferred gains and other income.... 345 - 345 Gain (loss) on real estate and mortgage loans............... 6,552 - 6,552 Gain on securities................. 4,314 - 4,314 ------- ------- ------- 23,633 3,470 27,103 ------- ------- ------- Expenses Real estate owned Operating expense................ 4,876 1,970 6,846 Interest expense................. 2,230 - 2,230 Depreciation and amortization.... 1,331 347 1,678 Minority interest................ (100) - (100) Interest expense Notes payable to banks........... 156 758 914 Notes payable on wrap mortgages.. 135 - 135 Management company expenses........ 804 - 804 Other expenses..................... 2,299 - 2,299 ------- ------- ------- 11,731 3,075 14,806 ------- ------- ------- Income before income taxes......... 11,902 395 12,297 Income tax provision............... 82 - 82 ------- ------- ------- Net income.........................$11,820 $ 395 $12,215 ======= ======= ======= Net income per share...............$ 4.24 $ .14 $ 4.38 ======= ======= ======= Weighted average shares outstanding...................... 2,787 2,787 ======= ======= THE PARKWAY COMPANY AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED 3/31/96 (Unaudited) Parkway Pro Forma Parkway Historical Adjustments Pro Forma ---------- ----------- --------- (In thousands, except per share data) Revenues Income from real estate properties......................$ 3,475 $ 888 $ 4,363 Management company income......... 279 - 279 Interest on mortgage loans........ 564 - 564 Equity in earnings (losses): Real estate partnerships and corporate joint venture....... 4 - 4 Loss on securities................ (190) - (190) Interest on investments........... 99 - 99 Deferred gains and other income... 47 - 47 Dividend income................... 66 - 66 Gain on real estate and mortgage loans........................... 193 - 193 -------- -------- ------- 4,537 888 5,425 -------- -------- ------- Expenses Real estate owned: Operating expense............... 1,677 472 2,149 Interest expense................ 655 - 655 Depreciation and amortization... 418 87 505 Minority interest............... (28) - (28) Interest expense: Notes payable to banks.......... - 189 189 Notes payable on wrap mortgages. 120 - 120 Management company expenses....... 239 - 239 Other expenses.................... 669 - 669 -------- -------- ------- 3,750 748 4,498 -------- -------- ------- Net income........................$ 787 $ 140 $ 927 ======== ======== ======= Net income per share..............$ .26 $ .05 $ .31 ======== ======== ======= Weighted average shares outstanding 3,012 3,012 ======== ======= The Parkway Company Notes to Pro Forma Consolidated Financial Statements (Unaudited) 1. On April 15, 1996, The Parkway Company ("Parkway") purchased the Woodbranch and 400 North Belt Office Buildings from Penn Mutual Life Insurance Company, an unrelated party, for $13,900,000. The buildings consist of approximately a combined 333,000 net rentable square feet. The pro forma adjustments to the Consolidated Balance Sheet as of March 31, 1996 and the Consolidated Statements of Income for the twelve months ended December 31, 1995 and three months ended March 31, 1996 include the purchase of the Woodbranch and the 400 North Belt Office Buildings. 2. The pro forma adjustment for interest expense for Woodbranch and 400 North Belt Office Buildings reflects interest on an acquisition line with Deposit Guaranty National Bank which was used for this purchase and is secured by the Woodbranch and 400 North Belt Office Buildings. Interest on the acquisition line was computed at the current interest rate, which is 7.85%. 3. Depreciation is provided by the straight-line method over the estimated useful lives of the buildings (40 years). 4. All per share information for the twelve months ended December 31, 1995 and three months ended March 31, 1996 has been restated to reflect a 3 for 2 common stock split effected as a dividend of one share for every two shares outstanding on April 30, 1996. -----END PRIVACY-ENHANCED MESSAGE-----