-----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, NEjyoR0gnxdmFpO67v6xs+vN9/JAFCo2rnpkVh8pSDDhIQzHv1DB2zGxny4eyqyt CWz9DF/tOQYXFEY6R99ToA== 0000729237-97-000022.txt : 19970515 0000729237-97-000022.hdr.sgml : 19970515 ACCESSION NUMBER: 0000729237-97-000022 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970514 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARKWAY PROPERTIES INC CENTRAL INDEX KEY: 0000729237 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 742123597 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11533 FILM NUMBER: 97605369 BUSINESS ADDRESS: STREET 1: 300 ONE JACKSON PL STREET 2: 188 E CAPITOL ST STE 300 CITY: JACKSON STATE: MS ZIP: 39225-2728 BUSINESS PHONE: 6019484091 MAIL ADDRESS: STREET 1: P O BOX 22728 STREET 2: P O BOX 22728 CITY: JACKSON STATE: MS ZIP: 39201 FORMER COMPANY: FORMER CONFORMED NAME: PARKWAY CO DATE OF NAME CHANGE: 19951018 8-K/A 1 ------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 8-K/A AMENDMENT TO FORM 8-K Filed Pursuant to THE SECURITIES EXCHANGE ACT OF 1934 PARKWAY PROPERTIES, INC. ----------------------------------- (Exact name of registrant as specified in its charter) AMENDMENT NO. 1 The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Form 8-K filed March 21, 1997 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: May 14, 1997 PARKWAY PROPERTIES, INC. By /s/ Sarah P. Clark -------------------------------- Sarah P. Clark Vice President, Chief Financial Officer, Treasurer and Secretary FORM 8-K/A PARKWAY PROPERTIES, INC. Item 7. Financial Statements and Exhibits. (a) Financial Statements The following audited financial statement of Courtyard at Arapaho for the year ended December 31, 1996 is attached hereto. Page ---- Report of Independent Auditors 3 Statement of Rental Revenue and Direct Operating Expenses 4 Notes to Statement of Rental Revenue and Direct Operating Expenses 5 (b) Pro Forma Consolidated Financial Statements The following unaudited Pro Forma Consolidated Financial Statements are attached hereto. PARKWAY PROPERTIES, INC. Page ---- Pro Forma Consolidated Financial Statements (Unaudited) 7 Pro Forma Consolidated Balance Sheet (Unaudited) - As of December 31, 1996 9 Pro Forma Consolidated Statement of Income (Unaudited) - For the Year Ended December 31, 1996 10 Notes to Pro Forma Consolidated Financial Statements (Unaudited) 11 Report of Independent Auditors The Board of Directors Parkway Properties, Inc. We have audited the accompanying statement of rental revenue and direct operating expenses of Courtyard at Arapaho for the year ended December 31, 1996. 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 amounts 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 of Parkway Properties, Inc. as described in Note 2, and is not intended to be a complete presentation of Courtyard at Arapaho's revenue and expenses. In our opinion, the statement of rental revenue and direct operating expenses referred to above presents fairly, in all material respects, the rental revenue and direct operating expenses described in Note 2 of Courtyard at Arapaho for the year ended December 31, 1996, in conformity with generally accepted accounting principles. /S/ Ernst & Young LLP Jackson, Mississippi April 17, 1997 Courtyard at Arapaho Statement of Rental Revenue and Direct Operating Expenses Year ended December 31, 1996 ----------------- Rental revenue (Note 1): Minimum rents................................... $2,113,070 Reimbursed charges and other income............. 83,211 ---------- 2,196,281 ---------- Direct operating expenses (Note 2): Utilities...................................... 371,232 Real estate taxes.............................. 226,477 Management fees (Note 3)....................... 67,953 Janitorial services and supplies............... 80,331 Maintenance services and supplies.............. 121,986 Insurance...................................... 27,045 Administrative and miscellaneous expenses...... 52,932 ---------- 947,956 ---------- Excess of rental revenue over direct operating expenses....................... $1,248,325 ========== See accompanying notes. Courtyard at Arapaho Notes to Statement of Rental Revenue and Direct Operating Expenses 1. Organization and Significant Accounting Policies Description of Property On March 6, 1997, a limited partnership in which Parkway Properties, Inc. is a 99% limited parter and a wholly-owned subsidiary is a 1% general partner purchased a three-building development known as Courtyard at Arapaho ("the Building Complex") in Richardson, Texas for $15,125,000. The development consists of a two-story atrium office building with 155,974 (unaudited) net rentable square feet and two single-story service center buildings totaling 44,752 (unaudited) net rentable square feet. Rental Income Minimum rents from leases are accounted for ratably over the term of each lease. Tenant reimbursements are recognized as income as the applicable services are rendered or expenses incurred. The future minimum rents on non-cancelable operating leases at December 31, 1996 are as follows: Year Amount -------------------------------- 1997 $ 2,083,000 1998 2,037,000 1999 1,874,000 2000 1,058,000 2001 1,058,000 ----------- $ 8,110,000 =========== The above amounts do not include tenant reimbursements for utilities, taxes, insurance and common area maintenance. Two tenants, whose leases expire October 31, 1999 and December 31, 2001, accounted for approximately 95% of the Building Complex's 1996 rental revenue. 2. Basis of Accounting The accompanying statement of rental revenue and direct operating expenses is presented on the accrual basis. The statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired. Accordingly, the statement excludes certain expenses not comparable to the proposed future operations of the Building Complex such as depreciation and mortgage interest expense. Management is not aware of any material factors relating to the Building Complex that would cause the reported financial information not to be necessarily indicative of future operating results. 3. Management Fees Management fees of 3% of revenues received from the operations of the Building Complex were paid to an unrelated management company. PARKWAY PROPERTIES, INC. Pro Forma Consolidated Financial Statements (Unaudited) The following unaudited pro forma consolidated balance sheet as of December 31, 1996 and pro forma consolidated statement of income of Parkway Properties, Inc. ("Parkway") for the year ended December 31, 1996 give effect to the January 7, 1997 purchase of Forum II & III, the January 28, 1997 purchase of Ashford II, the March 6, 1997 purchase of the Courtyard at Arapaho and the March 18, 1997 purchase of Charlotte Park Executive Center as well as the sale of 2,012,500 shares of common stock under its existing shelf registration statement subsequent to December 31, 1996. 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 Forum II & III, Ashford II, Courtyard at Arapaho and Charlotte Park Executive Center as well as the sale of 2,012,500 shares of common stock as if they had been consumated on December 31, 1996. The pro forma consolidated statement of income sets forth the effects of Parkway's purchases of the following buildings as if they had been consummated on January 1, 1996. BUILDING DATE OF PURCHASE Charlotte Park Executive Center 03/18/97 Courtyard at Arapaho 03/06/97 Ashford II 01/28/97 Forum II & III 01/07/97 Tensor 10/31/96 BB&T Financial Center 09/30/96 Falls Pointe 08/09/96 Roswell North 08/09/96 Cherokee 07/09/96 Courthouse 07/09/96 400 Northbelt 04/15/96 Woodbranch 04/15/96 One Park 10 Plaza 03/07/96 In addition to the purchases listed above, the pro forma consolidated statements of income set forth the effect of the May 31, 1996 sale of 157 mortgage loans, the placement of non-recourse mortgage debt on recently acquired properties and the December 24, 1996 sale of the Virginia Beach mortgage loan as if the transactions occurred January 1, 1996. These pro forma consolidated financial statements may not be indicative of the results that actually would have occurred if the purchase, sale and/or financings had been in effect on the dates indicated or which may be obtained in the future. The pro forma consolidated financial statements should be read in conjunction with the consolidated financial statements and notes of Parkway included in its annual report on Form 1O-KSB for the year ended December 31, 1996. PARKWAY PROPERTIES, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEET DECEMBER 31, 1996 (Unaudited) Parkway Pro Forma Parkway Historical Adjustments Pro Forma ---------- ----------- --------- (In thousands) Assets Real estate related investments Office buildings.............$132,309 $ 49,828 $182,137 Accumulated depreciation..... (9,507) - (9,507) -------- -------- -------- 122,802 49,828 172,630 Real estate held for sale Land....................... 5,664 - 5,664 Operating properties....... 3,675 - 3,675 Other non-core real estate assets......... 381 - 381 Mortgage loans............... 350 - 350 Real estate partnership...... 319 - 319 -------- -------- -------- 133,191 49,828 183,019 Interest, rents receivable and other assets............. 5,791 - 5,791 Cash and cash equivalents...... 8,053 1,393 9,446 -------- -------- -------- $147,035 $ 51,221 $198,256 ======== ======== ======== Liabilities Mortgage notes payable without recourse..............$ 62,828 $ - $ 62,828 Accounts payable and other liabilities................... 6,299 - 6,299 -------- -------- -------- 69,127 - 69,127 -------- -------- -------- Shareholders' Equity Common stock, $.001 par value, 69,424,000 shares authorized, 4,257,534 shares issued in 1996 (Pro Forma 6,270,034 shares)....................... 4 2 6 Additional paid-in capital...... 52,356 51,219 103,575 Retained earnings............... 25,548 - 25,548 -------- -------- -------- 77,908 51,221 129,129 -------- -------- -------- $147,035 $ 51,221 $198,256 ======== ======== ======== See accompanying notes. PARKWAY PROPERTIES, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED 12/31/96 (Unaudited) Parkway Pro Forma Parkway Historical Adjustments(6) Pro Forma ---------- -------------- --------- (In thousands, except per share data) Revenues Income from office properties...$18,840 $15,505 (a) $34,345 Income from other real estate properties.................... 1,773 - 1,773 Interest on mortgage loans...... 1,740 (1,384)(c) 356 Management company income....... 784 - 784 Interest on investments......... 500 - 500 Dividend income................. 118 - 118 Deferred gains and other income. 324 - 324 Gains on real estate held for sale and mortgage loans... 9,909 - 9,909 Gain on securities.............. 549 - 549 ------- ------- ------- 34,537 14,121 48,658 ------- ------- ------- Expenses Office properties Operating expense............. 8,466 7,115 (a) 15,581 Interest expense.............. 3,526 1,600 (b) 5,126 Depreciation and amortization. 2,444 2,002 (a) 4,446 Minority interest............. (28) - (28) Other real estate properties Operating expense............. 1,379 - 1,379 Interest expense Notes payable to banks........ 281 (281)(d) - Notes payable on wrap mortgages................... 340 (340)(e) - Management company expense...... 673 - 673 General and administrative...... 2,982 - 2,982 ------- ------- ------- 20,063 10,096 30,159 ------- ------- ------- Income before income taxes...... 14,474 4,025 18,499 Income tax expense.............. 103 - 103 ------- ------- ------- Net income......................$14,371 $ 4,025 $18,396 ======= ======= ======= Net income per share............$ 3.92 $ 3.24 ======= ======= Weighted average shares outstanding................... 3,662 5,674 ======= ======= See accompanying notes. PARKWAY PROPERTIES, INC. Notes to Pro Forma Consolidated Financial Statements (Unaudited) 1. On January 7, 1997, Parkway Properties LP purchased Forum II & III for $16,425,000 from an unrelated party. The buildings consist of approximately 173,000 net rentable square feet. The purchase was funded with existing cash reserves and borrowings of $7,440,000 on a line of credit with Deposit Guaranty National Bank, Jackson, Mississippi, at a rate equal to 8.0062%. 2. On March 6, 1997, a limited partnership in which Parkway Properties, Inc. is a 99% limited partner and a wholly-owned subsidiary is a 1% general partner purchased a three building development known as Courtyard at Arapaho for $15,125,000. The development consist of a two-story atrium office building with 155,974 net rentable square feet and two single-story service center buildings totaling 44,752 net rentable square feet. The purchase price was funded with existing cash reserves. 3. On March 18, 1997, Parkway Properties LP purchased Charlotte Park Executive Center for $16,071,000. The 30 acre master- planned office park consists of three buildings with approximately 187,207 square feet of net rentable area. The Company also purchased 17.64 acres of development land in the office park for $1,721,000. The purchases were funded with existing cash reserves. 4. The pro forma adjustments to the Consolidated Balance Sheet as of December 31, 1996 include the January 28, 1997 purchase of Ashford II for $2,207,000. 5. Subsequent to December 31, 1996, the Company completed the sale of 2,012,500 shares of common stock under its existing shelf registration statement for net proceeds of $51,221,000. 6. The pro forma adjustments to the Consolidated Statement of Income for the year ended December 31, 1996 sets forth the effects of Parkway's purchases of the following buildings as if they had been consummated on January 1, 1996. BUILDING DATE OF PURCHASE Courtyard at Arapaho 03/18/97 Charlotte Park Executive Center 03/18/97 Ashford II 01/28/97 Forum II & III 01/07/97 Tensor 10/31/96 BB&T Financial Center 09/30/96 Falls Pointe 08/09/96 Roswell North 08/09/96 Cherokee 07/09/96 Courthouse 07/09/96 400 Northbelt 04/15/96 Woodbranch 04/15/96 One Park 10 Plaza 03/07/96 In addition to the purchases listed above, the adjustments on the pro forma consolidated statements of income set forth the effect of the May 31, 1996 sale of 157 mortgage loans, the December 24, 1996 sale of the Virginia Beach mortgage loan and the placement of non-recourse mortgage debt on recently acquired properties as if the transactions occurred January 1, 1996. These pro forma adjustments are detailed below by property for the year ended December 31, 1996. The effect on income and expenses from real estate properties due to the above purchases are as follows: (a) For the year ended December 31, 1996: Revenue Expenses ----------- --------------------------- Income From Real Estate Owned Real Estate Operating Depreciation Properties Expense Expense ----------- ------------ ------------ One Park 10 $ 299,000 $ 160,000 $ 25,000 400 North Belt & Woodbranch 1,036,000 551,000 92,000 Cherokee & Courthouse Road Bldgs. 917,000 480,000 124,000 Falls Pointe & Roswell North 1,161,000 439,000 191,000 BB&T Financial Center 3,072,000 1,055,000 413,000 Tensor 810,000 530,000 64,000 Forum II & III 2,749,000 1,331,000 370,000 Charlotte Park 2,616,000 1,180,000 333,000 Ashford II 649,000 441,000 50,000 Courtyad at Arapaho 2,196,000 948,000 340,000 ----------- ----------- ----------- $15,505,000 $ 7,115,000 $ 2,002,000 =========== =========== =========== Depreciation is provided by the straight-line method over the estimated useful lives of the buildings (40 years). (b) Pro forma interest expense on real estate owned reflects the non-recourse debt placed on the buildings at the actual amounts and rates by property as if placed January 1, 1996 and is detailed below. Property/Placement Year Ended Date/Rate Debt 12/31/96 ------------------ ----------- ---------- IBM Building 2/96 7.78% $ 4,800,000 $ 41,000 Waterstone 6/96 8.00% 5,620,000 185,000 One Park 10 7/96 8.35% 4,700,000 196,000 400 North Belt & Woodbranch 7/96 8.25% 10,000,000 412,000 Falls Pointe & Roswell North 12/96 8.375% 9,850,000 766,000 ---------- $1,600,000 ========== (c) The January 1, 1996 pro forma effect of the sale of 157 mortgage loans on May 31, 1996 and the December 24, 1996 sale of the Virginia Beach mortgage loan is as follows: Year Ended 12/31/96 ------------ Interest Income: Mortgage loans $(1,384,000) (d) The pro forma effect of the purchases of Forum II & III, Ashford II, Courtyard at Arapaho and Charlotte Park Executive Center as well as the stock offering of 2,012,500 shares on interest expense on notes payable to banks for the year ended December 31, 1996 is a decrease of $281,000. (e) The pro forma effect of the sale of the Virginia Beach mortgage loan on interest expense on notes payable on wrap mortgages for the year ended December 31, 1996 is a decrease of $340,000. 7. No additional income tax expenses were provided because of the Company's net operating loss carryover. 8 All per share information for the year ended December 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 as well as the June 14, 1996 private placement of 1,140,000 shares as if both transactions had occurred January 1, 1996. FORM 8-K/A PARKWAY PROPERTIES, INC. SIGNATURES 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 hereunto duly authorized. DATE: May 14, 1997 PARKWAY PROPERTIES, INC. BY: /s/Sarah P. Clark Sarah P. Clark Vice President, Chief Financial Officer, Treasurer and Secretary -----END PRIVACY-ENHANCED MESSAGE-----