<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): July 1, 1999
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Indiana 0-20625 35-1898425
(State or jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
8888 KEYSTONE CROSSING, SUITE 1200
INDIANAPOLIS, INDIANA 46240
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (317) 808-6000
Not applicable
(Former name or former address, if changed since last report)
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<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Pro forma condensed consolidated balance sheet as of March 31, 1999
Notes to pro forma condensed consolidated balance sheet as of March 31, 1999
Pro forma condensed consolidated statement of operations for the three months
ended March 31, 1999
Notes to pro forma condensed consolidated statement of operations for the three
months ended March 31, 1999
Pro forma condensed consolidated balance sheet as of December 31, 1998
Notes to pro forma condensed consolidated balance sheet as of December 31,
1998
Pro forma condensed consolidated statement of operations for the year ended
December 31, 1998
Notes to pro forma condensed consolidated statement of operations for the year
ended December 31, 1998
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following pro forma condensed financial statements for Duke-Weeks Realty
Limited Partnership (the "Partnership") include certain pro forma adjustments to
the historical financial statements of Duke Realty Limited Partnership ("Duke
Operating Partnership") to reflect the proposed merger (the "Merger") of Duke
Operating Partnership and Weeks Realty Limited Partnership ("Weeks Operating
Partnership").
Duke Realty Investments, Inc., the general partner of Duke Operating
Partnership, will merge with Weeks Corporation, the general partner of Weeks
Operating Partnership, immediately following the merger of Duke Operating
Partnership and Weeks Operating Partnership. After the merger of Duke Realty
Investments, Inc. and Weeks Corporation, the combined company will be known as
Duke-Weeks Realty Corporation (the "General Partner"), and will be the sole
general partner of the Partnership.
The Mergers will be accounted for using the purchase method of accounting in
accordance with Accounting Principles Board Opinion No. 16. These pro forma
condensed consolidated financial statements should be read in conjunction with
the Duke Operating Partnership Form 10-Q as of and for the three months ended
March 31, 1999, and also in conjunction with Weeks Operating Partnership Form
10-Q as of and for the three months ended March 31, 1999.
The following pro forma condensed consolidated balance sheet is based upon
the March 31, 1999 consolidated balance sheet of Duke Operating Partnership
and the March 31, 1999 consolidated balance sheet of Weeks Operating
Partnership, presented as if the Merger occurred on March 31, 1999.
The following pro forma condensed consolidated statement of operations is
based upon the consolidated statement of operations for the three months
ended March 31, 1999 of Duke Operating Partnership and Weeks Operating
Partnership, presented as if the Merger occurred as of January 1, 1999.
The pro forma condensed consolidated financial statements do not purport to
be indicative of the actual financial position or results of operations which
would have been obtained assuming that the Merger had been completed as set
forth above, or which may be obtained in the future.
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1999
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA DUKE-WEEKS
--------------------------- MERGER POST-MERGER
ASSETS DUKE WEEKS ADJUSTMENTS PRO FORMA
------ ---- ----- ------------ ----------
<S> <C> <C> <C> <C>
Real estate $2,720,892 $1,412,983 $281,323 (A) $4,415,198
Land held for development 185,507 37,118 - (B) 222,625
Investment in unconsolidated real estate companies 115,527 7,676 - (B) 123,203
Less accumulated depreciation (188,856) (101,640) 101,640 (A) (188,856)
------------ ------------- ------------ -----------
Net real estate investment 2,833,070 1,356,137 382,963 4,572,170
Cash and cash equivalents 34,981 2,159 (17,000)(D) 20,140
Accounts receivable 8,562 8,807 - 17,369
Straight-line rent receivable 21,664 6,529 (6,529)(C) 21,664
Investment in and notes receivable from
unconsolidated service companies - 42,926 - 42,926
Deferred financing costs 12,864 7,939 (7,939)(C) 12,864
Deferred other costs 52,642 20,466 (20,466)(C) 52,642
Other assets 105,223 14,781 - 120,004
----------- ------------- ------------ -----------
TOTAL ASSETS $3,069,006 $1,459,744 $331,029 $4,859,779
---------- ------------- ------------ ------------
---------- ------------- ------------ ------------
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Secured debt $333,560 $243,764 $ 12,109 (E) $589,433
Unsecured debt 715,000 285,000 1,994 (E) 1,001,994
Lines of credit 65,000 140,140 - 205,140
Accounts payable and other liabilities 166,695 38,945 - 205,640
---------- ----------- ------------- ---------
Total liabilities 1,280,255 707,849 14,103 2,002,207
Minority interest 501 - - 501
Partners' equity:
Preferred equity 460,000 250,000 (4,545)(A) 705,455
Common equity 1,328,250 501,895 321,471 (A) 2,151,616
---------- ----------- ----------- ---------
Total partners' equity 1,788,250 751,895 316,926 2,857,071
---------- ----------- ------------ --------
TOTAL LIABILITIES AND PARTNERS'
EQUITY $3,069,006 $1,459,744 $331,029 $4,859,779
----------- ----------- ------------- ----------
----------- ----------- ------------- ----------
</TABLE>
See accompanying notes to pro forma condensed consolidated balance sheet
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS)
(a) Represents adjustments to record Weeks Operating Partnership's assets and
liabilities at their respective purchase values based on the purchase
method of accounting. The assumed purchase price of $1.8 billion was
computed as follows:
<TABLE>
<CAPTION>
WEEKS DUKE DUKE
OPERATING OPERATING OPERATING
PARTNERSHIP PARTNERSHIP PARTNERSHIP
UNITS EXCHANGE UNITS VALUE ACQUISITION
OUTSTANDING RATIO ISSUED PER UNIT COSTS
----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Common units 27,079 1.38 37,369 $21.75 $812,776 (1)
-----------
-----------
Preferred Series A Units 6,000 1.00 6,000 $23.75 142,500 (2)
-----------
-----------
Preferred Series C Units 1,400 1.00 1,400 $25.00 35,000 (3)
-----------
-----------
Preferred Series D Units 2,600 1.00 2,600 $26.14 67,955 (4)
-----------
-----------
General Partner options and warrants issued 11,990 (5)
Weeks Operating Partnership outstanding debt assumed 683,007 (6)
Other Weeks Operating Partnership liabilities assumed 38,945
Estimated transaction costs 17,000 (7)
---------
Total assumed purchase price $1,809,173
---------
---------
</TABLE>
(1) Represents the value of the Duke Operating Partnership common units
that will be exchanged for the assumed outstanding Weeks Operating
Partnership common units. The value of the Duke Operating Partnership
common units is based upon the five day average of the closing price of
the General Partner's common stock as listed on the New York Stock
Exchange immediately before, during and after the date the terms of the
Merger were agreed to and announced to the public on March 1, 1999.
The following purchase accounting adjustments will be made to partners'
equity:
<TABLE>
<CAPTION>
<S> <C>
Value of Duke Operating Partnership common units issued $812,776
Less net book value of Weeks Operating Partnership
common equity at March 31, 1999 501,895
---------
Adjustments to common equity for Duke Operating Partnership
common units issued 310,881
Adjustment to preferred equity for Duke Operating Partnership
Series F Preferred Units issued (see note (a) (2)) (7,500)
Adjustment to preferred equity for Duke Operating Partnership
Preferred D Units (see note (a) (4)) 2,955
Adjustment to common equity for General Partner options
and warrants issued (see note (a) (5)) 10,590
---------
Total purchase accounting adjustment to partners' equity $316,926
----------
----------
</TABLE>
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
NOTES TO PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS)
(2) Each outstanding unit of Preferred Series A Cumulative Redeemable
Preferred Units of Weeks Operating Partnership will be converted into
the right to receive one depositary unit of Duke Operating Partnership
representing 1/1000 of a unit of Series F Cumulative Redeemable
Preferred Units of Duke Operating Partnership. The assumed value of the
Duke Operating Partnership Series F preferred units is based upon the
average closing price of the Weeks Corporation Series A Preferred Stock
the two days immediately following the date the terms of the Merger
were agreed to and announced to the public.
The following purchase accounting adjustment will be made to partners'
preferred equity:
<TABLE>
<S> <C>
Value of Duke Operating Partnership Series F Preferred Units issued $ 142,500
Less net book value of Weeks Operating Partnership Series A Preferred
Units at March 31, 1999 150,000
--------
Purchase accounting adjustment to partners' preferred equity $ (7,500)
--------
--------
</TABLE>
(3) The Duke Operating Partnership will issue preferred units valued at the
book value (which approximates estimated fair value), of Weeks
Operating Partnership Preferred C Units at March 31, 1999. The Duke
Operating Partnership Preferred Units will have the same economic
attributes as the Weeks Operating Partnership Preferred C Units.
(4) The Duke Operating Partnership will issue preferred units valued at the
estimated fair value of the Weeks Operating Partnership Preferred D
Units at March 31, 1999. The Duke Operating Partnership Preferred D
Units will have the same economic attributes as the Weeks Operating
Partnership Preferred D Units. The adjustment to estimated fair value
is based on the present value of amounts to be paid using pricing
levels available to the General Partner for preferred equity with
similar terms and features around March 1, 1999, the announced date of
the Merger.
The following purchase accounting adjustment will be made to partners'
preferred equity:
<TABLE>
<S> <C>
Value of Duke Operating Partnership Preferred D Units $67,955
Less net book value of Weeks Operating Partnership Series D
Preferred Units at March 31, 1999 65,000
-------
Purchase accounting adjustment to partners' preferred equity $ 2,955
-------
-------
</TABLE>
(5) Represents the fair value (computed using an option pricing model) of
the General Partner's stock options and warrants to be issued to
replace outstanding Weeks Corporation stock options and warrants. The
General Partner's stock options and warrants will carry the same terms
and remaining vesting schedule as the Weeks Corporation stock options
and warrants being replaced and provide for the option to purchase up
to 3,116,000 of General Partner common shares. The following purchase
accounting adjustment will be made to partners' common equity:
<TABLE>
<S> <C>
Value of General Partner issued stock options and warrants $11,990
Less book value of Weeks Corporation warrants at March 31, 1999 (1,400)
-------
Purchase accounting adjustment to partners' common equity $10,590
-------
-------
</TABLE>
(6) The Weeks Operating Partnership outstanding debt assumed is calculated as
follows (see note (e)):
<TABLE>
<S> <C>
Weeks Operating Partnership outstanding debt $668,904
Fair value adjustment to secured debt 12,109
Fair value adjustment to unsecured debt 1,994
---------
$683,007
---------
---------
</TABLE>
(7) Represents estimated costs to be incurred by Duke Operating Partnership
in connection with the Merger (see note (d)).
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
NOTES TO PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS)
(8) The total purchase accounting adjustment to net real estate investments
is calculated as follows:
<TABLE>
<S> <C>
Total adjustment for Duke Operating Partnership common units
issued per note (a) (1) $310,881
Total adjustment for Duke Operating Partnership Series F Preferred Units
issued per note (a) (2) (7,500)
Total adjustment for Duke Operating Partnership Series D preferred units
issued per note (a) (4) 2,955
Total adjustment for cash paid for closing costs per note (d) 17,000
Total adjustment to record Weeks Operating Partnership debt to fair market
value per note (a) (6) 14,103
Total adjustment to record General Partner stock options issued per note (a) (5) 10,590
Total adjustment to eliminate assets of Weeks Operating Partnership with no
future value per note (c) 34,934
---------
Total purchase accounting adjustment to net real estate investments $382,963
---------
---------
</TABLE>
(b) The book value of Weeks Operating Partnership's land held for development
and investments in unconsolidated companies at March 31, 1999, was
estimated to approximate the fair value because substantially all land
acquisitions and investments in unconsolidated companies occurred within
the last 24 months and the acquisition or investment cost is representative
of current market conditions.
(c) Represents the elimination of assets of Weeks Operating Partnership that
have no future value to the combined company.
(d) Represents the expected cash expenditures to fund the following costs to be
incurred with the merger:
<TABLE>
<S> <C>
Advisory Fees $13,000
Legal and Professional Fees 3,000
Other 1,000
-------
$17,000
-------
-------
</TABLE>
(e) Represents adjustments to Weeks Operating Partnership secured and
unsecured debt to reflect the premium or discount to adjust these
financial instruments to their estimated fair value. The adjustment is
based on the present value of amounts to be paid using interest rates
available to Duke Operating Partnership for debt obligations with
similar terms and features. The borrowing rates available to Duke
Operating Partnership are assumed to be comparable to the borrowing
rates available to the combined company. The adjustments are based on
current effective interest rates ranging from 6.29% to 7.45%. See note
(a)(6).
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA DUKE-WEEKS
------------------------ MERGER POST-MERGER
DUKE WEEKS ADJUSTMENTS PRO FORMA
----------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues
Rental income $99,479 $44,421 $374 (F) $144,274
Equity in earnings of unconsolidated
real estate companies 2,508 89 - 2,597
---------- -------- --------- ----------
Total income 101,987 44,510 374 146,871
----------- -------- --------- ----------
Expenses
Rental expenses 18,626 6,341 - 24,967
Real estate taxes 10,817 3,912 - 14,729
Interest 15,991 9,103 (1,029)(G) 24,065
Depreciation and amortization 20,454 11,344 416 (H) 32,214
----------- -------- --------- ---------
Total expenses 65,888 30,700 (613) 95,975
----------- -------- --------- --------
Earnings from rental operations 36,099 13,810 987 50,896
Earnings from service operations 5,036 - - 5,036
Equity in earnings from unconsolidated service
companies - 503 - 503
General and administrative (3,615) (1,756) - (5,371)
Other income and expenses 2,681 5,224 - 7,905
----------- -------- --------- ----------
Earnings from continuing operations
before minority interest 40,201 17,781 987 58,969
Other minority interest in earnings of
subsidiaries (430) (2,102) - (2,532)
----------- --------- -------- ---------
Net income from continuing operations 39,771 15,679 987 56,437
Less distributions to preferred unitholders (8,842) (3,000) - (11,842)
----------- -------- --------- ----------
Net income from continuing operations
available for common unitholders $30,929 $12,679 $987 $44,595
----------- -------- --------- ----------
----------- -------- --------- ----------
Weighted average common units
outstanding- basic 97,198 27,051 134,528
----------- -------- ----------
----------- -------- ----------
Weighted average common units
outstanding- diluted 98,094 27,177 135,598
----------- -------- ----------
----------- -------- ----------
Net income from continuing operations per
common unit (note (I)):
Basic $0.32 $0.47 $ 0.33
----------- -------- ----------
----------- -------- ----------
Diluted $0.32 $0.47 $ 0.33
----------- -------- ----------
----------- -------- ----------
</TABLE>
See accompanying notes to pro forma consolidated statement of operations
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
NOTES TO PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER UNIT DATA)
(f) Represents the net increase in rental income as a result of the re-setting
of straight-line rents for Weeks Operating Partnership under purchase
accounting.
(g) Represents the decrease in interest expense as a result of the following
items for the three months ended March 31, 1999:
<TABLE>
<S> <C>
Decrease based on the pro forma interest rates resulting from
the adjustments of Weeks Operating Partnership debt to estimated fair market
value as described in note (e) $(513)
Decrease in Weeks Operating Partnership deferred finance cost
amortization related to the elimination of Weeks Operating
Partnership deferred finance costs as described in note (c). $(516)
--------
$(1,029)
--------
--------
</TABLE>
(h) Represents the net increase in depreciation of real estate as a result of
the allocation of purchase price to record Weeks Operating Partnership's
real estate at estimated fair value for the three months ended March 31,
1999 (in thousands).
<TABLE>
<S> <C>
Additional basis in real estate basis (see note (a)) $382,963
Less amount of step-up allocated to:
Developments in progress (76,327)
Land portion of operating facilities (43,512)
--------
Depreciable portion of additional basis $263,124
--------
--------
</TABLE>
The depreciable portion of the additional basis is then allocated to
properties placed in service prior to or during the first quarter of 1999
and depreciation expense is computed over the time in service for each
property during 1999, based upon a 40 year estimated useful life. The
depreciation expense attributable to the additional basis is $1,617, offset
by a decrease in amortization expense of $1,201, which is related to the
elimination of Weeks Operating Partnership deferred costs as described in
note (c).
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERHIP
NOTES TO PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<TABLE>
<S> <C>
(i) The following summarizes the calculation of basic and diluted pro forma
earnings per common unit for the three months ended March 31, 1999:
Basic Earnings Per Common Unit Calculation
Weighted average common units outstanding:
Duke Operating Partnership prior to merger 97,198
Duke Operating Partnership common units issued to
Weeks Operating Partnership (1) 37,330
--------
Adjusted weighted average common units outstanding - basic 134,528
--------
--------
Pro forma net income from continuing operations
available for common unitholders $ 44,595
--------
--------
Basic pro forma earnings per common unitholder $ .33
--------
--------
Diluted Earnings Per Common Unit Calculation
Adjusted weighted average common units outstanding- Basic 134,528
Weighted average dilutive potential common units:
Duke Operating Partnership dilutive potential securities 896
Additional Duke Operating Partnership dilutive potential securities
after Merger conversion (1) 174
----------
Adjusted weighted average common and dilutive potential common units 135,598
--------
--------
Pro forma net income from continuing operations available for
common unitholders $ 44,595
--------
--------
Diluted pro forma earnings per common unitholder $ .33
--------
--------
</TABLE>
(1) The Partnership's pro forma weighted average common units outstanding
reflects adjustments based on the issuance of 1.38 Duke Operating
Partnership common units for each weighted average unit of Weeks
Operating Partnership common unit and each weighted average unit of
Weeks Operating Partnership dilutive potential securities.
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following pro forma condensed financial statements for Duke-Weeks Realty
Limited Partnership (the "Partnership") include certain pro forma adjustments to
the historical financial statements of Duke Realty Limited Partnership ("Duke
Operating Partnership") to reflect the proposed merger (the "Merger") of Duke
Operating Partnership and Weeks Realty Limited Partnership ("Weeks Operating
Partnership").
Duke Realty Investments, Inc., the general partner of Duke Operating
Partnership, will merge with Weeks Corporation, the general partner of Weeks
Operating Partnership, immediately following the merger of Duke Operating
Partnership and Weeks Operating Partnership. After the merger of Duke Realty
Investments, Inc. and Weeks Corporation, the combined company will be known as
Duke-Weeks Realty Corporation (the "General Partner"), and will be the sole
general partner of the Partnership.
The Mergers will be accounted for using the purchase method of accounting in
accordance with Accounting Principles Board Opinion No. 16. These pro forma
condensed consolidated financial statements should be read in conjunction with
the Duke Operating Partnership Form 10-K as of and for the three years ended
December 31, 1998, and also in conjunction with Weeks Operating Partnership Form
10-K as of and for the three years ended December 31, 1998.
The following pro forma condensed consolidated balance sheet is based upon the
December 31, 1998 consolidated balance sheet of Duke Operating Partnership and
the December 31, 1998 consolidated balance sheet of Weeks Operating Partnership,
presented as if the Merger occurred on December 31, 1998.
The following pro forma condensed consolidated statement of operations is based
upon the consolidated statement of operations for the year ended December 31,
1998 of Duke Operating Partnership and Weeks Operating Partnership, presented as
if the Merger occurred as of January 1, 1998.
The pro forma condensed consolidated financial statements do not purport to be
indicative of the actual financial position or results of operations which would
have been obtained assuming that the Merger had been completed as set forth
above, or which may be obtained in the future.
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1998
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA DUKE-WEEKS
--------------------------------------- MERGER POST-MERGER
ASSETS DUKE WEEKS ADJUSTMENTS PRO FORMA
------ ---- ----- ----------- ---------
<S> <C> <C> <C> <C>
Real estate $2,589,729 $1,361,843 $287,642 (A) $4,239,214
Land held for development 146,911 42,438 - (B) 189,349
Investment in unconsolidated real estate companies 125,746 35,204 - (B) 160,950
Less accumulated depreciation (179,887) (96,383) 96,383 (A) (179,887)
------------------- ------------------ ---------------- ----------------
Net real estate investment 2,682,499 1,343,102 384,025 4,409,626
Cash and cash equivalents 6,626 1,503 (8,453)(D) (324)
Accounts receivable 9,641 9,483 - 19,124
Straight-line rent receivable 20,332 5,833 (5,833)(C) 20,332
Investment in and notes receivable from
unconsolidated service companies - 43,639 - 43,639
Deferred financing costs 11,316 8,455 (8,455)(C) 11,316
Deferred other costs 53,281 20,708 (20,708)(C) 53,281
Other assets 70,367 14,869 - 85,236
------------------- ------------------ ---------------- ----------------
TOTAL ASSETS $2,854,062 $1,447,592 $340,576 $4,642,230
------------------- ------------------ ---------------- ----------------
------------------- ------------------ ---------------- ----------------
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Secured debt $326,317 $251,399 $12,109 (E) $589,825
Unsecured debt 590,000 285,000 1,994 (E) 876,994
Lines of credit 91,000 118,025 8,547 (D) 217,572
Accounts payable and other liabilities 168,390 42,603 - 210,993
------------------- ------------------ ---------------- ----------------
Total liabilities 1,175,707 697,027 22,650 1,895,384
Minority interest 367 - - 367
Partners' equity:
Preferred equity 360,000 250,000 (4,545)(A) 605,455
Common equity 1,317,988 500,565 322,471 (A) 2,141,024
------------------- ------------------ ---------------- ----------------
Total partners' equity 1,677,988 750,565 317,926 2,746,479
------------------- ------------------ ---------------- ----------------
TOTAL LIABILITIES AND PARTNERS'
EQUITY $2,854,062 $1,447,592 $340,576 $4,642,230
------------------- ------------------ ---------------- ----------------
------------------- ------------------ ---------------- ----------------
</TABLE>
See accompanying notes to pro forma condensed consolidated balance sheet
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
(UNAUDITED)
(IN THOUSANDS)
(a) Represents adjustments to record Weeks Operating Partnership's assets and
liabilities at their respective purchase values based on the purchase
method of accounting. The assumed purchase price of $1.8 billion was
computed as follows:
<TABLE>
<CAPTION>
WEEKS DUKE DUKE
OPERATING OPERATING OPERATING OPERATING
PARTNERSHIP PARTNERSHIP PARTNERSHIP
UNITS EXCHANGE UNITS VALUE ACQUISITION
OUTSTANDING RATIO ISSUED PER Unit COSTS
----------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Common units 27,068 1.38 37,354 $21.75 $812,446 (1)
-------
-------
Preferred Series A Units 6,000 1.00 6,000 $23.75 142,500 (2)
-------
Preferred Series C Units 1,400 1.00 1,400 $25.00 35,000 (3)
-------
-------
Preferred Series D Units 2,600 1.00 2,600 $26.14 67,955 (4)
-------
-------
General Partner options and warrants issued 11,990 (5)
Weeks Operating Partnership outstanding debt assumed 668,527 (6)
Other Weeks Operating Partnership liabilities assumed 42,603
Estimated transaction costs 17,000 (7)
----------
Total assumed purchase price $1,798,021
----------
----------
</TABLE>
(1) Represents the value of the Duke Operating Partnership common units
that will be exchanged for the assumed outstanding Weeks Operating
Partnership common units. The value of the Duke Operating Partnership
common units is based upon the five day average of the closing price of
the General Partner's common stock as listed on the New York Stock
Exchange immediately before, during and after the date the terms of the
Merger were agreed to and announced to the public on March 1, 1999.
The following purchase accounting adjustments will be made to partners'
equity:
<TABLE>
<CAPTION>
<S> <C> <S>
Value of Duke Operating Partnership common units issued $812,446
Less net book value of Weeks Operating Partnership
common equity at December 31, 1998 500,565
--------
Adjustments to common equity for Duke Operating Partnership
common units issued 311,881
Adjustment to preferred equity for Duke Operating Partnership Series F
Preferred Units issued (see note (a) (2)) (7,500)
Adjustment to preferred equity for Duke Operating Partnership
Preferred D Units (see note (a) (4)) 2,955
Adjustment to common equity for General Partner options and warrants issued
(see note (a) (5)) 10,590
---------
Total purchase accounting adjustment to partners' equity $317,926
---------
---------
</TABLE>
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
(UNAUDITED)
(IN THOUSANDS)
(2) Each outstanding unit of Preferred Series A Cumulative Redeemable
Preferred Units of Weeks Operating Partnership will be converted into
the right to receive one depositary unit of Duke Operating Partnership
representing 1/1000 of a unit of Series F Cumulative Redeemable
Preferred Units of Duke Operating Partnership. The assumed value of the
Duke Operating Partnership Series F preferred units is based upon the
average closing price of the Weeks Corporation Series A Preferred Stock
the two days immediately following the date the terms of the Merger
were agreed to and announced to the public.
The following purchase accounting adjustment will be made to partners'
preferred equity:
<TABLE>
<S> <C>
Value of Duke Operating Partnership Series F Preferred Units issued $142,500
Less net book value of Weeks Operating Partnership Series A Preferred
Units at December 31, 1998 150,000
Purchase accounting adjustment to partners' preferred equity --------
$ (7,500)
--------
--------
</TABLE>
(3) The Duke Operating Partnership will issue preferred units valued at the
book value (which approximates estimated fair value), of Weeks
Operating Partnership Preferred C Units at December 31, 1998. The Duke
Operating Partnership Preferred Units will have the same economic
attributes as the Weeks Operating Partnership Preferred C Units.
(4) The Duke Operating Partnership will issue preferred units valued at the
estimated fair value of the Weeks Operating Partnership Preferred D
Units at December 31, 1998. The Duke Operating Partnership Preferred D
Units will have the same economic attributes as the Weeks Operating
Partnership Preferred D Units. The adjustment to estimated fair value
is based on the present value of amounts to be paid using pricing
levels available to the General Partner for preferred equity with
similar terms and features around March 1, 1999, the announced date of
the Merger.
The following purchase accounting adjustment will be made to partners'
preferred equity:
<TABLE>
<S> <C>
Value of Duke Operating Partnership Preferred D Units $67,955
Less net book value of Weeks Operating Partnership Series D Preferred
Units at December 31, 1998 65,000
Purchase accounting adjustment to partners' preferred equity -------
$ 2,955
-------
-------
</TABLE>
(5) Represents the fair value (computed using an option pricing model) of
the General Partner's stock options and warrants to be issued to
replace outstanding Weeks Corporation stock options and warrants. The
General Partner's stock options and warrants will carry the same terms
and remaining vesting schedule as the Weeks Corporation stock options
and warrants being replaced and provide for the option to purchase up
to 3,116,000 of General Partner common shares. The following purchase
accounting adjustment will be made to partners' common equity:
<TABLE>
<S> <C>
Value of General Partner issued stock options and warrants $11,990
Less book value of Weeks Corporation warrants at December 31, 1998 (1,400)
-------
Purchase accounting adjustment to partners' common equity $10,590
-------
-------
</TABLE>
(6) The Weeks Operating Partnership outstanding debt assumed is calculated
as follows (see note (e)):
<TABLE>
<S> <C>
Weeks Operating Partnership outstanding debt $654,424
Fair value adjustment to secured debt 12,109
Fair value adjustment to unsecured debt 1,994
-------
$668,527
--------
--------
</TABLE>
(7) Represents estimated costs to be incurred by Duke Operating Partnership in
connection with the Merger (see note (d))
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
(UNAUDITED)
(IN THOUSANDS)
(8) The total purchase accounting adjustment to net real estate investments is
calculated as follows:
<TABLE>
<S> <C>
Total adjustment for Duke Operating Partnership common units
issued per note (a) (1) $311,881
Total adjustment for Duke Operating Partnership Series F Preferred Units
issued per note (a) (2) (7,500)
Total adjustment for Duke Operating Partnership Series D preferred units
issued per note (a) (4) 2,955
Total adjustment for cash paid for closing costs per note (d) 17,000
Total adjustment to record Weeks Operating Partnership debt to fair market
value per note (a) (6) 14,103
Total adjustment to record General Partner stock options issued per note (a) (5) 10,590
Total adjustment to eliminate assets of Weeks Operating Partnership with no
future value per note (c) 34,996
--------
Total purchase accounting adjustment to net real estate investments $384,025
--------
--------
</TABLE>
(b) The book value of Weeks Operating Partnership's land held for development
and investments in unconsolidated companies at December 31, 1998, was
estimated to approximate the fair value because substantially all land
acquisitions and investments in unconsolidated companies occurred within
the last 24 months and the acquisition or investment cost is representative
of current market conditions.
(c) Represents the elimination of assets of Weeks Operating Partnership that
have no future value to the combined company.
(d) Represents the expected incremental borrowings and cash expenditures to
fund the following costs to be incurred with the merger:
<TABLE>
<S> <C>
Advisory Fees $13,000
Legal and Professional Fees 3,000
Other 1,000
-------
$17,000
-------
</TABLE>
(e) Represents adjustments to Weeks Operating Partnership secured and unsecured
debt to reflect the premium or discount to adjust these financial
instruments to their estimated fair value. The adjustment is based on the
present value of amounts to be paid using interest rates available to Duke
Operating Partnership for debt obligations with similar terms and features.
The borrowing rates available to Duke Operating Partnership are assumed to
be comparable to the borrowing rates available to the combined company. The
adjustments are based on current effective interest rates ranging from
6.29% to 7.45%. See note (a)(6).
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA DUKE-WEEKS
--------------------- MERGER POST-MERGER
DUKE WEEKS ADJUSTMENTS PRO FORMA
------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
Rental income $337,768 $150,974 $2,102 (F) $490,844
Equity in earnings of unconsolidated real estate companies 10,857 329 - 11,186
-------- -------- ---------- --------
Total income 348,625 151,303 2,102 502,030
-------- -------- ---------- --------
Expenses:
Rental expenses 59,769 22,494 - 82,263
Real estate taxes 33,906 12,824 - 46,730
Interest 60,217 30,782 (3,054)(G) 87,945
Depreciation and amortization 68,766 38,348 1,987 (H) 109,101
-------- -------- ---------- --------
Total expenses 222,658 104,448 (1,067) 326,039
-------- -------- ---------- --------
Earnings from rental operations 125,967 46,855 3,169 175,991
Earnings from service operations 7,195 - - 7,195
Equity in earnings from unconsolidated service companies - 2,535 - 2,535
General and administrative (11,573) (5,809) - (17,382)
Other income and expenses 2,608 1,018 - 3,626
-------- -------- ---------- --------
Earnings from continuing operations before minority
interest 124,197 44,599 3,169 171,965
Other minority interest in earnings of subsidiaries (1,252) - - (1,252)
-------- -------- ---------- --------
Net income from continuing operations 122,945 44,599 3,169 170,713
Less distributions to preferred unitholders (19,833) (13,191) - (33,024)
-------- -------- ---------- --------
Net income from continuing operations available
for common unitholders $103,112 $31,408 $3,169 $137,689
-------- -------- ---------- --------
-------- -------- ---------- --------
Weighted average common units
outstanding- basic 91,576 26,134 127,641
-------- -------- --------
-------- -------- --------
Weighted average common units
outstanding- diluted 92,468 26,299 128,761
-------- -------- --------
-------- -------- --------
Net income from continuing operations per unit (note (I)):
Basic $1.13 $1.20 $ 1.08
-------- -------- --------
-------- -------- --------
Diluted $1.12 $1.19 $ 1.07
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes to pro forma consolidated statement of operations
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER UNIT DATA)
(f) Represents the net increase in rental income as a result of the re-setting
of straight-line rents for Weeks Operating Partnership under purchase
accounting.
(g) Represents the net change in interest expense as a result of the following
items for the year ended December 31, 1998:
<TABLE>
<S> <C>
Decrease based on the pro forma interest rates resulting from
the adjustments of Weeks Operating Partnership debt to estimated fair market
value as described in note (e) $(1,931)
Decrease in Weeks Operating Partnership deferred finance cost amortization related to the
elimination of Weeks Operating Partnership deferred finance costs as described
in note (c). (1,686)
Increase related to additional borrowings on the line of credit to fund
Merger related Costs identified in note (d) 563
--------
$(3,054)
--------
--------
</TABLE>
(h) Represents the net increase in depreciation of real estate as a result of
the allocation of purchase price to record Weeks Operating Partnership's
real estate at estimated fair value for the three months ended
December 31, 1998 (in thousands).
<TABLE>
<S> <C>
Additional basis in real estate basis (see note (a)) $384,025
Less amount of step-up allocated to:
Developments in progress (85,487)
Land portion of operating facilities (42,118)
Depreciable portion of additional basis ---------
$256,420
---------
---------
</TABLE>
The depreciable portion of the additional basis is then allocated to
properties placed in service prior to or during 1998 and depreciation
expense is computed over the time in service for each property during 1998,
based upon a 40 year estimated useful life. The depreciation expense
attributable to the additional basis is $5,586, offset by a decrease in
amortization expense of $3,599, which is related to the elimination of
Weeks Operating Partnership deferred costs as described in note (c).
<PAGE>
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER UNIT DATA)
(i) The following summarizes the calculation of basic and diluted pro forma
earnings per common unit for the three months ended December 31, 1998:
<TABLE>
<CAPTION>
<S> <S>
Basic Earnings Per Common Unit Calculation
Weighted average common units outstanding:
Duke Operating Partnership prior to merger 91,576
Duke Operating Partnership common units issued to
Weeks Operating Partnership (1) 36,065
--------
Adjusted weighted average common units outstanding - basic 127,641
--------
--------
Pro forma net income from continuing operations
available for common unitholders $ 137,689
---------
---------
Basic pro forma earnings per common unitholder $ 1.08
---------
---------
Diluted Earnings Per Common Unit Calculation
Adjusted weighted average common units outstanding- Basic 127,641
Weighted average dilutive potential common units:
Duke Operating Partnership dilutive potential securities 892
Additional Duke Operating Partnership dilutive potential securities after
Merger conversion (1) 228
---------
Adjusted weighted average common and dilutive potential common units 128,761
---------
---------
Pro forma net income from continuing operations available for
common unitholders $ 137,689
---------
---------
Diluted pro forma earnings per common unitholder $ 1.07
---------
---------
</TABLE>
(1) The Partnership's pro forma weighted average common units outstanding
reflects adjustments based on the issuance of 1.38 Duke Operating
Partnership common units for each weighted average unit of Weeks Operating
Partnership common unit and each weighted average unit of Weeks Operating
Partnership dilutive potential securities.
<PAGE>
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.
DUKE-WEEKS REALTY LIMITED PARTNERSHIP
By: DUKE-WEEKS REALTY CORPORATION
Date: August 31, 1999 By: /s/ Matthew A. Cohoat
------------------------
Matthew A. Cohoat
Vice President and
Corporate Controller
