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 December 14, 1994 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: February 9, 1995 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 audited financial statements of
Congress Street Properties, Inc. for the year ended
August 31, 1994 are attached in an Exhibit hereto.
CONGRESS STREET PROPERTIES, INC.
Page
Independent Auditors' Report 3
Consolidated Balance Sheets - as of August 31, 1994
and 1993 6
Consolidated Statements of Income - for the years ended
August 31, 1994 and 1993 7
Consolidated Statements of Cash Flows - for the years
ended August 31, 1994 and 1993 8
Consolidated Statements of Shareholders' Equity
for the years ended August 31, 1994 and 1993 9
Notes to Consolidated Financial Statements 10
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
Congress Street Properties, Inc.
We have audited the accompanying consolidated balance sheets of
Congress Street Properties, Inc. and subsidiary as of August 31,
1994 and 1993, and the related consolidated statements of income,
shareholders' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits. The financial statements
of EB, Inc. (an investee in which the Company has a 19.24% direct
and indirect interest) and EastGroup Properties (an investee in
which the Company has a .98% indirect interest through the
Company's investment in The Parkway Company), have been audited by
other auditors whose reports have been furnished to us; insofar as
our opinion on the consolidated financial statements relates to
data included for EB, Inc. for its years ended December 31, 1993
and 1992; and EastGroup Properties for its years ended December 31,
1993 and 1992; it is based in part on their reports.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and
the reports of other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the reports of other
auditors, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of Congress Street Properties, Inc. and subsidiary at
August 31, 1994 and 1993, and the consolidated results of their
operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Ernst & Young LLP
Jackson, Mississippi
January 24, 1995
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
EB, Inc.
Jackson, Mississippi
We have audited the accompanying balance sheets of EB, Inc. as of
December 31, 1993 and 1992 and the related statements of
operations, changes in stockholders' equity and cash flows for the
years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of EB, Inc. as of
December 31, 1993 and 1992 and the results of its operations and
its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
March 10, 1994
INDEPENDENT AUDITORS' REPORT
The Trustees and Shareholders
EastGroup Properties:
We have audited the consolidated balance sheets of EastGroup
Properties and subsidiaries (the Company), a Maryland real estate
investment trust, as of December 31, 1993 and 1992, and the related
consolidated statements of operations, changes in shareholders'
equity and cash flows for each of the years in the three-year
period ended December 31, 1993. Such consolidated financial
statements are not presented separately herein. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of EastGroup Properties and subsidiaries at December 31,
1993 and 1992, and the results of their operations and their cash
flows for each of the years in the three-year period ended December
31, 1993 in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
Jackson, Mississippi KPMG Peat Marwick LLP
March 17, 1994<PAGE>
CONSOLIDATED BALANCE SHEETS
August 31
-------------------
1994 1993
-------------------
(In thousands)
Assets
Real estate investments:
Real estate companies.................... $ 11,957 $ 11,110
Real estate partnership.................. (1,553) (1,151)
-------- --------
10,404 9,959
Cash....................................... 74 24
Amount receivable from affiliate........... 45 -
Other assets............................... 110 144
-------- --------
$ 10,633 $ 10,127
======== ========
Liabilities and Shareholders' Equity
Liabilities
Note payable to affiliate.................. $ 389 $ 448
Notes payable to bank...................... 36 746
Amounts payable to affiliates.............. 90 260
Deferred income taxes...................... 124 83
Other liabilities.......................... 203 160
-------- --------
842 1,697
-------- --------
Commitments and Contingencies
Shareholders' Equity
Common Stock, $.10 par value, authorized -
3,000,000 shares; issued and outstanding
2,358,714 in 1994 and 1,283,305 shares
in 1993.................................. 236 128
Capital in excess of par value............. 13,515 12,818
Retained earnings (deficit)................ (2,710) (2,997)
-------- --------
11,041 9,949
Less: Treasury shares at cost - 207,896
shares in 1994 and 1993............ (1,517) (1,519)
Unrealized gain on securities........ 267 -
-------- --------
9,791 8,430
-------- --------
$ 10,633 $ 10,127
-------- --------
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Year Ended August 31
-----------------------
1994 1993
-----------------------
Revenues
Equity in earnings (losses):
Real estate companies............... $ 897 $ 743
Real estate partnership............. (343) (378)
Interest............................. 35 34
Gain on sale of real estate
investments........................ 5 47
---------- ----------
594 446
---------- ----------
Expenses
Interest............................. 59 127
General and administrative........... 227 185
Real estate owned expenses........... - 1
Allowance for possible losses........ - (30)
---------- ----------
286 283
---------- ----------
Income before income taxes and
discontinued operations........... 308 163
Income tax expense.................... 41 54
---------- ----------
Income before discontinued operations. 267 109
---------- ----------
Equity in income from discontinued
operations of equity method investees:
Income from discontinued operations.. 23 213
Gain on sale of discontinued
operations......................... - 503
---------- ----------
23 716
---------- ----------
Net income........................... $ 290 $ 825
========== ==========
Income per share:
From continuing operations........... $ .15 $ .10
From discontinued operations......... .01 .67
---------- ----------
Net income.......................... $ .16 $ .77
========== ==========
Weighted average shares outstanding... 1,841 1,075
========== ==========
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended August 31
--------------------
1994 1993
--------------------
Operating Activities
Net income.............................. $ 290 $ 825
Adjustments to reconcile net income to
net cash provided by operating
activities:
Allowance for possible losses......... - (30)
Equity in earnings of real estate
companies and partnership............ (577) (1,081)
Dividends received from real estate
companies............................ 340 454
Gains on real estate.................. - (47)
Deferred income taxes................. 41 55
Deferred gain recognized.............. (5) -
Changes in operating assets and
liabilities:
(Increase) Decrease in other assets.. 34 27
Increase (decrease) in other
liabilities......................... 43 (16)
---------- ----------
Net cash provided by operating activities 166 187
---------- ----------
Investing Activities
Decrease in deferred gain.............. - (65)
Collection of note receivable.......... 5 30
Proceeds from sale of real estate...... - 339
Distributions from (contributions to)
partnership........................... 59 (63)
Advances (payments) of amounts due
affiliates............................ (215) 126
---------- ----------
Net cash provided by (used in) investing
activities............................ (151) 367
---------- ----------
Financing Activities
Proceeds from line of credit........... 1,733 2,185
Principal payments on line of credit... (2,443) (2,751)
Principal payments on notes payable to
affiliate............................. (59) -
Net proceeds from rights offering...... 805 -
Stock options exercised................ (1) -
---------- ----------
Net cash provided by (used in) financing
activities............................ 35 (566)
---------- ----------
Increase (decrease) in cash............. 50 (12)
Cash and cash equivalents at beginning
of year............................... 24 36
---------- ----------
Cash and cash equivalents at end of year $ 74 $ 24
========== ==========
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
Capital Retained Unrealized
Common In Excess Earnings Treasury Loss On
Stock of Par Value (Deficit) Stock Securities Total
----------------------------------------------------------
Balance at
August 31, 1992.. $ 128 $12,818 $(3,822) $(1,519) $ (29) $ 7,576
Net Income....... - - 825 - - 825
Unrealized loss
on securities... - - - - 29 29
------ ------- ------- ------- ------- -------
Balance at
August 31, 1993.. 128 12,818 (2,997) (1,519) - 8,430
Net income....... - - 290 - - 290
Stock issued in
rights offering. 108 697 - - - 805
Unrealized gain
on securities... - - - - 267 267
Stock options
exercised....... - - (3) 2 - (1)
------ ------- ------- ------- ------- -------
Balance at
August 31, 1994.. $ 236 $13,515 $(2,710) $(1,517) $ 267 $ 9,791
====== ======= ======= ======= ======= =======
See notes to consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of
Congress Street Properties, Inc. (the "Company"), and its wholly-
owned subsidiary, Eastover Realty Corporation. All significant
intercompany transactions and accounts have been eliminated.
For years ending after August 31, 1992, the Company adopted the
financial statement reporting provisions of Regulation S-B of the
Securities and Exchange Commission.
Investments in Real Estate Companies and Partnerships
The equity method of accounting is used to account for
investments in which the Company has the ability to exercise
significant influence over the operating and financial policies of
the investee. Loss in value of equity investments that is
considered to be an other than temporary decline is charged to
operations.
Impact of Recently Issued Accounting Standards
In May, 1993, Statement of Financial Accounting Standard (SFAS)
No. 114, "Accounting by Creditors for Impairment of a Loan" was
issued. The statement must be adopted for fiscal years beginning
after December 15, 1994. Management does not expect any material
effect to the Company from the application of Statement No. 114.
In March 1993, SFAS No. 115 "Accounting for Certain Investments
in Debt and Equity Securities", was issued and is to be effective
for fiscal years beginning after December 15, 1993. Management
does not expect any material effect to the Company from the
application of SFAS No. 115. Certain of the Company's equity
method investees adopted SFAS No. 115 during fiscal 1994. The
effect to the Company is reflected in the accompanying consolidated
statements of shareholders' equity as unrealized gain on
securities.
Income Recognition
Interest income on each loan is recognized based on the
outstanding loan balances, unless its collectibility is determined
to be doubtful.
Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
Reclassifications
Certain reclassifications have been made in the 1993 financial
statements to conform to the 1994 classifications.
Business Segment
The Company's operations are almost exclusively in the real
estate industry.
Note B - Investments in Real Estate Companies
The equity method of accounting was used to account for the
investments in The Parkway Company ("Parkway") and EB, Inc. because
officers and directors of the Company were also directors or
officers of these investees, and the Company and its other equity
method investees own substantial shareholdings in Parkway and EB,
Inc. (36.74% and 52.36%, respectively, in the aggregate).
Investments in real estate companies consist of the following:
Aug. 31,
1994 August 31, 1994 August 31, 1993
---------- ------------------ ------------------
Direct Quoted Quoted
Ownership Market Market
Percentage Investment Value Investment Value
---------- ---------- ------ ---------- ------
(In thousands)
Equity method investees
Parkway ...... 36.74% $11,712 $7,514 $10,882 $5,671
EB, Inc. ..... .80% 245 134 228 123
------- -------
$11,957 $11,110
======= =======
The Company also owned 930,132 shares of Rockwood National
Corporation at August 31, 1994 and 1993. This investment was
written to zero at March 31, 1992.
The condensed financial information for the equity method
investees presented below was summarized from the investees'
financial statements filed with the Securities and Exchange
Commission prior to August 31, 1994 and was used by the Company to
record the Company's equity in the investees' operations.
Parkway Balance Sheet (In thousands)
June 30
Assets 1994
-------
Real estate and mortgage loans........................... $41,512
Investments in real estate companies,
partnerships and corporate joint venture................ 15,711
Cash and short term investments.......................... 412
Other.................................................... 2,100
-------
$59,735
=======
Liabilities
Notes and mortgages payable.............................. $26,533
Other liabilities........................................ 1,473
-------
28,006
-------
Shareholders' Equity..................................... 31,729
-------
$59,735
=======
Statements of Operations (In thousands)
For the Twelve Months Ended
June 30
---------------------------
1994 1993
---------------------------
Parkway
Revenues........................... $ 8,956 $ 8,719
Expenses........................... (7,703) (7,494)
Income tax expense................. (1) (3)
Income from discontinued operations 51 1,490
---------- ----------
Net income......................... $ 1,303 $ 2,712
========== ==========
Equity in earnings recorded by
Congress Street.................. $ 913 $ 1,434
========== ==========
In the fourth quarter of fiscal 1994, Parkway issued shares of
its stock to acquire the net assets of First Continental Real
Estate Investment Trust ("First Continental"). The Company
recognized no gain or loss on the transaction, although its
ownership percentage of Parkway decreased from 45.00% to 36.74%.
The Company's investment in Parkway was $51,000 greater than and
$1,350,000 less than the Company's pro rata share of Parkway's book
value as of August 31, 1994 and 1993 respectively. This amount has
been assigned to Parkway's and First Continental's principal assets
and is being recognized as income and expense as the assets of
Parkway and First Continental are liquidated. The income
recognition amounted to $318,000 and $185,000 for the years ended
August 31, 1994 and 1993, respectively.
For the Twelve Months Ended
March 31
---------------------------
1994 1993
---------------------------
EB, Inc.
Revenue............................. $ 2,650 $ 2,880
Expenses............................ (1,993) (6,935)
Income from discontinued operations. 342 7,174
Income tax expense.................. - (100)
------- -------
Net income.......................... $ 999 $ 3,019
======= =======
Equity in earnings recorded by
Congress Street................... $ 7 $ 25
======= =======
For the Twelve Months Ended
March 31
---------------------------
1994 1993
---------------------------
EastGroup Properties
Revenue.............................. $17,739 $14,137
Expenses............................. (15,197) (12,385)
Recoveries (provisions for) possible
losses............................. 144 (1,675)
Gains (losses) on investments........ 4,560 (3,598)
------- --------
Net income (loss).................... $ 7,246 $(3,521)
======= =======
Congress Street does not have a direct ownership in EastGroup
Properties. The Company's equity method investee, Parkway, has a
2.68% ownership in EastGroup and accounts for this investment under
the equity method of accounting. Congress Street, by virtue of its
36.74% ownership of Parkway, has recorded the operations of
EastGroup indirectly through its equity in earnings of Parkway.
The investment in Parkway includes equity in earnings of Parkway
through June 30, 1994. Equity in earnings of EB, Inc. is recorded
through its quarter ended March 31, 1994. Congress Street owned
its investment in EB, Inc. through a corporation of which 5% was
owned by Congress Street and 95% by Parkway. This corporation was
dissolved effective December 31, 1993 and the EB, Inc. stock was
distributed pro rata to Congress Street and Parkway. The Company
received 11,673 shares of EB, Inc. in the distribution and now owns
the investment directly. In computing equity in earnings to be
recorded from the investment in Parkway, the equity in earnings
(losses) of Congress Street that are reflected in the operations of
Parkway have been eliminated.
On March 1, 1993, Eastover Bank sold its banking operations to
Sunburst. This disposition of the banking operations has been
treated in the financial statements of EB, Inc. as discontinued
operations. The Company's share of these discontinued operations,
recorded directly through its ownership interest and indirectly
through the equity in earnings of Parkway, were $23,000 in 1994 and
$716,000 in 1993.
At August 31, 1994 and 1993, the Company has recorded in
shareholders' equity approximately $6,251,000 and $5,678,000,
respectively of undistributed earnings of Parkway.
Note C - Real Estate Owned
Changes in real estate owned were as follows:
Year Ended August 31
----------------------
1994 1993
----------------------
Balance at beginning of period......... $ - $ 321
Cost of real estate sold............... - (321)
---------- ----------
Balance at end of period............... $ - $ -
========== ==========
During the first quarter of fiscal 1993, the Company sold the
Tall Pines land as follows:
Sales price $ 350,000
Land (net of allowance of $126,000) (321,000)
Closing costs (11,000)
---------
Gain recognized $ 18,000
=========
The proceeds from the sale were used to pay down the master
note.
Note D - Real Estate Partnership
Investment in real estate partnership at August 31, 1994 and
1993 was as follows:
August 31
Ownership -----------------
Investment Percentage 1994 1993
- - - ---------- ---------- -----------------
(In thousands)
One Place Partners; owns a
73.125% interest in an office
building (One Jackson Place)
in Jackson, MS................ 48.5% $(1,553) $(1,151)
======= =======
Condensed financial statements for One Jackson Place were as
follows:
Balance Sheets
June 30, 1994
--------------
(In thousands)
Assets
Land and building, net.............. $ 15,064
Rent receivable..................... 669
Cash and other assets............... 584
--------
$ 16,317
========
Liabilities
Mortgage and notes payable.......... $ 23,895
Other liabilities................... 476
--------
24,371
Partnership Deficit................. (8,054)
--------
$ 16,317
========
Statements of Operations
For the Twelve Months Ended
June 30
---------------------------
1994 1993
---------------------------
(In thousands)
Revenues........................ $ 3,504 $ 3,312
Operating expenses.............. (1,463) (1,368)
Depreciation and amortization... (847) (830)
Interest expense................ (2,179) (2,166)
Interest income................. 13 5
-------- --------
Net Loss........................ $ (972) $ (1,047)
======== ========
Equity in loss recorded by
Congress Street............... $ (343) $ (378)
======== ========
Note E - Notes Payable
The Company had a short-term line of credit with a bank totaling
$200,000 ($1,050,000 at August 31, 1993). No balance was
outstanding on the note at August 31, 1994 and $675,000 was
outstanding at August 31, 1993. The line of credit is secured by
75,000 shares of the Company's investment in Parkway which had a
market value of $919,000 and a carrying value of $1,543,000 at
August 31, 1994. The effective average interest rate for the years
ended August 31, 1994, and 1993 was 7.8%, and 8.00% respectively.
The maximum amount outstanding during the years ended August 31,
1994, and 1993 was $972,000, and $1,500,000 respectively. The line
of credit will mature on December 30, 1995. Interest paid was
$28,000 in 1994, and $98,000 in 1993.
Note F - Deferred Gain
On February 2, 1990, the Company sold the Eastover Bank
Building. Congress Street recorded the sale under the deposit
method and accounted for the building as an operating asset until
August 31, 1990 because Congress Street had guaranteed net
operating income ("NOI") to the purchaser and had received as part
of the purchase price a mortgage note of $727,000 at 10.3%
subordinate to an existing first mortgage. The purchaser repaid
the subordinated mortgage in October 1990, and the Company had no
future ownership claim to the building. Use of the deposit method
was discontinued beginning in fiscal 1991.
A deferred gain of approximately $827,000 was recorded as of
August 31, 1990. The Company deferred the gain due to several
contingencies and commitments related to the sale of the building.
The Company had guaranteed $41,000 per month of net operating
income to the purchaser which expired on January 31, 1992. The
second contingency was a capital improvements line of credit. The
terms of the sales agreement provided for a line of credit from the
Company to the purchaser for tenant improvements totaling $375,000.
The line of credit matured on January 31, 1993 with no funds to be
advanced past that date. The tenant improvement note is secured by
an interest in the limited partnership that purchased the building.
After the NOI contingency expired in January 1992, the Company
recorded for financial reporting purposes a gain of $682,000. The
balance of the gain will continue to be deferred and recognized as
principal payments are received on the tenant improvement note
receivable. The note matures January 31, 1996 and the purchaser is
making monthly payments based on a twenty-five year amortization.
The balance of the note and deferred gain was $336,000 at August
31, 1994.
Note G - Income Tax Expense
The following is a reconciliation between the amount reported
for income taxes and the amount computed by multiplying income
before taxes by the statutory federal tax rate of 34%.
August 31
----------------------
1994 1993
----------------------
(In thousands)
Income tax expense based
on statutory tax rate.................. $ 113 $ 299
Operating losses not utilized............ 148 98
Equity in earnings not deductible
for federal income taxes............... (261) (397)
Federal alternative minimum tax expense.. 9 10
State income tax expense................. 32 44
-------- --------
Income tax expense....................... $ 41 $ 54
======== ========
The Company has $3,972,000 of net operating loss carryforwards
for financial reporting purposes. For federal income tax
reporting, the Company has net operating loss carryforwards of
approximately $5,937,000 which expire as follows:
August 31 Amounts
-------- --------------
(In thousands)
2000 $ 56
2001 692
2002 69
2003 988
2004 1,398
2006 1,137
2007 660
2008 558
2009 379
---------
$ 5,937
=========
There were no income taxes paid in fiscal 1994 and 1993.
The Company's income differs for tax and financial reporting
purposes principally because (1) the timing of the recognition of
earnings (losses) from real estate partnership investments, (2) the
timing of the recognition of earnings (losses) of real estate
companies compared to the dividends received from those
investments, and (3) the timing of the deduction for depreciation.
The components of the deferred tax liabilities follows:
August 31
---------------------
1994 1993
---------------------
(In thousands)
Federal alternative minimum tax...... $ 31 $ 22
State income tax..................... 93 61
------- -------
$ 124 $ 93
======= =======
Note H - Stock Option and Stock Appreciation Rights Plan
The Company's Board of Directors and shareholders approved a key
employee stock option and stock appreciation rights plan under
which 43,200 shares of common stock are reserved for issuance upon
exercise of options granted thereunder. The option price may not
be less than the fair market value at the date of grant, and in no
event may the option be exercisable for more than ten years.
Under the Company's stock option plan stock appreciation rights
are granted to the same key employees and for the same number of
shares for which stock options are granted. The rights exercised
cannot exceed the number of options exercised. The stock
appreciation rights entitle the optionees, upon exercise of the
stock option, to receive compensation equal to the excess of the
market price over the exercise price. At August 31, 1994, 30,767
options were outstanding, 20,000 were granted with an exercise
price of $3.44 and 10,767 with an exercise price of $1.50. During
fiscal 1994, 500 options were exercised. At August 31, 1994,
11,933 shares of common stock were available for grant under this
plan.
Note I - Capital Transactions
On October 14, 1993, the Company issued rights to purchase
common stock to its shareholders. The Company distributed to each
shareholder of record on the Record Date (August 30, 1993) one
Right for each share owned. Each right entitled a shareholder to
purchase one share at the subscription price of $.80 per share.
The rights were transferable and expired 60 days after issuance.
In December 1993, the Company completed its rights offering and
received proceeds of $805,000, net of expenses. The net proceeds
were used by the Company to reduce its bank indebtedness under its
line of credit with a bank.
The Company has authorized 150,000 shares of preferred stock,
no par value, which may be issued in series by the Board of
Directors with such dividend and liquidation preferences, voting
rights, dividend rates, conversion rights and redemption price as
the Board of Directors shall determine. At August 31, 1994, and
1993, there were no shares of preferred stock outstanding.
Note J - Related Party Transactions
The Company had an expense-sharing agreement with Eastover,
Parkway and EastGroup Properties ("EastGroup") pursuant to which
the participants shared administrative offices at the same location
in Jackson, Mississippi and common officers and other personnel,
subject to the authority of the board of directors of each
participating company to elect or appoint and remove its officers
in accordance with its certificate of incorporation, declaration of
trust or other charter documents and applicable law. EB, Inc. had
a separate administrative agreement with Congress Street which
allowed EB, Inc. to participate in the expense-sharing agreement on
the same basis as the companies which are parties to the expense-
sharing arrangement. Under this arrangement, the participants
shared the cost of the common officers and other employees and of
shared facilities and activities. These common costs were
initially paid by Congress Street, which served as the
administrator of the agreement, and the other participants paid the
Company an annual fee (on a monthly basis) of one half of one
percent of their assets which are publicly-traded securities.
After these fees, any profits from Eastover Realty Corporation
("Eastover Realty") and the fees from LNH REIT, Inc. ("LNH"),
Citizens Growth Properties ("Citizens") and Rockwood National
Corporation ("Rockwood") were subtracted from the total common
costs (see further description below), the remaining common costs
were allocated on a monthly basis among the Company, EastGroup,
Parkway, Eastover and EB, Inc. in proportion to their assets other
than publicly-traded securities, based on their balance sheets as
contained in their most recent SEC filings. Certain costs which
the common officers believed to be particularly attributable to
each member company were not shared. These non-allocable costs
include but are not limited to directors' and trustees' fees,
legal, audit and stock transfer expenses, stationery and items of
a similar nature. Congress Street received no fee income for
fulfilling its duties as the administrator of the expense-sharing
agreement. Congress Street recorded its share of the common
expenses,computed as described above, as a general and
administrative expense. The Company's share of these common costs
were $56,000 in 1994 and $49,000 in 1993. The amounts that
Congress Street allocated to the other companies totalled
$2,039,000 for 1994 and $1,634,000 for 1993. The Company had
amounts payable to the participating companies totaling $90,000 in
1994 and $260,000 in 1993, which represented advances made by the
participating companies to Congress Street.
Note J - Related Party Transactions (continued)
Citizens Growth Properties, a former member of the Eastover
Group of Companies withdrew from the expense sharing agreement
effective September 30, 1989. Citizens contracted with Congress
Street to manage the day-to-day operations for a fixed annual fee
of $40,000 cancelable on sixty days notice by either party.
Effective September 1, 1990, Rockwood withdrew from the expense
sharing agreement. Rockwood signed an agreement separately with
the Company whereby the Company provided management and
administrative services for an annual fee of the lessor of $196,000
or the amount that would have been paid under the expense sharing
agreement. This agreement was terminated June 29, 1994. Effective
April 22, 1992, LNH REIT, Inc. moved its corporate offices to
Jackson, Mississippi and agreements were executed whereby the
Company, through an affiliated partnership, provided certain
management and administrative services for LNH REIT, Inc. for an
annual fee of $125,000.
The Company signed an amendment to the One Place Partner's
Partnership Agreement whereby Parkway loaned to the Company the
Company's portion of capital contributions. This note accrued
interest at prime plus one percent with interest due annually. At
August 31, 1994 and 1993, $389,000 and $448,000, respectively, was
outstanding on the loan from Parkway.
A part of the common expenses of the Eastover Group of Companies
is the cost of office space leased from One Jackson Place. The
Company's lease expires on March 31, 1995.
