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