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