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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 January 2, 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: March 1, 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 audited financial statement of the
Waterstone Building for the twelve months ended June 30,
1995 are attached in an Exhibit hereto.
Page
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Report of Independent Auditors 3
Statement of Rental Revenue and
Direct Operating Expenses 4
Notes to Statement of Rental Revenue
and Direct Operating Expenses 5
(b) Pro Forma Consolidated Financial Statements
The unaudited Pro Forma Consolidated Financial
Statements are attached in an Exhibit hereto.
THE PARKWAY COMPANY
Page
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Pro Forma Consolidated Financial Statements 7
Pro Forma Consolidated Balance Sheet (Unaudited) -
As of September 30, 1995 8
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Six Months Ended December 31, 1994 9
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Nine Months Ended September 30, 1995 10
(c) Exhibits.
None
<PAGE>
Report of Independent Auditors
The Board of Directors
The Parkway Company
We have audited the accompanying statement of rental revenue and
direct operating expenses of the Waterstone Building for the year
ended June 30, 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 Waterstone Building's revenue and expenses.
In our opinion, the statement of rental revenue and direct
operating expenses referred to above presents fairly, in all
material respects, the rental revenue and direct operating
expenses, as described in Note 2, of the Waterstone Building for
the year ended June 30, 1995, in conformity with generally accepted
accounting principles.
We have compiled the accompanying statement of rental revenue and
direct operating expenses of the Waterstone Building for the three
months ended September 30, 1995 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 Waterstone Building for the three months
ended September 30, 1995 and, accordingly, do not express an
opinion or any other form of assurance on them.
/s/ Ernst & Young LLP
Jackson, Mississippi
January 5, 1996
<PAGE>
Waterstone Building
Statement of Rental Revenue
and Direct Operating Expenses
Year ended Three months ended
June 30, 1995 September 30, 1995
------------- ------------------
(unaudited)
Rental revenue:
Minimum rents................ $1,266,546 $334,142
Reimbursed charges and
other income................ 25,189 6,862
---------- --------
1,291,735 341,004
Direct operating expenses
(Note 2):
Utilities.................. 148,931 36,455
Real estate taxes.......... 87,821 22,791
Management fees and
commissions (Note 3)...... 58,894 23,042
Janitorial services
and supplies.............. 69,169 17,139
Maintenance services
and supplies.............. 81,024 14,879
Administrative and
miscellaneous expenses.... 81,321 23,931
---------- --------
527,160 138,237
---------- --------
Excess of rental revenue over
direct operating expenses.... $ 764,575 $202,767
========== ========
See accompanying notes.
<PAGE>
Waterstone Building
Notes to Statement of Rental Revenue
and Direct Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
The Parkway Company (the "Company") acquired the Waterstone
Building (the "Building") effective December 19, 1995 from an
unrelated party. The Building is an office building located in
College Park, Georgia with approximately 92,600 (unaudited) square
feet of leasable area.
Rental Income
Minimum rents from leases are accounted for ratably over the term
of each lease. Tenant reimbursements are recognized as income as
the applicable services are rendered or expenses incurred.
The future minimum rents on non-cancelable operating leases at June
30, 1995 are as follows:
Fiscal Year Amount
-------------------------------
1996 $ 1,342,000
1997 1,164,000
1998 703,000
1999 181,000
2000 43,000
-----------
$ 3,433,000
===========
<PAGE>
Waterstone Building
Notes to 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 statement of rental revenue and direct operating
expenses is presented on the accrual basis. The statement has been
prepared in accordance with the applicable rules and regulations of
the Securities and Exchange Commission for real estate properties
acquired. Accordingly, the statement excludes certain expenses not
comparable to the proposed future operations of the Building such
as depreciation and mortgage interest expense. Management is not
aware of any material factors relating to the Building that would
cause the reported financial information not to be necessarily
indicative of future operating results.
3. Management Fee
Management fees of 3.5% of revenue received from the operations of
the Building 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 of The
Parkway Company ("Parkway") as of September 30, 1995 gives effect
to the December 19, 1995 purchase of the Waterstone Building and
the October 2, 1995 purchase of the IBM Building. The pro forma
consolidated statements of income for the six months ended December
31, 1994 and the nine months ended September 30, 1995 give effect
to the purchase of the Waterstone Building, the IBM Building and
the July 31, 1995 purchase of the Mtel Centre'. 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 Waterstone Building and the IBM Building
as if the purchase had been consummated on September 30, 1995. The
pro forma consolidated statements of income set forth the effect of
Parkway's purchase of the Waterstone Building, the IBM Building and
Mtel Centre' as if these transactions had been consummated on July
1, 1994.
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, 1994.
<PAGE>
The Parkway Company
Pro Forma Consolidated Balance Sheet (Unaudited)
September 30,1995
Pro Forma Pro Forma
Parkway Adjustments Consolidated
------- ----------- ------------
(In thousands)
Assets
Real estate related
investments
Operating real estate
(net of accumulated
depreciation) $40,913 $14,531 (1) $55,444
Real estate held for sale 9,551 9,551
Real estate and financial
service companies 14,415 14,415
Mortgage loans 6,447 6,447
Real estate partnerships
and corporate joint
venture 753 753
------- ------- -------
72,079 14,531 86,610
Interest and rents
receivable and other
assets 2,226 2,226
Cash and cash equivalents 10,062 (10,062)(1) 0
Restricted cash 357 357
------- ------- -------
$84,724 $ 4,469 $89,193
======= ======= =======
Liabilities
Notes payable to banks $10,000 $ 4,469 $14,469
Mortgage notes payable
without recourse 22,404 22,404
Mortgage notes payable
on wrap mortgages 1,903 1,903
Accounts payable and
other liabilities 4,004 4,004
Deferred gain 269 269
------- ------- -------
38,580 4,469 43,049
------- ------- -------
Shareholders' Equity
Common Stock 1,996 1,996
Additional paid-in
capital 32,796 32,796
Retained earnings 8,380 8,380
------- ------- -------
43,172 0 43,172
Unrealized gains on
securities 2,972 2,972
------- ------- -------
46,144 0 46,144
------- ------- -------
$84,724 $ 4,469 $89,193
======= ======= =======
See accompanying notes to pro forma consolidated financial
statements (unaudited).
<PAGE>
The Parkway Company
Pro Forma Consolidated Statement of Income (Unaudited)
For the six months ended December 31,1994
Parkway Pro Forma Pro Forma
Historical Adjustments Consolidated
---------- ----------- ------------
(In thousands, except for per share data)
Revenues
Income from real estate
properties $3,683 $3,003 (1) $6,686
Interest on mortgage loans 283 283
Equity in earnings:
Real estate companies 681 681
Real estate partnerships
and corporate joint 195 195
Gain on securities 27 27
Interest on investments 18 18
Dividends, deferred gains
and other income 46 46
Gain on real estate and
mortgage loans 529 529
------ ------ ------
5,462 3,003 8,465
------ ------ ------
Expenses
Real estate owned:
Operating expense 1,951 1,590 (1) 3,541
Interest expense 1,078 614 (2) 1,692
Depreciation and
amortization 565 310 (3) 875
Minority interest (209) (209)
Notes payable to banks 140 140
Shared general and
administrative expenses 270 270
Other expenses 662 662
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4,457 2,514 6,971
------ ------ ------
Net income $1,005 $ 489 $1,494
====== ====== ======
Net income per share $ 0.65 $ .97
====== ======
Weighted average shares
outstanding 1,544 1,544
====== ======
See accompanying notes to pro forma consolidated financial
statements (unaudited).
<PAGE>
The Parkway Company
Pro Forma Consolidated Statement of Income (Unaudited)
For the nine months ended September 30, 1995
Parkway Pro Forma Pro Forma
Historical Adjustments Consolidated
---------- ----------- ------------
(In thousands, except per share data)
Revenues
Income from real estate
properties $ 6,045 $4,370 (1) $10,415
Management company income 885 885
Interest on mortgage loans 915 915
Equity in earnings:
Real estate companies 135 135
Real estate partnerships and
corporate joint venture 93 93
Gain on securities 1,393 1,393
Interest on investments 67 67
Dividends, deferred gains and
other income 774 774
Gain on real estate and
mortgage loans 4,178 4,178
------- ----- ------
14,485 4,370 18,855
------- ----- ------
Expenses
Real estate owned:
Operating expense 3,364 2,992 (1) 6,356
Interest expense 1,631 775 (2) 2,406
Depreciation and
amortization 911 414 (3) 1,325
Minority interest (113) (113)
Interest expense:
Notes payable to banks 155 155
Notes payable on wrap
mortgages 73 73
Management company expenses 621 621
Other expenses 1,631 1,631
------- ------ ------
8,273 4,181 12,454
------- ------ ------
Income before taxes 6,212 189 6,401
------- ------ ------
Income tax provision 83 0 83
------- ------ ------
Net Income $ 6,129 $ 189 $6,318
======= ====== ======
Net income per share $ 3.39 $ 3.49
======= ======
Weighted average shares
outstanding 1,810 1,810
======= ======
See accompanying notes to pro forma consolidated financial
statements (unaudited).
<PAGE>
The Parkway Company
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. On December 19, 1995, The Parkway Company ("Parkway") purchased
the Waterstone Building in College Park, Georgia from Massachusetts
Mutual Life Insurance Company, an unrelated party, for $8,031,000.
The building consists of 92,600 net rentable square feet.
The pro forma adjustments to the Consolidated Balance Sheet as
of September 30, 1995 includes the Waterstone Building and the
October 2, 1995 purchase of the IBM Building for $6,500,000.
The pro forma adjustments to the Consolidated Statements of
Income for the six months ended December 31, 1994 and nine months
ended September 30, 1995 include the purchase of the IBM Building
and the July 31, 1995 purchase of Mtel Centre', as well as the
purchase of the Waterstone Building. The following tables show the
detail of pro forma adjustments for each purchase (in thousands).
For the six months ended December 31, 1994:
Mtel IBM Waterstone Pro Forma
Centre' Building Building Adjustments
------- -------- ---------- -----------
Income from real
estate properties.. $1,769 $592 $642 $3,003
Real estate owned:
Operating expense.. 1,091 235 264 1,590
Interest expense... 437 0 177 614
Depreciation and
amortization...... 152 68 90 310
For the nine months ended September 30, 1995:
Mtel IBM Waterstone Pro Forma
Centre' Building Building Adjustments
------- -------- ---------- -----------
Income from real
estate properties.. $2,420 $959 $991 $4,370
Real estate owned:
Operating expense.. 1,442 449 401 2,292
Interest expense... 510 0 265 775
Depreciation and
amortization...... 177 102 135 414
2. The pro forma adjustment for interest expense for Mtel Centre'
reflects interest on a $10,000,000 term loan with Deposit Guaranty
which was funded on September 19, 1995 and is secured by the Mtel
Centre'. Interest on the $10,000,000 term loan was computed at
8.75%, the prime rate.
The pro forma adjustment for interest expense for the Waterstone
Building reflects interest on the $4,469,000 pro forma borrowings
under the Company's line of credit. Interest was computed at
7.912%, the rate on the line of credit.
3. Depreciation is provided by the straight-line method over the
estimated useful lives of the buildings (40 years).
