------------------
UNITED STATES
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
PARKWAY PROPERTIES, INC.
-----------------------------------
(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 October 15, 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: December 13, 1996 PARKWAY PROPERTIES, INC.
By /s/ Sarah P. Clark
-----------------------
Sarah P. Clark
Vice President, Chief
Financial Officer,
Treasurer and Secretary
FORM 8-K/A
PARKWAY PROPERTIES, INC.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
The following combined audited financial
statement of the BB&T Financial Center Building 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 following unaudited Pro Forma
Consolidated Financial Statements are attached hereto.
PARKWAY PROPERTIES, INC.
Page
----
Pro Forma Consolidated Financial Statements (Unaudited) 7
Pro Forma Consolidated Balance Sheet (Unaudited) -
As of September 30, 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 Nine Months Ended September 30, 1996 10
Notes to Pro Forma Consolidated Financial
Statements (Unaudited) 11
Report of Independent Auditors
The Board of Directors
Parkway Properties, Inc.
We have audited the accompanying statement of rental revenue and
direct operating expenses of BB&T Financial Center 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 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 Parkway
Properties, Inc. as described in Note 2, and is not intended to
be a complete presentation of the BB&T Financial Center'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 described in Note 2 of the BB&T Financial Center for the
year ended December 31, 1995, in conformity with generally
accepted accounting principles.
We have compiled the accompanying statement of rental revenue and
direct operating expenses of BB&T Financial Center for the nine
months ended September 30, 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 BB&T Financial Center for the
nine months ended September 30, 1996 and, accordingly, do not
express an opinion or any other form of assurance on them.
Jackson, Mississippi /s/ Ernst & Young LLP
December 9, 1996
BB&T Financial Center
Statement of Rental Revenue
and Direct Operating Expenses
Year ended Nine months ended
December 31, 1995 September 30, 1996
----------------- ------------------
(unaudited)
Rental revenue:
Minimum rents (Note 1)....... $2,737,375 $2,097,937
Reimbursed charges........... 1,237,289 954,722
Other income.................. 24,259 19,343
---------- ----------
3,998,923 3,072,002
---------- ----------
Direct operating expenses
(Note 2):
Utilities................... 307,846 254,333
Real estate taxes........... 282,710 212,033
Management fees (Note 3).... 104,602 91,796
Janitorial services
and supplies............... 167,890 127,015
Maintenance services
and supplies............... 259,422 137,815
Security services........... 75,377 53,776
Insurance................... 27,256 22,309
Legal and professional
fees....................... 16,118 1,469
Administrative and
miscellaneous expenses..... 136,811 154,101
---------- ----------
1,378,032 1,054,647
---------- ----------
Excess of rental revenue over
direct operating expenses.... $2,620,891 $2,017,355
========== ==========
See accompanying notes.
BB&T Financial Center
Notes to Statement of Rental Revenue
and Direct Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
Parkway Carolina, Inc. a wholly-owned subsidiary of Parkway
Properties, Inc. (the "Company"), acquired the BB&T Financial
Center (the "Building") effective September 30, 1996 from an
unrelated party. The Building is a 19-story Class A office
building located in Winston-Salem, North Carolina with
approximately 239,000 (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 and scheduled reimbursed charges on non-
cancelable operating leases at December 31, 1995 are as follows:
Year Amount
--------------------------------
1996 $ 3,975,000
1997 3,910,000
1998 3,996,000
1999 3,926,000
2000 3,842,000
Thereafter 28,795,000
-----------
$48,444,000
===========
Two tenants, whose leases expire June 30, 2005 and December 31,
2012, accounted for approximately 75% of 1995 rental revenue.
BB&T Financial Center
Notes to Statement of Rental Revenue
and Direct Operating Expenses (continued)
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 Fees
Management fees of 3% of revenues received from the operations of
the Building were paid to an unrelated management company.
PARKWAY PROPERTIES, INC.
Pro Forma Consolidated Financial Statements
(Unaudited)
The following unaudited pro forma consolidated balance sheet as
of September 30, 1996 and pro forma consolidated statements of
income of Parkway Properties, Inc. ("Parkway") as of December 31,
1995 and September 30, 1996 give effect to the September 30, 1996
purchase of the BB&T Financial Center. 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 purchase of the BB&T Financial Center on its purchase
date of September 30, 1996. No pro forma adjustments were needed
due to the September 30th purchase date.
The pro forma consolidated statements of income set forth the
effects of Parkway's purchase of the BB&T Financial Center, Falls
Pointe and Roswell North Buildings and the Cherokee Business
Center, the 8381 and 8391 Courthouse Road Buildings as well as
the July 31, 1995 purchase of Mtel Centre', the October 2, 1995
purchase of the IBM Building, the December 19, 1995 purchase of
the Waterstone Building and the April 15, 1996 purchase of the
400 North Belt and Woodbranch Buildings as if these transactions
had been consummated on January 1, 1995. The pro forma
consolidated statements of income also set forth the effect of
the May 31, 1996 sale of 157 mortgage loans and the placement of
non-recourse mortgage debt on recently acquired properties as if
the transactions occurred January 1, 1995.
These pro forma consolidated financial statements may not be
indicative of the results that actually would have occurred if
the purchases, sale and/or financings 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.
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited)
Parkway Pro Forma(2) Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands)
Assets
Real estate related investments
Office buildings.............$129,507 $ - $129,507
Accumulated depreciation..... (8,671) - (8,671)
-------- -------- --------
120,836 - 120,836
Real estate held for sale
Land....................... 8,206 - 8,206
Operating properties....... 3,928 - 3,928
Mortgage loans............... 6,173 - 6,173
Real estate securities....... 507 - 507
Real estate partnerships and
corporate joint venture.... 312 - 312
-------- -------- --------
139,962 - 139,962
Interest and rents receivable
and other assets............. 3,865 - 3,865
Cash and cash equivalents...... 134 - 134
-------- -------- --------
$143,961 $ - $143,961
======== ======== ========
Liabilities
Notes payable to banks.........$ 6,836 $ - $ 6,836
Mortgage notes payable without
recourse..................... 53,452 - 53,452
Mortgage notes payable on wrap
mortgages.................... 4,470 - 4,470
Accounts payable and other
liabilities.................. 5,999 - 5,999
-------- -------- --------
70,757 - 70,757
-------- -------- --------
Shareholders' Equity
Preferred stock, $.001 par
value, 576,000 shares
authorized, 576,000 shares
issued in 1996............... 1 1
Common stock, $.001 par value,
69,424,000 shares authorized,
3,636,421 shares issued...... 3 - 3
Additional paid-in capital..... 51,924 - 51,924
Retained earnings.............. 21,061 - 21,061
-------- -------- --------
72,989 - 72,989
Unrealized gain on securities.. 215 - 215
-------- -------- --------
73,204 - 73,204
-------- -------- --------
$143,961 $ - $143,961
======== ======== ========
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED 12/31/95
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands, except per share data)
Revenues
Income from real estate
properties.......................$ 8,941 $16,149 (a)$25,090
Interest on mortgage loans......... 1,421 (896)(e) 525
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 on real estate
and mortgage loans............... 6,552 - 6,552
Gain on securities................. 4,314 - 4,314
------- ------- -------
23,633 15,253 38,886
------- ------- -------
Expenses
Real estate owned
Operating expense................ 4,876 7,508 (a) 12,384
Interest expense................. 2,230 2,240 (c) 4,470
Depreciation and amortization.... 1,331 1,922 (a) 3,253
Minority interest................ (100) - (100)
Interest expense
Notes payable to banks........... 156 391 (e) 547
Notes payable on wrap mortgages.. 135 - 135
Management company expenses........ 804 - 804
Other expenses..................... 2,299 - 2,299
------- ------- -------
11,731 12,061 23,792
------- ------- -------
Income before taxes................ 11,902 3,192 15,094
Income tax provision............... 82 - (4) 82
------- ------- -------
Net income.........................$11,820 $ 3,192 $15,012
======= ======= =======
Net income per share...............$ 4.24 $ 3.82
======= =======
Weighted average shares
outstanding...................... 2,787 3,927
======= =======
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED 9/30/96
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands, except per share data)
Revenues
Income from real estate
properties...................... $13,559 $ 6,186 (b) $19,745
Management company income......... 537 - 537
Interest on mortgage loans........ 1,435 (438)(f) 997
Equity in earnings:
Real estate partnerships and
corporate joint venture....... 121 - 121
Gain on securities................ 304 - 304
Interest on investments........... 471 - 471
Deferred gains and other income... 91 - 91
Dividend income................... 118 - 118
Gain on real estate and mortgage
loans........................... 5,863 - 5,863
------- ------- -------
22,499 5,748 28,247
------- ------- -------
Expenses
Real estate owned:
Operating expense............... 6,570 2,525 (b) 9,095
Interest expense................ 2,390 608 (d) 2,998
Depreciation and amortization... 1,591 797 (b) 2,388
Minority interest............... (12) - (12)
Interest expense:
Notes payable to banks.......... 95 315 (f) 410
Notes payable on wrap mortgages. 340 - 340
Management company expenses....... 483 - 483
Other expenses.................... 2,198 - 2,198
------- ------- -------
13,655 4,245 17,900
------- ------- -------
Income before taxes............... 8,844 1,503 10,347
Income tax provision.............. 23 - (4) 23
------- ------- -------
Net income........................ $ 8,821 $ 1,503 $10,324
======= ======= =======
Net income per share.............. $ 2.54 $ 2.48
======= =======
Weighted average shares
outstanding 3,474 4,169
======= =======
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. On September 30, 1996, Parkway Carolina, Inc., a wholly-
owned subsidiary of Parkway Properties, Inc. ("Parkway" or
the "Company") purchased the BB&T Financial Center for
$24,500,000 from an unrelated party. This building consists
f approximately 239,000 net rentable square feet.
2. No pro forma adjustments were needed to the Consolidated
Balance Sheet as of September 30, 1996 due to the September
30, 1996 purchase date.
3. The pro forma adjustments to the Consolidated Statements of
Income for the twelve months ended December 31, 1995 and the
nine months ended September 30, 1996 include the September
30, 1996 purchase of the BB&T Financial Center, August 9,
1996 purchase of the Falls Pointe and Roswell North
Buildings, the July 31, 1995 purchase of Mtel Centre', the
October 2, 1995 purchase of the IBM Building, the December
19, 1995 purchase of the Waterstone Building and the April
15, 1996 purchase of the 400 North Belt and Woodbranch
Buildings. In addition, the adjustments include the July 9,
1996 purchase of the Cherokee Business Center and the 8381
and 8391 Courthouse Road Buildings, the May 31, 1996 sale of
157 mortgage loans and the placement of non-recourse
mortgage financing on certain recent property acquisitions.
These pro forma adjustments are detailed below by property
for the twelve months ended December 31, 1995 and nine
months ended September 30, 1996.
The effect on income and expenses from real estate
properties due to the above purchases are as follows:
(a) For the twelve months ended December 31, 1995:
Revenue Expenses
----------- ---------------------------
Income From Real Estate Owned
Real Estate Operating Depreciation
Properties Expense Expense
----------- ------------ ------------
Mtel Centre' $ 2,420,000 $ 1,442,000 $ 177,000
IBM Building 959,000 449,000 102,000
Waterstone 1,183,000 499,000 181,000
400 North Belt
& Woodbranch 3,470,000 1,970,000 347,000
Cherokee &
Courthouse
Road Bldgs. 1,848,000 841,000 249,000
Falls Pointe &
Roswell North 2,270,000 929,000 315,000
BB&T Financial
Center 3,999,000 1,378,000 551,000
----------- ----------- -----------
$16,149,000 $ 7,508,000 $ 1,922,000
=========== =========== ===========
(b) For the nine months ended September 30, 1996:
Revenue Expenses
----------- ---------------------------
Income From Real Estate Owned
Real Estate Operating Depreciation
Properties Expense Expense
----------- ------------ ------------
400 North Belt
& Woodbranch $ 1,036,000 $ 551,000 $ 102,000
Cherokee &
Courthouse
Road Bldgs. 917,000 480,000 124,000
Falls Pointe &
Roswell North 1,161,000 439,000 158,000
BB&T Financial
Center 3,072,000 1,055,000 413,000
----------- ----------- -----------
$ 6,186,000 $ 2,525,000 $ 797,000
=========== =========== ===========
Depreciation is provided by the straight-line method over
the estimated useful lives of the buildings (40 years).
Pro forma interest expense on real estate owned reflects the
non-recourse debt placed on the buildings at the actual
amounts and rates by property as if placed January 1, 1995
is as follows:
Property/Placement Twelve Months Nine Months
Date/Rate Debt 12/31/95 (c) 9/30/96 (d)
------------------ ----------- ------------- -----------
Mtel Centre
12/95 7.75% $11,000,000 $ 595,000 $ -
IBM Building
2/96 7.78% 4,800,000 370,000 41,000
Waterstone
6/96 8.00% 5,620,000 450,000 185,000
400 North Belt &
Woodbranch
7/96 8.25% 10,000,000 825,000 382,000
---------- ----------
$2,240,000 $ 608,000
========== ==========
The January 1, 1995 pro forma effect of the sale of 157
mortgage loans on May 31, 1996 is as follows:
Twelve Months Nine Months
12/31/95 (e) 9/30/96 (f)
------------- -----------
Interest Income:
Mortgage loans $ (896,000) $ (438,000)
The pro forma effect of the purchase of the BB&T Financial
Center on interest expense on notes payable to banks is as follows:
Interest Expense:
Notes payable to banks $ 547,000 $ 410,000
4. No additional income tax expenses were provided because of
the Company's net operating loss carryover.
5. All per share information for the twelve months ended
December 31, 1995 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 as well as
the June 14,1996 private placement of 1,140,000 shares as if
both transactions had occurred January 1, 1995.
