<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 25, 1997
WEEKS CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 011-13254 58-1525322
- -------------------------- ---------------- ----------------------------
(State of (Commission File (IRS Employer Identification
Incorporation) Number) No.)
4497 Park Drive, Norcross, Georgia 30093
----------------------------------------
(Address of principal executive offices, including zip code)
(770)923-4076
-------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS.
The following unaudited interim financial statements and pro forma financial
information relating to the registrant's acquisition of certain properties and
operating businesses of NWI Warehouse Group ("NWI") are attached as exhibits to
this Current Report.
(i) Financial Statements of Business Acquired:
-----------------------------------------
The unaudited interim financial statements of NWI for the nine month
periods ended September 30, 1996 and 1995, respectively, relating to the
Company's acquisition of NWI described in Item 2 of Form 8-K of Weeks
Corporation dated November 1, 1996 and filed on November 6, 1996, are
attached hereto as Exhibit A and incorporated herein by this reference.
The audited historical financial statements of NWI for the years ended
December 31, 1995 and 1994, respectively, required by Item 7(a) of Form 8-K
were previously filed as Exhibit A to the Company's Form 8-K dated November
1, 1996 and are incorporated herein by reference to such filing.
(ii) Pro Forma Financial Information:
-------------------------------
The pro forma financial information relating to the NWI acquisition
described in Item 2 of Form 8-K of Weeks Corporation dated November 1,
1996 and filed on November 6, 1996 is attached hereto as Exhibit B and
incorporated herein by this reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit # Description
--------- -----------
A Unaudited interim financial statements of NWI for the nine month
periods ended September 31, 1996 and 1995, respectively.
B Pro forma financial information for the nine month period ended
September 30, 1996, and for the year ended December 31, 1995.
<PAGE>
SIGNATURES
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 hereunto duly authorized.
WEEKS CORPORATION
Registrant
Date: March 25, 1997 /s/David P. Stockert
--------------------------------
David P. Stockert
Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit # Description Page
- --------- ----------- ----
A Unaudited interim financial statements of
NWI for the nine month periods ended 5
September 30, 1996 and 1995, respectively.
B Pro forma financial information for the nine
month period ended September 30, 1996 and 12
for the year ended December 31, 1995.
<PAGE>
EXHIBIT A
NWI WAREHOUSE GROUP
COMBINED FINANCIAL STATEMENTS
FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
<PAGE>
NWI WAREHOUSE GROUP
COMBINED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31, SEPTEMBER 30,
1995 1996
----------------------------
(Unaudited)
ASSETS
Real estate assets:
Land $13,008 $19,186
Buildings and improvements 35,255 42,889
Accumulated depreciation (6,575) (7,560)
----------------------------
Operating real estate assets 41,688 54,515
Developments in progress 11,149 11,236
Land held for future development 9,555 6,598
----------------------------
Net real estate assets 62,392 72,349
Cash and cash equivalents 1,313 1,673
Receivables and other assets 1,004 1,014
Deferred costs, net 716 858
----------------------------
$65,425 $75,894
============================
LIABILITIES AND OWNERS' EQUITY
Notes payable $44,604 $54,607
Line of credit borrowings 640 1,500
Notes payable - related parties 1,220 1,550
Accounts payable and accrued expenses 2,438 1,109
Other liabilities 126 167
----------------------------
Total liabilities 49,028 58,933
----------------------------
Owners' equity 25,219 24,888
Less: notes receivable from owners (8,822) (7,927)
----------------------------
Owners' equity, net 16,397 16,961
----------------------------
$65,425 $75,894
============================
The accompanying notes are an integral part of the combined balance sheets.
<PAGE>
NWI WAREHOUSE GROUP
COMBINED STATEMENTS OF INCOME
(IN THOUSANDS)
NINE MONTHS
ENDED SEPTEMBER 30,
-------------------
1995 1996
-------------------
(Unaudited)
Revenues:
Rental income $4,218 $5,496
Tenant reimbursements 681 1,046
Other 109 163
-------------------
5,008 6,705
-------------------
Expenses:
Property operating and maintenance 571 628
Real estate taxes 482 585
Tenant improvements and lease 322 347
commissions
Depreciation 835 932
Interest 2,190 3,069
Interest--related party 69 97
Amortization of deferred financing costs 70 96
General and administrative 435 594
-------------------
4,974 6,348
-------------------
Income before interest income and
income taxes 34 357
Interest income from related parties 853 606
-------------------
Income before income taxes 887 963
Income tax expense (72) (73)
-------------------
Net income $ 815 $ 890
===================
The accompanying notes are an integral part of these combined financial
statements.
<PAGE>
NWI WAREHOUSE GROUP
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1995 1996
-------------------------------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 815 $ 890
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 835 932
Amortization of deferred financing costs 70 96
Straight-line rent revenue 128 69
Accrued interest income on notes
receivable from related parties (301) (314)
Provision for bad debts 110 215
Net change in:
Receivables and other assets 244 (294)
Accounts payable, accrued expenses and
other liabilities 64 152
-------------------------------
Net cash provided by operating activities 1,965 1,746
-------------------------------
INVESTING ACTIVITIES
Property acquisition, development and construction (13,678) (12,329)
Notes receivable collections 10,824 850
Interest proceeds on notes receivable 3,481 569
Notes receivable additions (8,647) (210)
-------------------------------
Net cash used in investing activities (8,020) (11,120)
-------------------------------
FINANCING ACTIVITIES
Line of credit proceeds (repayments), net (185) 860
Proceeds from mortgage, construction
and other notes payable 15,696 12,175
Payments of mortgage, construction and other notes
payable (6,481) (2,172)
Proceeds from related party notes payable 393 520
Repayments of related party notes payable (622) (190)
Deferred financing costs (347) (238)
Distributions to owners (234) (1,221)
-------------------------------
Net cash provided by financing activities 8,220 9,734
-------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 2,165 360
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 785 1,313
-------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,950 $ 1,673
===============================
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
<PAGE>
NWI WAREHOUSE GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
1. ORGANIZATION AND BASIS OF COMBINATION
NWI Warehouse Group ("NWI") represents the combined industrial building
development, construction, ownership and management operations of NWI Warehouse
Group, L.P. (the "Partnership"), and certain assets, liabilities and operations
of Buckley & Company Real Estate, Inc. ("Buckley"), comprising primarily the
property management operations of NWI. The accompanying condensed financial
statements of NWI have been presented on a combined basis due to the common
ownership and control resulting from their acquisition by a real estate
investment trust (Note 2).
As of September 30, 1996, NWI owned and managed 17 industrial buildings
comprising 1.4 million square feet and had seven additional buildings under
development or in lease-up comprising an additional 1.0 million square feet.
The buildings are located in Nashville, Tennessee.
The Partnership commenced business operations in 1993 through a combination with
nine related partnerships and the contribution of certain assets and liabilities
of other related partnerships and entities under common management and control.
In 1994, six additional related partnerships were combined with and into the
Partnership. These combined, related partnerships (the "Predecessor
Partnerships") discussed herein, and their related properties, are as follows:
<PAGE>
1. ORGANIZATION AND BASIS OF COMBINATION (CONTINUED)
COMMENCEMENT OF
PREDECESSOR PARTNERSHIPS PROPERTY RENTAL OPERATIONS
- ----------------------------------------------------------------------------
Partnerships:
Pine Tree Corporation Airpark I 1985
NWI VI, L.P. Airpark II 1986
NWI VII, L.P. Airpark III 1986
NWI XIV, L.P. Airpark IV 1989
NWI XI, L.P. Airpark V 1988
NWI XVI, L.P. Airpark VI 1990
NWI XIX, L.P. Airpark VII 1992
NWI XX, L.P. Airpark VIII 1995
NWI XXI, L.P. Airpark IX 1995
NWI VIII, L.P. Brentwood South I 1987
NWI IX, L.P. Brentwood South II 1987
NWI XVII, L.P. Brentwood South III 1989
NWI XVIII, L.P. Brentwood South IV 1990
NWI XXIII, L.P. Brentwood South V 1990
NWI XXII, L.P. Brentwood South VI 1990
The combination of the Predecessor Partnerships, described above, was accounted
for as a reorganization of entities under common control and, accordingly, the
related assets, liabilities and owner's equity were reflected at historical cost
in a manner similar to that in pooling of interests accounting. Accordingly, the
accompanying combined financial statements of NWI have been presented giving
retroactive effect to all periods prior to the combinations. All significant
intercompany accounts and transactions have been eliminated in these combined
financial statements.
The accompanying interim unaudited combined financial statements have been
prepared by the Company's management in accordance with generally accepted
accounting prinicples for interim financial information and in conformity with
the rules and regulations of the Securities and Exhchange Commission. In the
opinion of management, the interim combined financial statements presented
herein reflect all adjustments of a normal and recurring nature which are
necessary to fairly state the interim combined financial statements. The results
of operations for the interim periods are not necessarily indicative of the
results that may be expected for the years ending December 31, 1995 and 1996,
respectively. These financial statements should be read in conjunction with
NWI's audited financial statements and the notes thereto included in the Weeks
Corporation Form 8-K dated November 1, 1996.
<PAGE>
2. ACQUISITION-MERGER
On November 1, 1996, NWI completed the first phase of an acquisition and merger
transaction with Weeks Corporation, a real estate investment trust, and its
subsidiaries (collectively "Weeks"). The first phase of the transaction was
comprised of the acquisition by Weeks of 17 industrial buildings and the
combination of NWI's business operations, management and employees with those of
Weeks. During the remainder of 1996, NWI contributed to Weeks approximately 45
net usable acres of undeveloped land, including reimbursement of certain
infrastructure costs, valued at approximatley $6.3 million. The remaining assets
of NWI will be contributed to Weeks over a period of up to six additional years.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT B
WEEKS CORPORATIONS
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Lichtin
NWI Properties
Company Acquisition Acquisition Pro Forma
(Unaudited, in thousands.) Historical(a) Historical(b) Historical(c) Adjustments Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Land $ 48,740 $ 19,186 $ 4,422 $ 4,132 (d) $ 76,480
Building and improvements 312,382 42,889 87,052 3,877 (d) 446,200
Accumulated depreciation (37,958) (7,560) (20,134) 27,694 (d) (37,958)
- ------------------------------------------------------------------------------------------------------------------------------------
Operating real estate assets 323,164 54,515 71,340 35,703 484,722
- ------------------------------------------------------------------------------------------------------------------------------------
Developments in progress 32,276 11,236 7,288 (18,524) (i) 32,276
Land held for future development 4,323 6,598 2,017 (5,325) (d) 7,613
- ------------------------------------------------------------------------------------------------------------------------------------
Net real estate assets 359,763 72,349 80,645 11,854 524,611
- ------------------------------------------------------------------------------------------------------------------------------------
Real estate development loans 7,521 - - - 7,521
Direct financing lease 5,162 - - - 5,162
Cash and cash equivalents 48 1,673 665 (1,315) (i) 1,071
Deferred costs, net 9,929 858 3,837 (4,695) (i) 9,929
Investments in and notes receivable
from unconsolidated subsidiaries 7,668 - - - 7,668
Receivables and other assets 6,534 1,014 2,682 (3,398) (d)(i) 6,832
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets $ 396,625 $ 75,894 $ 87,829 $ 2,446 $ 562,794
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES & SHAREHOLDERS' EQUITY
Mortgage notes payable $ 112,662 $ 54,607 $ 94,629 $ (59,604) (e) $ 202,294
Bank credit facility borrowings 112,905 1,500 4,036 21,283 (f) 139,724
Notes payable - related parties and other - 1,500 9,043 (10,593) (i) -
Accounts payable and accrued expenses 9,383 1,109 4,424 (5,533) (i) 9,383
Other liabilities 2,660 167 535 - 3,362
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 237,610 58,933 112,667 (54,447) 354,763
- ------------------------------------------------------------------------------------------------------------------------------------
Minority Interests in
Operating Partnership 29,706 - - 26,462 (g) 56,168
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholders' and Owners' Equity
Common Stock 112 - - 2 (h) 114
Preferred Stock - - - - -
Additional paid-in capital 191,779 - - 7,122 (h) 198,901
Accumulated deficit (62,582) - - 15,430 (j) (47,152)
Owners' equity (deficit) - 16,961 (24,838) 7,877 (i) -
- ------------------------------------------------------------------------------------------------------------------------------------
Total Shareholders' and
Owners' Equity (Deficit) 129,309 16,961 (24,838) 30,431 151,863
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders'
and Owners' Equity (Deficit) $ 396,625 $ 75,894 $ 87,829 $ 2,446 $ 562,794
====================================================================================================================================
</TABLE>
<PAGE>
WEEKS CORPORATION
NOTES AND ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET AS OF
SEPTEMBER 30, 1996
1. BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated balance sheet is presented as if
Weeks Corporation (the "Company") acquired as of September 30, 1996, the
business operations and real estate assets of NWI (described in the Company's
Current Report on Form 8-K dated November 1, 1996 and filed on November 6, 1996)
and the business operations and real estate assets of Lichtin Properties
(described in the Company's Current Report on Form 8-K dated December 31, 1996
and filed on January 15, 1997). The unaudited pro forma condensed consolidated
balance sheet is not necessarily indicative of what the actual financial
position would have been at September 30, 1996, nor does it purport to represent
the future financial position of the Company.
The unaudited pro forma condensed consolidated balance sheet should be read in
conjunction with the unaudited pro forma condensed consolidated statements of
operations of the Company included herein, the consolidated financial statements
and accompanying notes thereto of the Company included in its Annual Report on
Form 10-K for the year ended December 31, 1995, and the unaudited condensed
consolidated financial statements and accompanying notes thereto of the Company
included in its September 30, 1996 Quarterly Report on Form 10-Q.
The unaudited pro forma amounts of Lichtin Properties and NWI reflected in the
September 30, 1996 condensed consolidated pro forma balance sheet include the
operating businesses, land and the office and industrial properties acquired at
the respective initial closing dates of each acquisition. Certain completed
properties, office and industrial properties under development and land held for
future development of Lichtin Properties and NWI which are under agreements to
be acquired subsequent to the initial closing dates discussed in the Company's
Current Report on Form 8-K dated December 31, 1996 and filed on January 15, 1997
relating to Lichtin Properties and in the separate Current Report on Form 8-K of
the Company dated November 1, 1996 and filed on November 6, 1996 relating to NWI
have been excluded from the accompanying pro forma amounts as of September 30,
1996.
The acquisitions of Lichtin Properties and NWI have been accounted for under the
purchase method of accounting. Accordingly, assets acquired and liabilities
assumed have been reflected herein at their estimated fair values which may be
subject to further modification based upon the final determination of the
acquired properties' fair values and the final determination of actual closing
costs associated with each of the Lichtin Properties and NWI transactions.
Management believes that its final allocation of the purchase price will not
differ materially from the purchase price allocations included herein.
<PAGE>
2. ASSUMPTIONS TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(a) Represents the Company's unaudited condensed consolidated historical
balance sheet contained in its Quarterly Report on Form 10-Q as of
September 30, 1996.
(b) Represents the historical unaudited combined balance sheet of NWI as of
September 30, 1996, included herein in Exhibit A.
(c) Represents the historical unaudited combined balance sheet of Lichtin
Properties as of September 30, 1996, as set forth in Exhibit A to the
Company's Current Report on Form 8-K/A dated December 31, 1996 and filed on
March 14, 1997, relating to the Lichtin Properties acquisition.
(d) Represents the adjustments to reflect the estimated initial purchase price
of the Lichtin Properties business operations and real estate assets of
$93,800,000 and the NWI business operations and real estate assets of
$71,100,000, including estimated closing costs and acquisition expenses.
Approximately $300,000 of the purchase price relating to furniture and
equipment is included in receivables and other assets.
(e) Represents the adjustment to reflect the assumption of mortgage,
construction and other notes payable of Lichtin of $47,590,000 (as of
September 30, 1996) and of NWI of $42,042,000 (as of September 30, 1996).
The weighted average interest rate was 8.5% on the Lichtin Properties debt
and 8.5% on the NWI debt.
(f) Represents borrowings of $26,819,000 under the Company's revolving credit
facility to fund the cash components of, and the debt assumption and
retirement relating to, the Lichtin Properties transaction and closing
costs of the NWI and Lichtin Properties transactions.
(g) Represents the issuance of approximately 565,000 units of partnership
interest ("Units") in Weeks Realty, L.P., the partnership subsidiary
through which the Company conducts substantially all of its operations,
with a value for purposes of the initial closing of the Lichtin Properties
transaction of $25.25 per Unit, and approximately 1,105,000 Units with a
value for purposes of the initial closing of the NWI transaction of $25.00
per Unit. The resulting consolidated pro forma minority interest balance
was adjusted to reflect the consolidated pro forma minority interest
percentage of 27.0% at September 30, 1996 as follows (in thousands):
Value of Lichtin Properties Units $ 14,275
Value of NWI Units 27,617
Reclassification to shareholders' equity (15,430)
---------
$ 26,462
---------
(h) Represents the issuance of approximately 282,000 shares of common stock
valued at $25.25 per share relating to the Lichtin Properties transaction.
<PAGE>
(i) Represents adjustments to eliminate certain asset and liability amounts
that were not acquired or assumed as part of the NWI and Lichtin Properties
transactions.
(j) Represents the adjustment to state the consolidated pro forma shareholders'
equity balance and minority interest balance to 73.0% and 27.0%,
respectively, of the total consolidated pro forma equity interests (both
shareholders' equity and minority interests) in the Company.
<PAGE>
<TABLE>
<CAPTION>
WEEKS CORPORATIONS
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Lichtin
NWI Properties Principal
(Unaudited, in thousands, Company Acquisition Acquisition Properties Pro Forma
except per share data) Historical(a) Historical(b) Historical(c) Historical(c) Adjustments Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Rental income $ 34,136 $ 5,496 $ 8,921 $ 2,002 $(3,742)(e) $ 46,813
Tenant reimbursements 3,064 1,046 2,694 167 (1,801)(e) 5,170
Income from direct financing lease 576 - - - - 576
Other 287 163 89 - 448 (f) 987
- ------------------------------------------------------------------------------------------------------------------------------------
Total Revenue 38,063 6,705 11,704 2,169 (5,095) 53,546
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses
Property operating and maintenance 4,276 628 2,618 241 (1,523)(e) 6,240
Real estate taxes 3,288 585 746 178 (378)(e) 4,419
Depreciation and amortization 9,416 1,279 2,760 - 555 (g) 14,010
Interest 8,157 3,166 6,118 - (1,504)(h) 15,937
Amortization of deferred financing costs 642 96 170 - (266)(h) 642
General and administrative 2,174 594 941 - - 3,709
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expenses 27,953 6,348 13,353 419 (3,116) 44,957
- -----------------------------------------------------------------------------------------------------------------------------------
Income before Equity in Earnings of
Unconsolidated Subsidiares and
Interest Income 10,110 357 (1,649) - (1,979) 8,589
Equity in earnings of
unconsolidated subsidiaries 919 - - - - 919
Interest income 321 606 21 - (627)(i) 321
- ------------------------------------------------------------------------------------------------------------------------------------
Income before Income Taxes 11,350 963 (1,628) 1,750 (2,606) 9,829
Income taxes - (73) - - (73)(j) (2,654)
- -----------------------------------------------------------------------------------------------------------------------------------
Income before Minority Interests 11,350 890 (1,628) 1,750 (2,533) 9,829
Minority interests (2,124) - - - (530)(k) (2,654)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income $ 9,226 $ 890 $ (1,628) $ 1,750 $(3,063) $ 7,175
===================================================================================================================================
Per Share Data
Net Income $ 0.83 - - - - $ 0.63
===================================================================================================================================
Weighted Average Shares Outstanding 11,162 - - - 282 11,444
===================================================================================================================================
Weighted Average Shares
and Units Outstanding 13,729 - - - 1,953 15,682
===================================================================================================================================
</TABLE>
<PAGE>
WEEKS CORPORATION
NOTES AND ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
1. BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated statement of operations for the
nine months ended September 30, 1996 is presented as if the Company acquired as
of January 1, 1996, the business operations and real estate assets of NWI
(described in the Company's Current Report on Form 8-K dated November 1, 1996
and filed on November 6, 1996), the business operations and real estate assets
of Lichtin Properties (described in the Company's Current Report on Form 8-K
dated December 31, 1996 and filed on January 15, 1997), and the Principal
Properties (described in the Company's Current Report on Form 8-K dated August
9, 1996 and filed on August 22, 1996). In management's opinion, all adjustments
necessary to present fairly the effects of these acquisitions have been made.
This unaudited pro forma condensed consolidated statement of operations should
be read in conjunction with unaudited pro forma condensed consolidated balance
sheet of the Company included herein, the consolidated financial statements and
accompanying notes thereto of the Company included in its Annual Report on Form
10-K for the year ended December 31, 1995, and the unaudited condensed
consolidated financial statements and accompanying notes thereto of the Company
included in its September 30, 1996 Quarterly Report on Form 10-Q.
This unaudited pro forma condensed consolidated statement of operations is not
necessarily indicative of what the actual results of operations of the Company
would have been assuming the Company had acquired NWI, Lichtin Properties and
the Principal Properties (as described above) as of the beginning of the period
presented, nor do they purport to represent the results of operations for future
periods.
The unaudited historical results of operations of NWI included herein have been
adjusted to reflect on a pro forma basis the operating business, land and
industrial properties acquired at the initial closing of the acquisition
transaction on November 1, 1996. NWI's industrial properties under development
and land held for future development, which are under agreements to be acquired
subsequent to November 1, 1996, and their associated results of operations, have
been excluded from the accompanying pro forma amounts for the period presented.
The unaudited historical results of operations of Lichtin Properties included
herein have been adjusted to reflect on a pro forma basis the operating
business, land and office and industrial properties acquired at the initial
closing of the Lichtin Properties transaction on December 31, 1996. Certain of
Lichtin Properties' buildings leased to Northern Telecom, certain other of
Lichtin Properties' completed office and industrial properties, certain
properties under development or in lease-up and land held for development, which
are under agreements to be acquired subsequent to the initial closing date
discussed herein, and their associated results of operations, have been excluded
from the accompanying pro forma amounts for the period presented.
<PAGE>
2. ASSUMPTIONS TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS
(a) Represents the Company's unaudited condensed consolidated historical
statement of operations contained in its Quarterly Report on Form 10-Q for
the nine months ended September 30, 1996.
(b) Represents the historical unaudited combined statement of operations of NWI
for the nine months ended September 30, 1996, included herein in Exhibit A.
(c) Represents the historical unaudited combined statement of operations of
Lichtin Properties for the nine months ended September 30, 1996, as set
forth in Exhibit A to the Company's Current Report on Form 8-K/A dated
December 31, 1996 and filed on March 14, 1997, relating to the Lichtin
Properties acquisition.
(d) Represents the historical unaudited rental income, tenant reimbursements,
real estate taxes and property operating and maintenance expenses for the
Principal Properties for the period from January 1, 1996 to August 9, 1996
(the acquisition date).
(e) Represents the net adjustment to reduce rental income, tenant
reimbursements, real estate taxes and property operating and maintenance
expenses for the results of operations of certain of Lichtin Properties'
buildings leased to Northern Telecom, certain other completed buildings of
Lichtin Properties, certain properties of NWI and Lichtin Properties under
development or in lease-up and expenses associated with land held for
development which are to be acquired subsequent to the initial closing
dates of the NWI and Lichtin Properties acquisitions as shown below (in
thousands):
Lichtin
Properties NWI Total
---------- ---- ------
Rental income $3,221 $521 $3,742
Tenant reimbursements 1,708 93 1,801
Property operating and
maintenance expenses 1,429 94 1,523
Real estate taxes 318 60 378
(f) Represents the assumed payment by Lichtin Properties and NWI to the Company
of management fees and overhead cost reimbursements relating to the
Company's management of certain operating buildings and buildings in lease-
up not acquired at the respective initial closing dates.
<PAGE>
(g) Represents the adjustment to reflect depreciation and amortization expense
of the acquired properties (consisting of properties acquired at the
initial closing dates for the Lichtin Properties and NWI acquisitions and
the closing of the Principal Properties) based upon the assumed allocation
of the acquisition price to land, buildings and improvements, using a 35
year life for buildings and the life of the lease for tenant improvements.
Aggregate pro forma depreciation and amortization expense for the nine
months ended September 30, 1996 was $2,346,000 and $1,619,000 for Lichtin
Properties and NWI, respectively, and was $629,000 for the Principal
Properties for the period from January 1, 1996 to August 9, 1996 (the date
of acquisition).
(h) Represents the adjustment of interest expense and the amortization of
deferred financing costs to reflect interest on notes payable and bank line
of credit borrowings assumed at the initial closing dates in the Lichtin
Properties and NWI transactions, interest costs through August 9, 1996 (the
acquisition date) associated with additional borrowings under the Company's
revolving credit facility of $30.8 million at 7.0% for the purchase of the
Principal Properties, including closing costs and acquisition expenses, and
interest costs associated with additional borrowings under the Company's
revolving credit facility of $26.8 million at 7.0% to fund the cash portion
of, and the debt assumption and retirement relating to, the Lichtin
Properties transaction and cash closing and acquisition expenses of the
Lichtin Properties and NWI transactions.
(i) Represents the adjustment to eliminate interest income included in the NWI
and Lichtin Properties historical amounts as the notes receivable and cash
balances were not acquired by the Company.
(j) Represents the adjustment to eliminate income tax expense as the Company
has and expects to continue to qualify as a real estate investment trust.
(k) Represents the net adjustment of pro forma minority interest to adjust the
pro forma consolidated minority interest amount to reflect the weighted
average ownership percentage of the Unitholders in the Operating
Partnership of 27.0% for the nine months ended September 30, 1996.
<PAGE>
<TABLE>
<CAPTION>
WEEKS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Lichtin
NWI Properties Principal
Company Acquisition Acquisition Properties Pro Forma
(Unaudited, in thousands, except per share data) Historical(a) Historical(b) Historical(c) Historical(d) Adjustments Pro Forma
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<S> <C> <C> <C> <C> <C> <C>
Revenue
Rental income $31,217 $5,836 $10,245 $3,235 $(4,792)(e) $45,741
Tenant reimbursements 2,464 994 3,374 281 (2,385)(e) 5,062
Income from direct financing lease 776 - - - - 776
Other 480 348 24 - 563 (f) 1,415
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Total Revenue 34,937 7,178 13,643 3,516 (6,614) 52,994
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Expenses
Property operating and maintenance 3,565 762 3,029 455 (2,076)(e) 6,069
Real estate taxes 2,997 642 817 293 (462)(e) 4,287
Depreciation and amortization 8,177 1,572 3,264 - 1,010 (g) 14,023
Interest 8,106 3,093 7,094 - (1,401)(h) 16,892
Amortization of deferred financing costs 691 93 191 - (284)(h) 691
General and administrative 1,848 643 1,154 - - 3,645
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Total Expenses 25,384 6,805 15,549 748 (3,213) 45,607
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Income before Equity in Earnings of
Unconsolidated Subsidiaries and
Interest Income 9,553 373 (1,906) 2,768 (3,401) 7,387
Gain on sale of property - - 1,245 - (1,245)(l) -
Equity in earnings of unconsolidated subsidiaries 1,220 - - - - 1,220
Interest income 334 1,117 18 - (1,135)(i) 334
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Income before Income Taxes 11,107 1,490 (643) 2,768 (5,781) 8,941
Income taxes - (102) - - 102 (j) -
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Income before Minority Interests 11,107 1,388 (643) 2,768 (5,679) 8,941
Minority interests (2,681) - - - (314)(k) (2,995)
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Net income $ 8,426 $1,388 $ (643) $ 2,768 $(5,993) $ 5,946
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Per Share Data
Net Income $1.03 - - - - $0.07
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Weighted Average Shares Outstanding 8,171 - - - 282 8,453
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Weighted Average Shares and Unites Outstanding 10,760 - - - 1,953 12,713
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</TABLE>
<PAGE>
WEEKS CORPORATION
NOTES AND ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
1. BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated statement of operations for the
year ended December 31, 1995 is presented as if the Company acquired as of
January 1, 1995 the business operations and real estate assets of NWI (described
in the Company's Current Report on Form 8-K dated November 1, 1996 and filed on
November 6, 1996), the business operations and real estate assets of Lichtin
Properties (described in the Company's Current Report on Form 8-K dated December
31, 1996 and filed on January 15, 1997), and the Principal Properties (described
in the Company's Current Report on Form 8-K dated August 9, 1996 and filed on
August 22, 1996). In management's opinion, all adjustments necessary to present
fairly the effects of these acquisitions have been made.
This unaudited pro forma condensed consolidated statement of operations should
be read in conjunction with unaudited pro forma condensed consolidated balance
sheet of the Company included herein and the consolidated financial statements
and accompanying notes thereto of the Company included in its Annual Report on
Form 10-K for the year ended December 31, 1995.
The unaudited pro forma condensed consolidated statement of operations is not
necessarily indicative of what the actual results of operations of the Company
would have been assuming the Company had acquired NWI, Lichtin Properties and
the Principal Properties (as described above) as of the beginning of the period
presented, nor do they purport to represent the results of operations for future
periods.
The unaudited historical results of operations of NWI included herein have been
adjusted to reflect on a pro forma basis the operating business, land and
industrial properties acquired at the initial closing of the acquisition
transaction on November 1, 1996. NWI's industrial properties under development
and land held for future development, which are under agreements to be acquired
subsequent to November 1, 1996, and their associated results of operations have
been excluded from the accompanying pro forma amounts for the period presented.
The historical results of operations of Lichtin Properties included herein have
been adjusted to reflect on a pro forma basis the operating business, land and
office and industrial properties acquired at the initial closing of the Lichtin
Properties transaction on December 31, 1996. Certain of Lichtin Properties'
buildings leased to Northern Telecom, certain other of Lichtin Properties'
completed office and industrial properties, certain properties under development
or in lease-up and land held for development, which are under agreements to be
acquired subsequent to the initial closing date discussed herein, and their
associated results of operations, have been excluded from the accompanying pro
forma amounts for the period presented.
<PAGE>
2. ASSUMPTIONS TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
(a) Represents the Company's consolidated historical statement of operations
contained in its Annual Report on Form 10-K for the year ended December 31,
1995.
(b) Represents the historical combined statement of operations of NWI for the
year ended December 31, 1995, as set forth in Exhibit A to the Company's
Current Report on Form 8-K dated November 1, 1996 and filed on November 6,
1996 relating to the NWI acquisition.
(c) Represents the historical combined statement of operations of Lichtin
Properties for the year ended December 31, 1995, as set forth in Exhibit A
to the Company's Current Report on Form 8-K dated November 5, 1996 and filed
on November 6, 1996.
(d) Represents the historical rental income, tenant reimbursements, real estate
taxes and property operating and maintenance expenses for the Principal
Properties for the year ended December 31, 1995, as set forth in the
Company's Current Report on Form 8-K dated August 9, 1996 and filed on
August 22, 1996, relating to the Principal Properties acquisition.
(e) Represents the net adjustment to reduce rental income, tenant
reimbursements, real estate taxes and property operating and maintenance
expenses for the results of operations of certain of Lichtin Properties'
buildings leased to Northern Telecom, certain other completed properties of
Lichtin Properties, certain properties of NWI and Lichtin Properties under
development or in lease-up and expenses associated with land held for
development which are to be acquired subsequent to the initial closing dates
of the NWI and Lichtin Properties acquisitions as shown below (in
thousands):
Lichtin
Properties NWI Total
---------- ---- ------
Rental income $4,670 $122 $4,792
Tenant reimbursements 2,374 11 2,385
Property operating and maintenance
expenses 2,047 29 2,076
Real estate taxes 429 33 462
(f) Represents the assumed payment by Lichtin Properties to the Company of
management fees and overhead cost reimbursements relating to the Company's
management of certain operating buildings and buildings in lease-up not
acquired at the initial closing date of the Lichtin Properties transaction.
(g) Represents the adjustment to reflect depreciation and amortization expense
of the acquired properties (consisting of properties acquired at the
initial closing dates for the Lichtin Properties and NWI acquisitions and
the closing of the Principal Properties) based upon the assumed allocation
of the acquisition price to land, buildings and improvements, using a 35
year life for buildings and the life of the lease for tenant improvements.
Aggregate pro forma depreciation and amortization expense for the year ended
<PAGE>
December 31, 1995 was $2,716,000, $2,100,000 and $1,030,000 for Lichtin
Properties, NWI and the Principal Properties, respectively.
(h) Represents the adjustment of interest expense and the amortization of
deferred financing costs to reflect interest on notes payable and bank line
of credit borrowing assumed at the initial closing dates of the Lichtin
Properties and NWI transactions, interest costs associated with additional
borrowings under the Company's revolving credit facility of $30.8 million at
7.0% for the purchase of the Principal Properties, including closing costs
and acquisition expenses, and interest costs associated with additional
borrowings under the Company's revolving credit facility of $26.8 million at
7.0% to fund the cash portion of, and the debt assumption and retirement
relating to, the Lichtin Properties transaction and cash closing and
acquisition expenses of the Lichtin Properties and NWI transactions.
(i) Represents the adjustment to eliminate interest income included in the NWI
and Lichtin Properties historical amounts as the notes receivable and cash
balances were not acquired by the Company.
(j) Represents the adjustment to eliminate income tax expense as the Company has
and expects to continue to qualify as a real estate investment trust.
(k) Represents the net adjustment of pro forma minority interest to adjust the
pro forma consolidated minority interest amount to reflect the weighted
average ownership percentage of the Unitholders in the Operating Partnership
of 33.5% for the year ended December 31, 1995.
(l) Represents the adjustment to eliminate the gain on sale of property as the
property was not part of the Lichtin Properties acquisition transaction.
