<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996 Commission file number 0-18261
--------------------- ---------
Tower Properties Company
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Missouri 43-1529759
- ------------------------------ -------------------
STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION IDENTIFICATION NO.)
911 Main Street, Kansas City, Missouri 64105
- -------------------------------------------------- -------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (816) 421-8255
---------------------------
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
- ----------------------------------- --------------------------------------
- ----------------------------------- --------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
$1 Par Value Common Stock
- --------------------------------------------------------------------------------
(TITLE OF CLASS)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR SUCH FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
----- -----
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K (Sec.229.405 OF THIS CHAPTER) IS NOT CONTAINED HEREIN,
AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN
DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART
III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K.
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES OF
THE REGISTRANT. (THE AGGREGATE MARKET VALUE SHALL BE COMPUTED BY REFERENCE
TO THE PRICE AT WHICH THE STOCK WAS SOLD, OR THE AVERAGE BID AND ASKED PRICES
OF SUCH STOCK, AS OF A SPECIFIED DATE WITHIN 60 DAYS PRIOR TO THE DATE OF
FILING.)
$16,064,130 at February 18, 1997
- --------------------------------------------------------------------------------
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE (APPLICABLE ONLY TO
CORPORATE REGISTRANTS).
$1 Par Value Common Stock - 170,895 Shares
- --------------------------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE: LIST THE FOLLOWING DOCUMENTS IF
INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-K INTO WHICH THE
DOCUMENT ARE INCORPORATED: (1) ANY ANNUAL REPORT TO SECURITY HOLDERS; (2)
ANY PROXY OR INFORMATION STATEMENT; AND (3) ANY PROSPECTUS FILED PURSUANT TO
RULE 424(b) OR (c) UNDER THE SECURITIES ACT OF 1933. (THE LISTED DOCUMENTS
SHOULD BE CLEARLY DESCRIBED FOR IDENTIFICATION PURPOSES.)
Portions of Annual Report to Stockholders for the year ended Dec. 31, 1996,
- --------------------------------------------------------------------------------
are incorporated by reference in Parts I, II and IV. Portions of the Annual
- --------------------------------------------------------------------------------
Proxy Statement are incorporated by reference into Part III.
- --------------------------------------------------------------------------------
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
TOWER PROPERTIES COMPANY
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
<PAGE> 3
<TABLE>
CROSS-REFERENCE SHEET
<S> <C>
Part II
- -------
Item 6 - Selected Financial Data 1996 Annual Report to Stockholders,
Page 21.
Item 7 - Management's Discussion and
Analysis of Financial Condition
and Results of Operations 1996 Annual Report to Stockholders,
Pages 17 through 20.
Item 8 - Financial Statements and
Supplementary Data 1996 Annual Report to Stockholders,
Pages 4 through 15 and Pages 22 and 23.
Part III
- --------
Item 10 - Directors and Executive
Officers of the Registrant Proxy Statement relating to Annual
Meeting of Stockholders to be held on
April 9, 1997, under the caption
"Election of Directors."
Item 11 - Executive Compensation Proxy Statement relating to Annual
Meeting of Stockholders to be held on
April 9, 1997, under the captions
"Summary Compensation Table" and
"Compensation Plans."
Item 12 - Security Ownership of Certain
Beneficial Owners and
Management Proxy Statement relating to Annual
Meeting of Stockholders to be held on
April 9, 1997, under the caption
"Security Ownership of Certain
Beneficial Owners and Management."
Item 13 - Certain Relationships and
Related Transactions Proxy Statement relating to Annual
Meeting of Stockholders to be held on
April 9, 1997, under the caption
"Transactions."
Part IV
- -------
Item 14(a)(1) - Financial Statements 1996 Annual Report to Stockholders,
Pages 4 through 15.
Item 14(a)(2) - Exhibits Registrant's 1996 Form 10-K (File
No. 0-18261) filed on March 31, 1997.
</TABLE>
-2-
<PAGE> 4
Part I
- ------
Item 1. Business.
(a) General Development of Business:
In September 1989, Tower Properties Company (Tower) formed Tower Acquisition
Corp. (TAC), a wholly-owned subsidiary of Tower. TAC was formed pursuant to
the terms of a merger between Tower and Commerce Bancshares, Inc. (Commerce),
a bank holding company. Tower spun off certain assets and liabilities to TAC
with a net book value of approximately $17,500,000. Tower then merged with
Commerce on January 29, 1990. In connection with the merger each Tower
shareholder received 7.88 shares of Commerce in exchange for each Tower
share. TAC's capital stock was distributed to Tower's shareholders on
January 29, 1990 in the form of a stock dividend. TAC's name was changed to
Tower Properties Company (the Company) on this same date. The net assets
distributed to TAC represent the assets currently owned and managed by the
Company.
A private letter ruling was obtained from the IRS that the distribution was
tax-free under Section 355 of the Internal Revenue Code and the merger
constituted a tax-free reorganization under Section 368(a)(1)(A) of the
Internal Revenue Code.
The Company is primarily engaged in owning, developing, leasing and managing
real property located in Johnson County, Kansas, and Clay and Jackson County,
Missouri.
(b) Financial Information About Industry Segments:
Registrant considers its business to be concentrated in one industry
segment--real estate ownership, development, leasing and management.
(c) Narrative Description of Business:
Registrant is primarily engaged in the business of owning, developing,
leasing and managing real property. Registrant owns and manages 1,133,000
rentable square feet of office and warehouse space located in the Kansas City
metropolitan area.
Substantially all the improved real estate owned by Registrant consists of
office buildings and a warehouse and a warehouse/office facility held for
lease, automobile parking garages, apartments and land held for future sale.
Registrant has not pursued a policy of acquiring real estate on a speculative
-3-
<PAGE> 5
basis, although some real estate owned by Registrant may be sold at a future
time.
Registrant leasing operations provided rental income constituting
approximately 93 percent of the 1996 revenues. Registrant competes with
other building owners in the renting and leasing of office building space.
Registrant employs approximately 42 persons on a full-time basis and
approximately 3 persons on a part-time basis. The remaining 7 percent of
1996 revenues include management and service fees (4 percent), real estate
sales (4 percent) and other income (1 percent).
Registrant leases rental space and provides services to Commerce Bancshares,
Inc. The annual aggregate rental and service fees paid to Registrant by
Commerce will vary depending upon the space occupied and services provided.
For the years ended December 31, 1996, 1995 and 1994, Registrant received
rent and fees of $1,151,525, $1,000,900 and $1,012,620, respectively, from
Commerce.
Item 2. Properties.
(a) The following real property is owned, in fee, by Registrant:
(1) The Commerce Tower, a 30-story office building located at 911 Main
Street, Kansas City, Missouri, was opened for occupancy in January 1965.
The Commerce Tower has net rentable space of approximately 425,000 square
feet and is presently 97 percent occupied. The building, of modern
architectural design, has six elevators serving the first 17 floors and an
additional six express elevators serving the 17th through the 30th floors.
Registrant considers the Commerce Tower to be in good condition.
(2) The Barkley Place, a 6-story 95,000 rentable square foot office
building located in Overland Park, Kansas. The building was completed in
1988. The Company purchased the building on July 15, 1994. Registrant
considers the building to be in good condition. The building is 100 percent
occupied. The building is subject to a mortgage deed of trust securing a
loan with a balance owing of $3,804,686.
(3) 6601 College Boulevard, a 6-story 101,200 rentable square foot
building, located in Overland Park, Kansas. The building was completed in
1979. The Company purchased the building on December 15, 1995. Registrant
considers the building to be in good condition. The building is 100 percent
leased under a triple net lease. The building is subject to a mortgage deed
of trust securing a loan with a balance owing of $5,308,925.
-4-
<PAGE> 6
(4) 9221 Quivera, a 1-story 24,000 rentable square foot building and
an adjacent 70,000 square foot vacant parcel of land, located in Overland
Park, Kansas. The building was completed in 1968. The Company purchased the
building on December 27, 1996. Registrant considers the building to be in
good condition. The building is 100 percent leased under a triple net lease.
(5) A warehouse/office facility, located at 9200 Cody, Overland Park,
Kansas. The building contains approximately 19,100 square feet of office
space and 74,800 square feet of warehouse space. The building was
constructed in 1973, with an addition in 1976. The Company purchased the
facility on June 30, 1995. Registrant considers this facility to be in good
condition. The building is 100 percent leased under a triple net lease. The
warehouse/office facility is subject to a mortgage deed of trust securing a
loan with a balance owing of $1,905,193.
(6) A warehouse, located at 9909 Lakeview, Lenexa, Kansas. The building
contains approximately 115,000 square feet of warehouse space. The
building was constructed in 1987. The Company purchased the facility on
December 18, 1996. Registrant considers this facility to be in excellent
condition. The building is 100 percent leased under a triple net lease
(7) A two-story office building, located at 908-10 Walnut Street,
Kansas City, Missouri, is immediately adjacent to the Commerce Tower and
contains approximately 7,500 square feet of net rentable space. This
building is approximately 60 years old, and is unoccupied. The Company plans
to demolish the building in the near future to accommodate a proposed car
garage on the Southwest corner of 9th and Walnut.
(8) Two office buildings, located at 916 and 920 Walnut Street, Kansas
City, Missouri, and contains approximately 48,750 square feet of net
rentable space. These buildings are presently 25% occupied. The Company,
under its Tax Redevelopment District, plans to demolish the buildings in the
near future to accommodate a proposed garage on the Southwest corner of 9th
and Walnut.
(9) A 19-building, 210-unit apartment complex, on a 17.4-acre tract,
located at New Mark Drive and North Cherry in Kansas City North.
Construction of the first phase was completed in mid-1971 and completion of
the second phase in 1978. The Company is presently constructing an
additional l40 units to be completed in 1997. The apartments are 94 percent
occupied. Registrant considers the complex to be in good condition. The
apartments are subject to a mortgage deed of trust securing a loan with a
balance owing of $2,302,175.
-5-
<PAGE> 7
(10) A 24-building, 329-unit apartment complex, on a 30.3-acre tract,
located at 5401 Fox Ridge Drive in Mission, Kansas. Construction of the
complex was completed in 1985, with an addition of 7 buildings in 1996. The
Company purchased the complex on December 31, 1992. Registrant considers the
24-building complex to be in good condition. The apartments are 94 percent
occupied. The apartments are subject to a mortgage deed of trust securing a
loan with a balance owing of $9,865,726.
(11) A 7-building, 162-unit apartment complex, on an 8.7-acre tract located
at 6800 Antioch in Merriam, Kansas. Construction of the complex was
completed in 1987. The Company purchased the complex on September 30, 1993.
Registrant considers the 7-building complex to be in good condition. The
apartments are 97 percent occupied. The apartments are subject to a mortgage
deed of trust securing a loan with a balance owing of $3,718,353.
(12) One block of surface parking bounded generally by Sixth Street, Baltimore
Street, Seventh Street and Wyandotte Street. This parking location contains
approximately 206 parking stalls.
(13) A block of surface parking located generally at the corner of Eighth
and Wyandotte Streets in Kansas City, Missouri, that contains approximately 200
parking stalls and a surface parking located located at 102 E. 8th in Kansas
City, Missouri, that contains approximately 40 parking stalls.
(14) A tract of land located at the southwest corner of Ninth and Walnut.
This tract contains approximately 12,000 square feet of land.
(15) A two-story facility located at the Northwest corner of Ninth and
Walnut, immediately adjacent to the 811 Main building and garage. The
parking facility contains approximately 80 parking spaces.
(b) New Mark, a division of Registrant, originally owned 1,207 acres
located in Kansas City North immediately adjacent to and contiguous with the
apartment complex owned by Registrant. The tract is owned in fee.
Residential lots and land aggregating approximately 629 acres have been sold
from the tract by the Company. An additional 116 acres have been dedicated
to streets, and 103 acres are designated as an open greenbelt area.
(c) Downtown Redevelopment Corporation, an urban redevelopment corporation
under the laws of the state of Missouri, of which Registrant owns
approximately 98 percent of the outstanding capital stock, owns the following
property located in downtown Kansas City, Missouri:
-6-
<PAGE> 8
(1) The 811 Main building, which consists of an L-shaped, 12-story
combination office building and parking garage, was completed in 1959. The
first five floors are utilized primarily for parking, although approximately
27,000 square feet of ground floor and lower level space is available for use
as commercial office space and storage. The office space extending from the
6th floor through the 12th floor encloses a gross area of approximately
252,000 square feet. The building became a full-service, multi-tenant
building in April, 1996, and is presently 94 percent occupied. The condition
of the property is considered good.
(2) 710 Main Garage Building, a, multi-deck, self-parking garage
facility, contains approximately 737 parking spaces. The original portion
was completed in 1959, with additions made in 1962. The condition of the
property is considered good.
(3) A tract of ground approximately one-half block in width on the
east side of Main Street between 6th and 8th Streets. The Company
successfully pursued quiet title actions against the leaseholder, and as a
result, now holds clear title to the leasehold improvements on this tract,
Prom/Rodeway Inn and 711 Main Garage. These structures are functionally
obsolete. The Company had remediated environmental problems in the buildings
and plans to demolish them except for the 280 car parking garage at 711Main.
The Company demolished the north Rodeway facility and has completed a 100 car
surface parking lot to be occupied in February, 1997.
(4) An irregular tract of ground containing approximately 35,000
square feet , which was leased in part to a service station until December,
1996. Approximately 21,000 square feet is used for surface parking. The
tract is owned in fee. The company plans to demolish the station in 1997 and
use the entire area for surface parking.
Item 3. Legal Proceedings.
Neither Registrant nor any of its subsidiaries are involved in any material
pending litigation other than ordinary routine proceedings incidental to
their business.
Item 4. Submission of Matters to a Vote of Security Holders.
Registrant did not submit any matters to a vote of security holders during
the fourth quarter of 1996.
-7-
<PAGE> 9
Part II
- -------
Item 5. Market for Registrant's Common Stock and Related Security
Holder Matters.
Registrant's stock is traded in the "over-the-counter" market and trading of
such stock is limited. The schedule below depicts the bid and asked prices,
as provided by an investment banking firm, in each quarter of 1996. The
"over-the-counter" market quotations shown below reflect interdealer prices
without retail markup, markdown or commissions and may not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
1996 1995
----------------- -----------------
Quarter Bid Asked Bid Asked
------- --- ----- --- -----
<S> <C> <C> <C> <C>
First $75.00 $ - $65.00 $ -
Second 87.50 - 65.00 -
Third 87.50 - 65.00 -
Fourth 94.00 - 75.00 -
</TABLE>
There are no present or future restrictions on the ability of Registrant to
pay common stock dividends. No dividends were paid in 1996, 1995 and 1994.
(Management has indicated it will not pay dividends in 1997.)
The table below shows the number of holders of record of each class of equity
securities of Registrant as of February 18, 1997:
<TABLE>
<CAPTION>
Number of
Title of Class Security Holders
-------------- ----------------
<S> <C>
Common stock,
$1.00 par value 538
</TABLE>
Item 6. Selected Financial Data.
Reference is made to the caption "Selected Financial Data" on Page 21 of
Registrant's 1996 Annual Report to Stockholders for a summary of certain
financial data for the Registrant for each of its last five fiscal years.
Pursuant to General Instruction G(2) to Form 10-K and Securities Exchange Act
Rule 12b-23, the information set forth therein is incorporated herein by
reference.
-8-
<PAGE> 10
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Reference is made to the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" set forth on Pages 17 through
20 of Registrant's 1996 Annual Report to Stockholders which, pursuant to
General Instruction G(2) to Form 10-K and Securities Exchange Act Rule
12b-23, is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
Reference is made to Pages 4 through 15 and Pages 22 and 23 of Registrant's
1996 Annual Report to Stockholders which, pursuant to General Instruction
G(2) to Form 10-K and Securities Exchange Act Rule 12b-23, is incorporated
herein by reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosures.
None.
Part III
- --------
Item 10. Directors and Executive Officers of the Registrant.
Reference is made to the caption "Election of Directors" set forth on Page 2
of Registrant's Proxy Statement relating to Annual Meeting of Stockholders to
be held April 9, 1997. Pursuant to General Instruction G(2) to Form 10-K and
Securities Exchange Act Rule 12b-23, information therein relating to the
names, ages, positions, terms of office, family relationships and business
experience of Registrant's directors is incorporated herein by reference.
Item 11. Executive Compensation.
Reference is made to the captions "Summary Compensation Table" and
"Compensation Plans" set forth on Pages 7 through 9 of Registrant's Proxy
Statement relating to Annual Meeting of Stockholders to be held April 9,
1997. Pursuant to General Instruction G(2) to Form 10-K and Securities
Exchange Act Rule 12b-23, information therein is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Reference is made to the caption "Security Ownership of Certain Beneficial
Owners and Management" set forth on Page 4 of Registrant's Proxy Statement
relating to
-9-
<PAGE> 11
Annual Meeting of Stockholders to be held April 9, 1997. Pursuant to General
Instruction G(2) to Form 10-K and Securities Exchange Act Rule 12b-23, the
information therein is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
Reference is made to the caption "Transactions" in Registrant's Proxy
Statement relating to Annual Meeting of Stockholders to be held April 9,
1997. Pursuant to General Instruction G(2) to Form 10-K and Securities
Exchange Act Rule 12b-23, the information therein is incorporated herein by
reference.
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)(1) Financial Statements. The following consolidated financial
--------------------
statements of the Registrant and its subsidiaries, together
with the report of independent public accountants, contained in
the Registrant's 1996 Annual Report to Stockholders are hereby
incorporated herein:
Report of Independent Public Accountants
Consolidated Balance Sheets - December 31, 1996 and 1995
Consolidated Statements of Income for the Years Ended December
31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Stockholders' Investment for the Years
Ended December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Schedule III
All other schedules have been omitted because the required
information is shown in the financial statements or notes
thereto, because the amounts involved are not significant or
because of the absence of the conditions under which they are
required.
-10-
<PAGE> 12
(2) Exhibits.
--------
<TABLE>
<CAPTION>
Item No. Description Location
- -------- -------------------------------------- -----------------------------------
<C> <S> <C>
3(a) Articles of Incorporation of
Tower Acquisition Corp. Filed on March 30, 1990, as
Exhibit 3(a) to Registrant's 1989
Form 10-K (File No. 0-18261)
3(b) Bylaws of Tower Acquisition
Corp. Filed on March 30, 1990, as
Exhibit 3(b) to Registrant's 1989
Form 10-K (File No. 0-18261)
3(c) Certificate of Amendment and
Amendment of Articles of
Incorporation Filed on March 30, 1990, as
Exhibit 3(c) to Registrant's 1989
Form 10-K (File No. 0-18261)
4(a) Conformed composite copy of
Note Agreement and Deed of
Trust dated September 21, 1972,
with respect to $8,000,000,
8 percent, due in monthly install-
ments to October 2007 Filed on March 30, 1990, as
Exhibit 4(a) to Registrant's 1989
Form 10-K (File No. 0-18261)
10 Hillsborough Apartment Complex
acquisition agreement Filed on January 11, 1993, as
Exhibit A to Registrant's Form 8-K
(File No. 0-18261)
Peppertree Apartment Complex
acquisition agreement Filed on October 12, 1993, as
Exhibit A to Registrant's Form 8-K
(File No. 0-18261)
Barkley Place Office Building
acquisition agreement Filed on July 26, 1994, as
Exhibit A to Registrant's Form 8-K
(File No. 0-18261)
6601 College Boulevard Office
Building acquisition agreement Filed on February 27, 1996, as
Exhibit A to Registrant's Form 8-K
(File No. 0-18261)
-11-
<PAGE> 13
13 Tower Properties Company's
annual report to its security holders
for the 1996 fiscal year. Such
report is furnished for the informa-
tion of the Commission and is not
to be deemed as filed as a part of
this report. Filed on March 05, 1997, as
Exhibit 13 to Registrant's 1996
Form 10-K (File No. 0-18261)
21 A list of Tower Properties
Company subsidiaries See attached Exhibit 21
</TABLE>
(b) Reports on Form 8-K. Registrant filed no required reports on
-------------------
Form 8-K during the last quarter of 1996.
-12-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TOWER PROPERTIES COMPANY
(Registrant)
DATE: March 31, 1997 BY: /s/ JAMES M. KEMPER, JR.
----------------------------------
James M. Kemper, Jr.
Chairman, President and
Chief Executive Officer
DATE: March 31, 1997 BY: /s/ CHESTER A. WITTWER, JR.
----------------------------------
Chester A. Wittwer, Jr.
Vice President and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Registrant
and in the capacities and on the dates indicated.
DATE: March 31, 1997 BY: /s/ NEIL T. DOUTHAT
----------------------------------
Neil T. Douthat
Director
DATE: March 31, 1997 BY: /s/ BRIAN D. EVERIST
----------------------------------
Brian D. Everist
Director
DATE: March 31, 1997 BY: /s/ JONATHAN M. KEMPER
----------------------------------
Jonathan M. Kemper
Director
DATE: March 31, 1997 BY: /s/ BENJAMIN F. BRYAN
----------------------------------
Benjamin F. Bryan
Executive Vice President and Director
-13-
<PAGE> 1
TOWER PROPERTIES COMPANY
ANNUAL REPORT 1996
<PAGE> 2
TOWER PROPERTIES COMPANY
911 Main Street, Suite 100
Kansas City, Missouri 64105
Transfer Agent:
UMB Bank, n.a.
928 Grand Avenue, Post Office Box 410064
Kansas City, Missouri 64141-0064
Description of the Company's Business
- -------------------------------------
The Company and its subsidiary organizations are primarily engaged in the
business of owning, developing, leasing and managing real property. All real
estate assets are located in Johnson County, Kansas, and Clay and Jackson
County, Missouri. Substantially all the improved real estate owned by the
Company and its subsidiaries consists of office buildings, apartment
complexes, a warehouse and a warehouse/office facility, automobile parking
garages and land held for future sale or development. The Company has not
pursued a policy of acquiring real estate on a speculative basis for future
sale, although some real estate owned by the Company or a subsidiary may be
sold at some future time.
Stock Market Data
- -----------------
The Company's stock is traded on the "over the counter" market. Following is
a schedule of the bid and asked prices in each quarter of 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
Quarter Bid Asked Bid Asked
------- --- ----- --- -----
<S> <C> <C> <C> <C>
First $75.00 $ - $65.00 $ -
Second 87.50 - 65.00 -
Third 87.50 - 65.00 -
Fourth 94.00 - 75.00 -
</TABLE>
The Company will furnish to any person who was a stockholder on February 18,
1997, a copy of the annual report, on Form 10-K, including the financial
statement schedules required to be filed with the Securities and Exchange
Commission, upon such person's written request for the same, which request
must contain a good faith representation that, as of February 18, 1997, such
person was a beneficial owner of securities entitled to vote at such meeting.
The request should be directed to Mr. Chester A. Wittwer, Jr., Vice
President, Tower Properties Company, 911 Main Street, Suite 100, Kansas City,
Missouri 64105.
-2-
<PAGE> 3
DEAR STOCKHOLDER:
1996 was a good year for real estate investments with demand equaling supply
and a gradual appreciation in real estate values. Real estate lenders have
adopted a more positive attitude on suburban properties in particular which
will undoubtedly lead to further construction and increased competition with
existing properties.
Tower Properties acquired during 1996, a one hundred thousand square foot
warehouse in Lenexa of modern design, as well as a small office building with
adjoining land in Overland Park. We are in the process of building one
hundred and forty new apartments at New Mark which should be completed by the
end of 1997.
We began work on our new Tax Increment Finance Redevelopment District with
the demolition of blighted property, and are in the process of designing a
garage adjoining the Commerce Tower. Our downtown properties in Kansas City
have been enhanced by the restoration of the historic New York Life Building
adjoining our property, as well as the continued development of the Quality
Hill area. Downtown office rentals, however, continue to be extremely
competitive. We continue to spend large amounts of money to maintain our
downtown properties and are the landlord of choice for knowledgeable tenants
in that market.
Sincerely,
/s/ James Kemper
James M. Kemper, Jr.
Chairman and President
-3-
<PAGE> 4
<TABLE>
TOWER PROPERTIES COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<CAPTION>
ASSETS 1996 1995
------------ ------------
<S> <C> <C>
Cash $ 52,772 $ 5,577
Short Term Investments 60,000 60,000
Related Party Investment, At Market (Note 8) 2,995,520 2,359,413
Accounts Receivable 759,600 988,565
Notes Receivable 77,409 69,678
Tenant Leasehold Improvements, Net 4,131,175 4,555,924
Construction in Progress 1,592,153 3,016,024
Prepaid Expenses and Other Assets 482,754 346,478
Rental Income Property, At Cost
(Notes 2, 3, 5 and 7) 72,059,597 62,521,254
Less: Accumulated Depreciation (22,841,620) (21,492,176)
------------ ------------
Net Rental Income Property 49,217,977 41,029,078
Real Estate Held for Sale (Note 2) 753,748 1,147,859
Equipment and Furniture, at Cost (Note 2) 7,847,000 6,572,718
Less: Accumulated Depreciation (4,345,863) (3,647,253)
------------ ------------
Net Equipment and Furniture 3,501,137 2,925,465
------------ ------------
Total Assets $ 63,624,245 $ 56,504,061
============ ============
LIABILITIES AND STOCKHOLDERS'
INVESTMENT
Liabilities:
Accounts Payable and Other Liabilities $ 904,168 $ 919,297
Related Party Line of Credit (Note 8) 12,121,859 13,856,859
Income Taxes Payable 85,333 436,086
Deferred Income Taxes (Note 6) 926,196 1,230,788
Mortgage Notes Payable (Note 5) 26,905,057 19,300,872
------------ ------------
Total Liabilities 40,942,613 35,743,902
Minority Interest 137,404 124,900
Commitments and Contingencies (Note 9)
Preferred Stock, No Par Value
Authorized 60,000 Shares, None Issued -- --
Stockholders' Investment:
Common Stock, Par Value $1.00
Authorized 1,000,000 Shares, Issued
178,430 Shares 178,430 178,430
Paid-In Capital 17,355,872 17,355,872
Retained Earnings 4,118,935 2,613,712
Unrealized Holding Gain for Securities (Note 8) 1,385,789 972,319
------------ ------------
23,039,026 21,120,333
Less Treasury Stock, At Cost (494,798) (485,074)
------------ ------------
Total Stockholders' Investment 22,544,228 20,635,259
------------ ------------
Total Liabilities and Stockholders' Investment $ 63,624,245 $ 56,504,061
============ ============
The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>
-4-
<PAGE> 5
<TABLE>
TOWER PROPERTIES COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES: (Notes 2 and 8)
Rent $14,587,306 $11,798,377 $ 9,913,907
Rent, Related Party 687,052 569,783 551,548
Management and Service Fees 44,967 166,139 250,736
Management and Services Fees, Related Party 356,588 329,062 356,983
Real Estate Sales 580,000 91,800 294,800
Interest and Other Income 128,447 95,667 225,055
Other Income, Related Party 107,885 102,054 104,089
----------- ----------- -----------
Total Revenues 16,492,245 13,152,882 11,697,118
----------- ----------- -----------
COSTS & EXPENSES:
Salaries and Employee Benefits (Note 4) 1,706,111 1,576,932 1,959,427
Depreciation (Note 2) 2,049,245 1,593,638 1,493,831
Maintenance and Repairs (Note 2) 2,877,710 2,193,407 1,968,331
Cost of Real Estate Sold (Note 2) 352,240 52,756 114,842
Taxes Other than Income 1,197,183 1,065,872 978,819
Utilities 1,241,963 842,177 1,036,316
Interest 2,023,803 1,518,560 1,121,051
Interest, Related Party (Note 8) 511,545 330,900 366,000
Amortization of Leasehold Improvements 1,259,681 911,372 714,131
Leasing and Advertising 99,188 91,396 109,867
Professional Fees 142,314 113,724 241,054
Insurance 199,270 186,518 200,837
Reduction in Real Estate Valuation (Note 2) -- -- (289,757)
Other 496,977 310,660 387,924
----------- ----------- -----------
Total Costs and Expenses 14,157,230 10,787,912 10,402,673
Income Before Minority Interest and
Provision for Income Taxes 2,335,015 2,364,970 1,294,445
Minority Interest In Income of Subsidiary (12,504) (26,982) (28,667)
----------- ----------- -----------
Income Before Provision for Income Taxes and 2,322,511 2,337,988 1,265,778
PROVISION (BENEFIT) FOR INCOME TAXES (NOTE 6):
Currently Payable 933,288 1,012,808 421,682
Deferred (116,000) (185,000) 32,265
----------- ----------- -----------
817,288 827,808 453,947
----------- ----------- -----------
NET INCOME $ 1,505,223 $ 1,510,180 $ 811,831
=========== =========== ===========
Earnings Per Share (Note 2) $ 8.80 $ 8.84 $ 4.75
=========== =========== ===========
Weighted Average Common Shares Outstanding 170,958 170,871 170,849
=========== =========== ===========
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
-5-
<PAGE> 6
<TABLE>
TOWER PROPERTIES COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
----------- ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,505,223 $ 1,510,180 $ 811,831
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 2,049,245 1,593,638 1,493,831
Amortization of Leasehold Improvements 1,259,681 911,372 714,131
Increase (Decrease) in Deferred Taxes (527,229) (185,000) 124,551
Decrease (Increase) in Accounts Receivable 228,965 (299,334) 49,847
(Increase) Decrease in Notes Receivables (7,731) 99,928 83,625
(Decrease) Increase in Accounts Payable and
Other Liabilities (15,129) (37,925) 155,244
Increase in Prepaid Expenses and
Other Assets (136,276) (7,899) (154,364)
(Decrease) Increase in Income Taxes Payable (350,753) 436,086 (30,692)
Reduction in Real Estate Valuation Reserve -- -- (289,757)
Gain on Real Estate Sales (227,760) (39,044) (179,958)
----------- ------------ -----------
Net Cash Provided by Operating Activities 3,778,236 3,982,002 2,778,289
----------- ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction of Hillsborough Phase II Apartments (4,157,931) -- --
Purchase of Barkley Place Office Building -- -- (5,900,000)
Purchase of Warehouse (3,675,000) (2,600,000) --
Purchase of Suburban Office Building (2,220,294) (7,700,000) --
Decrease (Increase) in Construction in Progress 1,423,871 (2,627,762) 113,620
Proceeds from Sale of Land 541,261 91,800 158,800
Additions to Real Estate Held for Sale, Net (2,782) (15,697) (10,760)
Additions to Equipment & Furniture (571,579) (432,137) (279,396)
Additions to Rental Income Property (105,620) (82,814) (64,258)
Additions to Leasehold Improvements (834,932) (2,142,572) (836,538)
----------- ------------ -----------
Net Cash Used in Investing Activities (9,603,006) (15,509,182) (6,818,532)
----------- ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments on Mortgages (695,815) (469,608) (3,092,713)
Proceeds from Long Term Borrowings 8,300,000 1,950,000 10,600,000
(Decrease) Increase in Short Term Borrowings (1,735,000) 10,113,779 (3,500,345)
Purchase of Treasury Stock (29,663) (15,470) (10,790)
Treasury Shares Issued to Directors 19,939 19,920 20,020
Increase (Decrease) in Minority Interest 12,504 (89,089) 28,667
----------- ------------ -----------
Net Cash Provided by Financing Activities 5,871,965 11,509,532 4,044,839
----------- ------------ -----------
NET INCREASE (DECREASE) IN CASH: 47,195 (17,648) 4,596
CASH, Beginning of Period 5,577 23,225 18,659
----------- ------------ -----------
CASH, End of Period $ 52,772 $ 5,577 $ 23,255
=========== ============ ===========
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
-6-
<PAGE> 7
<TABLE>
TOWER PROPERTIES COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
Common Stock Treasury Stock
------------------ -----------------
Retained Unrealized
Paid-In Earnings Holding
Shares Amount Capital (Deficit) Share Amount Gain Total
------- -------- ----------- ---------- ----- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993 178,430 $178,430 $17,355,872 $ 291,701 7,606 $(498,754) $ -- $17,327,249
Net Income -- -- -- 811,831 -- -- -- 811,831
Treasury Stock Purchases -- -- -- -- 166 (10,790) -- (10,790)
Treasury Stock Issued to
Directors -- -- -- -- (308) 20,020 469,732 489,752
------- -------- ----------- ---------- ----- --------- ---------- -----------
Balance, December 31, 1994 178,430 178,430 17,355,872 1,103,532 7,464 (489,524) 469,732 18,618,042
Net Income -- -- -- 1,510,180 -- -- -- 1,510,180
Treasury Stock Purchases -- -- -- -- 238 (15,470) -- (15,470)
Treasury Stock Issued to
Directors -- -- -- -- (286) 19,920 -- 19,920
Unrealized Holding Gain
For Securities -- -- -- -- -- -- 502,587 502,587
------- -------- ----------- ---------- ----- --------- ---------- -----------
Balance, December 31, 1995 178,430 178,430 17,355,872 2,613,712 7,416 (485,074) 972,319 20,635,259
Net Income -- -- -- 1,505,223 -- -- -- 1,505,223
Treasury Stock Purchases -- -- -- -- 339 (29,663) -- (29,663)
Treasury Stock Issued to
Directors -- -- -- -- (220) 19,939 -- 19,939
Unrealized Holding Gain
For Securities -- -- -- -- -- -- 413,470 413,470
------- -------- ----------- ---------- ----- --------- ---------- -----------
Balance, December 31, 1996 178,430 $178,430 $17,355,872 $4,118,935 7,535 $(494,798) $1,385,789 $22,544,228
======= ======== =========== ========== ===== ========= ========== ===========
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
-7-
<PAGE> 8
TOWER PROPERTIES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS:
Tower Properties Company (the Company) is primarily engaged in owning,
developing, leasing and managing real property located in Johnson County,
Kansas, and Clay and Jackson County, Missouri. Substantially all of the
improved real estate owned by the Company and its subsidiaries consists of
office buildings, apartment complexes, a warehouse and a warehouse/office
facility and automobile parking lots and garages.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of the Company and
its majority-owned subsidiary. All significant intercompany accounts and
transactions have been eliminated. Certain reclassifications have been made
to conform prior year financial statements to the 1996 presentation.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The Company's accounting
policies conform to generally accepted accounting principles.
Depreciation and Amortization
- -----------------------------
Depreciation is charged to operations using straight-line and accelerated
methods over the estimated asset lives as follows:
<TABLE>
<S> <C>
Commercial office & warehouse buildings 18-65 years<F*>
Apartments 8-40 years
Parking facilities 15-45 years
Equipment and furniture 3-20 years
Tenant leasehold improvements 1-20 years
<FN>
<F*>Certain components of the Commerce Tower office building are depreciated
over 65 years. The original weighted average life of all components is 38
years.
</TABLE>
-8-
<PAGE> 9
Maintenance and repairs are charged to expense as incurred. The cost of
additions and betterments are capitalized. The cost of assets retired or
sold and the related accumulated depreciation are removed from the applicable
accounts and any gain or loss is recognized as income or expense. Fully
depreciated assets are retained in the accounts until retired or sold.
The amount of accumulated amortization on tenant leasehold improvements was
$6,340,129 and $5,080,459 at December 31, 1996 and 1995, respectively.
Revenue Recognition
- -------------------
Rental revenue is recognized on a straight-line basis over the term of
individual leases.
Real Estate Held for Sale
- -------------------------
Revenue is recorded on the sale of real estate when title passes to the
buyer. All land sales are to builders for cash or short-term notes
receivable. The Company's real estate held for sale is recorded at cost
which does not exceed its estimated realizable value.
Statements of Cash Flows
- ------------------------
Interest payments were $2,549,254, $1,832,288 and $1,487,051 for the years
ended December 31, 1996, 1995 and 1994, respectively. The Company paid
income taxes of $1,633,704, $496,146, and $440,664 for the years ended
December 31, 1996, 1995 and 1994, respectively.
Earnings Per Share
- ------------------
Earnings per share have been calculated based on the weighted average common
shares outstanding during each period.
3. RENTAL INCOME PROPERTY:
Major classes of rental income property owned by the Company at December 31,
1996 and 1995 are as follows:
<TABLE>
<CAPTION>
Accumulated
Cost Depreciation Net
---- ------------ ---
<S> <C> <C> <C>
December 31, 1996--
Commercial office and warehouse buildings $43,390,449 $16,724,114 $26,666,335
Apartments 22,989,330 4,024,779 18,964,551
Parking facilities 5,679,818 2,092,727 3,587,091
----------- ----------- -----------
$72,059,597 $22,841,620 $49,217,977
=========== =========== ===========
-9-
<PAGE> 10
Accumulated
Cost Depreciation Net
---- ------------ ---
December 31, 1995--
Commercial office and warehouse buildings $38,556,983 $16,177,608 $22,379,375
Apartments 19,096,504 3,512,640 15,583,864
Parking facilities 4,867,767 1,801,928 3,065,839
----------- ----------- -----------
$62,521,254 $21,492,176 $41,029,078
=========== =========== ===========
</TABLE>
4. PENSION PLAN:
The Company sponsors a defined benefit pension plan covering substantially
all employees not covered in collective bargaining agreements. The plan's
assets are primarily invested in fixed income securities. The Company's
funding policy is to make annual contributions as required by applicable
regulations.
The following table sets forth the Company pension plan's funded status at
the measurement dates of October 1, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Fair value of plan assets $553,016 $516,506
======== ========
Accumulated benefit obligation $506,696 $524,997
======== ========
Vested benefit obligation $499,694 $509,642
======== ========
Projected benefit obligation $607,149 $625,652
======== ========
Projected benefit obligation in
excess of plan assets $(42,713) $(99,666)
Unrecognized prior service cost 18,796 22,240
Unrecognized transitional obligation (7,866) (10,550)
Unrecognized net loss (gain) (12,641) 24,380
-------- --------
Accrued pension liability $(44,424) $(63,596)
======== ========
</TABLE>
-10-
<PAGE> 11
Assumptions used in calculation:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Expected long-term rate of return 7.75% 7.75% 7.75%
Discount rate 7.25% 6.25% 7.25%
Salary increase 3.78% 3.82% 4.50%
Pension cost consists of:
Service cost $ 25,461 $ 13,474 $ 16,712
Interest cost 35,940 31,848 30,738
Actual return on plan assets (9,498) (75,214) 12,651
Net amortization (deferral) (27,335) 38,821 (42,795)
-------- -------- --------
Net periodic pension cost $ 24,568 $ 8,929 $ 17,306
======== ======== ========
</TABLE>
All of the Company's union employees are covered by union-sponsored,
collectively-bargained, multi-employer pension plans. Tower contributed
$8,837, $8,577 and $29,368 in 1996, 1995 and 1994, respectively, to such
plans. The contributions were determined in accordance with the provisions
of negotiated labor contracts and are based on the number of hours worked.
5. MORTGAGE NOTES PAYABLE:
Mortgage notes payable, secured by rental income property with a net book
value of approximately $33,538,000 and an assignment of certain leases and
related revenue, consist of the following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
8.50%, principal and interest payable
$66,388 monthly, until April, 2013 $ 7,022,669 $ 7,213,504
7.875%, principal and interest payable
$24,660 monthly, until February,
2009 2,302,175 2,412,052
7.50%, principal and interest payable
$32,224 monthly, until February,
2014 3,718,353 3,821,909
9.00%, principal and interest payable
$37,458 monthly, until December,
2012 3,804,686 3,906,718
8.00%, principal and interest payable
$16,311 monthly, until December,
2015 1,905,192 1,946,689
-11-
<PAGE> 12
7.65%, principal and interest payable
$25,448 monthly, until April,
2013 2,843,057 -
7.40%, principal and interest payable
$43,172 monthly, until April,
2016 5,308,925 -
----------- -----------
$26,905,057 $19,300,872
=========== ===========
</TABLE>
Minimum mortgage note principal payments required over the next five years
and thereafter are as follows:
<TABLE>
<S> <C>
1997 $ 815,267
1998 883,325
1999 957,094
2000 1,037,054
2001 1,123,729
Thereafter 22,088,588
-----------
$26,905,057
===========
</TABLE>
The carrying value of debt at December 31, 1996 approximates fair value.
6. INCOME TAXES:
Deferred income taxes are determined based on the difference between the
financial statement and tax basis of assets and liabilities using the enacted
tax rate.
The Company's effective income tax rate differed from the statutory federal
income tax rate primarily due to the following:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate 34.0% 34.0% 34.0%
Tax effect of:
Dividend exclusion (1.4) (1.4) (2.0)
Minority interest .5 1.2 2.3
State income taxes,
net of federal benefit 3.1 3.1 2.2
Other (1.0) (1.5) (0.6)
---- ---- ----
Effective Income Tax Rate 35.2% 35.4% 35.9%
==== ==== ====
</TABLE>
-12-
<PAGE> 13
The tax effect of temporary differences giving rise to the Company's net
deferred income tax liability at December 31, 1996 and 1995, is as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Amortization of leasehold improvements $ 985,450 $ 661,799
Pension 35,528 19,732
Vacation 32,328 24,613
Contested real estate taxes - 52,132
----------- -----------
1,053,306 758,276
----------- -----------
Deferred tax liabilities:
Depreciation on rental income property,
equipment and furniture (919,622) (1,181,206)
Unrealized holding gain for securities (783,209) (549,527)
Other - (35,614)
Accrued rent receivable (276,671) (222,717)
----------- -----------
(1,979,502) (1,989,064)
----------- -----------
Net deferred income tax liability $ (926,196) $(1,230,788)
=========== ===========
</TABLE>
7. ACQUISITIONS:
On December 27, 1996, the Company purchased the 9221 Quivera commercial
office building and an additional 70,000 square foot vacant parcel of land
for $1,750,000. 9221 Quivera is a one-story, 24,000 square foot commercial
office building located in Overland Park, Kansas.
On December 18, 1996, the Company purchased the 9909 Lakeview Avenue
warehouse facility for $3,675,000. The property is a 115,000 square foot
warehouse located in Lenexa, Kansas.
On October 11, 1996 the Company purchased the 916-920 Walnut commercial
office buildings and the 102 E. 8th Street parking lot assets for $700,000
and assumed liabilities of $5,867. 916 Walnut is a eight-story commercial
office building and 920 Walnut is a two-story commercial office building
located in Kansas City, Missouri.
On December 15, 1995, the Company purchased the 6601 College Boulevard
commercial office building assets for $7,700,000. 6601 College Boulevard is
a six-story, 101,200 square foot commercial office building located in
Overland Park, Kansas.
On June 30, 1995, the Company purchased the 9200 Cody warehouse/office
facility for $2,600,000. The property is a 93,900 square foot
warehouse/office facility located in Overland Park, Kansas.
-13-
<PAGE> 14
The following unaudited pro forma summary combines the results of operations
of the Company as if the acquisition of 6601 College had occurred at January
1, 1995, after giving effect to certain adjustments, including additional
interest expense, depreciation and amortization and related income tax
effects.
<TABLE>
<CAPTION>
Unaudited
---------
Fiscal Year 1995
----------------
<S> <C>
Total revenue $13,957,746
Net income 1,525,300
Earnings per common share 8.93
</TABLE>
This pro forma information does not purport to be indicative of the results
that actually would have been obtained if the operations had been combined
during the period and is not intended to be a projection of future results.
8. OTHER RELATED PARTY TRANSACTIONS:
The Company received rent, fees, and other income from Commerce Bank, N.A.
and Commerce Bancshares, Inc. (Commerce) and its subsidiaries of $1,151,525,
$1,000,900 and $1,012,620 in 1996, 1995, and 1994, respectively.
The Company owns 64,768 shares of Commerce common stock, which is shown as a
related party investment in the accompanying consolidated balance sheet.
There are common officers and directors of the Company and Commerce.
The Company has a $15,000,000 line of credit with a variable interest rate
equal to one and one half percent (1 1/2%) in excess of the Fed Funds rate,
floating with Commerce. At December 31, 1996, $2,878,141 was available under
this line of credit, and the interest rate was 6.27%. The line requires
monthly interest payments and expires March 1, 1997. Interest expense paid to
Commerce was $511,545, $330,900, and $366,000 for the years ended December
31, 1996, 1995 and 1994, respectively. The weighted short term borrowing
rate was 6.79% in 1996. Interest of $60,866 and $87,198 was capitalized for
the years ending December 31, 1996 and 1995, respectively.
9. CONTINGENCIES:
Congress passed the Americans With Disabilities Act (the Act) of 1990 which
became effective January 26, 1992. The Act contains provisions for building
owners to provide persons with disabilities with accommodations and access
equal to, or similar to, that available to the general public. Management
cannot estimate the eventual impact of the Act on the financial condition of
the Company since certain provisions of the Act are open to interpretation.
The Company is implementing the requirements of the Act that are readily
achievable and will not constitute an undue burden on the Company.
-14-
<PAGE> 15
<TABLE>
10. QUARTERLY FINANCIAL DATA (UNAUDITED)
<CAPTION>
1996 Quarters 1995 Quarters
------------------------------------------------- -------------------------------------------------
First Second Third Fourth First Second Third Fourth
- -------------------------------------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue 4,126,156 3,934,430 4,137,169 4,294,490 3,168,714 3,224,200 3,315,985 3,443,983
Net income 527,860 400,173 422,555 154,635 432,589 364,696 367,743 345,152
- -------------------------------------------------------------------------- -------------------------------------------------
Earnings per share: 3.09 2.34 2.47 0.91 2.53 2.13 2.15 2.02
- -------------------------------------------------------------------------- -------------------------------------------------
Market price per share: $ 75 $ 87.5 $ 87.5 $ 94 $ 65 $ 65 $ 65 $ 75
- -------------------------------------------------------------------------- -------------------------------------------------
</TABLE>
-15-
<PAGE> 16
To the Board of Directors of
Tower Properties Company:
We have audited the accompanying consolidated balance sheets of Tower
Properties Company (a Missouri corporation) and subsidiary as of December 31,
1996 and 1995, and the related consolidated statements of income,
stockholders' investment and cash flows for each of the three years in the
period ended December 31, 1996. These financial statements and schedules
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tower Properties Company and
subsidiary as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying Schedule III is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as
a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Kansas City, Missouri
February 26, 1997
-16-
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
The Company's principal assets consist of real estate holdings which are not
liquid assets. Real estate holdings include office buildings, apartment
complexes, a warehouse and a warehouse/office facility, parking facilities
and land held for future sale. The principal source of funds generated
internally is income from operations, depreciation and amortization. The
principal source of external funds is long term debt and a line of credit
with Commerce Bank, N.A. The Company has not experienced liquidity problems
during the twelve months ended December 31, 1996. On December 15, 1995, the
Company acquired the 6601 College Boulevard commercial office building,
located in Overland Park, Kansas, for $7,700.000. The Company used the line
of credit with Commerce Bank, N.A. to make this purchase. In March, 1996, a
$5,400,000 twenty-year term mortgage loan was secured for this property with
Nationwide Insurance. The proceeds from this loan were used to reduce the
line of credit with Commerce Bank, N.A.. During 1996, the Company
constructed an additional 68 units at the Hillsborough apartment complex.
The Company used the line of credit with Commerce Bank, N.A. to fund the
construction project. In April, 1996, a $2,900,000 twenty-year term mortgage
loan was secured for this property with Penn Mutual. The proceeds from this
loan were used to reduce the line of credit with Commerce Bank, N.A. On
October 11, 1996, the Company acquired the 916-920 Walnut office buildings
and the 120 E. 8th Street parking lot in Kansas City, Missouri for $700,000.
The Company used the line of credit with Commerce Bank, N.A. to acquire the
property. On December 18, 1996, the Company acquired the 9909 Lakeview
Avenue warehouse located in Lenexa, Kansas , for $3,675,000. The Company
used the line of credit with Commerce Bank, N.A. to acquire this property.
The Company is arranging permanent financing of $2,720,000 from Prudential
Insurance of America at a fixed rate of 7.70%. The loan will close during
first quarter of 1997, and the proceeds of this loan will be used to reduce
the line of credit. On December 27, 1996, the Company acquired the 9221
Quivera commercial office building and an adjoining 70,000 square foot vacant
parcel of land, located in Overland Park, Kansas for $1,750,000. The Company
expects to finance this purchase with long term debt. The Company used the
line of credit with Commerce Bank, N.A. to make this purchase.
-17-
<PAGE> 18
Year Ended December 31, 1996
Compared with the Year Ended December 31, 1995
Results of Operations
- ---------------------
Rental income increased 23% during 1996, primarily due to increased occupancy
in the Commerce Tower and Barkley Place office buildings, the conversion of
the 811 Main building from a net leased facility to a multi-tenant, full
service building effective April 1, 1996, the completion of Phase II of the
Hillsborugh apartment complex, increased revenue from parking operations,
the acquisition of the 9200 Cody warehouse/office facility effective June 30,
1995, the acquisition of the 6601 College Boulevard commercial office
building on December 15, 1995, the acquisition of the 916-920 Walnut Street
office buildings on October 11, 1996, the acquisition of the 9909 Lakeview
Avenue warehouse on December 18, 1996 and the December 27, 1996 acquisition
of the 9221 Quivera office building. Occupancy in the Commerce Tower is 97%.
The Barkley Place office building is 100% leased and the 811 Main office
building is 94% leased. The 9200 Cody warehouse/office facility, the 6601
College Boulevard commercial office building, the 9909 Lakeview warehouse and
the 9221 Quivera commercial office building are 100% leased under triple net
leases. The New Mark garden apartments are 94% leased, Hillsborough
Apartments are 94% leased and Peppertree Apartments are 97% leased at year
end. The increase in parking revenues in 1996 is primarily due to an
increase in occupancy in both the 710 and 711 Main Garages.
The decrease in management and service fees is primarily due to a decrease in
the amount of fees billed for tenant leasehold improvements performed by
Company employees and the loss of the management fee for the 811 Main office
building for Kemper Service Company effective April, 1996.
The sale of twenty nine acres of undeveloped land located in the New Mark
sub-division in 1996 compared to the sale of a 6 acre tract sold in 1995
accounts for the increase in real estate sales and cost of real estate sold.
The increase of $684,303 in maintenance and repairs is primarily due to the
conversion of 811 Main to a full service, multi-tenant building in April,
1996 offset by the repairs to chillers, the cleaning and sealing of the
exterior precast panels of the Commerce Tower building in 1995. The increase
in depreciation and interest expense is a direct result of the acquisition of
the 6601 College Boulevard and the 9221 Quivera office buildings, the 9200
Cody warehouse/office facility and the 9907 Lakeview warehouse and the
completion of Phase II of the Hillsborough apartment complex. The increase
in utilities is primarily due to severe weather conditions in the first two
months of 1996, the conversion of 811 Main to a full service, multi-tenant
building and the completion of Phase II of the Hillsborough apartment
complex.
The increase in related party interest expense is due to the use of the line
of credit with Commerce Bank, N.A. to acquire the 9200 Cody warehouse/office
facility on June 30, 1995, the 6601 College Boulevard commercial office
building on December 15, 1995, the
-18-
<PAGE> 19
October 11, 1996 purchase of 916-920 Walnut office buildings, the 9909
Lakeview warehouse on December 18, 1996 and the 9221 Quivera office building
on December 27, 1996. The increase in other interest expense is a result of
the interest expense incurred on the 6601 College Boulevard mortgage loan of
$5,400,000 funded March 21, 1996, and the $2,900,000 Hillsborough Phase II
loan funded April 24, 1996.
The increase in amortization of leasehold improvements is primarily due to
the large expenditures for tenant improvements in both the Commerce Tower and
Barkley Place office buildings which are being amortized over the life of the
respective leases. The increase in professional fees and other expenses is
primarily due to the expenses incurred in connection with the buy out of the
downtown Texaco lease and the write off of a note receivable for rent from a
former Commerce Tower tenant that filed bankruptcy.
Year Ended December 31, 1995
Compared with the Year Ended December 31, 1994
Results of Operations
- ---------------------
Rental income increased 18% during 1995, primarily due to increased occupancy
in the Commerce Tower Building, increased revenue from parking operations,
the acquisition of the 9200 Cody warehouse/office facility effective June 30,
1995, and the acquisition of the 6601 College Boulevard commercial office
building on December 15, 1995. Occupancy in the Commerce Tower was 92%. The
Barkley Place office building was 86% leased. Both the 9200 Cody
warehouse/office facility and the 6601 College Boulevard commercial office
building were 100% leased under triple net leases. The New Mark garden
apartments were 97% leased, Hillsborough Apartments were 94% leased and
Peppertree Apartments were 95% leased at year end. The increase in parking
revenues in 1995 is primarily due to an increase in occupancy in both the 710
and 711 Main Garages.
A decision by management to sub-contract engineering services in the Commerce
Tower and 811 Main buildings in September, 1994 accounts for the decrease in
management and service fees income and salaries and employee benefit expense.
The sale of the remaining ten single family lots located in the New Mark
sub-division and 33.5 acres of undeveloped land in 1994 compared to the sale
of a 6 acre tract sold in 1995 accounts for the decrease in real estate sales
and cost of real estate sold.
The sub-contracted engineering costs of $284,165, repairs to chillers, the
cleaning and sealing of the exterior precast panels of the Commerce Tower
building and the acquisition of the Barkley Place office building on July 15,
1994 offset by the painting and repairs of Hillsborough, New Mark and
Peppertree apartment complexes in 1994, are primarily responsible for the
increase of $225,076 in maintenance and repairs. The increase in
depreciation and taxes other than income is a direct result of the
acquisition of the Barkley Place and 6601 College Boulevard office buildings
and the 9200 Cody warehouse/office facility. The decrease in utilities is
primarily due to milder weather conditions in 1995.
-19-
<PAGE> 20
The increase in related party interest expense is a result of the use of the
line of credit with Commerce Bank, N.A. to acquire the 9200 Cody
warehouse/office facility on June 30, 1995 and the 6601 College Boulevard
commercial office building on December 15, 1995. The increase in other
interest expense is a result of the interest expense incurred on the
$4,000,000 Barkley Place Office building loan funded December 23, 1994, and
the 9200 Cody warehouse/office facility mortgage loan of $1,950,000 funded
November 21, 1995.
The increase in amortization of leasehold improvements is primarily due to
expenditures for the Commerce Tower and Barkley Place tenant improvements
which are being amortized over the life of the respective leases. The
decrease in professional fees and other expenses is primarily due to the
expenses incurred in connection with the land lease on the land at 6th and
Main Streets, the future construction of a downtown parking garage and the
legal fees related to the operating engineers union negotiations in 1994.
Impact of Accounting Changes
None.
Environmental Issues
Due to governmental regulations regarding asbestos and the uncertainty
surrounding the advantages and disadvantages of asbestos removal, Tower
Properties Company will continue to monitor the status of asbestos in its
commercial office buildings and will take appropriate action when required.
The cost to remove all asbestos from properties owned by Tower Properties
Company has not been determined; however, these removal costs could have a
significant adverse impact on the future operations and liquidity of Tower
Properties Company.
Americans With Disabilities Act
Congress passed the Americans With Disabilities Act (the Act) of 1990 which
became effective January 26, 1992. The Act contains provisions for building
owners to provide persons with disabilities with accommodations and access
equal to, or similar to, that available to the general public. Management
cannot estimate the eventual impact of the Act on the financial condition of
the Company since certain provisions of the Act are open to interpretation.
The Company is implementing the requirements of the Act that are readily
achievable and will not constitute an undue burden on the Company. During
1996, the Company made modifications to certain properties at a cost of
approximately $22,000.
-20-
<PAGE> 21
<TABLE>
TOWER PROPERTIES COMPANY
SELECTED FINANCIAL DATA
TWELVE MONTHS ENDING DECEMBER 31,
<CAPTION>
----------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Revenue $ 16,492,245 $ 13,152,882 $ 11,697,118 $ 9,870,654 $ 8,913,457
Net Income 1,505,223 1,510,180 811,831 495,492 272,210
Earnings Per Common Share 8.80 8.84 4.75 2.90 1.58
Dividends Per Common Share -- -- -- -- --
Mortgages Notes Payable 26,905,057 19,300,872 17,820,480 10,313,193 2,967,547
Net Equity 22,544,228 20,635,259 18,618,042 17,327,249 16,818,887
Total Assets $ 63,624,245 $ 56,504,061 $ 42,497,944 $ 36,669,540 $ 32,938,994
</TABLE>
-21-
<PAGE> 22
<TABLE>
REAL ESTATE AND ACCUMULATED DEPRECIATION
SCHEDULE III
<CAPTION>
Cost Capitalized Gross Amount at Which
Subsequent to Carried at Close
Initial Cost to Company Acquisition of Period
-------------------------- --------------------- ---------------------------
Buildings and Carrying Buildings and
Description-(C) Encumbrances Land Improvements Improvements Costs Land Improvements
--------------- ------------ ---- ------------- ------------ -------- ---- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMMERCIAL OFFICE BUILDINGS
Commerce Tower $ 0 $ 919,920 $18,133,895 $ 58,446 $ 0 $ 919,920 $18,192,341
811 Main 0 596,387 2,553,247 198,764 0 608,355 2,740,043
Barkley Place 3,804,686 871,000 4,943,000 30,905 0 871,000 4,973,905
6601 College Boulevard 5,308,925 1,000,000 5,950,000 0 0 1,000,000 5,950,000
9200 Cody Warehouse/office 1,905,193 296,850 2,174,150 0 0 296,850 2,174,150
9909 Lakeview Avenue 0 652,000 2,773,000 0 0 652,000 2,773,000
9221 Quivera 0 290,738 1,193,130 0 0 290,738 1,193,130
Other Rental Properties 0 319,797 433,680 1,540 0 319,797 435,220
----------- ----------- ----------- ---------- -------- ----------- -----------
Sub-Total 11,018,803 4,946,692 38,154,102 289,655 0 4,958,660 38,431,789
APARTMENTS
New Mark Apartments, 210 Units 2,302,175 19,768 3,797,495 237,099 0 19,768 4,034,594
Hillsborough Apartments, 329 Units 9,865,726 1,161,740 8,485,514 3,875,062 0 1,161,740 12,360,576
Peppertree Apartments, 162 Units 3,718,353 833,243 4,554,674 24,735 0 833,243 4,579,409
----------- ----------- ----------- ---------- -------- ----------- -----------
Sub-Total 15,886,253 2,014,751 16,837,683 4,136,896 0 2,014,751 20,974,579
PARKING FACILITIES
710 Main 0 286,361 672,655 4,974 0 350,349 613,641
811 Main 0 149,096 614,122 599,857 0 149,096 1,213,979
DRC Texaco & 711 Garage 0 501,513 50,538 - 0 501,513 50,538
Surface lots & 9th & Walnut Garage 0 2,129,257 81,000 590,445 0 2,719,702 81,000
----------- ----------- ----------- ---------- -------- ----------- -----------
Sub-Total 0 3,066,227 1,418,315 1,195,276 0 3,720,660 1,959,158
----------- ----------- ----------- ---------- -------- ----------- -----------
TOTALS $26,905,057 $10,027,670 $56,410,100 $5,621,827 $ 0 $10,694,071 $61,365,526
=========== =========== =========== ========== ======== =========== ===========
<CAPTION>
Life
on Which
Depreciation
December 31, 1996 in Latest
----- ------------------------------- -------- Income
Accumulated Date of Date Statement
Description-(C) Total Depreciation Construction Acquired is Computed
--------------- ----- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL OFFICE BUILDINGS
Commerce Tower $19,112,261 $13,702,548 1965 1971 18 to 65 Years
811 Main 3,348,398 2,252,869 1959 1972 45 Years
Barkley Place 5,844,905 379,151 1988 1994 40 Years
6601 College Boulevard 6,950,000 197,258 1979 1995 40 Years
9200 Cody Warehouse/office 2,471,000 96,113 1973 1995 40 Years
9909 Lakeview Avenue 3,425,000 6,381 1987 1996 40 Years
9221 Quivera 1,483,868 3,192 1968 1996 40 Years
Other Rental Properties 755,017 86,602 Various Various 10 to 40 Years
----------- -----------
Sub-Total 43,390,449 16,724,114
APARTMENTS
New Mark Apartments, 210 Units 4,054,362 2,624,075 1969/1977 1971/1977 8 to 40 Years
Hillsborough Apartments, 329 Units 13,522,316 990,177 1985 1992 40 Years
Peppertree Apartments, 162 Units 5,412,652 410,527 1986 1993 40 Years
----------- -----------
Sub-Total 22,989,330 4,024,779
PARKING FACILITIES
710 Main 963,990 535,151 1959 1972 45 Years
811 Main 1,363,075 1,194,456 1959/1996 1972/1996 15 to 45 Years
DRC Texaco & 711 Garage 552,051 195,272
Surface lots & 9th & Walnut Garage 2,800,702 167,848 Various 1989 20 Years
----------- -----------
Sub-Total 5,679,818 2,092,727
----------- -----------
TOTALS $72,059,597 $22,841,620
=========== ===========
</TABLE>
-22-
<PAGE> 23
TOWER PROPERTIES COMPANY
NOTES TO SCHEDULE
(A) An analysis of Rental Income Property for the three years ended
December 31, 1996 follows:
<TABLE>
<S> <C>
Balance, December 31, 1993 $ 47,069,157
Additions during period -
Land 999,848
Building 4,948,435
------------
Balance, December 31, 1994 53,017,440
Additions during period -
Land 1,302,060
Building 8,201,754
------------
Balance, December 31, 1995 62,521,254
Additions during period -
Land 1,789,716
Building 7,748,627
------------
Balance, December 31, 1996 $ 72,059,597
============
</TABLE>
(B) An analysis of accumulated depreciation reserves applicable to Rental
Income Property for the three years ending December 31, 1996:
<TABLE>
<S> <C>
Balance, December 31, 1993 $ 19,447,528
Additions during period -
Provision for depreciation 985,120
------------
Balance, December 31, 1994 20,432,648
Additions during period -
Provision for depreciation 1,059,528
------------
Balance, December 31, 1995 21,492,176
Additions during period -
Provision for depreciation 1,349,444
------------
Balance, December 31, 1996$ $ 22,841,620
============
</TABLE>
(C) All of the real estate is located in Johnson County, Kansas, and Clay
and Jackson County, Missouri.
(D) There are no significant differences in the aggregate cost basis of the
real estate for federal income tax purposes and financial reporting
purposes.
-23-
<PAGE> 24
DIRECTORS
James M. Kemper, Jr.
Chairman, President and Chief Executive Officer of Tower Properties Company
Benjamin F. Bryan
Executive Vice President, Tower Properties Company
David W. Kemper
Chairman, President and Chief Executive Officer, Commerce Bancshares, Inc., a
bank holding company
Jonathan M. Kemper
Vice Chairman, Commerce Bancshares, Inc., a bank holding Company and Chairman
and Chief Executive Officer, Commerce Bank, N.A.
Brian D. Everist
President, Intercontinental Engineering Manufacturing Corporation
Neil T. Douthat
Sr. Vice President-Investments, Smith Barney, Inc.
OFFICERS
James M. Kemper, Jr.
Chairman, President and Chief Executive Officer
Benjamin F. Bryan
Executive Vice President
Chester A. Wittwer, Jr.
Vice President and Secretary
Margaret V. Allinder
Assistant Secretary and Controller
-24-
<PAGE> 25
<TABLE>
PRINCIPAL REAL ESTATE OF
TOWER PROPERTIES COMPANY
<C> <S>
Commerce Tower Building 30-story office building, 911 Main Street
Barkley Place Office Building 6-story office building, 10561 Barkley
811 Main Building 230,000 rentable square feet office building
and 530 car parking garage
6601 College Boulevard Office Building 6-story office building, 6601 College Blvd.
9221 Quivera Office Building 1-story office building, 9221 Quivera
9200 Cody Warehouse/Office Facility 93,900 square foot warehouse/office facility and an
expansion of 25,000 square feet to be completed by
October 1997
9909 Lakeview Avenue Warehouse 115,000 square foot warehouse
710 Main Parking Garage 740 car parking garage
711 Main Parking Garage 250 car parking garage
New Mark Apartment Complex 210 apartments and an additional 140 apartments to
be completed in November 1997, located at 100th
and North Oak Streets
New Mark Subdivision 315 acres of residential and commercial
land in the area of 100th and North Oak
Streets
Texaco Service Station Land and improvements located at 6th
and Main Streets (to be demolished in 1997)
Downtown Kansas City Vacant Land 6th Street to 7th Street, Baltimore to
Wyandotte Streets and a block of land
located on the corner of 8th and
Wyandotte Streets, land and improvements from
7th to 8th Streets on east side of Main Street,
a 100 car parking lot at 6th & Main and a 40
car parking lot at 8th and Walnut
908-920 Walnut Approximately 56,150 square feet of
rental space (to be demolished in 1997)
9th and Walnut Property located at the southwest corner
of Ninth and Walnut and a two-story
parking facility located at the northwest
corner of Ninth and Walnut
Hillsborough Apartment Complex 329 garden apartments located at 5401 Fox Ridge
Drive
Peppertree Apartment Complex 162 garden apartments, located at
6800 Antioch
</TABLE>
All of the real estate is located in Johnson County, Kansas, and Clay and
Jackson County, Missouri.
-25-
<PAGE> 1
EXHIBIT 21
<TABLE>
TOWER PROPERTIES COMPANY
LISTING OF SUBSIDIARIES
<CAPTION>
Percentage
Subsidiary Ownership
---------- ---------
<S> <C>
Downtown Redevelopment Corporation 98%
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 52,772
<SECURITIES> 3,055,520
<RECEIVABLES> 837,009
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,020,208
<PP&E> 79,906,597
<DEPRECIATION> 27,187,483
<TOTAL-ASSETS> 63,624,245
<CURRENT-LIABILITIES> 13,111,360
<BONDS> 26,905,057
<COMMON> 178,430
0
0
<OTHER-SE> 22,365,798
<TOTAL-LIABILITY-AND-EQUITY> 63,624,245
<SALES> 0
<TOTAL-REVENUES> 16,492,245
<CGS> 0
<TOTAL-COSTS> 11,621,882
<OTHER-EXPENSES> 12,504
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,535,348
<INCOME-PRETAX> 2,322,511
<INCOME-TAX> 817,288
<INCOME-CONTINUING> 1,505,223
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,505,223
<EPS-PRIMARY> 8.80
<EPS-DILUTED> 0
</TABLE>
