<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2000
-------------------------------
Commission File Number 0-18261
TOWER PROPERTIES COMPANY
------------------------
(Exact name of registrant as specified in its charter)
Missouri (43-1529759)
------------------------ ----------------
(State of incorporation) (IRS tax number)
Suite 100, 911 Main Street, Kansas City, Missouri 64105
-------------------------------------------------------------------------------
(Address of principal Zip Code
executive offices)
(816) 421-8255
----------------------------------------------------
(Registrant's telephone number, including area code)
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 for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
the filing requirements for the past 90 days.
Yes X No
-------------------------------- ---------------------------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, at the close of the period covered by this report.
179,139 shares of common stock
------------------------------
$1.00 par value per share, at July 15, 2000
<PAGE> 2
<TABLE>
TOWER PROPERTIES COMPANY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
<CAPTION>
(UNAUDITED)
2000 1999
--------------- ---------------
<S> <C> <C>
ASSETS
Investment in Commercial Properties:
Rental Property, Net $75,016,055 $76,109,334
Tenant Leasehold Improvements, Net 3,220,339 3,871,804
Equipment and Furniture, Net 3,856,806 4,068,565
Construction in Progress 1,963,993 1,266,623
--------------- ---------------
Commercial Properties, Net 84,057,192 85,316,326
Real Estate Held for Sale 396,453 396,453
Cash and Cash Equivalents 90,808 145,362
Investments At Market (Related Party) 3,345,804 3,809,718
Receivables 2,178,433 2,555,254
Prepaid Expenses and Other Assets 1,148,124 1,200,207
--------------- ---------------
TOTAL ASSETS $91,216,815 $93,423,320
=============== ===============
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Liabilities:
Mortgage Notes $46,694,549 $47,567,080
Real Estate Bond Issue 6,400,000 6,400,000
Line of Credit (Related Party) 3,866,000 5,065,030
Accounts Payable and Other Liabilities 2,930,999 2,837,461
Deferred Income Taxes 2,225,669 2,406,595
Income Taxes Payable 257,616 --
--------------- ---------------
Total Liabilities 62,374,833 64,276,166
Commitments and Contingencies
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
183,430 Shares 183,430 183,430
Paid-In Capital 18,460,986 18,460,693
Retained Earnings 9,330,831 8,760,535
Other Comprehensive Income 1,514,183 1,797,170
--------------- ---------------
29,489,430 29,201,828
Less Treasury Stock, At Cost (4,291 and
516 shares in 2000 and 1999, respectively) (647,448) (54,674)
--------------- ---------------
Total Stockholders' Investment 28,841,981 29,147,154
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $91,216,815 $93,423,320
=============== ===============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE> 3
<TABLE>
TOWER PROPERTIES COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
(UNAUDITED)
<CAPTION>
2000 1999
-------------- --------------
<S> <C> <C>
REVENUES
Rent $ 9,006,048 $ 8,905,845
Rent, Related Party 846,063 796,025
Management and Service Fees 3,098 15,648
Management and Services Fees, Related Party 305,368 296,537
Real Estate Sales -- 59,840
Interest and Other Income 243,747 193,599
-------------- --------------
Total Revenues 10,404,324 10,267,494
-------------- --------------
OPERATING EXPENSES
Operating Expenses 1,797,344 1,640,111
Maintenance and Repairs 1,940,616 3,118,031
Depreciation and Amortization 2,210,388 2,004,747
Taxes Other than Income 826,204 846,027
General, Administrative and Other 568,998 561,364
-------------- --------------
Total Operating Expenses 7,343,550 8,170,280
OTHER EXPENSE
Interest (Including Related Party) 2,125,862 1,884,733
Income Before Minority Interest and
Provision for Income Taxes 934,912 212,481
Minority Interest In Income of Subsidiary -- (4,470)
-------------- --------------
Income Before Provision for Income Taxes 934,912 208,011
-------------- --------------
PROVISION FOR INCOME TAXES
Currently Payable 364,616 82,875
-------------- --------------
NET INCOME $ 570,296 $ 125,136
============== ==============
Earnings Per Share:
Basic $ 3.13 $ 0.69
============== ==============
Diluted $ 3.13 $ 0.69
============== ==============
Weighted Average Common Shares Outstanding:
Basic 182,061 182,631
============== ==============
Diluted 182,061 182,633
============== ==============
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
<PAGE> 4
<TABLE>
TOWER PROPERTIES COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
(UAUDITED)
<CAPTION>
2000 1999
------------- -------------
<S> <C> <C>
NET INCOME $ 570,296 $ 125,136
Unrealized holding losses on marketable
equity securities arising during the period (463,914) (240,996)
Deferred Income tax benefit 180,926 93,988
------------- -------------
Comprehensive income (loss) $ 287,309 $ (21,872)
============= =============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE> 5
<TABLE>
TOWER PROPERTIES COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
(UNAUDITED)
<CAPTION>
2000 1999
------------- -------------
<S> <C> <C>
REVENUES
Rent $4,528,166 $4,503,272
Rent, Related Party 423,918 409,296
Management and Service Fees 2,903 (14,643)
Management and Service Fees, Related Party 188,458 203,550
Real Estate Sales -- 59,840
Interest and Other Income 87,999 97,933
------------- -------------
Total Revenues 5,231,444 5,259,248
------------- -------------
OPERATING EXPENSES
Operating Expenses 859,599 811,381
Maintenance and Repairs 1,022,987 1,743,773
Depreciation and Amortization 1,103,337 1,001,007
Taxes Other than Income 413,102 423,036
General, Administrative and Other 294,975 302,832
------------- -------------
Total Operating Expenses 3,694,000 4,282,029
OTHER EXPENSE
Interest (Including Related Party) 1,046,912 954,379
Net Income Before Minority Interest and
Provision for Income Taxes 490,533 22,840
Minority Interest In Income of Subsidiary -- (1,210)
------------- -------------
Income Before Provision for Income Taxes 490,533 21,630
------------- -------------
PROVISION FOR INCOME TAXES
Currently Payable 191,309 8,917
------------- -------------
NET INCOME $ 299,224 $ 12,713
============= =============
Earnings Per Share:
Basic $ 1.65 $ 0.07
============= =============
Diluted $ 1.65 $ 0.07
============= =============
Weighted Average Common Shares Outstanding:
Basic 181,287 182,967
============= =============
Diluted 181,287 182,967
============= =============
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<PAGE> 6
<TABLE>
TOWER PROPERTIES COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
(UNAUDITED)
<CAPTION>
2000 1999
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 570,295 $ 125,136
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 1,540,596 1,425,297
Amortization of Leasehold Improvements 669,792 579,450
Gain on Real Estate Sales -- (24,951)
Net Change in Minority Interest -- 4,470
Treasury Shares Issued to Directors 7,536 9,954
Change in Assets and Liabilities, Net:
Receivables 376,821 (394,265)
Prepaid Expenses and Other Assets 52,085 55,094
Accounts Payable and Other Liabilities 93,538 (899,844)
Income Taxes Payable 257,616 25,466
-------------- --------------
Net Cash Provided by Operating Activities 3,568,279 905,807
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in Construction in Progress (697,370) (2,974,553)
Proceeds from Sale of Land -- 59,870
Additions to Real Estate Held for Sale, Net -- (655)
Additions to Equipment & Furniture, Net (229,355) (226,171)
Additions to Rental Income Property, Net (6,203) (23,034)
Additions to Leasehold Improvements, Net (18,327) (244,747)
-------------- --------------
Net Cash Provided by Investing Activities (951,255) (3,409,290)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments on Mortgages (872,531) (754,192)
Proceeds from Long Term Borrowings -- 7,000,000
Change in Short Term Borrowings, Net (1,199,030) (2,045,000)
Sale of Treasury Stock -- 312,000
Purchase of Treasury Stock (600,017) (43,864)
-------------- --------------
Net Cash Provided by (Used in) Financing Activities (2,671,578) 4,468,944
-------------- --------------
NET INCREASE (DECREASE) IN CASH (54,554) 1,965,461
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 145,362 147,928
-------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 90,808 $ 2,113,389
============== ==============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE> 7
TOWER PROPERTIES COMPANY AND SUBSIDIARIES
FOOTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The consolidated financial statements included herein have been
prepared by Tower Properties Company (the Company) and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion
of management, necessary for a fair statement of the results for the interim
periods. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, although the Company
believes that the disclosures are adequate to make the information presented
not misleading. It is suggested that these condensed financial statements be
read in conjunction with the consolidated financial statements and the notes
thereto included in the Company's latest annual report on Form 10-K as of and
for the year ended December 31, 1999.
The Company is primarily engaged in owning, developing, leasing and
managing real property located in Johnson County, Kansas and Clay, Jackson
and St. Louis 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, parking
facilities and land held for future sales.
2. Rental revenue is recognized on a straight-line basis over the term of
individual leases.
3. Interest of $23,946 and $67,264 was capitalized during the first six
months of 2000 and 1999, respectively.
4. Interest paid during the first six months of 2000 and 1999 for long-term
mortgages amounted to $1,855,068 and $1,758,865, respectively. Interest paid
to related party was $175,495 and $74,087 for the first six months of 2000
and 1999, respectively. Income taxes paid during the first six months of
2000 and 1999 amounted to $107,000 and $57,409, respectively.
5. Certain prior quarter amounts have been reclassified to conform to the
2000 presentation.
6. Under SFAS No. 115, the investment in Commerce Bancshares, Inc. common
stock is classified as "available for sale", and is recorded at fair value.
The unrealized gain of $2,482,267 net of tax effects of $968,084 is reflected
as a separate component of equity. There was a decrease in the net
unrealized holding gain for the six months from January 1, 2000 to June 30,
2000, of $282,987, net of deferred taxes, and a decrease in
<PAGE> 8
the net unrealized holding gain of $98,616, net of deferred taxes, for the
three months from April 1, 2000 to June 30, 2000.
7. COMMITMENTS AND 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. During the first six months of 2000, the Company made modifications
to certain properties at a cost of approximately $9,900.
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 the Company
cannot be determined; however, these removal costs could have a significant
adverse impact on the future operations and liquidity of Tower Properties
Company.
The Company has outstanding construction commitments of $2,645,000 as of
June 30, 2000 for structural repairs to the 811 Main garage. There has been
$375,000 paid through June 30, 2000, which is included in construction in
progress, related to the structural repairs. The Company also has an
extraordinary repair project at Phase II of the New Mark apartment complex
due to sudden termite damage with remaining estimated expense of $56,000.
$116,000 has been expensed through June 30, 2000 for repair of the termite
damage. The Company has agreed to the modernization of the elevators at the
811 Main Building for approximately $729,000 with a remaining obligation of
$142,000 as of June 30, 2000. The project began in the fourth quarter of
1999 and will be completed in the third quarter of 2000.
On Saturday July 22, 2000, the Company incurred fire damage at its
Commerce Tower office building located at 911 Main Street in Kansas City,
Missouri. Damage was primarily confined to an office suite on the 23rd
floor. Minor water damage was incurred on the floors above and below. The
Company is more than adequately insured. The cause of the fire was tenant
mishandling of smoking devices. The Company does not expect any significant
financial impact from this event.
<PAGE> 9
8. BUSINESS SEGMENTS
The Company groups its operations into three business segments, commercial
office, apartments, and parking. The Company's business segments are
separate business units that offer different real estate services. The
accounting policies for each segment are the same as those described in the
summary of significant accounting policies.
Following is information for each segment as of and for the six months
ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
JUNE 30, 2000
----------------------------------------------------------------------------
COMMERCIAL CORPORATE
OFFICE APARTMENTS PARKING AND OTHER TOTAL
----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
REVENUE FROM EXTERNAL CUSTOMERS $ 5,959,976 3,093,448 733,988 616,912 10,404,324
LAND SALES -- -- -- -- --
INTEREST EXPENSE 865,003 799,489 147,388 313,982 2,125,862
DEPRECIATION AND AMORTIZATION 1,261,440 608,094 176,742 164,112 2,210,388
SEGMENT INCOME (LOSS) BEFORE TAX 985,101 126,490 21,783 (198,463) 934,911
CAPITAL EXPENDITURES BY SEGMENT 93,557 138,083 11,461 10,784 253,885
IDENTIFIABLE SEGMENT ASSETS 38,810,844 26,433,037 11,966,279 14,006,655 91,216,815
<CAPTION>
----------------------------------------------------------------------------
JUNE 30, 1999
----------------------------------------------------------------------------
COMMERCIAL CORPORATE
OFFICE APARTMENTS PARKING AND OTHER TOTAL
----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
REVENUE FROM EXTERNAL CUSTOMERS $ 6,275,654 2,962,609 810,992 218,239 10,267,494
LAND SALES -- -- -- 59,840 59,840
INTEREST EXPENSE 844,261 801,226 -- 239,245 1,884,733
DEPRECIATION AND AMORTIZATION 1,208,122 584,610 61,404 150,611 2,004,747
SEGMENT INCOME (LOSS) BEFORE TAX 1,636,060 (564,993) (368,779) (489,806) 212,481
CAPITAL EXPENDITURES BY SEGMENT 338,384 113,617 -- 41,951 493,952
IDENTIFIABLE SEGMENT ASSETS 36,545,842 25,781,951 5,619,859 20,645,504 88,593,156
</TABLE>
<PAGE> 10
Following is information for each segment as of and for the three months
ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
JUNE 30, 2000
----------------------------------------------------------------------------
COMMERCIAL CORPORATE
OFFICE APARTMENTS PARKING AND OTHER TOTAL
----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
REVENUE FROM EXTERNAL CUSTOMERS $ 2,959,313 1,567,148 393,511 311,472 5,231,444
LAND SALES -- -- -- -- --
INTEREST EXPENSE 430,568 397,739 72,355 146,251 1,046,912
DEPRECIATION AND AMORTIZATION 630,720 304,047 86,514 82,056 1,103,337
SEGMENT INCOME (LOSS) BEFORE TAX 449,219 82,432 40,414 (81,533) 490,532
CAPITAL EXPENDITURES BY SEGMENT 87,786 83,807 448 6,560 178,601
IDENTIFIABLE SEGMENT ASSETS 38,810,844 26,433,037 11,966,279 14,006,655 91,216,815
<CAPTION>
----------------------------------------------------------------------------
JUNE 30, 1999
----------------------------------------------------------------------------
COMMERCIAL CORPORATE
OFFICE APARTMENTS PARKING AND OTHER TOTAL
----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
REVENUE FROM EXTERNAL CUSTOMERS $ 3,402,073 1,494,209 412,032 (49,066) 5,259,248
LAND SALES -- -- -- 59,840 59,840
INTEREST EXPENSE 488,316 400,911 -- 65,151 954,379
DEPRECIATION AND AMORTIZATION 603,693 292,305 30,702 74,307 1,001,007
SEGMENT INCOME (LOSS) BEFORE TAX 1,010,681 (389,553) (259,228) (339,059) 22,840
CAPITAL EXPENDITURES BY SEGMENT 170,712 71,375 -- 20,985 263,072
IDENTIFIABLE SEGMENT ASSETS 36,545,842 25,781,951 5,619,859 20,645,504 88,593,156
</TABLE>
<PAGE> 11
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. The principal source of external funds
is long-term debt and line of credit with Commerce Bank, N.A. The Company
has not experienced liquidity problems during the six months ended June 30,
2000. In April, 1999 the Company secured a $7,000,000 twenty-year mortgage
loan on the UMB Bank commercial office building from Business Men's Assurance
at a fixed rate of 6.9%. The proceeds of this loan were used to pay off the
line of credit and the balance invested in short-term money market accounts.
In December, 1999, the Company secured a $1,045,000 eighteen-year mortgage
loan for Phase IV of the New Mark apartments from Ohio National Life
Insurance at a fixed rate of 7.78%. The proceeds were used to pay for the
major repairs at the New Mark apartments and the construction of the Tower
garage.
Cash and cash equivalents on hand at June 30, 2000 totaled $90,808, a
decrease of $54,554 from December 31, 1999. The decrease in cash and cash
equivalents is due to changes in the level of capital expenditures and
financing activities in the respective quarters, as well as an increase in
cash flows from operating activities, primarily due to changes in accounts
receivable and current liabilities. Management believes the Company's
current cash position and the properties' ability to provide operating cash
flow should enable the Company to fund anticipated capital expenditures and
service debt in 2000.
SIX MONTHS ENDED JUNE 30, 2000
COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 1999
RESULTS OF OPERATIONS:
Total revenue increased $136,830. The completion of the Tower Garage
and Phase IV New Mark Apartments, an increase in occupancy at the New Mark
Phase III
<PAGE> 12
and the Hillsborough apartment complexes and the pass through of an increase
in real estate taxes as additional rent at the UMB Bank commercial office
building offset by the loss of parking revenue due to the 1999 exchange of
the 710 Main parking garage for the 700 Baltimore lot, the loss of revenue
due to the structural repairs at the 811 Main garage and the decrease in
occupancy at the Commerce Tower commercial office building primarily resulted
in a $150,241 increase in rental income.
Management and service fees decreased primarily due to the decrease in
rentable income in preparation of the Commerce Trust commercial office
building renovation. A real estate commission earned on the leasing of a
non-company owned warehouse accounts for the increase in interest and other
income.
The decrease in real estate sales is due to the 1999 sale of 7.48 acres
of undeveloped land in the New Mark subdivision.
The change in operating expenses and general, administrative and other
are a direct result of the completion of the New Mark Phase IV apartments,
the completion of the Tower Garage and the contract management fee of our
parking facilities. Salaries and employee benefits, which are included in
operating expenses, have increased primarily due to the leasing commission
earned on the leasing of the non-company warehouse and the salaries of the
contracted parking management. Maintenance and repairs decreased primarily
due to the termite repair at New Mark Phase I & II and the 1999 repairs of
the 710 Main parking facility, offset by the completion of the New Mark Phase
IV and the Tower Garage.
Interest expense, including related party from June 30, 1999 to June 30,
2000, increased due to the following factors: the mortgage loan on the UMB
Bank commercial office building April, 1999, the mortgage loan on New Mark
Phase IV in December, 1999, the increase in the related party line of credit
and a reduction in the 2nd quarter capitalized interest on construction of
$23,946 as compared to $67,264 in 1999.
THREE MONTHS ENDED JUNE 30, 2000
COMPARED WITH THE THREE MONTHS ENDED JUNE 30, 1999
RESULTS OF OPERATIONS:
The completion of the Tower Garage and Phase IV New Mark Apartments, an
increase in occupancy at the New Mark Phase III and the Hillsborough
apartment complexes and the pass through of an increase in real estate taxes
as additional rent at the UMB Bank commercial office building offset by the
loss of parking revenue due to the 1999 exchange of the 710 Main parking
garage for the 700 Baltimore lot, the loss of revenue due to the structural
repairs at the 811 Main garage and the decrease in occupancy at the Commerce
Tower commercial office building primarily resulted in a $39,516 increase in
rental income.
The decrease in real estate sales is due to the 1999 sale of 7.48 acres
of undeveloped land in the New Mark subdivision.
<PAGE> 13
The change in operating expenses and general, administrative and other
are a direct result of the completion of the New Mark Phase IV apartments,
the completion of the Tower Garage and the contract management fee of our
parking facilities. Salaries and employee benefits, which are included in
operating expenses, have increased primarily due to the leasing commission
earned on the leasing of the non-company warehouse and the salaries of the
contracted parking management. Maintenance and repairs decreased primarily
due to the termite repair at New Mark Phase I & II and the 1999 repairs of
the 710 Main parking facility, offset by the completion of the New Mark Phase
IV and the Tower Garage.
Interest expense, including related party, increased due to the mortgage
loan on New Mark Phase IV in December, 1999 and the increase in the related
party line of credit.
MARKET RISK DISCLOSURE
The Company is exposed to various market risks, including equity
investment prices and interest rates.
The Company has $3,345,804 of equity securities as of June 30, 2000.
These investments are not hedged and are exposed to the risk of changing
market prices. The Company classifies these securities as
"available-for-sale" for accounting purposes and marks them to fair value on
the balance sheet at the end of each period. Management estimates that the
value of its investments will generally move consistently with trends and
movements of the overall stock market excluding any unusual situations. An
immediate 10% change in the fair value of the Company's equity securities
would have a $204,094 effect on comprehensive income.
The Company has approximately $10,266,000 of variable rate debt as of
June 30, 2000. A 100 basis point change in each debt series benchmark would
impact net income on an annual basis by approximately $62,623.
PRONOUNCEMENTS ISSUED BUT NOT YET EFFECTIVE
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133). This statement establishes accounting and reporting
standards requiring that every derivative instrument, including certain
derivative instruments embedded in other contracts, be recorded in the
balance sheet at its fair value. SFAS 133, effective January 1, 2001,
requires that changes in the derivative's fair value be recognized currently
in earnings unless specific hedge accounting criteria are met. The Company
is currently evaluating the impact of adopting SFAS 133, however, it is not
expected to have a material impact on the Company's financial position and
results of operations.
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TOWER PROPERTIES COMPANY
/s/ Thomas R. Willard
---------------------
Thomas R. Willard
President
/s/ Robert C. Harvey, III
-------------------------
Robert C. Harvey, III
Vice President and Chief Financial Officer
Date: August 15, 2000
