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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
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Tower Properties Company
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Missouri 43-1529759
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STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION IDENTIFICATION NO.)
911 Main Street, Kansas City, Missouri 64105
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (816) 421-8255
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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Securities registered pursuant to Section 12(g) of the Act:
$1 Par Value Common Stock
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(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
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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
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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
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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,
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are incorporated by reference in Parts I, II and IV. Portions of the Annual
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Proxy Statement are incorporated by reference into Part III.
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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
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CROSS-REFERENCE SHEET
Part II
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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
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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
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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.
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Part I
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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
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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.
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(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.
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(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:
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(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.
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Part II
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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.
1996 1995
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Quarter Bid Asked Bid Asked
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First $75.00 $ - $65.00 $ -
Second 87.50 - 65.00 -
Third 87.50 - 65.00 -
Fourth 94.00 - 75.00 -
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:
Number of
Title of Class Security Holders
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Common stock,
$1.00 par value 538
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.
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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
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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
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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
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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.
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(2) Exhibits.
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Item No. Description Location
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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)
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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
(b) Reports on Form 8-K. Registrant filed no required reports on
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Form 8-K during the last quarter of 1996.
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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.
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James M. Kemper, Jr.
Chairman, President and
Chief Executive Officer
DATE: March 31, 1997 BY: /s/ CHESTER A. WITTWER, JR.
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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
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Neil T. Douthat
Director
DATE: March 31, 1997 BY: /s/ BRIAN D. EVERIST
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Brian D. Everist
Director
DATE: March 31, 1997 BY: /s/ JONATHAN M. KEMPER
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Jonathan M. Kemper
Director
DATE: March 31, 1997 BY: /s/ BENJAMIN F. BRYAN
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Benjamin F. Bryan
Executive Vice President and Director
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