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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, 1997 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 IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION
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.)
$23,808,598 at February 17, 1998
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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 - 176,034 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, 1997,
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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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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, 1997
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CROSS-REFERENCE SHEET
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Part II
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Item 6 - Selected Financial Data 1997 Annual Report to Stockholders,
Page 24.
Item 7 - Management's Discussion and 1997 Annual Report to Stockholders,
Analysis of Financial Condition Pages 19 through 23.
and Results of Operations
Item 8 - Financial Statements and 1997 Annual Report to Stockholders,
Supplementary Data Pages 4 through 17 and Pages 24 and 25.
Part III
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Item 10 - Directors and Executive Proxy Statement relating to Annual
Officers of the Registrant Meeting of Stockholders to be held on
April 8, 1998, under the caption
"Election of Directors."
Item 11 - Executive Compensation Proxy Statement relating to Annual
Meeting of Stockholders to be held on
April 8, 1998, under the captions
"Summary Compensation Table" and
"Compensation Plans."
Item 12 - Security Ownership of Certain Proxy Statement relating to Annual
Beneficial Owners and Meeting of Stockholders to be held on
Management April 8, 1998, under the caption
"Security Ownership of Certain
Beneficial Owners and Management."
Item 13 - Certain Relationships and Proxy Statement relating to Annual
Related Transactions Meeting of Stockholders to be held on
April 8, 1998, under the caption
"Transactions."
Part IV
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Item 14(a)(1) - Financial Statements 1997 Annual Report to Stockholders,
Pages 4 through 17.
Item 14(a)(2) - Exhibits Registrant's 1997 Form 10-K (File
No. 0-18261) filed on March 31, 1998.
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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 1,160,000 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 96 percent of the 1997 revenues. Registrant
competes with other building owners in the renting and leasing of
office building space. Registrant employs approximately 45
persons on a full-time basis and approximately 4 persons on a
part-time basis. The remaining 4 percent of 1997 revenues include
management and service fees (3 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, 1997, 1996 and 1995, Registrant received rent and
fees of $1,180,051, $1,043,640 and $898,846, respectively, from
Commerce.
The Company was also reimbursed for utilities in the amount of
$107,711, $107,885 and $102,054 in 1997, 1996 and 1995.
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 86 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. The building
is collateral for a line of credit with Commerce Bank.
(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
$3,693,083.
(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
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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 $5,179,584.
(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. The building is subject
to a mortgage deed of trust securing a loan with a balance
owing of $1,178,790.
(5) A warehouse/office facility, located at 9200 Cody,
Overland Park, Kansas. The building contains
approximately 24,100 square feet of office space and
96,800 square feet of warehouse space. The building was
constructed in 1973, with an addition in 1976 and an
expansion completed in 1997. 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 $1,860,276.
(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 presently vacant. The
warehouse is subject to a mortgage deed of trust securing
a loan with a balance owning of $2,670,665.
(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 1998 to
accommodate a new 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. The 916
building is vacated and the 920 building is 90% occupied.
The Company, under its Tax Redevelopment District, plans
to demolish the buildings in 1998 to accommodate a new
garage on the Southwest corner of 9th and Walnut.
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(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 May, 1998. The
apartments are 92 percent occupied. Registrant considers
the complex to be in good condition. The original 210
unit apartments are subject to a mortgage deed of trust
securing a loan with a balance owing of $2,183,326. The
140 units under construction are subject to a mortgage
deed of trust securing a loan with a balance owing of
$4,983,229.
(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 87 percent occupied. The apartments are
subject to a mortgage deed of trust securing a loan with a
balance owing of $9,566,991.
(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 95 percent occupied. The
apartments are subject to a mortgage deed of trust
securing a loan with a balance owing of $3,606,757.
(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.
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(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:
(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 81
percent occupied. The condition of the property is
considered good. The building is subject to a mortgage
deed of trust of trust securing a loan with a balance
owing $6,711,914.
(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 completed a 100 car surface parking
lot.
(4) An irregular tract of ground containing approximately
35,000 square feet , which was previously leased in part
to a service station until December, 1996. The company
demolished the station in 1997 and completed the entire
area for a 112 car surface parking lot.
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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 1997.
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 1997. The "over-the-counter" market quotations shown below
reflect interdealer prices without retail markup, markdown or
commissions and may not necessarily represent actual transactions.
1997 1996
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Quarter Bid Asked Bid Asked
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First $121.00 $ - $75.00 $ -
Second 127.50 - 87.50 -
Third 127.50 - 87.50 -
Fourth 135.25 - 94.00 -
There are no present or future restrictions on the ability of Registrant
to pay common stock dividends. No dividends were paid in 1997, 1996 and
1995. (Management has indicated it will not pay dividends in 1998.)
The table below shows the number of holders of record of each class of
equity securities of Registrant as of February 17, 1998:
Number of
Title of Class Security Holders
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Common stock,
$1.00 par value 503
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Item 6. Selected Financial Data.
Reference is made to the caption "Selected Financial Data" on Page 24 of
Registrant's 1997 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.
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 19
through 23 of Registrant's 1997 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 17 and Pages 24 and 25 of
Registrant's 1997 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 8, 1998. 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
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Statement relating to Annual Meeting of Stockholders to be held
April 8, 1998. 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 Annual Meeting of Stockholders to be held
April 8, 1998. 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 8,
1998. 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
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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 1997 Annual Report to
Stockholders are hereby incorporated herein:
Report of Independent Public Accountants
Consolidated Balance Sheets - December 31, 1997 and 1996
Consolidated Statements of Income for the Years Ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Stockholders' Investment for the
Years Ended December 31, 1997, 1996 and 1995.
Notes to Consolidated Financial Statements
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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.
(2) Exhibits.
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Item No. Description Location
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3(a) Articles of Incorporation of Filed on March 30, 1990, as
Tower Acquisition Corp. Exhibit 3(a) to Registrant's
1989 Form 10-K (File No. 0-18261)
3(b) Bylaws of Tower Acquisition Filed on March 30, 1990, as
Corp. Exhibit 3(b) to Registrant's 1989
Form 10-K (File No. 0-18261)
3(c) Certificate of Amendment and Filed on March 30, 1990, as
Amendment of Articles of Exhibit 3(c) to Registrant's 1989
Incorporation Form 10-K (File No. 0-18261)
4(a) Conformed composite copy of Filed on March 30, 1990, as
Note Agreement and Deed of Exhibit 4(a) to Registrant's 1989
Trust dated September 21, 1972, Form 10-K (File No. 0-18261)
with respect to $8,000,000,
8 percent, due in monthly install-
ments to October 2007
10 Hillsborough Apartment Complex Filed on January 11, 1993, as
acquisition agreement Exhibit A to Registrant's Form 8-K
(File No. 0-18261)
Peppertree Apartment Complex Filed on October 12, 1993, as
acquisition agreement Exhibit A to Registrant's Form 8-K
(File No. 0-18261)
Barkley Place Office Building Filed on July 26, 1994, as
acquisition agreement Exhibit A to Registrant's Form 8-K
(File No. 0-18261)
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6601 College Boulevard Office Filed on February 27, 1996, as
Building acquisition agreement Exhibit A to Registrant's Form 8-K
(File No. 0-18261)
13 Tower Properties Company's Filed on March 04, 1998, as
annual report to its security holders Exhibit 13 to Registrant's 1997
for the 1997 fiscal year. Such Form 10-K (File No. 0-18261)
report is furnished for the informa-
tion of the Commission and is not
to be deemed as filed as a part of
this report.
21 A list of Tower Properties See attached Exhibit 21
Company subsidiaries
(b) Reports on Form 8-K. Registrant filed no required reports on Form 8-K during
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the last quarter of 1997.
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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, 1998 BY: /s/ JAMES M. KEMPER, JR.
------------------------------------
James M. Kemper, Jr.
Chairman and Chief Executive Officer
DATE: March 31, 1998 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, 1998 BY: /s/ NEIL T. DOUTHAT
------------------------------------
Neil T. Douthat
Director
DATE: March 31, 1998 BY: /s/ BRIAN D. EVERIST
------------------------------------
Brian D. Everist
Director
DATE: March 31, 1998 BY: /s/ JONATHAN M. KEMPER
------------------------------------
Jonathan M. Kemper
Director
DATE: March 31, 1998 BY: /s/ THOMAS R WILLARD
------------------------------------
Thomas R. Willard
President and Director
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