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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, 2002
-------------------------------

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 executive offices) Zip Code

(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.

178,823 shares of common stock
------------------------------
$1.00 par value per share, at July 18, 2002





INDEX



Page

PART I FINANCIAL INFORMATION


ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets 3
Consolidated Statements of Income - Six months 4
Consolidated Statements of Comprehensive Income 5
Consolidated Statements of Income - Three months 6
Consolidated Statements of Cash Flow 7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS 11

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS 15
ITEM 2. CHANGES IN SECURITIES 15
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 15
ITEM 5. OTHER INFORMATION 15
ITEM 6. EXHIBITS 15

SIGNATURES 16










2

PART I - FINANCIAL INFORMATION
ITEM 1. - CONSOLIDATED FINANCIAL STATEMENTS

TOWER PROPERTIES COMPANY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2002 AND DECEMBER 31, 2001



(UNAUDITED)
ASSETS 2002 2001
------------ ------------

Investment in Commercial Properties:
Rental Property, Net $ 71,801,413 $ 72,745,287
Tenant Leasehold Improvements, Net 3,366,546 3,657,280
Equipment and Furniture, Net 4,048,773 3,982,516
Construction in Progress 1,773,215 354,834
------------ ------------
Commercial Properties, Net 80,989,947 80,739,917

Real Estate Held for Sale 472,658 472,658

Cash and Cash Equivalents (Related Party) 4,578,288 3,827,520
Investments At Market (Related Party) 5,485,362 4,834,409
Receivables 2,112,769 2,162,624
Income Taxes Receivable 74,615 --
Prepaid Expenses and Other Assets 833,926 975,725
------------ ------------

TOTAL ASSETS $ 94,547,565 $ 93,012,852
============ ============

LIABILITIES AND STOCKHOLDERS' INVESTMENT
Liabilities:
Mortgage Notes $ 49,780,541 $ 50,879,886
Real Estate Bond Issue 6,400,000 6,400,000
Accounts Payable and Other Liabilities 2,197,262 1,642,007
Income Taxes Payable -- 136,813
Deferred Income Taxes 3,083,604 2,829,733
------------ ------------

Total Liabilities 61,461,407 61,888,439

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 18,479,547 18,478,511
Retained Earnings 12,322,725 10,674,040
Accumulated Other Comprehensive Income 2,819,313 2,422,232
------------ ------------
33,805,014 31,758,213
Less Treasury Stock, At Cost (4,593 and
4,112 shares in 2002 and 2001, respectively) (718,856) (633,800)
------------ ------------
Total Stockholders' Investment 33,086,159 31,124,413
------------ ------------

TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 94,547,565 $ 93,012,852
============ ============



See accompanying notes to the consolidated financial statements


3


TOWER PROPERTIES COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001
(UNAUDITED)



2002 2001
----------- -----------

REVENUES
Rent $10,840,209 $10,549,762
Rent, Related Party 966,919 857,585
Management and Service Fees 600 520
Management and Service Fees, Related Party . 461,578 448,212
Gain on Sale of Real Estate -- 365,485
Interest and Other Income 118,916 117,237
Interest and Other Income, Related Party 109,577 53,450
----------- -----------
Total Revenues 12,497,799 12,392,251
----------- -----------

OPERATING EXPENSES
Operating Expenses 1,800,615 1,901,563
Maintenance and Repairs 2,271,063 1,982,692
Depreciation and Amortization 2,062,218 2,226,972
Taxes Other than Income 903,937 878,840
General, Administrative and Other 735,694 672,835
----------- -----------
Total Operating Expenses 7,773,527 7,662,902

OTHER EXPENSE
Interest 2,012,680 2,050,501
Interest, Related Party 8,834 372,172
----------- -----------

Income Before Provision for Income Taxes 2,702,758 2,306,676

PROVISION FOR INCOME TAXES 1,054,072 899,603
----------- -----------

NET INCOME $ 1,648,686 $ 1,407,073
=========== ===========

Earnings Per Share:
Basic $ 9.22 $ 7.82
=========== ===========
Diluted $ 9.20 $ 7.82
=========== ===========
Weighted Average Common Shares Outstanding:
Basic 178,857 179,966
=========== ===========
Diluted 179,160 179,983
=========== ===========


See accompanying notes to the consolidated financial statements.


4

TOWER PROPERTIES COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001
UNAUDITED



Six Month Ended Three Month Ended
6/30/2002 6/30/2001 6/30/2002 6/30/2001
----------- ----------- ----------- -----------

NET INCOME $ 1,648,686 $ 1,407,073 $ 323,607 $ 791,739

Unrealized holding gain (loss) on marketable
equity securities arising during the period 650,953 (661,288) 2,480 (41,331)

Deferred income tax benefit (expense) (253,872) 257,902 (967) 16,119
----------- ----------- ----------- -----------

Comprehensive income $ 2,045,767 $ 1,003,687 $ 325,120 $ 766,527
=========== =========== =========== ===========


See accompanying notes to the consolidated financial statements.


5

TOWER PROPERTIES COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001
(UNAUDITED)



2002 2001
---------- ----------

REVENUES
Rent $4,681,699 $5,246,088
Rent, Related Party 469,738 429,237
Management and Service Fees 300 220
Management and Service Fees, Related Party 261,365 252,087
Gain on Sale of Real Estate -- 365,485
Interest and Other Income 62,100 73,734
Interest and Other Income, Related Party 50,361 28,299
---------- ----------
Total Revenues 5,525,564 6,395,150
---------- ----------

OPERATING EXPENSES
Operating Expenses 902,961 934,322
Maintenance and Repairs 1,236,515 1,057,314
Depreciation and Amortization 1,030,878 1,115,250
Taxes Other than Income 443,578 434,828
General, Administrative and Other 373,426 371,925
---------- ----------
Total Operating Expenses 3,987,358 3,913,639

OTHER EXPENSE
Interest 1,001,709 1,078,204
Interest, Related Party 5,999 105,374
---------- ----------

Income Before Provision for Income Taxes 530,498 1,297,933

PROVISION FOR INCOME TAXES 206,891 506,194
---------- ----------

NET INCOME $ 323,607 $ 791,739
========== ==========

Earnings Per Share:
Basic $ 1.81 $ 4.40
========== ==========
Diluted $ 1.81 $ 4.40
========== ==========

Weighted Average Common Shares Outstanding:
Basic 178,784 179,803
========== ==========
Diluted 179,129 179,837
========== ==========


See accompanying notes to the consolidated financial statements.



6


TOWER PROPERTIES COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001
(UNAUDITED)



2002 2001
------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,648,685 $ 1,407,073
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 1,512,919 1,618,695
Amortization 549,299 608,277
Gain on Sale of Real Estate -- (365,485)
Treasury Shares Issued to Directors 9,800 --
Change in Balance Sheet Accounts, Net:
Account Receivable 49,855 (10,389)
Prepaid Expenses and Other Assets 110,871 55,352
Accounts Payable and Other Liabilities 555,253 258,412
Current Income Taxes (211,428) 637,558
------------ ------------
Net Cash Provided by Operating Activities 4,225,254 4,209,493
------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Net Change in Construction in Progress (1,418,381) 32,661
Proceeds from Sale of Real Estate -- 11,500,000
Additions to Equipment and Furniture, Net (506,366) (950,915)
Additions to Rental Property, Net (128,937) (99,191)
Additions to Leasehold Improvements, Net (227,637) (163,775)
Additions to Real Estate Held for Sale -- (76,205)
------------ ------------
Net Cash (Used in) Provided by Investing Activities (2,281,320) 10,242,575
------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments on Mortgage Notes (1,099,345) (982,371)
Proceeds from Mortgage Notes -- 7,016,000
Net Change in Line of Credit -- (16,339,616)
Purchase of Treasury Stock (93,821) (202,497)
Additions to Loan Costs -- (110,142)
------------ ------------
Net Cash Used in Financing Activities (1,193,166) (10,618,626)
------------ ------------

NET INCREASE (DECREASE) IN CASH 750,768 3,833,442

CASH AND CASH EQUIVALENTS, Beginning of Period 3,827,520 160,510
------------ ------------
CASH AND CASH EQUIVALENTS, End of Period $ 4,578,288 $ 3,993,952
============ ============


See accompanying notes to the consolidated financial statements.


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 accounting principles generally accepted in the
United States of America ("GAAP") 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, 2001.

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 sale or development.

2. Interest of $0 and $7,892 was capitalized during the first six months of 2002
and 2001, respectively, and during the three months ended June 30, 2002 and 2001
there was no interest capitalized.

3. Interest paid during the six months of 2002 and 2001 for long-term mortgages
amounted to $1,963,985 and $1,925,719, respectively. Interest paid to related
party was $8,834 and $381,131 for the first six months of 2002 and 2001,
respectively. Income taxes paid during the first six months of 2002 and 2001
amounted to $1,265,500 and $752,000, respectively.

4. 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 $4,621,824 net of tax effects of $1,802,511 is reflected as a
separate component of equity. There was an increase in the net unrealized
holding gain for the six months from January 1, 2002 to June 30, 2002, of
$397,081, net of deferred taxes, and an increase in the net unrealized holding
gain of $1,513, net of deferred taxes, for the three months from April 1, 2002
to June 30, 2002.



8


5. 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 for the six months ended June 30, 2002
and 2001:





--------------------------------------------------------------------
June 30, 2002
--------------------------------------------------------------------
COMMERCIAL CORPORATE
OFFICE APARTMENTS PARKING AND OTHER TOTAL
------------ ---------- ------------ ------------ ----------

REVENUE FROM EXTERNAL CUSTOMERS 7,802,883 2,992,125 587,657 1,115,134 12,497,799

INTEREST EXPENSE 1,056,767 726,098 -- 238,649 2,021,514

DEPRECIATION AND AMORTIZATION 1,124,119 631,608 65,919 240,572 2,062,218

SEGMENT INCOME (LOSS) BEFORE TAX 2,103,722 (20,112) 182,275 436,873 2,702,758

CAPITAL EXPENDITURES BY SEGMENT 673,356 144,147 10,515 34,922 862,940

IDENTIFIABLE SEGMENT ASSETS 49,041,442 25,001,413 2,337,030 18,167,680 94,547,565











June 30, 2001
--------------------------------------------------------------------
COMMERCIAL CORPORATE
OFFICE APARTMENTS PARKING AND OTHER TOTAL
------------ ---------- ------------ ------------ ------------

REVENUE FROM EXTERNAL CUSTOMERS 6,984,739 3,221,930 1,162,450 1,023,132 12,392,251

INTEREST EXPENSE 1,167,147 762,516 132,694 360,316 2,422,673

DEPRECIATION AND AMORTIZATION 1,191,036 607,967 192,782 235,187 2,226,972

SEGMENT INCOME BEFORE TAX 1,415,714 372,913 427,819 90,230 2,306,676

CAPITAL EXPENDITURES BY SEGMENT 1,010,192 149,825 -- 130,069 1,290,086

IDENTIFIABLE SEGMENT ASSETS 55,760,033 26,121,291 2,019,595 9,672,422 93,573,341



9

Following is information for each segment for the three months ended June 30,
2002 and 2001:





------------------------------------------------------------------------
June 30, 2002
------------------------------------------------------------------------
COMMERCIAL CORPORATE
OFFICE APARTMENTS PARKING AND OTHER TOTAL
------------ ----------- ------------ --------------- ------------

Revenue from external customers 3,200,070 1,443,878 290,572 591,044 5,525,564

INTEREST EXPENSE 526,079 360,845 -- 120,784 1,007,708

DEPRECIATION AND AMORTIZATION 559,051 317,742 32,874 121,211 1,030,878

SEGMENT INCOME (LOSS) BEFORE TAX 345,370 (105,633) 54,428 236,333 530,498

CAPITAL EXPENDITURES BY SEGMENT 482,094 106,816 10,515 6,808 606,233

IDENTIFIABLE SEGMENT ASSETS 49,041,442 25,001,413 2,337,030 18,167,680 94,547,565





June 30, 2001
------------------------------------------------------------------------
COMMERCIAL CORPORATE
OFFICE APARTMENTS PARKING AND OTHER TOTAL
------------ ----------- ------------ --------------- ------------

Revenue from external customers 3,468,836 1,617,625 761,530 547,159 6,395,150

INTEREST EXPENSE 578,049 379,236 58,533 167,760 1,183,578

DEPRECIATION AND AMORTIZATION 601,419 306,053 89,900 117,878 1,115,250

SEGMENT INCOME BEFORE TAX 718,765 149,712 390,819 38,637 1,297,933

CAPITAL EXPENDITURES BY SEGMENT 230,457 107,651 -- 118,296 456,404

IDENTIFIABLE SEGMENT ASSETS 55,760,033 26,121,291 2,019,595 9,672,422 93,573,341





6. PROFORMA INFORMATION

On June 20, 2001, the Company sold the Tower Garage to a subsidiary of Commerce
Bancshares, Inc. The unaudited pro forma information below presents the results
of operations without the Tower Garage for the three and six months ended June
30, 2001. This pro forma operating results are not necessarily indicative of
what the actual results would have been had the Tower Garage been sold on
January 1, 2001.



Unaudited
---------
6 months ended 3 months ended
-------------- --------------
06/30/01 06/30/01
-------------- ---------------

Total Revenue $11,789,171 $5,937,756
Net Income 1,470,420 684,750
Basic earnings per share $ 8.16 $ 3.80






10


ITEM 2. 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 a $12,490,000 line of credit with Commerce Bank, N.A. Commerce Bank has
issued $6,721,000 in letters of credit resulting in $5,769,000 available under
the line at June 30, 2002. At June 30, 2002, the Company had no outstanding
borrowings on the line of credit. This line of credit has been extended at
market rates and terms and management believes the Company could obtain similar
financing arrangements if the Company's relationship with Commerce Bank, N.A.
did not exist. The Company does not utilize any off-balance sheet financing or
leasing transactions of any kind.

Cash provided by operations during the six months ended June 30, 2002 was
$4,225,254, approximately $15,761 higher than the same period ended June 30,
2001 primarily because of increased net income. Investing activities used
$2,281,320 of cash, primarily due to an increase in capital expenditures.
Financing activities used $1,193,166. The Company has not experienced liquidity
problems during the six months ended June 30, 2002. The Company does not
anticipate any difficulties in meeting its liquidity needs currently or in the
foreseeable future. The Company has cash on hand of $4,578,288 at June 30, 2002,
the credit line described above and cash generated by future operations. The
increase in cash and cash equivalents is due to changes in the level of capital
expenditures and financing activities in the respective periods, offset by an
increase in cash flows from operating activities, primarily due to the lease
buyout of Kaiser at our Barkley Place commercial office building and 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 2002.

The Company's commercial properties are continually evaluated for impairment.
Impairment analyses are based primarily upon current and expected future cash
flows generated by the properties. If future cash flows are negative, it is
possible that properties could become impaired. The Company's lease expirations
for 2002 are not expected to impair any asset values, and the Company expects to
lease available property space in the normal course of business over a
reasonable period of time.




11


RELATED PARTY TRANSACTIONS:

The Company has a variety of related party transactions with Commerce. In
addition to the borrowing arrangement described above, the Company has the
following transactions with Commerce:

o Rentals - The Company leases space to Commerce Bank and its
affiliates. Total rental income derived from these leases for the six
months ended June 30, 2002 was $966,919 and $469,738 for the three
months ended June 30, 2002. Such leases contain lease rates and other
provisions similar to those of other leases with unrelated parties.

o Management fees - The Company manages certain properties owned by
Commerce under property management agreements. In addition, the
Company is overseeing the rehabilitation of the Commerce Trust
Building. Total fees earned under these arrangements were $461,578 for
the six months ended June 30, 2002. Total fees earned for the three
months ended June 30, 2002 was $261,365. The Company provides similar
services to unrelated parties and revenues earned under these
arrangements are similar to those earned from other unrelated parties.

o Interest and other income - The Company owns 123,991 shares of
Commerce Bancshares common stock and received dividend income of
approximately $40,000 on such shares through June, 2002 and $20,000
for the three months from April 1, 2002 to June 30, 2002. In addition,
excess funds are deposited in Commerce Bank, N.A. Interest earned on
such deposits aggregated approximately $50,000 for the six months and
$26,000 for the three months ended June 30, 2002. The Company may earn
lease commissions on property owned by or rented by Commerce under a
listing agreement. Total fees earned under these arrangements were
approximately $19,000 for the six months and $4,000 for the three
months ended June 30, 2002. The Company provides similar services to
unrelated parties and revenues earned under these arrangements are
similar to those earned from other unrelated parties.

SIX MONTHS ENDED JUNE 30, 2002
COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 2001

RESULTS OF OPERATIONS:

Total revenue increased $105,547. The lease buyout of a tenant at the
Barkley Place commercial office building for $1,200,000, and an increase in
monthly parking at the 811 Main Garage, offset by the sale of the Tower Garage
in June, 2001, the vacancy of the 9221 Quivira commercial office building and an
increase in vacancy at the apartment complexes resulted in an $399,781 increase
in rental income.

Management and service fees increased primarily due to the increase in
construction fees charged for the Trust Building renovation to date, which is
based on invoices billed and processed.

The decrease in the gain on sale of real estate is due to the sale of
the Tower Garage in June, 2001. Real estate commissions earned of $39,574 in
2002 and an increase


12


in cash invested in short term investments accounts for the increase in interest
and other income.

Operating expenses decreased primarily due to a decrease in utilities.
Maintenance and repairs increased due to snow removal and repairs at our
apartment complexes, repairs and elevator expense at the Commerce Tower and 811
Main commercial office buildings, an increase in security costs at the 811 Main
and Commerce Tower and environmental expenses at the Commerce Tower commercial
office building.

Depreciation and amortization decreased primarily due to the sale of
the Tower Garage in June 2001. The change in taxes other than income represents
the increase in real estate taxes of the Woodlands Plaza #1 commercial office
building and the undeveloped land at New Mark, offset by the sale of the Tower
Garage.

General, administrative and other also increased due to an increase in
lease expense in the Commerce Tower commercial office building, an increase in
advertising at our apartment complexes, and an increase in our property and
liability insurance, offset by a decrease in our professional fees and auditing
and accounting fees.

Interest expense, including related party, decreased due to the
decrease in the related party line of credit which was reduced due to the
financing in March, 2001 of the Woodlands Plaza #1 commercial office building
and the pay off of the line of credit due after the sale of the Tower Garage in
June, 2001.

THREE MONTHS ENDED JUNE 30, 2002
COMPARED WITH THE THREE MONTHS ENDED JUNE 30, 2001

RESULTS OF OPERATIONS:

Total revenue decreased $869,586. The decrease in occupancy at the
Barkley Place and Commerce Tower commercial office building, the sale of the
Tower Garage in June, 2001, the vacancy of the 9221 Quivira commercial office
building and the decrease in occupancy at the apartment complexes, offset an
increase in monthly parking at the 811 Main Garage and rental income at the
Woodlands Plaza #1 commercial office building resulted in an $523,888 increase
in rental income.

Management and service fees increased primarily due to the increase in
construction fees, offset by a decrease in management fees related to the
decrease in occupancy at the Executive Plaza office building.

The decrease in the gain on sale of real estate is due to the sale of
the Tower Garage in June, 2001. The decrease in interest and other income is
primarily the decrease in real estate commissions earned in the 2nd quarter of
2002 as compared to the same period in 2001.

Operating expenses decreased primarily due to a decrease in utilities
and a slight decrease in salaries and benefits as compared to 2001. Maintenance
and repairs increased for this period due to the following: an increase in
alterations at our apartment complexes, an increase in repairs, including
heating and cooling expenses, at the Commerce Tower, 811 Main and UMB commercial
office buildings, an increase in security costs at the 811

13


Main and Commerce Tower, and an increase in environmental expenses at the
Commerce Tower commercial office building, offset by the sale of the Tower
Garage.

Depreciation and amortization decreased primarily due to the sale of
the Tower Garage in June 2001. The change in taxes other than income represents
the increase in real estate taxes of the Woodlands Plaza #1 commercial office
building, offset by the sale of the Tower Garage.

General, administrative and other also increased slightly due to a
decrease in lease expense and advertising and professional fees, offset by an
increase in our property and liability insurance.

Interest expense, including related party, decreased due to the
decrease in the related party line of credit which was reduced due to the
financing in March, 2001 of the Woodlands Plaza #1 commercial office building
and the pay off of the line of credit due after the sale of the Tower Garage in
June, 2001.

MARKET RISK DISCLOSURE

The Company is exposed to various market risks, including equity
investment prices and interest rates.

The Company has 123,991 shares of common stock of Commerce
Bancshares, Inc. with a fair value of $5,485,362 as of June 30, 2002. This
investment is not hedged and is exposed to the risk of changing market prices.
The Company classifies these securities as "available-for-sale" for accounting
purposes and marks them to market on the balance sheet at the end of each
period. Management estimates that 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 market price of the
securities would have a $335,000 effect on comprehensive income.

The Company has approximately $6,400,000 of variable rate debt as of
June 30, 2002. A 100 basis point change in each debt series benchmark would
impact net income on an annual basis by approximately $39,000. This debt is not
hedged.

EFFECT OF NEW ACCOUNTING PRONOUNCEMENT

In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144 (SFAS 144), "Accounting for the Impairment or Disposal of
Long-Lived Assets". This statement addresses financial accounting and reporting
for the impairment or disposal of long-lived assets. While this statement
supersedes SFAS No. 121, "Accounting for Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of" it retains many of the fundamental
provisions of that statement. This statement also supersedes the accounting and
reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations
- - Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions", for
the disposal of a segment of a business. However, it retains the requirement in
Opinion No. 30 to report separately discontinued operations and extends that
reporting to a component of an entity that either has been disposed of (by sale,
abandonment, or in a distribution to owners) or is classified as held for sale.
SFAS 144 is effective for fiscal years beginning

14


after December 14, 2001, and was adopted by the Company in the first quarter of
2002. The adoption of SFAS 144 did not have a material impact the Company's
financial position and results of operations.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
None

ITEM 2. CHANGES IN SECURITIES
None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On April 10, 2002 the Company held its annual meeting of stockholders
to elect two directors of the Company to serve until annual stockholders meeting
in 2005 and to transact such other business as may properly come before the
meeting or any adjournment thereof. The results of the meeting were as follows:

James M Kemper, Jr. was elected to serve as a director of the Company
with 158,386 votes for and 503 votes withheld.

William E. Quirk was elected to serve as a direct of the Company with
158,834 votes for and 55 votes withheld.

To transact such other business as may properly come before the meeting
or any adjournment thereof was ratified with 158,869 votes for and 20 votes
withheld.

ITEM 5. OTHER INFORMATION
None

ITEM 6. EXHIBITS

Exhibit 99.1 - Certification of James M. Kemper, Jr., pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, dated August 14, 2002.

Exhibit 99.2 - Certification of Robert C. Harvey, III, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, dated August 14, 2002.


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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 14, 2002











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