SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995 Commission file number 0-3576
COUSINS PROPERTIES INCORPORATED
A GEORGIA CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO. 58-0869052
2500 WINDY RIDGE PARKWAY
ATLANTA, GEORGIA 30339-5683
TELEPHONE: 404-955-2200
Registrant 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, and has
been subject to such filing requirements for the past 90 days.
At April 30, 1995, 27,881,070 shares of common stock of the Registrant were
outstanding.
<PAGE>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts)
<TABLE>
<CAPTTION>
DECEMBER 31, MARCH 31,
1994 1995
------------ ---------
(Unaudited)
<S> <C> <C>
ASSETS
PROPERTIES:
Operating properties $104,576 $105,008
Land held for investment or future development 27,353 28,828
Projects under construction 8,711 26,824
Residential lots under development 8,602 11,550
Less: accumulated depreciation (12,112) (13,061)
------- -------
Total properties 137,130 159,149
CASH AND CASH EQUIVALENTS, at cost which
approximates market 3,407 152
NOTES AND OTHER RECEIVABLES 52,571 51,823
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 130,838 136,589
OTHER ASSETS 6,871 5,912
-------- --------
TOTAL ASSETS $330,817 $353,625
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
NOTES PAYABLE $ 41,799 $ 65,923
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 11,144 10,255
MINORITY INTERESTS IN CONSOLIDATED ENTITIES 3,631 3,690
DEPOSITS AND DEFERRED INCOME 1,345 1,426
-------- --------
TOTAL LIABILITIES 57,919 81,294
-------- --------
STOCKHOLDERS' INVESTMENT
Common stock, $1 par value, authorized 50,000,000 shares;
issued 27,863,741 shares at December 31, 1994 and
27,881,070 shares at March 31, 1995 27,864 27,881
Additional paid-in capital 147,495 147,729
Cumulative undistributed net income 97,539 96,721
-------- --------
TOTAL STOCKHOLDERS' INVESTMENT 272,898 272,331
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
INVESTMENT $330,817 $353,625
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
<PAGE>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1995
(UNAUDITED)
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
1994 1995
------ ------
<S> <C> <C>
REVENUES:
Rental revenues $2,543 $4,434
Development and construction fees 207 295
Management fees 508 541
Leasing and other fees 514 714
Residential lot and outparcel sales - 838
Interest and other 1,735 1,178
------ ------
5,507 8,000
INCOME FROM UNCONSOLIDATED JOINT VENTURES 3,241 3,374
COSTS AND EXPENSES:
Rental property operating expenses 741 1,075
General and administrative expenses 2,113 1,982
Depreciation and amortization 813 1,096
Leasing and other commissions 13 -
Stock appreciation right expense (credit) 107 (198)
Residential lot and outparcel cost of sales - 800
Interest expense 14 163
Property taxes on undeveloped land 148 227
Other 50 173
------ ------
3,999 5,318
------ ------
INCOME FROM OPERATIONS BEFORE INCOME TAXES
AND GAIN ON SALE OF INVESTMENT PROPERTIES 4,749 6,056
PROVISION (BENEFIT) FOR INCOME TAXES FROM
OPERATIONS (49) 183
------ ------
INCOME BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES 4,798 5,873
GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF
APPLICABLE INCOME TAX PROVISION - -
------ ------
NET INCOME $4,798 $5,873
====== ======
INCOME PER SHARE:
From operations before gain on sale
of investment properties $ .17 $ .21
From gain on sale of investment properties,
net of applicable income tax provision - -
------ ------
NET INCOME PER SHARE $ .17 $ .21
====== ======
CASH DIVIDENDS DECLARED PER SHARE $ .22 $ .24
====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1995
(UNAUDITED)
($ in thousands)
<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from operations before gain on
sale of investment properties $ 4,798 $ 5,873
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization, net of minority
interests' share 813 1,055
Stock appreciation right expense (credit) 107 (198)
Cash charges to expense accrual for stock
appreciation rights (40) (21)
Rental revenue recognized on straight-line basis
in excess of rental revenue specified in lease
agreements (61) (33)
Deferred income received 222 258
Deferred income recognized (63) (196)
Income from unconsolidated joint ventures (3,241) (3,374)
Operating distributions from unconsolidated
joint ventures 3,776 3,380
Residential lot and outparcel cost of sales - 765
Changes in other operating assets and liabilities:
Change in other receivables (240) 674
Change in accounts payable and accrued liabilities (1,296) 1,306
------- -------
Net cash provided by operating activities 4,775 9,489
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in unconsolidated joint ventures (659) (5,756)
Non-operating distributions from unconsolidated
joint ventures 586 -
Property acquisition and development expenditures (8,307) (25,509)
Principal payments received on government
agency securities 290 15
Investment in notes receivable (28,031) -
Collection of notes receivable 4,782 91
Change in other assets, net (176) 810
------- -------
Net cash used in investing activities (31,515) (30,349)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (6,125) (6,691)
Proceeds from lines of credit 2,700 24,682
Repayment of line of credit (848) (513)
Common stock issued pursuant to stock option plan 56 172
Proceeds from other notes payable 16 -
Repayment of other notes payable (13) (45)
------- -------
Net cash (used in) provided by financing activities (4,214) 17,605
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (30,954) (3,255)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 31,684 3,407
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 730 $ 152
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
(UNAUDITED)
1. BASIS OF PRESENTATION
The Consolidated Financial Statements include the accounts of Cousins
Properties Incorporated ("Cousins") and its majority owned partnerships, as well
as Cousins Real Estate Corporation ("CREC") and its subsidiaries. All of the
entities included in the Consolidated Financial Statements are hereinafter
referred to collectively as the "Company."
Cousins has elected to be taxed as a real estate investment trust ("REIT"),
and intends to distribute 100% of its federal taxable income to stockholders,
thereby eliminating any liability for future corporate federal income taxes.
Therefore, the results included herein do not include a federal income tax
provision for Cousins. However, CREC and its subsidiaries are taxed separately
from Cousins as a regular corporation. Accordingly, the Consolidated Statements
of Income include a provision (benefit) for CREC's income taxes.
The Consolidated Financial Statements were prepared by the Company without
audit, but in the opinion of management reflect all adjustments necessary for
the fair presentation of the Company's financial position as of March 31, 1995,
and results of operations for the three month periods ended March 31, 1994 and
1995. Results of operations for the interim 1995 period are not necessarily
indicative of results expected for the full year. While certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission, the Company believes that the disclosures herein are adequate to
make the information presented not misleading. These condensed financial
statements should be read in conjunction with the Consolidated Financial
Statements and the notes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1994. The accounting policies employed are
the same as those shown in Note 1 to the Consolidated Financial Statements on
Form 10-K.
2. SUPPLEMENTAL INFORMATION CONCERNING CASH FLOWS
Interest (net of $340,000 and $724,000 capitalized in 1994 and 1995,
respectively) and income taxes paid were as follows for the three months ended
March 31, 1994 and 1995 ($ in thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Interest paid $ - $183
Income taxes paid $ 6 $ -
</TABLE>
3. COSTS CAPITALIZED AND FEES ELIMINATED IN CONSOLIDATION
Development, construction, and leasing fees received by CREC and its
subsidiaries from Cousins and Cousins' majority owned joint ventures are
eliminated in consolidation. Costs related to planning, development, leasing
and construction of properties (including related general and administrative
expenses) are capitalized. The table below shows the fees eliminated, the
internal costs capitalized related to these fees, and the additional internal
costs capitalized by CREC to its own residential developments for the three
months ended March 31, 1994 and 1995 ($ in thousands):
<TABLE>
<CAPTION>
1994 1995
----- ------
<S> <C> <C>
Fees eliminated in consolidation $ 583 $1,020
Internal costs capitalized to projects
on which fees were eliminated 263 646
Internal costs capitalized to CREC
residential developments 35 101
</TABLE>
4. DEVELOPMENT ACTIVITIES
COLONIAL PLAZA
In February 1995, the Company purchased Colonial Plaza Mall, a regional
mall located on 49 acres of land in suburban north central Orlando, Florida for
$10 million. The Company has commenced the demolition of this mall and begun
construction of Colonial Plaza, a 543,000 square foot retail power center.
MANSELL CROSSING-PHASE II
In February 1995, North Point Market Associates, L.P. ("NPMA") pursuant to
a tax-free exchange, swapped the proceeds which had been escrowed from a
September 1994 land sale ($3.0 million) into the purchase of the land for
Mansell Crossing-Phase II. The purchase price of this 13 acre site was $3.3
million. Mansell Crossing-Phase II is a 100,000 square foot retail power center
expansion adjacent to the Company's other North Point properties.
5. NOTES PAYABLE AND INTEREST EXPENSE
At December 31, 1994 and March 31, 1995, the composition of notes payable
were as follows ($ in thousands):
<TABLE>
<CAPTION>
December 31, 1994 March 31, 1995
------------------------------------ ------------------------------------
Share of Share of
Consolidated Unconsolidated Consolidated Unconsolidated
Entities Joint Ventures Total Entities Joint Ventures Total
------------ -------------- -------- ------------ -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Fixed Rate Mortgages
(non-recourse) $ 1,168 $72,650 $ 73,818 $ 1,123 $72,427 $ 73,550
Floating Rate Lines
of Credit 40,631 6,905 47,536 64,800 6,455 71,255
------- ------- -------- ------- ------- -------- --------
$41,799 $79,555 $121,354 $ 65,923 $78,882 $144,805
======= ======= ======== ======= ======= ========
</TABLE>
During the first quarter of 1995, interest related to approximately $54
million of floating rate debt was capitalized to projects under construction.
For the three months ended March 31, 1995, interest expense was recorded as
follows ($ in thousands):
<TABLE>
<CAPTION>
Share of
Consolidated Unconsolidated
Entities Joint Ventures Total
------------ -------------- -----
<S> <C> <C> <C>
Interest Expensed $163 $1,731 $1,894
Interest Capitalized 724 - 724
---- ------ ------
$887 $1,731 $2,618
==== ====== ======
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 2.Management's Discussion and Analysis of Financial Condition and Results
of Operations for the Three Months Ended March 31, 1994 and 1995.
RESULTS OF OPERATIONS:
RENTAL PROPERTY REVENUES AND OPERATING EXPENSES. Rental property revenues
were approximately $1,891,000 higher in 1995. The increase was primarily due to
rental property revenues from two retail power centers, North Point Market-Phase
I ($974,000) and Presidential Market-Phase I ($383,000) which became operational
in May 1994 and December 1994, respectively. Perimeter Expo, which was still in
the lease-up phase during the first quarter of 1994, also contributed to the
increase ($238,000). In addition, $89,000 of the increase was due to revenue
from 13 acres of the Georgia Highway 400 land being ground leased to free
standing users. During the first quarter of 1994, revenue was being recognized
from only 7 acres of the Georgia 400 land. Rental property revenues were also
favorably impacted ($91,000 increase) from the lease-up of the First Union
Tower.
Rental property operating expenses increased $334,000, which increase is
primarily related to the occupancy of the three retail power centers in 1994.
LEASING AND OTHER FEES. Leasing and other fees were approximately $200,000
higher in 1995 due primarily to leasing fee income received from the leasing of
the NationsBank Plaza.
RESIDENTIAL LOT AND OUTPARCEL SALES AND COST OF SALES. Residential lot and
outparcel sales in 1995 include approximately $313,000 of sales of residential
lots by CREC and approximately $525,000 from the sale of an outparcel site in
Presidential Market-Phase I by a subsidiary of CREC. The related cost of sales
were $305,000 and $495,000, respectively. No similar sales occurred in the
first quarter of 1994.
INTEREST AND OTHER REVENUE. Interest and other revenue was approximately
$557,000 lower in 1995. The decrease was primarily due to repayment of $39.9
million of 9.1% mortgage notes upon their maturity in June 1994 ($896,000
decrease). Additionally, interest income decreased due to lower cash balances
in 1995 ($151,000 decrease). These two decreases were partially offset by
interest income recognized on the 650 Massachusetts Avenue mortgage notes
acquired in March 1994 ($533,000 increase).
INCOME FROM UNCONSOLIDATED JOINT VENTURES. (All amounts reflect the
Company's share of joint venture income.) Income from unconsolidated joint
ventures increased approximately $133,000 in 1995. Income from Haywood Mall
Associates increased $238,000 in 1995 due to the venture's prepayment of its
outstanding debt through equity contributions of $10 million from each partner
on April 29, 1994. Income from CSC Associates, L.P. increased $114,000 as
leases at NationsBank Plaza executed in 1994 impacted operating results in 1995.
Income from unconsolidated joint ventures in 1994 was favorably impacted by
$238,000 from outparcel and other land sales at several of the Company's other
joint ventures. There were no similar sales in 1995.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased approximately $131,000 in 1995. This decrease was primarily due to an
increase in costs capitalized to projects under development ($747,000 in 1995
versus $299,000 in 1994). The decrease was partially offset by increases
related to personnel increases due to the Company's continued expansion.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
approximately $283,000 in 1995. This increase is due primarily to three retail
power centers, Perimeter Expo, North Point Market-Phase I and Presidential
Market-Phase I, becoming operational in December 1993, May 1994 and December
1994, respectively ($361,000 increase).
STOCK APPRECIATION RIGHT EXPENSE. This non-cash item is primarily related
to the Company's stock price, which was $16.50 and $16.75 at December 31, 1993
and March 31, 1994, respectively; and $17.375 and $16.625 at December 31, 1994
and March 31, 1995, respectively.
INTEREST EXPENSE. Interest expense increased approximately $149,000 in
1995. In 1995, interest expense before capitalization increased to $887,000 due
to higher debt levels, but the increase was partially offset by increased
capitalization because of a higher level of projects under development.
INCOME TAXES. The provision (benefit) for income taxes from operations
increased approximately $232,000 from a benefit of $49,000 to a provision of
$183,000. The increase in the provision for income taxes from operations is due
primarily to an increase in CREC and its subsidiaries' net income before income
taxes from a net loss of $145,000 in 1994 to net income of $444,000 in 1995.
The increase in CREC and its subsidiaries' net income before income taxes was
due to an increase in intercompany development and leasing fees recognized, and
decreased intangible amortization. Intercompany fee income is eliminated in
consolidation, but the tax effect is not.
FINANCIAL CONDITION:
Major investment activity during the first quarter of 1995 included $25.5
million of property acquisition and development investments, primarily in
projects under construction (See Note 4 of "Notes to Consolidated Financial
Statements"). The Company also made $5.8 million of contributions during the
first quarter of 1995 to certain of its joint ventures including $3.6 million to
Haywood Mall Associates to fund the expansion of the mall and $2.0 million to
CC-JM II Associates (see Note 5 of "Notes to Consolidated Financial Statements"
in the Company's annual report on Form 10-K for the year ended December 31,
1994).The source of cash for these investments was primarily the Company's
line of credit.
The Company has development projects in various stages. The Company
currently intends to finance these projects, as well as the completion of
projects currently under construction, using its existing lines of credit and
increasing those lines of credit as required. Additionally, the Company is in
the process of arranging approximately $50 million of fixed rate non-recourse
financing secured by its North Point Market and Perimeter Expo retail power
center projects.
SUPPLEMENTAL FINANCIAL INFORMATION:
Depreciation and amortization expense include the following components for
the three months ended March 31, 1995 ($ in thousands):
<TABLE>
<CAPTION>
Share of
Consolidated Unconsolidated
Entities Joint Ventures Total
------------ -------------- ------
<S> <C> <C> <C>
General and administrative $ 105 $ 39 $ 144
Deferred financing costs - 20 20
Goodwill and related business
acquisition costs 57 8 65
Real estate related:
Building (including tenant
first generation) 897 1,958 2,855
Tenant second generation 37 131 168
------ ------ ------
$1,096 $2,156 $3,252
====== ====== ======
</TABLE>
Exclusive of new developments, the Company had the following capital
expenditures during the three months ended March 31, 1995, including its share
of unconsolidated joint ventures ($ in thousands):
<TABLE>
<CAPTION>
Office Retail Other Total
------ ------ ----- -----
<S> <C> <C> <C> <C>
Second generation related costs $57 $ - $ - $ 57
Building improvements - - - -
Furniture, fixtures and equipment 11 - 61 72
--- --- --- ----
$68 $ - $61 $129
=== === === ====
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company's Annual Meeting of Stockholders was held on April
28, 1995.
(b) Not applicable.
(c) The following proposals were adopted by the
stockholders of the Company:
(i) A proposal to amend the 1987 Restricted Stock Option Plan so
as to allow the outside Directors to elect to receive all or
part of their compensation in the form of shares of stock of
the Company.
The vote on the above proposal was:
For 20,368,116
Against 624,554
Abstained 416,666
(ii) The election of six Directors.
The vote on the above was:
<TABLE>
<CAPTION>
For Against Abstained
---------- ------- ---------
<S> <C> <C> <C>
Bennett A. Brown 21,398,252 - 11,084
Richard W. Courts, II 21,398,252 - 11,084
Thomas G. Cousins 21,397,982 - 11,354
Henry C. Goodrich 21,396,638 - 12,698
Boone A. Knox 21,398,152 - 11,184
Richard E. Salomon 21,398,252 - 11,084
</TABLE>
(iii) The appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 1995.
The vote on the above was:
For 21,348,460
Against 34,460
Abstained 26,416
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) There were no reports on Form 8-K filed by the Registrant during
the fiscal quarter ended March 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COUSINS PROPERTIES INCORPORATED
Registrant
/s/ Peter A. Tartikoff
----------------------------------------------
Peter A. Tartikoff
Senior Vice President - Finance
(Authorized Officer)
(Principal Financial Officer)
May 10, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 152
<SECURITIES> 0
<RECEIVABLES> 51,823
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 172,210
<DEPRECIATION> 13,061
<TOTAL-ASSETS> 353,625
<CURRENT-LIABILITIES> 0
<BONDS> 20,145
<COMMON> 27,881
0
0
<OTHER-SE> 244,450
<TOTAL-LIABILITY-AND-EQUITY> 353,625
<SALES> 0
<TOTAL-REVENUES> 8,000
<CGS> 0
<TOTAL-COSTS> 5,318
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 163
<INCOME-PRETAX> 6,056
<INCOME-TAX> 183
<INCOME-CONTINUING> 5,873
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,873
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
