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 September 30, 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: 770-955-2200
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 October 31, 1995, 28,086,974 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>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1994 1995
------------ -------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
PROPERTIES:
Operating properties $104,576 $108,578
Land held for investment or future development 27,353 31,688
Projects under construction 8,711 57,511
Residential lots under development 8,602 10,592
Less: accumulated depreciation (12,112) (14,576)
-------- --------
Total properties 137,130 193,793
-------- --------
CASH AND CASH EQUIVALENTS, at cost which
approximates market 3,407 657
NOTES AND OTHER RECEIVABLES 52,571 52,757
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 130,838 137,401
OTHER ASSETS 6,871 5,335
-------- --------
TOTAL ASSETS $330,817 $389,943
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- ----------------------------------------
NOTES PAYABLE $ 41,799 $ 91,929
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 11,144 16,447
MINORITY INTERESTS IN CONSOLIDATED ENTITIES 3,631 3,823
DEPOSITS AND DEFERRED INCOME 1,345 373
-------- --------
TOTAL LIABILITIES 57,919 112,572
-------- --------
STOCKHOLDERS' INVESTMENT
Common stock, $1 par value, authorized
50,000,000 shares; issued 27,863,741 shares
at December 31, 1994 and 28,086,974 shares
at September 30, 1995 27,864 28,087
Additional paid-in capital 147,495 150,932
Cumulative undistributed net income 97,539 98,352
-------- --------
TOTAL STOCKHOLDERS' INVESTMENT 272,898 277,371
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $330,817 $389,943
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
<PAGE>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1995
(UNAUDITED)
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1994 1995 1994 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Rental property revenues $3,507 $ 4,844 $ 8,957 $13,867
Development and construction fees 148 2,804 564 3,305
Management fees 522 547 1,539 1,648
Leasing and other fees 425 421 1,422 1,743
Residential lot and outparcel sales 2,389 5,469 2,959 7,595
Interest and other 1,156 1,245 4,964 3,581
------ ------- ------- -------
8,147 15,330 20,405 31,739
------ ------- ------- -------
INCOME FROM UNCONSOLIDATED JOINT VENTURES 3,335 3,467 9,350 10,336
------ ------- ------- -------
COSTS AND EXPENSES:
Rental property operating expenses 798 1,119 2,293 3,227
General and administrative expenses 1,825 1,801 5,924 5,819
Depreciation and amortization 1,065 1,088 2,770 3,208
Leasing and other commissions 3 13 61 18
Stock appreciation right expense 380 308 184 493
Residential lot and outparcel cost
of sales 2,172 5,142 2,657 7,085
Interest expense 10 123 348 377
Property taxes on undeveloped land 554 286 860 740
Other 383 502 701 1,138
------ ------- ------- -------
7,190 10,382 15,798 22,105
------ ------- ------- -------
INCOME FROM OPERATIONS BEFORE INCOME TAXES
AND GAIN ON SALE OF INVESTMENT PROPERTIES 4,292 8,415 13,957 19,970
PROVISION (BENEFIT) FOR INCOME TAXES FROM
OPERATIONS (165) 562 (112) 803
INCOME BEFORE GAIN ON SALE OF
INVESTMENT PROPERTIES 4,457 7,853 14,069 19,167
GAIN ON SALE OF INVESTMENT PROPERTIES,
NET OF APPLICABLE INCOME TAX PROVISION 1,677 1,746 4,919 1,746
------ ------- ------- -------
NET INCOME $6,134 $ 9,599 $18,988 $20,913
====== ======= ======= =======
INCOME PER SHARE:
From operations before gain on sale
of investment properties $ .16 $ .28 $ .50 $ .69
From gain on sale of investment properties,
net of applicable income tax provision .06 .06 .18 .06
------ ------- ------- -------
NET INCOME PER SHARE $ .22 $ .34 $ .68 $ .75
====== ======= ======= =======
CASH DIVIDENDS DECLARED PER SHARE $ .22 $ .24 $ .66 $ .72
====== ======= ======= =======
</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 NINE MONTHS ENDED SEPTEMBER 30, 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 $14,069 $19,167
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization, net of minority
interests' share 2,723 3,099
Stock appreciation right expense 184 493
Cash charges to expense accrual for stock
appreciation rights (48) (103)
Rental revenue recognized on straight-line basis in
excess of rental revenue specified in lease agreements (164) (90)
Deferred income received 691 1,673
Deferred income recognized (301) (2,800)
Income from unconsolidated joint ventures (9,350) (10,336)
Operating distributions from unconsolidated
joint ventures 12,592 11,220
Residential lot and outparcel cost of sales 2,629 6,832
Changes in other operating assets and liabilities:
Change in other receivables (281) 60
Change in accounts payable and accrued liabilities 2,160 1,040
------- -------
Net cash provided by operating activities 24,904 30,255
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisition and development expenditures (28,541) (63,925)
Investment in unconsolidated joint ventures (16,100) (8,671)
Gain on sale of investment properties, net of
applicable income tax provision 4,919 1,746
Investment properties cost of sales 2,844 1,051
Change in other assets, net (1,386) 1,085
Non-operating distributions from unconsolidated
joint ventures 586 1,226
Collection of notes receivable 44,926 744
Principal payments received on government agency
securities 618 128
Investment in notes receivable (28,043) -
------- -------
Net cash used in investing activities (20,177) (66,616)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of lines of credit (46,369) (58,373)
Proceeds from lines of credit 47,486 57,241
Proceeds from other notes payable 841 51,500
Dividends paid (18,376) (20,100)
Common stock issued under dividend reinvestment plan - 3,328
Common stock issued under employee/director plans 77 253
Repayment of other notes payable (16,964) (238)
Net cash (used in) provided by financing activities (33,305) 33,611
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (28,578) (2,750)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 31,684 3,407
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,106 $ 657
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 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 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 September 30,
1995, and results of operations for the nine month periods ended September 30,
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 included in Form 10-K.
2. SUPPLEMENTAL INFORMATION CONCERNING CASH FLOWS
- --------------------------------------------------
Interest (net of $741,000 and $3,469,000 capitalized in 1994 and 1995,
respectively) and income taxes paid (net of $252,000 refunded in 1995) were as
follows for the nine months ended September 30, 1994 and 1995 ($ in thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Interest paid $294 $568
Income taxes paid $ 29 $201
</TABLE>
In September 1995, North Point MarketCenter-Phase II (approximately
$2,860,000) was transferred from Projects Under Construction to Operating
Properties.
3. COSTS CAPITALIZED AND FEES ELIMINATED IN CONSOLIDATION
- ---------------------------------------------------------
Development, construction, and leasing fees received by CREC and its
subsidiaries from Cousins and Cousins' majority owned joint ventures are
eliminated in consolidation. Costs related to planning, development, leasing
and construction of properties (including related general and administrative
expenses) are capitalized. The table below shows the fees eliminated, the
internal costs capitalized related to these fees, and the additional internal
costs capitalized by CREC to its own residential developments for the nine
months ended September 30, 1994 and 1995 ($ in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
1994 1995
------ ------
Fees eliminated in consolidation $2,510 $3,775
Internal costs capitalized to projects
on which fees were eliminated 936 1,919
Internal costs capitalized to CREC
residential developments 194 355
</TABLE>
4. NOTES PAYABLE AND INTEREST EXPENSE
- --------------------------------------
At December 31, 1994 and September 30, 1995, the composition of notes
payable were as follows ($ in thousands):
<TABLE>
<CAPTION>
December 31, 1994 September 30, 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 $52,429 $71,991 $124,420
Floating Rate Lines
of Credit 40,631 6,905 47,536 39,500 10,983 50,483
------- ------- -------- ------- ------- --------
$41,799 $79,555 $121,354 $91,929 $82,974 $174,903
======= ======= ======== ======= ======= ========
</TABLE>
n July 1995, the Company completed the long term non-recourse financing of
its North Point MarketCenter and Perimeter Expo retail power centers. The North
Point MarketCenter financing is for $30 million, with an interest rate of 8.5%
and a maturity of 10 years. The Perimeter Expo financing is for $21.5 million,
with an interest rate of 8.04% and a maturity of 10 years. Proceeds of the
financings were used to reduce borrowing under the Company's line of credit.
The Company and its unconsolidated joint ventures have received commitments
for the following financings and refinancings which are expected to be closed in
the fourth quarter of 1995. Cousins has received a commitment to borrow $28
million for five years at a floating interest rate of LIBOR plus 1% secured by
its interest in the 650 Massachusetts Avenue Mortgage Notes (see Note 3 of
"Notes to Consolidated Financial Statements" in the Company's annual report on
Form 10-K for the year ended December 31, 1994). Wildwood Associates ("WWA")
has received commitments to refinance two existing mortgages. The mortgage note
payable secured by the 2500 Windy Ridge Parkway Building (due June 28, 1996 with
a balance of $30.8 million as of September 30, 1995 and an interest rate of
9.125%) will be paid down to and refinanced at $26 million. The new mortgage
will have a ten year term with an interest rate of 7.45%. The mortgage note
payable secured by the 2300 Windy Ridge Parkway Building (due August 10, 1999
with a balance of $81.4 million as of September 30, 1995 and an interest rate of
9.09%) will be paid down to and refinanced at $72 million. The new mortgage
will have a ten year term with an interest rate of 7.56%. There is no
prepayment penalty associated with the refinancing of the 2300 Windy Ridge
Parkway Building. WWA will draw against its existing $50 million line of credit
to finance the difference between the existing mortgages' balances and the
refinanced amounts. This line of credit was extended to September 1, 1997 with
all terms remaining the same.
For the three and nine months ended September 30, 1995, interest expense
was recorded as follows ($ in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1995 September 30, 1995
------------------------------------- -------------------------------------
Share of Share of
Consolidated Unconsolidated Consolidated Unconsolidated
Entities Joint Ventures Total Entities Joint Ventures Total
------------ -------------- ------- ------------ -------------- -------
<S> <C> <C> <C> <C> <C> <C>
Interest Expensed $ 123 $1,685 $1,808 $ 377 $5,140 $5,517
Interest Capitalized 1,563 94 1,657 3,469 94 3,563
------ ------ ------ ------ ------ ------
$1,686 $1,779 $3,465 $3,846 $5,234 $9,080
====== ====== ====== ====== ====== ======
</TABLE>
During the third quarter of 1995, interest related to consolidated and the
Company's share of unconsolidated joint venture projects under construction with
an average balance of $84 million was capitalized.
5. DEVELOPMENT ACTIVITIES
- --------------------------
4100/4300 Wildwood Parkway
--------------------------
In August 1995, construction commenced on two new office buildings in
the Wildwood Office Park on approximately 12.6 acres of land owned by Wildwood
Associates. The two buildings are expected to cost approximately $32 million
and will be a total of 250,000 rentable square feet, of which 227,000 rentable
square feet are pre-leased to Georgia-Pacific Corporation.
North Point Center-East Phase II
--------------------------------
In November 1995, construction commenced on Phase II of North Point
Center-East, a 125,000 rentable square foot office building at North Point,
adjacent to North Point Mall and the Company's retail properties in north
central suburban Atlanta. Construction commenced on this building after Phase I,
a 128,000 rentable square foot office building, became 100% pre-committed.
Phase I is expected to be completed in December 1995, and Phase II is scheduled
for completion in the second half of 1996.
6. DUSSELDORF JOINT VENTURE
- ----------------------------
In 1992, the Company entered into a joint venture agreement for the
development of a 133,000 rentable square foot office building in Dusseldorf,
Germany (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). Due
to the release of certain completion guarantees related to the building,
approximately $2,604,000 of previously deferred development income was
recognized in September 1995.
<PAGE>
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations for the Three and Nine Months Ended September 30, 1994 and
1995.
RESULTS OF OPERATIONS:
- ---------------------
RENTAL PROPERTY REVENUES AND OPERATING EXPENSES. Rental property revenues
were approximately $1,337,000 and $4,910,000 higher in the three and nine month
1995 periods, respectively. The increase was primarily due to rental property
revenues from two retail power centers, North Point MarketCenter and
Presidential MarketCenter-Phase I. North Point MarketCenter, which increased
$508,000 and $2,243,000 in the three and nine month 1995 periods, respectively,
became operational in May 1994 (Phase I) and September 1995 (Phase II).
Presidential MarketCenter-Phase I, which increased $479,000 and $1,293,000 in
the three and nine month 1995 periods, respectively, became operational in
December 1994. Perimeter Expo, which was still in the lease-up phase during the
third quarter of 1994, also contributed to the increase ($46,000 and $433,000,
in the three and nine month 1995 periods, respectively). In addition, $115,000
and $315,000 of the increase in the three and nine month 1995 periods,
respectively, was due to revenue from additional parcels of the Georgia Highway
400 land being ground leased to free standing users. Rental property revenues
were also favorably impacted by First Union Tower ($127,000 and $289,000
increases in the three and nine month 1995 periods, respectively) and the 3301
Windy Ridge Parkway Building ($42,000 and $106,000 increases in the three and
nine month 1995 periods, respectively).
Rental property operating expenses increased approximately $321,000 and
$934,000 in the three and nine month 1995 periods, respectively, which increase
is primarily related to the occupancy of the three retail power centers in 1994.
DEVELOPMENT AND CONSTRUCTION FEES. Development and construction fees were
approximately $2,656,000 and $2,741,000 higher in the three and nine month 1995
periods, respectively. The increase is due primarily to the recognition of
development income from the Dusseldorf project ($2,604,000) which had previously
been deferred (see Note 6). Also contributing to the increase were development
and construction fees related to Wildwood Office Park (increases of $128,000 and
$202,000 in three and nine month 1995 periods, respectively), primarily due to
construction of two new buildings (see Note 5). Partially offsetting these
increases were decreases of $38,000 and $82,000 in the three and nine month 1995
periods, respectively, in development fees recognized by the Company's retail
division from third party developments .
LEASING AND OTHER FEES. Leasing and other fees decreased approximately
$4,000 in the three month 1995 period and increased approximately $321,000 in
the nine month 1995 period. The increase in the nine month period was due
primarily to a $374,000 third party incentive fee received by the Company's
retail division. This increase was partially offset by a decrease of $209,000
in leasing fees recognized by the Company's retail division from third party
developments. In the nine month 1995 period, leasing fee income from
NationsBank Plaza increased $152,000.
RESIDENTIAL LOT AND OUTPARCEL SALES AND COST OF SALES. Residential lot and
outparcel sales increased $3,080,000 and $4,636,000 in the three and nine month
1995 periods, respectively. The increase in the three month 1995 period was due
to an increase in residential lot sales from 42 lots sold in the 1994 period to
123 lots sold in the 1995 period. The increase in the nine month 1995 period
was also due to an increase in residential lot sales from 55 lots sold in the
1994 period to 150 lots sold in the 1995 period. Also included in the increase
of the nine month 1995 period was $525,000 from the sale of an outparcel site in
Presidential MarketCenter-Phase I by a subsidiary of CREC. There was no similar
sale in the nine month 1994 period.
Residential lot and outparcel cost of sales increased $2,970,000 and
$4,428,000 in the three and nine month 1995 periods, respectively. These
increases were directly related to the sales increases discussed above.
INTEREST AND OTHER REVENUE. Interest and other revenue increased
approximately $89,000 in the three month 1995 period and decreased approximately
$1,383,000 in the nine month 1995 period. The increase in the three month 1995
period is due primarily to interest of $71,000 on tax refunds received as
discussed below. Approximately $1,813,000 of the decrease in the nine month
1995 period was primarily due to repayment of $39.9 million of 9.1% mortgage
notes upon their maturity in June 1994. Additionally, interest income decreased
$135,000 in the nine month 1995 period due to lower cash balances. The decrease
in the nine month 1995 period was 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 $132,000 and $986,000 in the three and nine
month 1995 periods, respectively. Income from Haywood Mall Associates decreased
approximately $123,000 in the three month 1995 period and increased
approximately $424,000 in the nine month 1995 period. The increase was due
primarily 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 approximately $79,000 and $334,000 in the three
and nine month 1995 periods, respectively, as leases at NationsBank Plaza
executed in 1994 impacted operating results in 1995.
Income from Wildwood Associates increased approximately $66,000 and
$223,000 in the three and nine month 1995 periods, respectively, due to
increased office building rentals and increased rental revenue from certain
ground lease sites which began generating rental revenue during the second
quarter of 1994 and during the second quarter of 1995.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased approximately $24,000 and $105,000 in the three and nine month 1995
periods, respectively. This decrease was primarily due to an increase in costs
capitalized to projects under development ($2,274,000 in the nine month 1995
period versus $1,130,000 in the nine month 1994 period and $799,000 in the three
month 1995 period versus $434,000 in the three month 1994 period). 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 $23,000 and $438,000 in the three and nine month 1995 periods,
respectively. This increase is due primarily to Perimeter Expo, North Point
MarketCenter-Phases I and II and Presidential MarketCenter-Phase I retail power
centers, becoming operational in December 1993, May 1994, September 1995 and
December 1994, respectively (increases of $148,000 and $724,000 in the three and
nine month 1995 periods, respectively). These increases were partially offset
by decreases of $67,000 and $208,000 in the three and nine month 1995 periods,
respectively, in the amortization of intangible assets acquired from the
purchase of the Company's retail division in 1992. These intangible assets were
fully amortized in 1994.
STOCK APPRECIATION RIGHT EXPENSE. This non-cash item is primarily related
to the Company's stock price, which was $16.50, $15.50, and $16.75 at December
31, 1993, June 30, 1994, and September 30, 1994, respectively; and $17.375,
$17.75, and $18.25 at December 31, 1994, June 30, 1995 and September 30, 1995,
respectively.
INTEREST EXPENSE. Interest expense increased approximately $113,000 and
$29,000 in the three and nine month 1995 periods, respectively. Interest
expense before capitalization increased approximately $1,495,000 and $2,757,000
in the three and nine month 1995 periods, respectively, due to higher debt
levels and higher interest rates. Interest rates on floating rate debt
increased in the three and nine month 1995 periods, respectively. Additionally,
during the third quarter of 1995, $50 million of floating rate debt was replaced
with long term fixed rate debt at higher interest rates. The increase in
interest expense was partially offset by increased capitalization because of a
higher level of projects under development.
INCOME TAXES. The provision for income taxes from operations increased
approximately $727,000 and $915,000 in the three month and nine month 1995
periods, respectively. The increase is due to an increase in CREC and its
subsidiaries' income before income taxes of approximately $2,552,000 and
$3,046,000 in the three and nine month 1995 periods, respectively. This
increase in CREC and its subsidiaries' income before income taxes was primarily
due to the recognition of CREC's share of the development income from the
Dusseldorf project in the three month 1995 period (see Note 6). Also,
contributing to the increase in CREC and its subsidiaries' income before income
taxes was an increase in intercompany development and leasing fees and decreased
intangible amortization. Intercompany fee income is eliminated in
consolidation, but the tax effect is not. The increase in the provision for
income taxes from operations was partially offset by $252,000 of state income
tax refunds received related to a successful judicial appeal by Cousins of an
assessment paid in 1992.
GAIN ON SALE OF INVESTMENT PROPERTIES. The $4,919,000 gain on sale of
investment properties in 1994 was from the June 1994 sale of the Company's 9
acre Peachtree Road property and the August 1994 sale of the 10.8 acre site in
North Point MarketCenter - Phase II. The $1,746,000 gain on sale of investment
properties in 1995 included the following: the August 1995 sale of the
approximately 1 acre parcel proximate to the CNN Center in downtown Atlanta, the
September sale of a 6.2 acre parcel in West Cobb County Georgia and the
September simultaneous purchase and sale of a 78 acre parcel adjacent to the
Company's Bradshaw Farm residential development in suburban Atlanta.
FINANCIAL CONDITION:
- -------------------
Major investment activity during the third quarter of 1995 included $18.9
million of property acquisition and development investments, primarily in
projects under construction. The Company also made $600,000 of contributions
during the third quarter of 1995 to Haywood Mall Associates to fund the
expansion of the mall (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 and net cash proceeds of $2.8 million from the sale of
certain investment properties as discussed above.
The Company has development projects in various stages. The Company
currently intends to finance these projects, as well as the completion of
projects currently under construction, using its existing lines of credit. The
Company intends to pay down its line of credit from time to time through long
term non-recourse financing secured by completed projects, as it did in July
1995 (see Note 4). Additionally, the Company and its unconsolidated joint
ventures have received commitments for financings and refinancings which are
expected to be closed in the fourth quarter of 1995 (see Note 4).
SUPPLEMENTAL FINANCIAL INFORMATION:
- ----------------------------------
Depreciation and amortization expense include the following components for
the three and nine months ended September 30, 1995 ($ in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1995 September 30, 1995
------------------------------------ ------------------------------------
Share of Share of
Consolidated Unconsolidated Consolidated Unconsolidated
Entities Joint Ventures Total Entities Joint Ventures Total
------------ -------------- ------- ------------ -------------- -------
<S> <C> <C> <C> <C> <C> <C>
General and administrative $ 95 $ 24 $ 119 $ 294 $ 99 $ 393
Deferred financing costs - 20 20 - 60 60
Goodwill and related business
acquisition costs 57 6 63 171 21 192
Real estate related:
Building (including tenant
first generation) 898 2,059 2,957 2,631 6,031 8,662
Tenant second generation 38 163 201 112 436 548
------ ------ ------ ------ ------ ------
$1,088 $2,272 $3,360 $3,208 $6,647 $9,855
====== ====== ====== ====== ====== ======
</TABLE>
Exclusive of new developments, the Company had the following capital
expenditures during the three and nine months ended September 30, 1995,
including its share of unconsolidated joint ventures ($ in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1995 September 30, 1995
------------------------- -------------------------
Office Retail Other Total Office Retail Other Total
------ ------ ----- ----- ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Second generation
related costs $ 354 $ - $ - $354 $888 $ - $ - $
888
Building improvements - - - - 17 23 - 40
Furniture, fixtures and
equipment - - 53 53 18 - 158 176
---- --- --- ---- ---- --- ---- ------
$354 $ - $53 $407 $923 $23 $158 $1,104
==== === === ==== ==== === ==== ======
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
There were no reports on Form 8-K filed by the Registrant during
the fiscal quarter ended September 30, 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)
November 8, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 657
<SECURITIES> 0
<RECEIVABLES> 52,757
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 208,369
<DEPRECIATION> 14,576
<TOTAL-ASSETS> 389,943
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 28,087
0
0
<OTHER-SE> 249,284
<TOTAL-LIABILITY-AND-EQUITY> 389,943
<SALES> 0
<TOTAL-REVENUES> 31,739
<CGS> 0
<TOTAL-COSTS> 22,105
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 377
<INCOME-PRETAX> 19,970
<INCOME-TAX> 803
<INCOME-CONTINUING> 20,913
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,913
<EPS-PRIMARY> .75
<EPS-DILUTED> .75
</TABLE>
