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, 1995 Commission file number 2-20111
COUSINS PROPERTIES INCORPORATED
A GEORGIA CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO. 58-086952
2500 WINDY RIDGE PARKWAY
ATLANTA, GEORGIA 30339
TELEPHONE: 770-955-2200
Name of exchange on which registered: New York Stock Exchange
Securities registered pursuant to Section 12(b) of the Act:
Common Stock ($1 Par Value)
Securities registered pursuant to Section 12(g) of the Act: None
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K 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.
As of March 20, 1996, 28,345,020 common shares were outstanding; and the
aggregate market value of the common shares of Cousins Properties Incorporated
held by nonaffiliates was $397,712,906.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents have been incorporated by reference into the
designated Part of this Form 10-K:
Registrant's Proxy Statement Part III, Items 10, 11, 12 and 13
dated March 29, 1996
Registrant's Annual Report to Part II, Items 5, 6, 7 and 8
Stockholders for the year
ended December 31, 1995
<PAGE>
PART I
Item 1. Business
- --------------------
Corporate Profile
Cousins Properties Incorporated (the "Registrant" or "Cousins") is a
Georgia corporation, which since 1987 has elected to be taxed as a real estate
investment trust ("REIT"). Cousins Real Estate Corporation ("CREC"), a taxable
entity consolidated with the Registrant, owns, develops, and manages a portion
of the Company's real estate portfolio. Cousins MarketCenters, Inc. ("CMC")
(formerly known as Cousins/New Market Development Company, Inc.) is a subsidiary
of CREC which develops retail shopping centers. The Registrant, together with
CREC, CMC and CREC's other consolidated entities, is hereafter referred to as
the "Company."
Cousins is an Atlanta-based, fully integrated equity real estate investment
trust. The Company has extensive experience in the real estate industry,
including the acquisition, financing, development, management and leasing of
properties. Cousins has been a public company since 1962, and its common stock
trades on the New York Stock Exchange. The Company owns a portfolio of
well-located, high-quality retail and office developments and holds several
tracts of strategically located undeveloped land. The Company's holdings are
concentrated in the southeastern United States, primarily in the Atlanta area.
The strategies employed to achieve the Company's investment goals include the
development of properties which are substantially precommitted to quality
tenants; maintaining high levels of occupancy within owned properties; the
selective sale of assets and the acquisition of quality income-producing
properties at attractive prices. The Company also seeks to be opportunistic and
take advantage of normal real estate business cycles.
Unless otherwise indicated, the notes referenced in the discussion below
are the "Notes to Consolidated Financial Statements" included in the financial
section of the Registrant's 1995 Annual Report to Stockholders.
Brief Description of Company Investments
Office. As of March 15, 1996, the Company owns, directly and indirectly,
equity interests of at least 50% in the following fourteen high-quality
commercial office buildings:
<TABLE>
<CAPTION>
Company's
Metropolitan Rentable Ownership
Property Description Area Square Feet Interest
-------------------- ------------ ----------- --------
<S> <C> <C> <C>
First Union Tower Greensboro, NC 317,000 100% (c)
3100 Windy Hill Road Atlanta 188,000 100% (b)
100 North Point Center East Atlanta 128,000 100% (a)
200 North Point Center East Atlanta 125,000 100% (a)
3301 Windy Ridge Parkway Atlanta 106,000 100%
NationsBank Plaza Atlanta 1,256,000 50%
3200 Windy Hill Road Atlanta 681,000 50%
2300 Windy Ridge Parkway Atlanta 634,000 50%
2500 Windy Ridge Parkway Atlanta 313,000 50%
Ten Peachtree Place Atlanta 259,000 50%
John Marshall-II Washington, D.C. 224,000 50%
4300 Wildwood Parkway Atlanta 150,000 50% (a)
Summit Green Greensboro, NC 135,000 50%
4100 Wildwood Parkway Atlanta 100,000 50% (a)
---------
4,616,000
=========
</TABLE>
(a) Under construction or in early stages of leaseup.
(b) See Item 2. Properties footnote (5) where ownership is discussed.
(c) See Item 2. Properties footnote (7) where ownership is discussed.
The weighted average leased percentage of these office buildings (excluding
200 North Point Center East on which construction commenced in late 1995) was
approximately 92% as of March 15, 1996 and the leases expire as follows:
<TABLE>
<CAPTION>
2005
&
1996 1997 1998 1999 2000 2001 2002 2003 2004 Thereafter Total
---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OFFICE
100% Owned Properties:
Square Feet Expiring (d) 0 3,306 202,672 2,705 161,755 80,365 8,125 73,896 0 84,536 617,360(b)
% of Leased Space 0% 1% 33% 0% 26% 13% 1% 12% 0% 14% 100%
Annual Base Rent (a) 0 43,342 2,529,721 37,762 2,381,034 1,445,262 156,406 665,064 0 1,306,665 8,565,256
Annual Base
Rent/Sq. Ft. (a) 0 13.11 12.48 13.96 14.72 17.98 19.25 9.00 0 15.46 13.87
50% Owned Properties:
SquareFeetExpiring(d) 122,735 128,133 342,204 54,722 203,460 704,311 237,402 66,177 65,019 1,592,269 3,516,432(c)
% of Leased Space 3% 4% 9% 2% 6% 20% 7% 2% 2% 45% 100%
Annual Base Rent (a)1,985,607 1,870,829 5,804,652 747,947 3,653,463 9,958,208 4,705,464 1,113,927 1,353,444 39,134,496 70,328,037
Annual Base
Rent/Sq. Ft. (a) 16.18 14.60 16.96 13.67 17.96 14.14 19.82 16.83 20.82 24.58 20.00
Total (including only Company's share of 50% Owned Properties):
Square Feet Expiring(d)61,368 67,372 373,774 30,066 263,485 432,520 126,826 106,985 32,510 880,670 2,375,576
% of Leased Space 3% 3% 16% 1% 11% 18% 5% 5% 1% 37% 100%
Annual Base Rent (a) 992,804 978,757 5,432,047 411,736 4,207,765 6,424,366 2,509,138 1,222,027 676,722 20,873,913 43,729,275
Annual Base
Rent/Sq. Ft. (a) 16.18 14.53 14.53 13.69 15.97 14.85 19.78 11.42 20.82 23.70 18.41
</TABLE>
(a) Annual base rent excludes the operating expense reimbursement portion of
the rent payable. If the lease does not provide for pass through of such
operating expense reimbursements, an estimate of operating expenses is
deducted from the rental rate shown. The base rental rate shown is the rate
in the year of expiration. Amounts disclosed are in dollars.
(b) Rentable square feet leased as of March 15, 1996 out of 739,000 total
rentable square feet.
(c) Rentable square feet leased as of March 15, 1996 out of 3,752,000 total
rentable square feet. (d) Where tenant has the option to cancel its lease
without penalty, the lease expiration date used in the table above reflects
the cancellation option date rather than the lease expiration date.
The weighted average remaining lease term of these thirteen office
buildings was approximately 8 years as of March 31, 1996. Most of the Company's
leases in these buildings provide for pass through of operating expenses, and
base rents which escalate over time.
Retail. As of March 15, 1996, the Company's retail portfolio includes the
following eleven properties:
Rentable
Square Feet Company's
Metropolitan (Company Ownership
Property Description Area Owned) Interest
-------------------- ------------ ----------- ----------
Colonial Plaza MarketCenter ....... Orlando, FL 533,000 100% (a)
Lawrenceville MarketCenter ........ Atlanta 499,000 100%
Greenbrier MarketCenter ........... Chesapeake, VA 474,000 100% (a)
North Point MarketCenter .......... Atlanta 370,000 100% (b)
Presidential MarketCenter ......... Atlanta 334,000 100% (c)
Perimeter Expo .................... Atlanta 170,000 100%
Los Altos MarketCenter ............ Long Beach, CA 152,000 100% (a)
Mansell Crossing Phase II ......... Atlanta 100,000 100% (a)(b)
Rivermont Station ................. Atlanta 92,000 100% (a)
Lovejoy Station ................... Atlanta 77,000 100%
Haywood Mall ...................... Greenville, SC 330,000 50%
---------
3,131,000
=========
(a) Under construction or in early stages of leaseup.
(b) See Item 2. Properties footnote (14) where ownership is discussed.
(c) Phase II (130,000 square feet) is under construction.
<PAGE>
The weighted average leased percentage of these eleven retail properties
(excluding the properties under construction or in early stages of leaseup and
excluding Haywood Mall) was approximately 99% as of March 15, 1996, and the
leases of these eleven properties (excluding only Haywood Mall) expire as
follows:
<TABLE>
<CAPTION>
2005
&
1996 1997 1998 1999 2000 2001 2002 2003 2004 Thereafter Total
---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RETAIL
Square Feet Expiring 0 2,195 13,810 54,904 68,988 74,776 0 0 85,267 2,028,808 2,328,748(b)
% of Leased Space 0% 0% 1% 2% 3% 3% 0% 0% 4% 87% 100%
Annual Base Rent (a) 0 41,486 217,051 982,861 1,032,491 711,701 0 0 941,311 22,906,420 26,833,321
Annual Base
Rent/Sq. Ft. (a) 0 18.90 15.72 17.90 14.97 9.52 0 0 11.04 11.29 11.52
</TABLE>
(a) Annual base rent excludes the operating expense reimbursement portion
of the rent payable and any percentage rents due. If the lease does
not provide for pass through of such operating expense reimbursements,
an estimate of operating expenses is deducted from the rental rate
shown. The base rental rate shown is the rate in the year of
expiration. Amounts disclosed are in dollars.
(b) Gross leasable area leased as of March 15, 1996 out of 2,801,000 total
gross leasable area.
The weighted average remaining lease term of these eleven retail properties
(excluding only Haywood Mall) was approximately 16 years as of March 15, 1996.
All of the major tenant leases in these retail properties have lease terms of 10
years or more and provide for pass through of operating expenses and base rents
which escalate over time.
Other. The Company's other real estate holdings include equity interests in
approximately 484 acres of strategically located land held for investment and
future development at North Point and Wildwood Office Park, and two mortgage
notes for $28 million which are secured by a 250,000 square foot office building
in Washington, D.C. The terms of these two notes have some of the
characteristics of an equity investment, and should provide a comparable return
on investment (see Note 3).
The Company's joint venture partners include IBM and affiliates of The
Coca-Cola Company ("Coca-Cola"), NationsBank Corporation ("NationsBank"),
Corporate Property Investors, Odyssey Partners, L.P., Temple-Inland Inc., Dutch
Institutional Holding Company ("DIHC"), American General Corporation, and Carr
Realty Corporation.
The success of the Company's operations is dependent upon such
unpredictable factors as the availability of satisfactory financing; general and
local economic conditions; the activity of others developing competitive
projects; the cyclical nature of the real estate industry; and zoning,
environmental impact, and other government regulations.
Refer to Item 2 hereof for a more detailed description of the Company's
real estate properties.
Significant Changes in 1995
Significant changes in the Company's business and properties during the
year ended December 31, 1995 were as follows:
In September 1995, North Point MarketCenter Phase II, a 173,000 square foot
(57,000 square feet of which are owned by the Company) retail power center
expansion in north central suburban Atlanta, became fully operational for
financial reporting purposes. In October 1995, Lawrenceville MarketCenter, a
499,000 square foot retail power center in northeast suburban Atlanta, became
partially operational for financial reporting purposes. In December 1995,
Lovejoy Station, a 77,000 square foot neighborhood retail center in south
central suburban Atlanta, became partially operational for financial reporting
purposes.
Construction which commenced during 1995 included: Colonial Plaza
MarketCenter, a 533,000 square foot retail power center in suburban north
central Orlando, Florida, in February 1995; Greenbrier MarketCenter, a 474,000
square foot retail power center in Chesapeake, Virginia, in May 1995; Mansell
Crossing Phase II, a 100,000 square foot retail power center expansion adjacent
to the Company's other North Point properties, in May 1995; Presidential
MarketCenter Phase II, a 130,000 square foot retail power center expansion in
northeast suburban Atlanta, in November 1995; and Rivermont Station, a 92,000
square foot neighborhood retail center in north central suburban Atlanta, in
December 1995. Also, development commenced on the Los Altos MarketCenter in
February 1996. Los Altos MarketCenter is a 280,000 square foot (152,000 square
feet of which the Company will own) retail power center located in Long Beach,
California.
In August 1995, Wildwood Associates, a 50% owned joint venture of the
Company, commenced construction on two new office buildings on approximately
12.6 acres of land it owns in Wildwood Office Park. The two buildings will be a
total of 250,000 rentable square feet of which 227,000 rentable square feet are
pre-leased to Georgia-Pacific Corporation. Georgia-Pacific Corporation began
occupying a portion of its space in February 1996.
In November 1995, construction commenced on 200 North Point Center East, a
125,000 rentable square foot office building at North Point, adjacent to 100
North Point Center East (a building of similar size which opened in December
1995), North Point Mall and the Company's retail properties in north central
suburban Atlanta.
The Company completed three new financings and two refinancings during
1995. In 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. In November
1995, the Company completed a $28 million financing secured by the 650
Massachusetts Avenue Notes Receivable. This $28 million note payable has a
maturity of 5 years with a rate of LIBOR + 1%, which rate was effectively fixed
at 6.53% as of January 10, 1996 through an interest rate swap agreement.
Wildwood Associates refinanced two mortgage notes in December 1995. One of
those mortgage notes, which had an $81 million balance at a 9.09% rate and
matured in August 1999, was refinanced with a $72 million 7.56% mortgage note
due in 10 years. The second mortgage note, which had a $31 million balance at a
9.125% rate and matured in June 1996, was refinanced with a $26 million 7.45%
mortgage note due in 10 years.
Executive Offices
The Registrant's executive offices are located at 2500 Windy Ridge Parkway,
Suite 1600, Atlanta, Georgia 30339. At December 31, 1995, the Company employed
130 people.
<PAGE>
Item 2. Properties
Table of Major Properties
The following tables set forth certain information relating to major office
and retail properties, stand alone retail lease sites, and land held for
investment and future development in which the Company has a 50% or greater
ownership interest. All information presented is as of December 31, 1995, except
percentage leased which is as of March 15, 1996. Dollars are stated in
thousands.
<TABLE>
<CAPTION>
Adjusted
Cost and
Adjusted
Percentage Cost Less
Description, Year Rentable Leased Average Major Depreciation
Location Development Joint Company's Square Feet as of 1995 Major Tenants (lease Tenants' and
and Completed Venture Ownership and Acres March 15, Economic expiration/options Rentable Amortization
Zip Code or Acquired Partner Interest as Noted 1996 Occupancy expiration) Sq. Feet (1)
-------- ----------- ------- --------- ----------- --------- --------- -------------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Office
- ------
Wildwood Office Park:
Suburban Atlanta, GA
2300 Windy
Ridge Parkway
30339-5671 1987 IBM 50% 634,000 95% 92% IBM (2002/2012) 240,430 $ 76,257
12 Acres Georgia-Pacific Corporation 63,006 $ 54,337
(2002/2007) (23)
Electrolux (2000/2005) 62,576
Computer Associates 62,445
(2005/2010)
Chevron USA (1998) 50,242
2500 Windy
Ridge Parkway
30339-5683 1985 IBM 50% 313,000 87% 88% Coca-Cola Enterprises Inc. 165,180 $ 27,414
8 Acres (1998/2008) $ 18,307
3200 Windy
Hill Road
30339-5609 1991 IBM 50% 681,000 95% 95% IBM (2001/2011) 440,139 $ 78,319
15 Acres Equifax (4) (1998/2003) 68,402 $ 63,326
W.H. Smith Inc. 41,858
(2002/2007)
3301 Windy Ridge
Parkway
30339-5685 1984 N/A 100% 106,000 70% 70% TSW International, Inc. 73,896 $ 10,368
10 Acres (2003/2008) (3) $ 7,179
3100 Windy Hill
Road
30339-5605 1983 N/A (5) 188,000 100% 100% IBM (1998/2003) 188,000 $ 17,416(5)
13 Acres $ 17,416(5)
4100/4300
Wildwood Parkway
30339-9999 (13) IBM 50% 250,000 91% (13) Georgia-Pacific 227,000 $ 10,964
13 Acres Corporation (2012/2017) (13)
</TABLE>
<TABLE>
<CAPTION>
Debt
Maturity
1995 FFO (2) and
------------------
Company's Debt Interest
100% Share Balance Rate
---- ----- ------- ----
<S> <C> <C> <C> <C>
Office
- ------
Wildwood Office Park:
Suburban Atlanta, GA
2300 Windy
Ridge Parkway
30339-5671 $ 9,648 $ 4,824 $72,000 12/1/05
7.56%
2500 Windy
Ridge Parkway
30339-5683 $ 4,563 $ 2,282 $26,000 12/15/05
7.45%
3200 Windy
Hill Road
30339-5609 $ 8,789 $ 4,395 $ 0 N/A
3301 Windy Ridge
Parkway
30339-5685 $ 467 $ 467 $ 0 N/A
3100 Windy Hill
Road
30339-5605 $ 1,931(5) $ 1,931(5) $ 0 N/A
4100/4300
Wildwood Parkway
30339-9999 (13) (13) $ 0 N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Adjusted
Cost and
Adjusted
Percentage Cost Less
Description, Year Rentable Leased Average Major Depreciation
Location Development Joint Company's Square Feet as of 1995 Major Tenants (lease Tenants' and
and Completed Venture Ownership and Acres March 15, Economic expiration/options Rentable Amortization
Zip Code or Acquired Partner Interest as Noted 1996 Occupancy expiration) Sq. Feet (1)
-------- ----------- ------- --------- ----------- --------- --------- -------------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Office (Continued)
- ------------------
NationsBank Plaza
Atlanta, GA
30308-2214 1992 NationsBank 50%(6) 1,256,000 92% 83% NationsBank(4) 572,742 $222,735
(4) 4 Acres (2012/2042) $196,621
Ernst & Young 188,175
(2007/2017)
Troutman Sanders 178,459
(2007/2017)
Paul Hastings (2012/2017) 68,980
Hunton & Williams 56,560
(2004/2009)
First Union Tower
Greensboro, NC
27401-2167 1990 N/A (7) 100%(7) 317,000 91% 85% Smith Helms Mullis & 70,360 $ 33,651(7)
1 Acre Moore (2000/2015) $ 25,304(7)
First Union Bank (4) 62,622
(2009/2019)
Halstead Industries 60,253
(2000/2005)
Ten Peachtree Place
Atlanta, GA
30309-3814 1991 Coca-Cola 50%(6) 259,000 100% 100% Coca-Cola (4) (2001/2006) 259,000 $ 23,474
(4) 5 Acres $ 20,897
Summit Green
Greensboro, NC
27408-7023 1986 IBM 50% 135,000 99% 100% IBM (1996/2006) 75,797 $ 10,540
9 Acres(9) Fitech Systems (1999/2004) 22,688 $ 7,420
Massachusetts Mutual 11,476
Life Ins. Co. (1997/2002)
John Marshall-II
Suburban
Washington, D.C.
22102-3802 (13) Carr Realty 50% 224,000 100% (13) Booz-Allen & Hamilton 224,000 $ 25,379
. Corporation (4) 3 Acres (2011/2016) (13)
North Point Center East
Suburban Atlanta, GA
30202-4885 1995(11) N/A 100% 128,000 55% (11) Schweitzer-Mauduit 30,728 $ 9,779
7 Acres International, Inc. (11)
(2001/2007)
Green Tree Financial 21,914
Debt
Maturity
1995 FFO (2) and
------------------
Company's Debt Interest
100% Share Balance Rate
---- ----- ------- ----
<S> <C> <C> <C> <C>
Office (Continued)
- ------------------
NationsBank Plaza
Atlanta, GA
30308-2214 $21,237 $10,653 $ 0 N/A
(6)
First Union Tower
Greensboro, NC
27401-2167 $ 4,172 $ 4,172 $ 0 N/A
(7)
Ten Peachtree Place
Atlanta, GA
30309-3814 $ 2,871 $ 1,173 $20,971 11/30/01(8)
(6) 8.00%
Summit Green
Greensboro, NC
27408-7023 $ 1,846 $ 923 $10,547 4/01/98
9.875%
John Marshall-II
Suburban
Washington, D.C.
22102-3802 (13) (13) $15,518 6/21/98(10)
. Renewable
Floating
100 North Point Center East
Suburban Atlanta, GA
30202-4885 (11) (11) $ 0 N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Adjusted
Cost and
Adjusted
Percentage Cost Less
Description, Year Rentable Leased Average Major Depreciation
Location Development Joint Company's Square Feet as of 1995 Major Tenants (lease Tenants and
and Completed Venture Ownership and Acres March 15, Economic expiration/options Rentable Amortization
Zip Code or Acquired Partner Interest as Noted 1996 Occupancy expiration) Sq. Feet (1)
-------- ----------- ------- --------- ----------- --------- --------- -------------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Office (Continued)
- ------------------
200 North Point Center East
Suburban Atlanta, GA
30202-4885 (13) N/A 100% 125,000 0% (13) N/A N/A $ 768
(13)
Retail Centers and Malls
Haywood Mall
Greenville, SC
29607-2749 1977/1995 Corporate 50% 1,256,000 95% 86% Sears (12) N/A $ 49,044
Property 86 acres overall of J.C. Penney (12) N/A $ 38,740
Investors (4) of which 83% of Venture Rich's (12) N/A
330,000 and Venture owned Belk (12) N/A
19 acres are owned Dillard's (12) N/A
owned by
venture (9)
Perimeter Expo
Atlanta, GA
30338-1519 1993 N/A 100% 290,000 95% 100% The Home Depot Expo (12) N/A $ 19,707
9 acres overall of Marshalls (2014/2029) 36,598 $ 18,837
of which 92% of Company Best Buy (2014/2029) 36,090
0,000 and Company owned Linens 'N Things(2014/2024)30,351
10 acres are owned Office Max (2013/2033) 23,500
owned by The Sport Shoe (2004/2014) 14,348
the Company
North Point MarketCenter Phases I & II
Suburban
Atlanta, GA
30202-4889 1994/1995 N/A 100% 486,000 100% 89% Target (12) N/A $ 25,121(14)
(14) (14)60 Acres (16) (15) Babies "R" Us (2012/2032) 50,275 $ 23,841(14)
of which Media Play (2010/2025) 48,884
370,000 and Marshalls (2010/2025) 40,000
49 acres are Rhodes (2011/2021) 40,000
owned by Linens 'N Things 35,000
the Company (2005/2025)
United Artists (2014/2034) 34,733
Circuit City (2015/2030) 33,420
PETsMART (2009/2029) 25,465
Gaps Old Navy Store 17,000
</TABLE>
<TABLE>
<CAPTION>
Debt
Maturity
1995 FFO (2) and
------------------
Company's Debt Interest
100% Share Balance Rate
---- ----- ------- ----
<S> <C> <C> <C> <C>
Office (Continued)
- ------------------
200 North Point Center East
Suburban Atlanta, GA
30202-4885 (13) (13) $ 0 N/A
Retail Centers and Malls
- ------------------------
Haywood Mall
Greenville, SC
29607-2749 $ 7,330 $ 3,665 $ 0 N/A
Perimeter Expo
Atlanta, GA
30338-1519 $ 3,048 $ 3,048 $21,442 8/15/05
8.04%
North Point MarketCenter Phases I & II
Suburban
Atlanta, GA
30202-4889 $ 3,564 $ 3,564 $29,853 7/15/05
(15) (14)(15) 8.50%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Adjusted
Cost and
Adjusted
Percentage Cost Less
Description, Year Rentable Leased Average Major Depreciation
Location Development Joint Company's Square Feet as of 1995 Major Tenants (lease Tenants' and
and Completed Venture Ownership and Acres March 15, Economic expiration/options Rentable Amortization
Zip Code or Acquired Partner Interest as Noted 1996 Occupancy expiration) Sq. Feet (1)
-------- ----------- ------- --------- ----------- --------- --------- -------------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retail Centers and Malls (Continued)
- ------------------------------------
Presidential MarketCenter Phase I
Suburban
Atlanta, GA
30278-2149 1994 N/A 100% 320,000 100% 98% Target (12) N/A $ 10,045
29 acres overall of Publix Super Market 56,146 $ 9,622
of which 100% ompany (2019/2044)
204,000 and of Company owned HomeGoods, Inc. (2004/2014) 35,000
19 acres owned T.J. Maxx (2004/2014) 32,000
are owned Marshalls (2010/2025) 30,000
by the
Company
Presidential MarketCenter Phase II
Suburban
Atlanta, GA
30278-2149 (13) N/A 100% 130,000(13) 54% (13) MJDesigns (4) 37,957 $ 3,822
15 Acres (2011/2026)(13) (13)
Office Depot, Inc. 31,615
(2011/2026)(13)
Lovejoy Station
Suburban
Atlanta, GA
30228-9999 1995 N/A 100% 77,000 96% 7% Publix Super Market 47,955 $ 6,132
12 Acres (17) (2016/2036) $ 6,120
Lawrenceville MarketCenter
Suburban
Atlanta, GA
30243-5420 1995 N/A 100% 499,000 100% 22% Target (2014/2040) 117,000 $ 16,647
56 Acres (18) Home Depot (2025/2040) 103,000 $ 16,566
AMC Theater (4)(2016/2036) 64,319
MJDesigns (4)(2011/2026) 36,966
Linens 'N Things(2010/2025) 35,000
Goody's (2008/2026) 32,400
Marshalls (2011/2026) 30,000
PETsMART (2011/2031) 25,416
Gap's Old Navy Store 14,000
(2002/2012)
Colonial Plaza MarketCenter
Orlando, FL
32803-5029 (13) N/A 100% 533,000 60% (13) Circuit City (2017/2037)(13) 43,432 $ 26,517
49 Acres Barnes & Noble 40,450 (13)
(2011/2021)(13)
Rhodes (2011/2026)(13) 40,000
BabySuperstore(2006/2021)(13)40,000
Linens 'N Things 35,000
(2011/2026)(13)
</TABLE>
<TABLE>
<CAPTION>
Debt
Maturity
1995 FFO (2) and
------------------
Company's Debt Interest
100% Share Balance Rate
---- ----- ------- ----
<S> <C> <C> <C> <C>
Retail Centers and Malls (Continued)
- ------------------------------------
Presidential MarketCenter Phase I
Suburban
Atlanta, GA
30278-2149 $ 1,313 $ 1,313 $ 0 N/A
Presidential MarketCenter Phase II
Suburban
Atlanta, GA
30278-2149 (13) (13) $ 0 N/A
Lovejoy Station
Suburban
Atlanta, GA
30228-9999 $ 26(17) $ 26(17) $ 0 N/A
Lawrenceville MarketCenter
Suburban
Atlanta, GA
30243-5420 $ 232(18) $ 232(18) $ 0 N/A
Colonial Plaza MarketCenter
Orlando, FL
32803-5029 (13) (13) $ 0 N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Adjusted
Cost and
Adjusted
Percentage Cost Less
Description, Year Rentable Leased Average Major Depreciation
Location Development Joint Company's Square Feet as of 1995 Major Tenants (lease Tenants' and
and Completed Venture Ownership and Acres March 15, Economic expiration/options Rentable Amortization
Zip Code or Acquired Partner Interest as Noted 1996 Occupancy expiration) Sq. Feet (1)
-------- ----------- ------- --------- ----------- --------- --------- -------------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retail Centers and Malls (Continued)
- ------------------------------------
Colonial Plaza MarketCenter (Continued) Luria's (2011/2026)(13) 32,900
Marshalls (2011/2026)(13) 30,400
Ross Stores (2006/2026)(13) 28,000
Walgreen Co. (2002/2012)(13) 18,614
Gap's Old Navy Store 17,920
(2002/2012)(13)
Mansell Crossing Phase II
Suburban
Atlanta, GA
30202-4822 (13) N/A 100% 100,000 61% (13) Bed Bath & Beyond 40,000 $ 5,367
(14) (14) 13 Acres (2010/2025)(13) (13)(14)
Rooms To Go (2015/2035)(13) 21,000
Greenbrier MarketCenter
Chesapeake, VA
23327-9999 (13) N/A 100% 474,000 76% (13) Target (2016/2046)(13) 117,220 $ 15,674
38 Acres Harris Teeter, Inc. 50,000 (13)
(2015/2035)(13)
Bed Bath & Beyond 40,484
(2011/2026)(13)
Baby Superstore, Inc. 40,000
(2005/2020)(13)
Kinetex, Inc.(2011/2026)(13) 33,111
Barnes & Noble Superstores, 30,545
Inc. (2010/2020)(13)
PETsMART (2010/2030)(13) 26,040
Office Max (2011/2026)(13) 23,484
Rivermont Station
Suburban
Atlanta, Ga.
30076-9999 (13) N/A 100% 92,000 73% (13) Harris Teeter, Inc. 58,261 $ 8,468
19 Acres (2015/2035)(13) (13)
CVS Drug Store (4) 8,775
(2006/2021)(13)
Los Altos MarketCenter
Long Beach, CA
90815-3126 (19) N/A 100% 280,000 (19) (19) Sears (12) N/A (19)
19 Acres Circuit City(4)(2016/2036)(19) 37,591
of which Borders, Inc.(2017/2037)(19 30,000
152,000 and Bristol Farms(4)(2011/2031)(19) 28,200
17 Acres CompUSA, Inc. (2011/2021)(19) 25,620
are owned by Savon Drugs (4)(2016/2026)(19) 16,914
the Company
</TABLE>
<TABLE>
<CAPTION>
Debt
Maturity
1995 FFO (2) and
------------------
Company's Debt Interest
100% Share Balance Rate
---- ----- ------- ----
<S> <C> <C> <C> <C>
Retail Centers and Malls (Continued)
- ------------------------------------
Colonial Plaza MarketCenter (Continued)
Mansell Crossing Phase II
Suburban
Atlanta, GA
30202-4822 (13) (13) $ 0 N/A
(14)
Greenbrier MarketCenter
Chesapeake, VA
23327-9999 (13) (13) $ 0 N/A
Rivermont Station
Suburban
Atlanta, Ga.
30076-9999 (13) (13) $ 0 N/A
Los Altos MarketCenter
Long Beach, CA
90815-3126 (19) (19) $ 0 N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Adjusted
Cost and
Adjusted
Percentage Cost Less
Description, Year Rentable Leased Average Major Depreciation
Location Development Joint Company's Square Feet as of 1995 Major Tenants (lease Tenants' and
and Completed Venture Ownership and Acres March 15, Economic expiration/options Rentable Amortization
Zip Code or Acquired Partner Interest as Noted 1996 Occupancy expiration) Sq. Feet (1)
-------- ----------- ------- --------- ----------- --------- --------- -------------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects
- -------------------------------------------------------------------------
Wildwood Office Park
Suburban
Atlanta, GA
30339-5671 1985-1993 IBM 50% 16 Acres 91% 89% N/A N/A $ 8,739
$ 7,834
GA Highway 400 Property
Suburban
Atlanta, GA
30202-4885 1993 N/A 100% 30 Acres 81% 56% N/A N/A $ 4,721
$ 4,694
</TABLE>
<TABLE>
<CAPTION>
Debt
Maturity
1995 FFO (2) and
------------------
Company's Debt Interest
100% Share Balance Rate
---- ----- ------- ----
<S> <C> <C> <C> <C>
Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects
- -------------------------------------------------------------------------
Wildwood Office Park
Suburban
Atlanta, GA
30339-5671 $ 994(20) $ 497(20) $ 0 N/A
$ 7,834
GA Highway 400 Property
Suburban
Atlanta, GA
30202-4885 $ 762(21) $ 762(21) $ 0 N/A
</TABLE>
(1) Cost as shown in the accompanying table includes deferred leasing and
financing costs and other related assets. For each of the following
projects: 2300 and 2500 Windy Ridge Parkway, 3200 Windy Hill Road,
4100/4300 Wildwood Parkway and Wildwood Stand Alone Retail Lease Sites, the
cost shown is what the cost would be if the venture's land cost were
adjusted downward to the Company's lower basis in the land it contributed
to the venture.
(2) FFO represents cash flows from operating activities before interest
expense excluding changes in other operating assets and liabilities. FFO
should not be considered an alternative to net income or other measurements
under generally accepted accounting principles as an indicator of operating
performance; or to cash flows from operating, investing, or financing
activities as a measure of liquidity.
(3) TSW International, Inc. and Georgia-Pacific Corporation have the right
to terminate their leases in 1998 and 2007, respectively, upon payment of
significant cancellation penalties.
(4) Actual tenant or venture partner is affiliate of entity shown.
(5) For 3100 Windy Hill Road, the cost shown is the Company's carrying
value of the land lease and first mortgage note from which it derives
substantially all of the economic benefits of the property. The FFO in the
accompanying table includes the interest and ground lease income recognized
by the Company and excludes $375,000 of principal amortization of the first
mortgage note.
(6) See "Major Properties" - "NationsBank Plaza" and "Ten Peachtree Place"
where the partnership's preferences are discussed.
(7) The Company has the option to purchase its 15% minority partner's interest
in the First Union Tower for $999,000 by July 31, 1996. Pursuant to this
partnership amendment, the Company is entitled to 100% of the earnings and
cash flow from the partnership through the option period. As a result, the
accompanying table discloses all information as if the Company owned 100%
of First Union Tower and includes the $999,000 buyout amount in the
Adjusted Cost amounts disclosed in the accompanying table.
(8) Maturity of the Ten Peachtree Place mortgage debt is extendible to December
31, 2008. Rate becomes floating after November 30, 2001.
(9) Summit Green and a portion of the Haywood Mall parking lot (3 acres) are
subject to long-term ground leases.
(10) The rate on the construction loan on the John Marshall-II building floats
at .90% over LIBOR rate. LIBOR rate averaged 5.74% for the month of
December 1995. The venture has a commitment for a $24,675,000, 17 year
fully amortizing non-recourse mortgage note at a 7% interest rate which
should fund by April 1996.
(11) 100 North Point Center East was completed in December 1995, but was not
considered operational for financial reporting purposes until the first
quarter of 1996.
(12) This anchor tenant owns its own space.
(13) Project was under construction as of December 31, 1995. Lease expiration
dates are based upon estimated commencement dates, and square footage is
estimated.
(14) At December 31, 1995, the Company had interests in two partnerships with
Coca-Cola which were exchanged effective January 1, 1996: Spring/Haynes
Associates (50% interest) and North Point Market Associates, L.P. (82.3%
interest). The Company and Coca-Cola entered into an exchange transaction
which effectively resulted in Coca-Cola receiving 100% of the Spring/Haynes
Associate' property and the Company receiving $1,092,000 in cash and 100%
of North Point Market Associates, L.P.'s properties (North Point
MarketCenter and Mansell Crossing Phase II). The above table discloses all
information as if the exchange transaction had occurred on December 31,
1995.
(15) North Point MarketCenter Phase II became operational for financial
reporting purposes in mid 1995. Thus, FFO and economic occupancy reported
for North Point MarketCenter Phase II does not include a full year of
operations.
(16) North Point MarketCenter includes approximately 6 outparcels available for
ground lease to freestanding users, of which four are currently leased. The
remaining 2 sites are expected to be developed for freestanding retailers
in 1996.
(17) Lovejoy Station became partially operational for financial reporting
purposes in December 1995. Thus, FFO and economic occupancy reported for
Lovejoy Station do not include a full year of operations. FFO will be
approximately $700,000 on a stabilized basis.
(18) Lawrenceville MarketCenter became partially operational for financial
reporting purposes in late 1995. Thus, FFO and economic occupancy reported
for Lawrenceville MarketCenter do not include a full year of operations.
FFO will be approximately $3.2 million on a stabilized basis.
(19) Land was acquired and construction commenced on Los Altos MarketCenter
subsequent to December 31, 1995. Lease expiration dates are based upon
estimated commencement dates, and square footage is estimated.
(20) Approximately 14 acres of the Wildwood Office Park ground lease sites were
generating FFO for the twelve months ended December 31, 1995. One of the
remaining 2 acres is leased to a tenant whose rental commencement begins in
August 1996.
(21) During 1995, rentals were received from 24 acres of the GA Highway 400
Property, with rentals from 11 of the acres commencing during 1995. The
remaining acres are currently being marketed to prospective tenants.
(22) Tenant has the option to purchase the building on its lease expiration date
for a price of $33,750,000.
(23) Tenant has the right to terminate its lease in 1997.
<PAGE>
Land Held for Investment and Future Development (excluding Retail Outparcels)
<TABLE>
<CAPTION>
Adjusted
Cost
Less
Developable Company's Depreciation
Land Area Joint Venture Ownership and Debt
Description, Location and Zoned Use Year Acquired (Acres)(1) Partner Interest Amortization Balances
- ----------------------------------- ------------------------ ------- -------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Wildwood Office Park
Suburban Atlanta, Georgia
Office and Commercial 1971-1987 148 N/A 100% $ 7,005 $ 0
Office and Commercial 1971-1982 42 IBM 50% $ 12,676(2) $ 0
Georgia Highway 400 Land
(Georgia Highway 400 & Haynes Bridge Road) (3)
Suburban Atlanta, Georgia
Office and Commercial - East 1970-1985 63 N/A 100% $ 1,856 $ 0
Office and Commercial - West 1970-1985 230 N/A 100% $ 4,422 $ 0
Midtown Atlanta
Office and Commercial 1984 2 N/A 100% $ 1,975 $ 0
Temco Associates
(Paulding County)
Suburban Atlanta, Georgia 1991 -(5) Temple-Inland 50% --(5) $ 0
Inc. (4)
Lawrenceville
Gwinnett County
Suburban Atlanta, Georgia
Single-Family Residential
and Commercial 1994 84 N/A 100% $ 1,484 $ 0
</TABLE>
(1) Based upon management's estimates.
(2) For the portion of the Wildwood Office Park land owned by a joint venture,
the cost shown is what the cost would be if the venture's land cost were
adjusted downward to the Company's lower basis in the land it contributed
to the venture. The adjusted cost excludes building predevelopment costs of
$1,252,000.
(3) The Georgia Highway 400 property is located both east and west of Georgia
Highway 400. Currently, only the land which is located east of Georgia
Highway 400 is being developed, but planning has begun for additional
development on the west side property. This land surrounds North Point
Mall, a 1.1 million square foot regional mall (currently being expanded to
1.3 million square feet) on a 100 acre site which the Company sold in 1988
to a joint venture of Homart Development Co. and JMB/Federated Realty
Associates, Ltd.
(4) Joint venture partner is an affiliate of the entity shown.
(5) Temco Associates has an option through March 2006, with no carrying costs,
to acquire approximately 35,000 acres in Paulding County, Georgia
(northwest of Atlanta, Georgia), of which approximately 13,000 acres would
be a fee simple interest and approximately 22,000 acres would be a timber
rights interest only. The option may be exercised in whole or in part over
the option period. Temco Associates has engaged in certain sales of land as
to which it simultaneously exercised its purchase option. During 1993 and
1994, approximately 1,100 and 72 acres, respectively of the option related
to the fee simple interest was exercised and simultaneously sold for gross
profits of $305,000 and $243,000, respectively. None of the option was
exercised in 1995.
<PAGE>
Major Properties
- ----------------
General
- -------
This section describes the major operating properties in which the Company
has an interest either directly or indirectly through joint venture
arrangements. A "negative investment" in a joint venture results from
distributions of capital to the Company, if any, exceeding the sum of (i) the
Company's contributions of capital and (ii) reported earnings (losses) of the
joint venture allocated to the Company. "Investment" in a joint venture means
the book value of the Company's investment in the joint venture.
Wildwood Office Park
- --------------------
Wildwood Office Park is a 289 acre Class A commercial development in
suburban Atlanta master planned by I.M. Pei, including 7 office buildings (of
which 2 are under construction) containing 2,172,000 rentable square feet. The
property is zoned for office, institutional and commercial use, with over 7
million additional gross square feet of office and commercial space planned for
the park. Approximately 107 acres in the park are owned by, or committed to be
contributed to, Wildwood Associates (see below), including approximately 42
acres of land held for future development. The Company owns 100% of the 148 acre
balance of the land available for future development.
Located in Atlanta's northwest commercial district, just north of the
Interstate 285/Interstate 75 intersection, Wildwood features convenient access
to all of Atlanta's major office, commercial and residential districts. The
Wildwood complex overlooks the Chattahoochee River and borders 1,200 acres of
national forest, thus providing an urban office facility in a forest setting.
Wildwood Associates. Wildwood Associates is a joint venture formed in 1985
between the Company and IBM. The Company and IBM each have a 50% interest in
Wildwood Associates. At December 31, 1995, the Company's investment in Wildwood
Associates and a related partnership (see "Summit Green") was approximately $2.2
million, which included the cost of the land the Company is committed to
contribute to Wildwood Associates.
Wildwood Associates owns the 3200 Windy Hill Road Building (681,000
rentable square feet), the 2300 Windy Ridge Parkway Building (634,000 rentable
square feet), the 2500 Windy Ridge Parkway Building (313,000 rentable square
feet) and the 4100/4300 Wildwood Parkway Buildings (250,000 rentable square
feet, which is under construction). At March 15, 1996, these buildings were 95%,
95%, 87%, and 91% leased, respectively. Wildwood Associates also owns 15 acres
leased to two banking facilities and five restaurants.
Wildwood Associates refinanced two mortgage notes in December 1995. The
2300 Windy Ridge Parkway Building which had an $81 million balance at a 9.09%
rate and matured in August 1999, was refinanced with a $72 million 7.56%
mortgage note due in 10 years. The 2500 Windy Ridge Parkway Building which had a
$31 million balance at a 9.125% rate and matured in June 1996, was refinanced
with a $26 million 7.45% mortgage note due in 10 years.
The 3200 Windy Hill Road Building and the 4100/4300 Wildwood Parkway
Buildings have no mortgage debt and are unencumbered assets. Wildwood Associates
has a $50 million bank line of credit (the Company severally guarantees
one-half) under which $26.3 million was drawn at December 31, 1995.
Other Buildings in Wildwood Office Park. Wildwood Office Park also contains
the 3301 Windy Ridge Parkway Building, a 106,000 rentable square foot office
building located on approximately 10 acres which is wholly owned by the Company.
Commencing January 1994, a single tenant, TSW International, Inc., leased the
building for a term of ten years. The lease was initially for 60% of the
building with options permitting the tenant to expand its occupancy to the
remainder of the building over the next several years; the first such option for
an additional 10% of the space was exercised in the fourth quarter of 1994. In
addition, the 3100 Windy Hill Road Building, a 188,000 rentable square foot
corporate training facility occupies a 13-acre parcel of land which is wholly
owned by the Company. The training facility improvements were sold in 1983 to a
limited partnership of private investors, at which time the Company received a
leasehold mortgage note. The training facility land was simultaneously leased to
the partnership for thirty years, along with certain equipment for varying
periods. The training facility was 100% leased by the partnership to IBM through
November 1993. In January 1993, the IBM lease was extended through November 30,
1998. Concurrently with the IBM extension, the mortgage note and related leases
were also modified (see Note 3).
North Point
- -----------
North Point is a mixed-use commercial development located in north central
suburban Atlanta, Georgia off of Georgia Highway 400, a six lane state highway
that runs from downtown Atlanta to the northern Atlanta suburbs. The Company
owns approximately 169 and 230 acres located on the east and west sides of
Georgia Highway 400, respectively. Currently, only the land which is located
east of Georgia Highway 400 is being developed, but planning has begun for
additional development on the west side property. The Company previously sold
100 acres of its holdings located on the east side of Georgia Highway 400 in
1988 to a joint venture of Homart Development Co. and JMB/Federated Realty
Associates, Ltd. This joint venture constructed North Point Mall, a 1.1 million
square foot regional mall which opened in October 1993 and has been expanded to
1.3 million square feet with the addition of a sixth anchor store (Dillard's).
The following describes the various components of North Point.
North Point MarketCenter and Mansell Crossing Phase II. Through December
31, 1995, these two retail properties were owned by North Point Market
Associates, L.P. ("NPMA") a limited partnership between Cousins (82.3%) and an
affiliate of Coca-Cola (17.7%). At December 31, 1995, Cousins also had a 50%
interest with an affiliate of Coca-Cola in another partnership, Spring/Haynes
Associates, which owned approximately 11 acres of land in midtown Atlanta.
Effective January 1, 1996, Cousins and Coca-Cola entered into a transaction to
exchange their interests in these two partnerships, which effectively resulted
in Coca-Cola receiving 100% of the Spring/Haynes Associates' property and
Cousins receiving $1,092,000 in cash and 100% of North Point Market Associates,
L.P.'s properties (North Point MarketCenter and Mansell Crossing Phase II).
North Point MarketCenter, which is 100% leased as of March 15, 1996, is a
486,000 square foot retail power center (of which 370,000 square feet are owned
by Cousins) located adjacent to North Point Mall. North Point MarketCenter-Phase
I (313,000 square feet) became operational for financial reporting purposes in
May 1994, with Phase II (173,000 square feet, of which 57,000 are owned by
Cousins) becoming fully operational for financial reporting purposes in
September 1995. Construction commenced in May 1995 on Mansell Crossing Phase II,
an approximately 100,000 square foot expansion of an existing retail power
center previously developed by the Company for a third party. North Point
MarketCenter also includes six outparcels available for ground lease to
freestanding users, of which four are currently leased.
North Point Center East. In November 1995, construction commenced on 200
North Point Center East, an approximately 125,000 rentable square foot Class A
office building located adjacent to 100 North Point Center East. 100 North Point
Center East, an approximately 128,000 rentable square foot Class A office
building opened in December 1995 and should become operational for financial
reporting purposes in the first quarter of 1996. These two office buildings are
located on 14 acres adjacent to North Point Mall.
Other North Point Property. Approximately 30 acres of the North Point land
are being ground leased in 1 to 5 acre sites to freestanding users.
Approximately 24 acres were leased as of March 15, 1996.
The remaining approximately 293 developable acres at North Point are 100%
owned by the Company. Approximately 63 acres of this land are located on the
east side of Georgia Highway 400 and are zoned for mixed-use development
including retail and office space. Approximately 230 acres of the land are
located on the west side of Georgia Highway 400 and are zoned for office,
institutional and light industrial use.
Other Office Properties
- -----------------------
NationsBank Plaza. NationsBank Plaza is a Class A, 55-story, 1.3 million
rentable square foot office tower designed by Kevin Roche and is located on
approximately 4 acres of land between the midtown and downtown districts of
Atlanta, Georgia. The building, which was completed in 1992, was approximately
92% leased at March 15, 1996. An affiliate of NationsBank leases 46% of the
rentable square feet. NationsBank Plaza was developed by CSC Associates, L.P.
("CSC"), a joint venture formed by the Company and a wholly owned subsidiary of
NationsBank Corporation, each as 50% partners.
In October 1993, the partnership fully repaid all of its debt with equity
contributions of $86.7 million made by each partner. At December 31, 1995, the
Company's investment in CSC was approximately $104,776,000.
CSC's net income or loss and cash distributions are allocated to the
partners based on their percentage interests (50% each), subject to a preference
to Cousins, which preference resulted in Cousins recognizing $874,000, $451,000,
and $36,000 in income over what it would have otherwise recognized in the years
ended December 31, 1993, 1994, and 1995, respectively. No additional preference
is due to Cousins.
First Union Tower. First Union Tower is a Class A office building
containing approximately 317,000 rentable square feet. The property is located
on approximately one acre of land in downtown Greensboro, North Carolina. First
Union Tower opened in the first quarter of 1990 and at March 15, 1996 was
approximately 91% leased.
First Union Tower is owned by North Greene Associates Limited Partnership
("NGA"), which was formed in 1987 as a joint venture between Cousins and Weaver
Downtown Limited Partnership. Cousins has an 85% ownership interest in NGA, and
accounts for it as a consolidated entity. Pursuant to an amendment to the
partnership agreement executed as of August 1, 1995, Cousins has the option to
purchase its partner's interest for $999,000 by July 1996 and is entitled to
100% of the earnings and cash flow from the partnership through the option
period. Cousins recognized 100% of the earnings from the partnership for the
year ended December 31, 1995.
One Ninety One Peachtree Tower. One Ninety One Peachtree Tower is a
50-story, Class A office tower located in downtown Atlanta, Georgia that was
completed in December 1990. One Ninety One Peachtree Tower, which contains 1.2
million rentable square feet, was designed by John Burgee Architects, with
Phillip Johnson as design consultant.
One Ninety One Peachtree Tower was developed on approximately 2 acres of
land, of which approximately 1.5 acres is owned and approximately one-half acre
under the parking facility is leased for a 99-year term expiring in 2088 with a
99-year renewal option. One Ninety One Peachtree Tower was approximately 92%
leased at March 15, 1996.
C-H Associates, Ltd. ("C-H Associates"), a partnership formed in 1988
between CREC (49%), Hines Peachtree Associates Limited Partnership (49%) and
Peachtree Palace Hotel, Ltd. (2%), owns a 20% interest in the partnership that
owns One Ninety One Peachtree Tower. C-H Associates' 20% ownership of One Ninety
One Peachtree Tower results in an effective 9.8% ownership interest by CREC in
the One Ninety One Peachtree Tower project. The balance of the One Ninety One
Peachtree Tower project is owned by DIHC Peachtree Associates, an affiliate of
DIHC.
Through C-H Associates, CREC received 50% of the development fees from the
One Ninety One Peachtree Tower project. In addition, CREC owns a 50% interest in
two general partnerships which receive fees from leasing and managing the One
Ninety One Peachtree Tower project.
The One Ninety One Peachtree Tower project was funded substantially by debt
until March 1993, at which time DIHC Peachtree Associates contributed equity in
the amount of $145,000,000. Subsequent to the equity contribution, C-H
Associates is entitled to a priority distribution of $250,000 per year (of which
the Company is entitled to receive $112,500) for seven years beginning in 1993.
The equity contributed by DIHC Peachtree Associates is entitled to a preferred
return at a rate increasing over the first 14 years from 5.5% to 11.5% (payable
after the Company's priority return); at December 31, 1995, the cumulative
undistributed preferred return was $9,770,495. Thereafter, the partners will
share in any distributions in accordance with their percentage interests. At
December 31, 1995, the Company had a negative investment of $90,000 in the One
Ninety One Peachtree Tower project.
Ten Peachtree Place. Ten Peachtree Place is a 20-story, 259,000 rentable
square foot Class A office building located in midtown Atlanta, Georgia.
Completed in 1991, this structure was designed by Michael Graves and is
currently 100% leased to Coca-Cola. Approximately four acres of adjacent land,
currently used for surface parking, are available for future development.
Ten Peachtree Place is owned by Ten Peachtree Place Associates, a general
partnership between the Company (50%) and a wholly owned subsidiary of Coca-Cola
(50%). The partnership acquired the property in 1991 for a nominal cash
investment, subject to a ten-year purchase money note. This 8% purchase money
note had an outstanding balance of $21.0 million at December 31, 1995. If the
purchase money note is paid in accordance with its terms, it will amortize to
approximately $15.3 million ($59 per rentable square foot) over the ten-year
term of the Coca-Cola lease, at which time Coca-Cola is entitled to receive the
preferred return described below and the property may be sold, released, or
returned to the lender under the purchase money note for $1.00 without penalty
or any further liability to the Company for the indebtedness. At December 31,
1995, the Company had a negative investment in Ten Peachtree Place Associates of
$39,000.
The Company anticipates that Ten Peachtree Place Associates will generate
approximately $400,000 per year of cash flows from operating activities net of
note principal amortization during the ten-year lease. The partnership agreement
generally provides that each of the partners is entitled to receive 50% of cash
flows from operating activities net of note principal amortization (excluding
any sale proceeds) for ten years, after which time the Company is entitled to
15% of cash flows (including any sale proceeds) and its partner is entitled to
receive 85% of cash flows (including any sale proceeds), until the two partners
have received a combined distribution of $15.3 million, after which time each
partner is entitled to receive 50% of cash flows (including any sale proceeds).
Summit Green. Summit Green, a 21-acre office park located in Greensboro,
North Carolina, is owned by Wildwood Associates (the partnership with IBM) and a
related partnership. The park contains a 135,000 rentable square foot mid-rise
office building which was 99% leased at March 15, 1996. The Summit Green land is
leased from an unrelated third party for a 99-year term expiring in 2084. Space
exists for two additional office buildings.
CC-JM II Associates. This joint venture was formed in 1994 between the
Company and an affiliate of Carr Realty Corporation, each as 50% general
partners, to develop and own a 224,000 square foot office building in suburban
Washington, D.C. The building is 100% leased for 15 years to Booz-Allen &
Hamilton, an international consulting firm, as a part of its corporate
headquarters campus. Rent commenced on January 21, 1996. The building is
expected to be completed in 1996 at a total cost of approximately $32 million
with contributions to the venture of $4 million by each partner. The venture has
a commitment for a $24,675,000, 17 year fully amortizing non-recourse mortgage
note at a 7% interest rate which should fund by April 1996.
Other Retail Properties
- -----------------------
Haywood Mall. Haywood Mall is an enclosed regional shopping center located
5 miles southeast of downtown Greenville, South Carolina, which was developed
and opened in 1980. Haywood Mall Associates, a venture formed in 1979 by the
Company and Bellwether Properties of South Carolina, L.P., an affiliate of
Corporate Properties Investors, owns the mall. Expansion of the mall from
956,000 gross leasable square feet ("GLA") (of which the venture's ownership is
approximately 272,000 GLA) to 1,256,000 GLA (of which the venture's ownership is
approximately 330,000) was substantially completed in 1995. The balance of the
mall is owned by the mall's five major department stores. The portion of Haywood
Mall owned by Haywood Mall Associates was developed on approximately 19 acres of
land, of which approximately 16 acres is owned and approximately 3 acres (of
parking area) is leased under a ground lease expiring in 2067. The portion of
Haywood Mall owned by the venture was approximately 83% leased as of March 15,
1996.
The Company has a 50% interest in Haywood Mall Associates. The Company
originally had only a nominal cash investment, but funded an aggregate of $2.8
million in 1988 through 1990 as its 50% share of capital improvements made to
the mall, including a new food court area. Additionally, the Company contributed
$16.1 million and $5.8 million during 1994 and 1995 to fund its share of the
expansion and the prepayment of an existing 9.37% first mortgage in May 1994. At
December 31, 1995, the Company's investment was $21,961,000.
Other Fully Operational Retail Properties. In addition to North Point
MarketCenter which is discussed above, the Company owns two other retail power
centers which were fully operational for financial reporting purposes as of
December 31, 1995. Perimeter Expo is a 295,000 square foot retail power center
(of which the Company owns 170,000 square feet) which is located in Atlanta,
Georgia and was 92% leased (Company owned) as of March 15, 1996. Presidential
MarketCenter Phase I is a 320,000 square foot retail power center (of which the
Company owns 204,000 square feet) which is located in suburban Atlanta, Georgia
and was 100% leased (Company owned) as of March 15, 1996.
Partially Operational Retail Properties. The Company owns two retail
properties which were partially operational for financial reporting purposes as
of December 31, 1995. Lawrenceville MarketCenter is a 499,000 square foot retail
power center which is located in suburban Atlanta and was 100% leased as of
March 15, 1996. Lovejoy Station is a 77,000 square foot neighborhood retail
center which is located in suburban Atlanta and was 96% leased as of March 15,
1996.
Retail Projects Under Construction. In addition to Mansell Crossing Phase
II which is discussed above, the Company owns three retail power centers and one
neighborhood retail center which were under construction as of December 31,
1995. Presidential MarketCenter Phase II is a 130,000 square foot expansion of
an existing retail power center which is located in suburban Atlanta and is
expected to be completed during 1996 and 1997 at a total cost of approximately
$10 million. Colonial Plaza MarketCenter is a 533,000 square foot retail power
center which is located in Orlando, Florida and is expected to be completed in
mid-1996 at a total cost of approximately $45 million. Greenbrier MarketCenter
is a 474,000 square foot retail power center which is located in Chesapeake,
Virginia and is expected to be completed in the fall of 1996 at a total cost of
approximately $34 million. Rivermont Station is a 92,000 square foot
neighborhood retail center which is located in suburban Atlanta and is expected
to be completed in late 1996 at a total cost of approximately $10 million.
Subsequent to year-end, the Company purchased the Los Altos Shopping
Center, a retail center located in Long Beach, California. The Company commenced
the demolition of the retail center and began construction of Los Altos
MarketCenter, a 280,000 square foot (of which the Company will own 152,000
square feet) retail power center which is expected to be completed in late 1996
at a total cost of approximately $23 million.
<PAGE>
Residential Lot Developments
- ----------------------------
As of December 31, 1995, CREC owned the following parcels of land which are
being developed into residential communities ($ in thousands):
<TABLE>
<CAPTION>
Estimated
Total Lots Purchase
Initial on Land Money
Year Currently Lots Remaining Carrying Debt
Description Acquired Owned (1) Sold to Date Lots Value Balances
----------- -------- --------- ------------ ---- ----- --------
<S> <C> <C> <C> <C> <C> <C>
Brown's Farm 1993 160 75 85 $ 2,214 $ 0
West Cobb County
Suburban Atlanta, GA
Apalachee River Club 1994 185 40 145 3,608 0
Gwinnett County
Suburban Atlanta, GA
Echo Mill 1994 219 78 141 2,261 617
West Cobb County
Suburban Atlanta, GA
Barrett Downs 1994 144 8 136 2,849 0
Forsyth County
Suburban Atlanta, GA
Bradshaw Farms 1994 118 95 23 520 0
Cherokee County
Suburban Atlanta, GA
--- --- --- ------- -----
Total 826 296 530 $11,452 $ 617
=== === === ======= =====
</TABLE>
(1) Includes lots sold to date. Additional lots may be developed on adjacent
land on which CREC holds purchase options.
Land Held for Investment and Future Development
- -----------------------------------------------
In addition to the various land parcels located adjacent to operating
properties or projects under construction discussed above, the Company owns the
following significant land holdings either directly or indirectly through joint
venture arrangements. The Company intends to convert its land holdings to
income-producing usage or to sell portions of land holdings as opportunities
present themselves over time.
Spring/Haynes Associates. This general partnership was formed in 1985
between the Company and a wholly owned subsidiary of Coca-Cola, each as 50%
general partners, to jointly own and develop real estate. See North Point above
where it is discussed that effective January 1, 1996, Cousins and Coca-Cola
exchanged their interests in Spring/Haynes Associates and North Point Market
Associates, L.P.
Temco Associates. Temco Associates was formed in March 1991 as a
partnership between CREC (50%) and a subsidiary of Temple-Inland Inc. (50%).
Temco Associates has an option through March 2006, with no carrying costs, to
acquire approximately 35,000 acres in Paulding County, Georgia (northwest of
Atlanta, Georgia), of which approximately 13,000 acres would be a fee simple
interest and approximately 22,000 acres would be a timber rights interest only.
The option may be exercised in whole or in part over the option period and the
option price of this fee simple land was $736 per acre at January 1, 1996,
escalating at 6% on January 1 of each succeeding year during the term of the
option. The Temco Associates property has the potential for future residential,
industrial and commercial development. Temco Associates has to date sold parcels
of land as to which it simultaneously exercised its purchase option. During 1993
and 1994, approximately 1,100 and 72 acres, respectively, of the option related
to the fee simple interest was exercised and simultaneously sold for gross
profits of $305,000 and $243,000, respectively. None of the option was exercised
in 1995.
Other Real Property Investments
- -------------------------------
Omni Norfolk Hotel. Norfolk Hotel Associates ("NHA") is a general
partnership formed in 1978 between the Company and an affiliate of Odyssey
Partners, L.P. (an investment partnership), each as 50% partners, which held a
mortgage note on and owned the land under the 442-room Omni International Hotel
in downtown Norfolk, Virginia. In January 1992, NHA terminated the land lease
and became the owner of the hotel and a long-term parking agreement with an
adjacent building owner. In April 1993, the partnership sold the hotel, but
retained its interest in the parking agreement. The Company's share of the gain
on this transaction was approximately $.5 million and is included in Income From
Joint Ventures in the 1993 Consolidated Statement of Income. The partnership
received a mortgage note for a portion of the sales proceeds. In July 1994, NHA
distributed to each partner a 50% interest in the parking agreement held by NHA.
The Company currently receives payments of approximately $228,000 per year for
its 50% interest in the agreement, and has entered into an agreement to sell its
interest for $2 million in July 1996, which would result in a profit to the
Company of approximately $411,000. Additionally, in July 1994, each partner
contributed $2 million to NHA to pay down $4 million in debt.
At December 31, 1995, the Company had an investment of $1,815,000 in NHA.
The Company has also guaranteed a $2.4 million line of credit to NHA under which
$2.2 million had been drawn at December 31, 1995, and its partner has guaranteed
an equal line of credit under which $2.2 million had been drawn at December 31,
1995.
Dusseldorf Joint Venture. In 1992, Cousins entered into a joint venture
agreement for the development of a 133,000 rentable square foot office building
in Dusseldorf, Germany which is 34% leased to IBM. Cousins' venture partners are
IBM and Multi Development Corporation International B.V. ("Multi"), a Dutch real
estate development company. In December 1993, the building was presold to an
affiliate of Deutsche Bank. CREC and Multi jointly developed the building. Due
to the release of certain completion guarantees related to the building,
approximately $2.6 million of development income was recognized in September
1995 ($931,000 of which had been deferred as of December 31, 1994).
Kennesaw Crossings. The Company owns Kennesaw Crossings, a 116,000 square
foot shopping center in suburban Atlanta, Georgia. The center was constructed in
1974 on 14 acres of land leased from an unrelated party through 2068. The
Company's net carrying value in Kennesaw Crossings as of December 31, 1995 was
$1.1 million.
Air Rights Near the CNN Center. The Company owns a leasehold interest in
the air rights over the approximately 365,000 square foot CNN Center parking
facility in Atlanta, Georgia, adjoining the world headquarters of Turner
Broadcasting System, Inc. and Cable News Network. The air rights are developable
for additional parking or office use. The Company's net carrying value of this
property is $0.
<PAGE>
Supplemental Financial and Leasing Information
- ----------------------------------------------
Depreciation and amortization expense include the following components for
the years ended December 31, 1994 and 1995 ($ in thousands):
<TABLE>
<CAPTION>
1994 1995
Share of Share of
Unconsolidated Unconsolidated
Consolidated Joint Ventures Total Consolidated Joint Ventures Total
------------ -------------- ----- ------------ -------------- -----
<S> <C> <C> <C> <C> <C> <C>
Furniture, fixtures and
equipment $ 444 $ 202 $ 646 $ 389 $ 122 $ 511
Deferred financing costs 119 80 199 -- 80 80
Goodwill and related business
acquisition costs 441 37 478 229 28 257
Real estate related:
Building (including tenant
first generation) 2,598 7,724 10,322 3,754 8,082 11,836
Tenant second generation 140 509 649 144 655 799
------ ------- ------- ------ ------- ---
$ 3,742 $ 8,552 $12,294 $4,516 $ 8,967 $13,483
======= ======= ======= ====== ======= =======
</TABLE>
Exclusive of new developments and purchases of furniture, fixtures and
equipment, the Company had the following capital expenditures for the years
ended December 31, 1994 and 1995, including its share of unconsolidated joint
ventures ($ in thousands):
<TABLE>
<CAPTION>
1994 1995
Office Retail Total Office Retail Total
------ ------ ----- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Second generation related costs $ 381 $ 272 $ 653 $1,316 $ -- $1,316
Building improvements 62 -- 62 28 23 51
----- ----- ----- ------ ----- --
Total $ 443 $ 272 $ 715 $1,344 $ 23 $1,367
===== ===== ===== ====== ===== ======
</TABLE>
<PAGE>
Item 3. Legal Proceedings
- --------------------------
No material legal proceedings are presently pending by or against the
Company.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
No matter was submitted to a vote of security holders during the fourth
quarter of the Registran's fiscal year ended December 31, 1995.
Item X. Executive Officers of the Registrant
- ---------------------------------------------
The Executive Officers of the Registrant as of the date hereof are as
follows:
<TABLE>
<CAPTION>
Name Age Office Held
---- --- -----------
<S> <C> <C>
Thomas G. Cousins 64 Chairman of the Board of Directors
and Chief Executive Officer
Daniel M. DuPree 49 President and Chief Operating Officer
George J. Berry 58 Senior Vice President
Tom G. Charlesworth 46 Senior Vice President, Secretary, and
General Counsel
Craig B. Jones 45 Senior Vice President
Joel T. Murphy 37 Senior Vice President and President of the
Retail Division (Cousins MarketCenters,
Inc.)
John L. Murphy 50 Senior Vice President - Marketing
W. James Overton 49 Senior Vice President - Development
Peter A. Tartikoff 54 Senior Vice President and Chief Financial
</TABLE>
Officer
Relationships:
- --------------
There are no family relationships among the Executive Officers or
Directors.
Term of Office:
- ---------------
The term of office for all officers expires at the annual directors'
meeting, but the Board has the power to remove any officer at any time.
Business Experience:
- --------------------
Mr. Cousins has been the Chief Executive Officer of the Company since its
inception.
Mr. DuPree joined the Company in October 1992, became Senior Vice President
in April 1993, Senior Executive Vice President in April 1995 and President and
Chief Operating Officer in November 1995. Prior to that he was President of New
Market Companies, Inc. and affiliates since 1984.
Mr. Berry has been Senior Vice President since joining the Company in
September 1990. Prior to that he was Commissioner of the State of Georgia's
Department of Industry, Trade and Tourism from 1983 to 1990.
Mr. Charlesworth joined the Company in October 1992 and became Senior Vice
President, Secretary, and General Counsel in November 1992. Prior to that he
worked for certain affiliates of Thomas G. Cousins as Chief Financial Officer
and Legal Counsel.
Mr. Jones joined the Company in October 1992 and became Senior Vice
President in November 1995. From 1987 until joining the Company, he was
Executive Vice President of New Market Companies, Inc. and affiliates.
Mr. Joel Murphy joined the Company in October 1992 and became Senior Vice
President of the Company and President of the Retail Division in November 1995.
From 1988 until joining the Company, he was Senior Vice President of New Market
Companies, Inc. and affiliates.
Mr. John Murphy has been Senior Vice President since joining the Company in
December 1987.
Mr. Overton has been Senior Vice President since joining the Company in
September 1989. Prior to that he was employed by Hardin Construction Group, Inc.
from 1972 to 1989, where he served as President from 1985 to 1989.
Mr. Tartikoff has been Senior Vice President and Chief Financial Officer of
the Company since February 1986.
PART II
-------
Item 5. Market for Registrant's Common Stock and Related Security Holder Matters
- --------------------------------------------------------------------------------
The information concerning the market prices for the Registrant's common
stock and related stockholder matters appearing under the caption "Market and
Dividend Information" on page 42 of the Registrant's 1995 Annual Report to
Stockholders is incorporated herein by reference.
Item 6. Selected Financial Data
- -------------------------------
The information appearing under the caption "Five Year Summary of Selected
Financial Data" on page 36 of the Registrant's 1995 Annual Report to
Stockholders is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- -------------------------------------------------------------------------------
of Operations
-------------
Management's Discussion and Analysis of Financial Condition and Results of
Operations which appears on pages 37 through 41 of the Registrant's 1995 Annual
Report to Stockholders is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
- ---------------------------------------------------
The Consolidated Financial Statements and Notes to Consolidated Financial
Statements of the Registrant and Report of Independent Public Accountants which
appear on pages 19 through 36 of the Registrant's 1995 Annual Report to
Stockholders are incorporated herein by reference.
The information appearing under the caption "Selected Quarterly Financial
Information (Unaudited)" on page 43 of the Registrant's 1995 Annual Report to
Stockholders is incorporated herein by reference.
Other financial statements and financial statement schedules required under
Regulation S-X are filed pursuant to Item 14 of Part IV of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- -------------------------------------------------------------------------
Financial Disclosure
--------------------
Not applicable.
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
- -----------------------------------------------------------
The information concerning the Directors and Executive Officers of the
Registrant that is required by this Item 10, except that which is presented in
Item X in Part I above, is included under the caption "Directors and Executive
Officers of the Company" on pages 2 through 4 of the Proxy Statement dated March
29, 1996 relating to the 1996 Annual Meeting of the Registrant's Stockholders,
and is incorporated herein by reference.
Item 11. Executive Compensation
- -------------------------------
The information appearing under the caption "Executive Compensation" on
pages 7 through 10 of the Proxy Statement dated March 29, 1996 relating to the
1996 Annual Meeting of the Registrant's Stockholders is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
The information concerning security ownership of certain beneficial owners
and management required by this Item 12 is included under the captions
"Directors and Executive Officers of the Company" on pages 2 through 6 and
"Principal Stockholders" on pages 27 and 28 of the Proxy Statement dated March
29, 1996 relating to the 1996 Annual Meeting of the Registrant's Stockholders,
and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
The information concerning certain transactions required by this Item 13 is
included under the caption "Certain Transactions" on pages 14 and 15 of the
Proxy Statement dated March 29, 1996 relating to the 1996 Annual Meeting of the
Registrant's Stockholders, and is incorporated herein by reference.
<PAGE>
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- --------------------------------------------------------------------------
(a) 1. Financial Statements
--------------------------
A. The following Consolidated Financial Statements of the Registrant, together
with the applicable Report of Independent Public Accountants, are contained
on pages 19 through 36 of the Registrant's 1995 Annual Report to
Stockholders and are incorporated herein by reference:
Page Number
in Annual Report
----------------
Consolidated Balance Sheets - December 31, 1994
and 1995 19
Consolidated Statements of Income for the Years Ended
December 31, 1993, 1994 and 1995 20
Consolidated Statements of Stockholders' Investment for the
Years Ended December 31, 1993, 1994 and 1995 21
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1993, 1994 and 1995 22
Notes to Consolidated Financial Statements
December 31, 1993, 1994 and 1995 23
Report of Independent Public Accountants 36
B. The following Combined Financial Statements, together with the applicable
Report of Independent Public Accountants, of Wildwood Associates and Green
Valley Associates II, joint ventures of the Registrant meeting the criteria
for significant subsidiaries under the rules and regulations of the
Securities and Exchange Commission, are filed as a part of this report.
Page Number
in Form l0-K
------------
Report of Independent Public Accountants F-1
Combined Balance Sheets - December 31, 1994 and 1995 F-2
Combined Statements of Income for the Years
Ended December 31, 1993, 1994 and 1995 F-3
Combined Statements of Partners' Capital for the Years
Ended December 31, 1993, 1994 and 1995 F-4
Combined Statements of Cash Flows for the Years Ended
December 31, 1993, 1994 and 1995 F-5
Notes to Combined Financial Statements
December 31, 1993, 1994 and 1995 F-6 through
F-12
Item 14. Continued
- ---------------------
C. The following Financial Statements, together with the applicable Report of
Independent Auditors, of CSC Associates, L.P., a joint venture of the
Registrant meeting the criteria for a significant subsidiary under the
rules and regulations of the Securities and Exchange Commission, are filed
as a part of this report.
Page Number
in Form l0-K
------------
Report of Independent Auditors G-1
Balance Sheets - December 31, 1994 and 1995 G-2
Statements of Operations for the Years Ended
December 31, 1993, 1994 and 1995 G-3
Statements of Partners' Capital for the Years Ended
December 31, 1993, 1994 and 1995 G-4
Statements of Cash Flows for the Years Ended
December 31, 1993, 1994 and 1995 G-5
Notes to Financial Statements G-6 through
December 31, 1993, 1994 and 1995 G-9
D. The following Financial Statements, together with the applicable Report of
Independent Auditors, of Haywood Mall Associates, a joint venture of the
Registrant meeting the criteria for a significant subsidiary under the
rules and regulations of the Securities and Exchange Commission, are filed
as part of this report.
Page Number
in Form l0-K
------------
Report of Independent Auditors H-1
Balance Sheets - December 31, 1995 and 1994 H-2
Statements of Income for the Years Ended
December 31, 1995, 1994 and 1993 H-3
Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993 H-4
Statements of Venturers' Equity for the Three Years
Ended December 31, 1995 H-5
Notes to Financial Statements H-6 through
December 31, 1995, 1994 and 1993 H-7
<PAGE>
2. Financial Statement Schedules
-----------------------------------
The following financial statement schedules, together with the
applicable report of independent public accountants are filed as
a part of this report.
Page Number
in Form l0-K
------------
A. Cousins Properties Incorporated and Consolidated Entities:
Report of Independent Public Accountants on Schedules S-1
Schedule III- Real Estate and Accumulated
Depreciation - December 31, 1995 S-2 through
S-6
B. Wildwood Associates and Green Valley Associates II
Schedule III - Real Estate and Accumulated
Depreciation - December 31, 1995 F-13
C. CSC Associates, L.P.
Schedule III- Real Estate and Accumulated
Depreciation - December 31, 1995 G-10
D. Haywood Mall Associates
Schedule III- Real Estate and Accumulated
Depreciation - December 31, 1995 H-8
NOTE:Other schedules are omitted because of the absence of conditions under
which they are required or because the required information is given in the
financial statements or notes thereto.
<PAGE>
Item 14. Continued
- ---------------------
3. Exhibits
-----------
3(a)(i) Articles of Incorporation of Registrant, as restated as of
April 29, 1993, filed as Exhibit 4(a) to the Registrant's
Form S-3 dated September 28, 1993, and incorporated herein by
reference.
3(b) By-laws of Registrant, as amended and restated as of November
30, 1989, as further amended by Stockholders on April 30, 1990,
and as further amended by the Stockholders on April 29, 1993,
filed as Exhibit 4(b) to the Registrant's Form S-3 dated
September 28, 1993, and incorporated herein by reference.
4(a) Dividend Reinvestment Plan as restated as of March 27, 1995,
filed in the Registrant's Form S-3 dated March 27, 1995, and
incorporated herein by reference.
10(a)(i) Cousins Properties Incorporated 1989 Stock Option Plan, as
amended on April 26, 1994, filed as Exhibit 99.1 to the
Registrant's Form S-8 dated December 8, 1994, and incorporated
herein by reference.
10(a)(ii) Cousins Real Estate Corporation Stock Appreciation Right Plan,
amended and restated as of March 15, 1993, filed as Exhibit
10(a)(ii) to the Registrant's Form 10-K for the year ended
December 31, 1992, and incorporated herein by reference.
10(a)(iii)Cousins Properties Incorporated Stock Appreciation Right Plan,
dated as of March 15, 1993, filed as Exhibit 10(a)(iii) to the
Registrant's Form 10-K for the year ended December 31, 1992, and
incorporated herein by reference.
10(b)(i) Cousins Properties Incorporated Profit Sharing Plan as amended
and restated effective as of January 1, 1996.
10(b)(ii) Cousins Properties Incorporated Profit Sharing Trust Agreement as
effective as of January 1, 1991, filed as Exhibit 10(b)(ii) to
the Registrant's Form 10-K for the year ended December 31, 1991,
and incorporated herein by reference.
10(c) Land lease (Kennesaw) dated December 17, 1969, and an amendment
thereto dated December 15, 1977, filed as Exhibit l0(d) to the
Registrant's Form 10-K for the year ended December 31, 1980, and
incorporated herein by reference.
10(d) Cousins Properties Incorporated Stock Plan for Outside Directors,
filed as Exhibit A to the Registrant's Proxy Statement dated
March 28, 1995 relating to the 1995 Annual Meeting of
Registrant's Stockholders, and incorporated herein by reference.
Item 14. Continued
- ---------------------
11 Schedule showing computations of weighted average number of
shares of common stock outstanding as used to compute primary and
fully diluted income per share for each of the five years ended
December 31, 1995.
13 Annual Report to Stockholders for the year ended December 31,
1995.
21 Subsidiaries of the Registrant.
23(a) Consent of Independent Public Accountants (Arthur Andersen LLP).
23(b) Consent of Independent Auditors (Ernst & Young LLP).
27 Financial Data Schedule.
(b) Reports on Form 8-K.
--------------------------
No reports on Form 8-K were filed during the fourth quarter of the
year ended December 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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)
Dated: March 27, 1996
BY: /s/ Peter A. Tartikoff
-----------------------------
Peter A. Tartikoff
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Capacity Date
- --------- -------- ----
Principal Executive Officer:
Chairman of the Board, March 27, 1996
Chief Executive Officer
/s/ T. G. Cousins and Director
- ----------------------------
T. G. Cousins
Principal Financial and Accounting Officer:
Senior Vice President and March 27, 1996
/s/ Peter A. Tartikoff Chief Financial Officer
- ----------------------------
Peter A. Tartikoff
Additional Directors:
/s/ Richard W. Courts, II Director March 27, 1996
- ----------------------------
Richard W. Courts, II
/s/ Boone A. Knox Director March 27, 1996
- ----------------------------
Boone A. Knox
/s/ Richard E. Salomon Director March 27, 1996
- ----------------------------
Richard E. Salomon
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
----------------------------------------------------
To the Stockholders of Cousins Properties Incorporated:
We have audited in accordance with generally accepted auditing standards,
the financial statements included in the Cousins Properties Incorporated annual
report to stockholders incorporated by reference in this Form l0-K, and have
issued our report thereon dated February 20, 1996. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The schedule
listed in Item 14, Part (a)2.A. is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 20, 1996
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
(Page 1 of 5)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisition December 31, 1995
---------- -------------- -----------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b)
- ----------- ------------ ---- ------------ ----- --------- ------------ ------------ -------
LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT
- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wildwood - Cobb Co., GA $ -- $ 11,156 $ -- $ 4,737 $ (8,888) $ 7,005 $ -- $ 7,005
North Fulton Property -
Fulton Co., GA -- 10,294 -- 12,213 (16,229) 6,278 -- 6,278
Midtown - Atlanta, GA 145 2,949 -- 56 (1,029) 1,976 -- 1,976
McMurray - Cobb Co., GA. -- 1,015 -- 172 (1,092) 95 -- 95
Presidential MarketCenter
Outparcels - Gwinnett
Co., GA -- 2,939 -- 623 (1,786) 1,776 -- 1,776
Lawrenceville -
Gwinnett Co., GA -- 5,543 -- 129 (1,560) 4,112 -- 4,112
Colonial Plaza MarketCenter
Orange Co., FL -- 1,649 -- -- 105 1,754 -- 1,754
Greenbrier MarketCenter
Outparcels
Chesapeake, VA -- 3,191 -- -- 153 3,344 -- 3,344
Lovejoy Station
Clayton Co., GA -- 575 -- -- -- 575 -- 575
Miscellaneous Investments -
Atlanta, GA -- 120 -- -- -- 120 -- 120
---------------------------------------------------------------------------------------------
145 39,431 -- 17,930 (30,326) 27,035 -- 27,035
---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 1995
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT
- ----------------------------------------------
<S> <C> <C> <C> <C>
Wildwood - Cobb Co., GA $ -- -- 1971-1982,1989 $--
North Fulton Property -
Fulton Co., GA -- -- 1970-1985 --
Midtown - Atlanta, GA -- -- 1984 --
McMurray - Cobb Co., GA. -- -- 1981 --
Presidential MarketCenter
Outparcels - Gwinnett
Co., GA -- -- 1993 --
Lawrenceville -
Gwinnett Co., GA -- -- 1994 --
Colonial Plaza MarketCenter
Orange Co., FL -- -- 1995 --
Greenbrier MarketCenter
Outparcels
Chesapeake, VA -- -- 1995 --
Lovejoy Station
Clayton Co., GA -- -- 1995 --
Miscellaneous Investments -
Atlanta, GA -- -- 1972-1984 --
-------
--
-------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
(Page 2 of 5)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisition December 31, 1995
---------- -------------- -----------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b)
- ----------- ------------ ---- ------------ ----- --------- ------------ ------------ -------
OPERATING PROPERTIES
- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First Union Tower -
Greensboro, N.C. $ -- $ 1,394 $ -- $ 29,287 $ 1,971 $ 1,399 $31,253 $ 32,652
Wildwood - 3301 Windy
Ridge - Cobb Co., GA -- 20 -- 8,829 1,519 1,237 9,131 10,368
Kennesaw - Cobb Co., GA -- -- -- 2,337 -- -- 2,337 2,337
Perimeter Expo -
Fulton Co., GA -- 8,564 -- 11,072 71 8,564 11,143 19,707
GA Highway 400
Stand Alone Retail Sites -
Fulton Co., GA -- 4,559 -- 162 -- 4,721 -- 4,721
North Point MarketCenter Phase I
Fulton Co., GA -- 7,932 -- 16,161 394 7,932 16,555 24,487
North Point MarketCenter Phase II
Fulton Co., GA -- 568 -- 2,623 112 568 2,735 3,303
Presidential MarketCenter Phase I
Gwinnett Co., GA -- 1,786 -- 8,037 222 1,786 8,259 10,045
Norfolk Parking Agreement -- 1,589 -- -- -- 1,589 -- 1,589
Miscellaneous -- 398 145 77 (475) -- 145 145
---------------------------------------------------------------------------------------------
-- 26,810 145 78,585 3,814 27,796 81,558 109,354
---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 1995
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
OPERATING PROPERTIES
- --------------------
<S> <C> <C> <C> <C>
First Union Tower -
Greensboro, N.C. $8,347 1988-1990 1987 40 Years
Wildwood - 3301 Windy
Ridge - Cobb Co., GA 3,189 1984 1984 30 Years
Kennesaw - Cobb Co., GA 1,247 1974 1973 30 Years
Perimeter Expo -
Fulton Co., GA 869 1993 1993 30 Years
GA Highway 400
Stand Alone Retail Sites -
Fulton Co., GA 27 -- 1970-1985 --
North Point MarketCenter Phase I
Fulton Co., GA 1,241 1993-1994 1970-1985 30 Years
North Point MarketCenter Phase II
Fulton Co., GA 39 1994 1970-1985 30 Years
Presidential MarketCenter Phase I
Gwinnett Co., GA 423 1993-1994 1993 30 Years
Norfolk Parking Agreement -- -- 1994 --
Miscellaneous 101 -- 1977-1984 Various
-------
15,483
-------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
(Page 3 of 5)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisition December 31, 1995
---------- -------------- -----------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b)
- ----------- ------------ ---- ------------ ----- --------- ------------ ------------ -------
PROJECTS UNDER CONSTRUCTION
- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mansell Crossing Phase II
Fulton Co., GA $ -- $ 3,272 $ -- $ 2,371 $ 266 $ 3,272 $ 2,637 $ 5,909
Lawrenceville MarketCenter
Gwinnett Co., GA -- 3,510 -- 12,550 507 3,960 12,607 16,567
100 North Point Center
Fulton Co., GA -- 441 -- 9,109 229 441 9,338 9,779
200 North Point Center
Fulton County, GA -- 441 -- 322 5 441 327 768
Colonial Plaza MarketCenter
Orange Co., FL -- 8,500 -- 17,025 992 8,500 18,017 26,517
Greenbrier MarketCenter
Chesapeake, VA -- 5,500 -- 9,767 407 5,500 10,174 15,674
Presidential MarketCenter-Phase II
Gwinnett Co., GA -- 2,170 -- 1,447 205 2,400 1,422 3,822
Lovejoy Station -
Clayton Co., GA -- 1,387 -- 4,433 300 811 5,309 6,120
Rivermont Station
Fulton Co., GA -- 2,050 -- 292 5 2,050 297 2,347
---------------------------------------------------------------------------------------------
-- 27,271 -- 57,316 2,916 27,375 60,128 87,503
---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 1995
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
PROJECTS UNDER CONSTRUCTION
- ---------------------------
<S> <C> <C> <C> <C>
Mansell Crossing Phase II
Fulton Co., GA $ -- 1995 1995 --
Lawrenceville MarketCenter
Gwinnett Co., GA -- 1994 1994 --
100 North Point Center
Fulton Co., GA -- 1994 1994 --
200 North Point Center
Fulton County, GA -- 1995 1995 --
Colonial Plaza MarketCenter
Orange Co., FL -- 1995 1995 --
Greenbrier MarketCenter
Chesapeake, VA -- 1995 1995 --
Presidential MarketCenter-Phase II
Gwinnett Co., GA -- 1995 1995 --
Lovejoy Station -
Clayton Co., GA -- 1994 1994 --
Rivermont Station
Fulton Co., GA -- 1995 1995 --
-------
--
-------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
(Page 4 of 5)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisition December 31, 1995
---------- -------------- -----------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b)
- ----------- ------------ ---- ------------ ----- --------- ------------ ------------ -------
RESIDENTIAL LOTS UNDER DEVELOPMENT
- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Brown's Farm -
Cobb Co., GA $ -- $ 1,473 $ -- $ 3,649 $ (2,908) $ 2,214 $ -- $ 2,214
Apalachee River Club
Gwinnett Co., GA -- 1,820 -- 3,008 (1,220) 3,608 -- 3,608
Echo Mill
Cobb Co., GA 454 1,318 -- 3,456 (2,513) 2,261 -- 2,261
Barrett Downs
Forsyth Co., GA -- 900 -- 2,031 (82) 2,849 -- 2,849
Bradshaw Farms
Cherokee Co., GA -- 1,741 -- 3,098 (4,319) 520 -- 520
---------------------------------------------------------------------------------------------
454 7,252 -- 15,242 (11,042) 11,452 -- 11,452
---------------------------------------------------------------------------------------------
$ 599 $ 100,764 $ 145 $169,073 $(34,638) $ 93,658 $141,686 $235,344
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life on
Which De-
preciation
Accumu- In 1995
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
RESIDENTIAL LOTS UNDER DEVELOPMENT
- ----------------------------------
<S> <C> <C> <C> <C>
Brown's Farm -
Cobb Co., GA $ -- 1993-1994 1993-1994 --
Apalachee River Club
Gwinnett Co., GA -- 1994 1994 --
Echo Mill
Cobb Co., GA -- 1994 1994 --
Barrett Downs
Forsyth Co., GA -- 1994 1994 --
Bradshaw Farms
Cherokee Co., GA -- 1994 1994 --
-------
--
-------
$15,483
=======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
(Page 5 of 5)
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
($ in thousands)
NOTES:
(a) Reconciliations of total real estate carrying value and accumulated
depreciation for the three years ended December 31, 1995 are as
follows:
Real Estate Accumulated Depreciation
---------------------------- -------------------------
1993 1994 1995 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $ 71,994 $108,252 $149,242 $7,448 $ 9,418 $12,112
Additions during the period:
Improvements and other
capitalized costs 37,851 53,580 101,544 -- -- --
Provision for depreciation -- -- -- 1,970 2,694 3,371
---------------------------- ------------------------
37,85 53,580 101,544 1,970 2,694 3,371
---------------------------- ------------------------
Deductions during the period:
Cost of real estate sold (1,593) (12,590) (15,442) -- -- --
---------------------------- -------------------------
(1,593) (12,590) (15,442) -- -- --
---------------------------- -------------------------
Balance at close of period $108,252 $149,242 $235,344 $9,418 $12,112 $ 15,483
============================ =========================
</TABLE>
(b) Initial cost for Kennesaw was previously adjusted to reflect a
write-down of $1,430 to state the property at the then realizable
value.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Wildwood Associates and Green Valley Associates II:
We have audited the accompanying combined balance sheets of WILDWOOD
ASSOCIATES (a Georgia general partnership) and GREEN VALLEY ASSOCIATES II (a
North Carolina general partnership) as of December 31, 1994 and 1995, and the
related combined statements of income, partners' capital and cash flows for each
of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the management of the partnerships. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Wildwood Associates and
Green Valley Associates II as of December 31, 1994 and 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995 in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 14 is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 20, 1996
<PAGE>
<TABLE>
<CAPTION>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
--------------------------------------------------
COMBINED BALANCE SHEETS
-----------------------
DECEMBER 31, 1994 AND 1995
--------------------------
($ in thousands)
1994 1995
---- ----
ASSETS
- ------
<S> <C> <C>
REAL ESTATE ASSETS:
Income producing properties, including land of
$37,677 in 1994 and 1995 (Note 7) ................. $217,869 $217,748
Accumulated depreciation and amortization ........... (40,009) (44,900)
------------------
177,860 172,848
Land committed to be contributed (Note 3) ........... 20,440 13,903
Land and property predevelopment costs .............. 12,429 27,777
------------------
Total real estate assets ..................... 210,729 214,528
------------------
CASH AND CASH EQUIVALENTS ............................... 4 --
------------------
OTHER ASSETS:
Deferred expenses, net of accumulated amortization of
$6,065 and $6,078 in 1994 and 1995, respectively .. 4,892 5,641
Receivables (Note 6) ................................ 14,506 14,920
Allowance for possible losses (Note 1) .............. (2,616) (2,550)
Furniture, fixtures and equipment, net of accumulated
depreciation of $1,198 and $1,276 in 1994 and 1995,
respectively ...................................... 358 296
Other ............................................... 2 31
------------------
17,142 18,338
------------------
$227,875 $232,866
==================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
NOTES PAYABLE (Note 7) .................................. $132,608 $134,855
RETAINAGE, ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES ................................. 2,983 7,843
------------------
Total liabilities ............................ 135,591 142,698
------------------
PARTNERS' CAPITAL (Notes 3 and 4):
International Business Machines Corporation ......... 46,142 45,084
Cousins Properties Incorporated ..................... 46,142 45,084
------------------
Total partners' capital ...................... 92,284 90,168
------------------
$227,875 $232,866
==================
</TABLE>
The accompanying notes are an integral part of these combined balance sheets.
<PAGE>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
---------------------------------------------------
COMBINED STATEMENTS OF INCOME
-----------------------------
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
----------------------------------------------------
($ in thousands)
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Rental income and recovery of expenses
charged directly to specific tenants ..... $36,104 $36,196 $37,589
Interest ..................................... 24 27 32
Other ........................................ 96 82 146
---------------------------
Total revenues .................... 36,224 36,305 37,767
---------------------------
OPERATING EXPENSES:
Real estate taxes ............................ 2,785 2,516 3,032
Maintenance and repairs ...................... 2,142 1,991 2,207
Utilities .................................... 1,737 1,822 1,965
Management and personnel costs ............... 1,805 1,794 1,892
Contract security ............................ 761 745 820
Grounds maintenance .......................... 632 588 646
Expenses charged directly to specific tenants 852 458 395
Insurance .................................... 99 100 98
---------------------------
Total operating expenses .............. 10,813 10,014 11,055
---------------------------
OTHER EXPENSES:
Interest expense ............................. 11,606 11,790 11,478
Depreciation and amortization ................ 8,336 8,648 8,353
Predevelopment, marketing and other expenses . 489 342 345
Ground lease expense (Note 8) ................ 322 322 322
Real estate taxes on undeveloped land (Note 4) 190 182 163
General and administrative expenses .......... 146 163 167
---------------------------
Total other expenses .................. 21,089 21,447 20,828
---------------------------
Total expenses ........................ 31,902 31,461 31,883
---------------------------
NET INCOME ....................................... $ 4,322 $ 4,844 $ 5,884
===========================
</TABLE>
The accompanying notes are an integral part of these combined statements.
<PAGE>
<TABLE>
<CAPTION>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
--------------------------------------------------
COMBINED STATEMENTS OF PARTNERS' CAPITAL
----------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
----------------------------------------------------
($ in thousands)
International
Business Cousins
Machines Properties
Corporation Incorporated Total
----------- ------------ -----
<S> <C> <C> <C>
BALANCE, December 31, 1992 $49,559 $49,559 $99,118
Distributions ........ (4,000) (4,000) (8,000)
Net income ........... 2,161 2,161 4,322
-----------------------------------
BALANCE, December 31, 1993 47,720 47,720 95,440
Distributions ........ (4,000) (4,000) (8,000)
Net income ........... 2,422 2,422 4,844
-----------------------------------
BALANCE, December 31, 1994 46,142 46,142 92,284
Distributions ........ (4,000) (4,000) (8,000)
Net income ........... 2,942 2,942 5,884
-----------------------------------
BALANCE, December 31, 1995 $45,084 $45,084 $90,168
===================================
</TABLE>
The accompanying notes are an integral part of these combined statements.
<PAGE>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
--------------------------------------------------
COMBINED STATEMENTS OF CASH FLOWS (Note 9)
------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
----------------------------------------------------
($ in thousands)
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ...................................... $ 4,322 $ 4,844 $ 5,884
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ............ 8,336 8,648 8,353
Rental revenue recognized on straight-line
basis in excess of rental revenue
specified in the lease agreements .... (570) (349) (383)
Change in tenant rental receivables ...... (106) 51 (38)
Change in accounts payable and accrued
liabilities related to operations .... 24 (195) (1,004)
--------------------------
Net cash provided by operating activities ........... 12,006 12,999 12,812
--------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisition and development expenditures (3,581) (3,008) (4,940)
Payment for deferred expenses; furniture, fixtures
and equipment; and other assets ............. (1,617) (661) (2,123)
--------------------------
Net cash used in investing activities ............... (5,198) (3,669) (7,063)
--------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable ...................... (413) (630) (1,063)
Repayment of long term financing ................ -- -- (111,998)
Proceeds from long term refinancing ............. -- -- 98,000
Proceeds from line of credit .................... 11,500 12,600 31,212
Repayments under line of credit ................. 10,40 (13,300) (13,904)
Partnership distributions ....................... 8,000) (8,000) (8,000)
--------------------------
Net cash used in financing activities ............... (7,313) (9,330) (5,753)
--------------------------
NET DECREASE IN CASH AND
CASH EQUIVALENTS ................................ (505) -- (4)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR ......................................... 509 4 4
--------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR ............ $ 4 $ 4 $ --
=========================
</TABLE>
The accompanying notes are an integral part of these combined statements.
<PAGE>
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
--------------------------------------------------
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------
DECEMBER 31, 1993, 1994 AND 1995
--------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation:
The Combined Financial Statements include the accounts of Wildwood
Associates ("WWA") and Green Valley Associates II ("GVA II"), both of which are
general partnerships. Cousins Properties Incorporated (together with its other
consolidated entities hereinafter referred to as "Cousins") and International
Business Machines Corporation ("IBM") each have a 50% general partnership
interest in both partnerships. The financial statements of the partnerships have
been combined because of the common ownership. The combined entities are
hereinafter referred to as the "Partnerships." All transactions between WWA and
GVA II have been eliminated in the Combined Financial Statements.
Cost of Property Contributed by Cousins:
The cost of property contributed or committed to be contributed by Cousins
was recorded by WWA based upon the procedure described in Note 3. Such cost was,
in the opinion of the partners, at or below estimated fair market value at the
time of such contribution or commitment, but was in excess of Cousins'
historical cost basis.
Cost Capitalization:
All costs related to planning, development and construction of buildings,
and expenses of buildings prior to the date they become operational for
financial statement purposes, are capitalized. Interest and real estate taxes
are also capitalized to property under development.
Depreciation and Amortization:
Buildings are depreciated over 25 to 40 years. Furniture, fixtures, and
equipment are depreciated over 5 years. Leasehold improvements and tenant
improvements are amortized over the life of the leases or useful life of the
assets, whichever is shorter. Deferred expenses - which include organizational
costs, certain marketing and leasing costs, and loan acquisition costs - are
amortized over the period of estimated benefit. The straight-line method is used
for all depreciation and amortization.
Allowance for Possible Losses:
The allowance for possible losses provides for potential writeoffs of
certain tenant related and other assets on WWA's books. The allowance reflects
management's evaluation of the exposure to WWA based on a specific review of its
properties and the impact of current economic conditions on those properties.
Allocation of Operating Expenses:
In accordance with certain lease agreements, certain management and
maintenance costs incurred by WWA are allocated to individual buildings or
tenants, including buildings not owned by WWA.
Income Taxes:
No provision has been made for federal or state income taxes because each
partner's proportionate share of income or loss from the Partnerships is
passed through to be included on each partner's separate tax return.
Cash and Cash Equivalents:
Cash and Cash Equivalents includes all cash and highly liquid money market
instruments. Highly liquid money market instruments include securities and
repurchase agreements with original maturities of three months or less, money
market mutual funds, and securities on which the interest rate is adjusted to
market rate at least every three months.
Rental Income:
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
13, income on leases which include scheduled increases in rental rates over the
lease term is recognized on a straight-line basis.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Impairment of Long-Lived Assets:
The Partnerships have adopted SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of" which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. SFAS
No. 121 also addresses the accounting for long-lived assets that are expected to
be disposed of. The adoption of SFAS No. 121 had no effect on the financial
results of the Partnerships.
2. FORMATION AND PURPOSE OF THE PARTNERSHIPS
WWA and GVA II were formed under the terms of partnership agreements
effective May 30, 1985 and March 31, 1988, respectively. The purpose of the
Partnerships is, among other things, to develop and operate the Summit Green
project located in Greensboro, North Carolina, and selected property within
Wildwood Office Park ("Wildwood"), located in Atlanta, Georgia.
Summit Green is a project consisting of one office building and a parts
distribution center totaling approximately 144,000 gross square feet ("GSF")
which was completed in 1986, and land for two additional office buildings not
yet constructed. The two additional buildings are planned to total approximately
240,000 GSF. The 21 acres in the project are leased from a third party by WWA
(see Note 8). GVA II subleases the undeveloped portion of this land from WWA.
Wildwood is an office park containing a total of approximately 289 acres,
of which approximately 85 acres are owned by WWA, and an estimated 22 acres are
committed to be contributed to WWA by Cousins (see Note 3). Cousins owns the
balance of the developable acreage in the park. At December 31, 1995, WWA's
income producing real estate assets in Wildwood consisted of: one office
building of 338,000 GSF which became operational January 1, 1986, one office
building of 684,000 GSF which became operational December 1, 1987 and one office
building of 757,000 GSF which became operational April 1, 1991, two office
buildings totaling 482,000 GSF which are under construction (including land
under such buildings totaling approximately 48 acres); land parcels totaling
approximately 15 acres leased to two banking facilities and five restaurants; a
2 acre site on which a child care facility is constructed, and a 1 acre retail
site currently being marketed to prospective users. In addition, WWA's assets
include 42 acres of land held for future development, which is composed of a 4
acre site with approximately 58,000 square feet of office space which was
purchased in 1986 for future development (classified with income producing
properties in the accompanying financial statements), and 38 acres of other land
to be developed (including additional land committed to be contributed by
Cousins) (see Note 3).
3. CONTRIBUTIONS TO THE PARTNERSHIPS
IBM and Cousins have each contributed or committed to contribute
$62,857,000 in cash or properties to the Partnerships. The value of property
contributed was agreed to by the partners at the time of formation of WWA.
The status of contributions at December 31, 1995, was as follows ($ in
thousands):
IBM COUSINS TOTAL
--- ------- -----
Cash contributed $46,590 $ 84 $ 46,674
Property contributed 16,267 49,354 65,621
Land committed to be contributed -- 13,419 13,419
----------------------------------
Total $62,857 $62,857 $125,714
==================================
WWA has elected not to take title to the remaining land committed to be
contributed by Cousins until such land is needed for development. However,
Cousins' capital account was previously credited with the amount originally
required to bring it equal to IBM's, and a like amount, plus preacquisition
costs paid by WWA, and condemnation proceeds net of condemnation restoration
costs, were set up as an asset entitled "Land Committed To Be Contributed." This
asset account subsequently has been reduced as land actually has been
contributed, or as land yet to be contributed became associated with a
particular building.
At December 31, 1995, Cousins was committed to contribute land on which an
additional 991,462 GSF are developable, provided that regardless of planned use
or density, 38,333 GSF shall be the minimum GSF attributed to each developable
acre contributed. Cousins has also agreed to contribute infrastructure land in
Wildwood, as defined, at no cost to WWA, in order to provide the necessary land
for development of roads and utilities. The ultimate acreage remaining to be
contributed by Cousins will depend upon the actual density achieved, but would
be approximately 22 acres if the density were similar to that achieved on land
contributed to date.
4. OTHER PROVISIONS OF THE PARTNERSHIP AGREEMENTS
Net income or loss and net cash flow, as defined, shall be allocated to the
partners based on their percentage interests (50% each, subject to adjustment as
provided in the partnership agreements).
In the event of dissolution of the Partnerships, the assets will be
distributed as follows:
First, to repay all debts to third parties, including any secured loans
with the partners.
Second, to each partner until each capital account is reduced to zero.
The balance to each partner in accordance with its percentage interest.
WWA pays all real estate taxes on property owned by Cousins which is
subject to future contribution. Such real estate taxes were $190,000, $182,000
and $163,000 in 1993, 1994 and 1995, respectively, all of which were expensed.
5. FEES TO RELATED PARTIES
The Partnerships engaged Cousins to manage, develop and lease the
Partnerships' property. Fees to Cousins incurred by the Partnerships during
1993, 1994 and 1995 were as follows ($ in thousands):
1993 1994 1995
---- ---- ----
Development and tenant
construction fees $ 132 $ 57 $ 250
Management fees 902 909 945
Leasing and procurement fees 523 189 235
-----------------------------
$1,557 $1,155 $1,430
=============================
6. RENTAL REVENUES
WWA leases property to the partners, as well as to unrelated third parties.
The leases with partners are at rates comparable to those quoted to third
parties. The leases typically contain escalation provisions and provisions
requiring tenants to pay a pro rata share of operating expenses. The leases
typically include renewal options and all are classified and accounted for as
operating leases.
At December 31, 1995, future minimum rentals to be received under existing
non-cancelable leases, including tenants' current pro rata share of operating
expenses are as follows ($ in thousands):
<PAGE>
Leases
Leases With
With Third
Partners Parties Total
-------- ------- -----
1996 $15,586 $ 20,973 $ 36,559
1997 14,049 21,063 35,112
1998 14,837 18,497 33,334
1999 14,524 12,432 26,956
2000 14,409 9,979 24,388
Thereafter 6,165 41,369 47,534
---------------------------------
$79,570 $124,313 $203,883
=================================
In the years ended December 31, 1993, 1994 and 1995, income recognized on a
straightline basis exceeded income which would have accrued in accordance with
the lease terms by $570,000, $349,000 and $383,000, respectively. At December
31, 1994 and 1995, receivables which related to the cumulative excess of
revenues recognized in accordance with SFAS No. 13 over revenues which accrued
in accordance with the actual lease agreements totaled $14,371,000, and
$14,754,000, respectively. Of the 1995 amount, 60% was related to leases with
IBM.
7. NOTES PAYABLE
At December 31, 1995, notes payable consisted of the following ($ in
thousands):
<TABLE>
<CAPTION>
Term/
Amortization Balance at
Period Final December 31,
Description Rate (Years) Maturity 1995
----------- ---- ------------ -------- ------------
<S> <C> <C> <C> <C>
Line of credit ($50 million maximum) Fed Funds + .75% 2/ N/A 9/1/97 $ 26,308
2300 Windy Ridge Parkway Building mortgage note 7.56% 10/25 12/01/05 72,000
2500 Windy Ridge Parkway Building mortgage note 7.45% 10/20 12/15/05 26,000
Summit Green mortgage note 9.875% 10/30 4/1/98 10,547
--------
$134,855
========
</TABLE>
Wildwood Associates refinanced two mortgage notes in December 1995. The
2300 Windy Ridge Parkway Building mortgage note which had an $81 million balance
at a 9.09% rate and matured in August 1999, was refinanced with a $72 million
7.56% mortgage note. The 2500 Windy Ridge Parkway Building mortgage note which
had a $31 million balance at a 9.125% rate and matured in June 1996, was
refinanced with a $26 million 7.45% mortgage note.
The 2300 Windy Ridge Parkway Building mortgage note is secured by the
building, which had a net carrying value of approximately $58,566,000 and
$57,507,000 as of December 31, 1994 and 1995, respectively. The 2500 Windy Ridge
Parkway Building mortgage note is secured by the building, which had a net
carrying value of approximately $20,665,000 and $20,161,000 as of December 31,
1994 and 1995, respectively. The Summit Green Building mortgage note is secured
by a leasehold mortgage on the building, which had a net carrying value of
approximately $7,571,000 and $7,420,000 as of December 31, 1995.
The line of credit matures September 1, 1997, but will automatically be
renewed from year to year unless the lender provides a notice of non-renewal at
least three months in advance of the annual renewal date. The line generally
prohibits new borrowings other than those under the line, or the pledging of any
assets not pledged as of August 1, 1990. The line bears a floating interest rate
equal to the daily federal funds rate plus 3/4%, and there are no fees or
compensating balance arrangements required under the line. Cousins and IBM have
each severally guaranteed one-half of the line of credit.
The aggregate maturities of the indebtedness at December 31, 1995
summarized above are as follows ($ in thousands):
1996 $ 1,620
1997 28,143
1998 13,107
1999 3,008
2000 3,243
Thereafter 85,734
--------
$134,855
========
The Partnerships capitalize interest expense to property under development
as required by Statement of Financial Accounting Standards No. 34. In the years
ended December 31, 1993 and 1995, the Partnerships capitalized interest totaling
$108,000 and $236,000, respectively. No interest was capitalized during the year
ended December 31, 1994.
The estimated fair value of the Partnership's $133 million and $135 million
of notes payable at December 31, 1994 and 1995 respectively, is $132 million and
$135 million, respectively, calculated by discounting future cash flows under
the notes payable at estimated rates at which similar notes would be made
currently.
8. GROUND LEASE
All of the land in the Summit Green development is subject to a
non-subordinated ground lease expiring October 31, 2084. Lease payments
commenced December 1, 1986, and are payable in monthly installments at an annual
rate of approximately $322,000 per year for the first ten years. The lease rate
escalates at ten year intervals commencing December 1, 1996, based on the
cumulative increase in the Consumer Price Index ("Index") over the prior ten
year period (subject to a 5% annual cap on the increase in such Index in any one
year); or, at lessor's option, at the end of any ten year interval the property
shall be appraised, and the lessee shall elect to either purchase the land for
the appraised value, or pay annually during the succeeding ten year period 10%
of the appraised fair market value of the land.
9. COMBINED STATEMENTS OF CASH FLOWS-SUPPLEMENTAL INFORMATION
Interest (net of amounts capitalized) was as follows ($ in thousands):
1993 1994 1995
---- ---- ----
Interest paid $11,608 $11,780 $12,011
Significant non-cash financing and investing activities included the
following:
In 1993, a land parcel with a value of $926,000 was transferred from Land
Committed To Be Contributed to Land and Property Predevelopment Costs. In
September 1993, restaurant site parcels under construction with an aggregate
value of $6,700,000 were transferred from Land and Property Predevelopment Costs
to Income Producing Properties. See Notes 2 and 3.
In 1994, the child care facility under construction with an aggregate value
of $1,600,000 was transferred from Land and Property Predevelopment Costs to
Income Producing Properties. See Notes 2 and 3.
In 1995, a land parcel with a value of $6,537,000 was transferred from Land
Committed To Be Contributed to Land and Property Predevelopment Cost. See Notes
2 and 3.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisition December 31, 1995
---------- -------------- -----------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b)
- ----------- ------------ ---- ------------ ----- --------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wildwood Office Park -
Cobb Co., GA
2500 Windy Ridge $ 26,000 $ 4,414 $ 14,814 $ 9,306 $ 141 $ 4,414 $ 24,261 $ 28,675
2300 Windy Ridge 72,000 8,927 -- 60,908 5,429 8,927 66,337 75,264
Parkside -- 4,274 2,553 (1,017) (45) 3,136 2,629 5,765
3200 Windy Hill -- 10,503 -- 66,020 5,470 10,503 71,490 81,993
4100/4300 Wildwood Parkway -- 6,537 -- 8,583 251 -- 15,371 15,371
Stand Alone Retail Sites -- 7,659 1,234 3,642 123 9,570 3,088 12,658
Land committed to
be contributed -- 13,522 -- -- 381 13,903 -- 13,903
Other land and
property -- 11,430 -- 3,467 (139) 11,609 3,149 14,758
--------------------------------------------------------------------------------------------
98,000 67,266 18,601 150,909 11,611 62,062 186,325 248,387
--------------------------------------------------------------------------------------------
Summit Green, Greensboro, NC:
Summit Green Phase I 10,547 -- -- 10,281 259 -- 10,540 10,540
Other property -- -- -- 501 -- -- 501 501
--------------------------------------------------------------------------------------------
10,547 -- -- 10,782 259 -- 11,041 11,041
--------------------------------------------------------------------------------------------
$108,547 $67,266 $ 18,601 $161,691 $ 11,870 $62,062 $197,366 $259,428
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Life on
Which De-
preciation
Accumu- In 1995
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
<S> <C> <C> <C> <C>
Wildwood Office Park -
Cobb Co., GA
2500 Windy Ridge $ 8,514 1985 1985 40 Years
2300 Windy Ridge 17,757 1986 1986 40 Years
Parkside 1,036 1980 1986 25 Years
3200 Windy Hill 13,162 1989 1989 40 Years
4100/4300 Wildwood Parkway -- 1995 1986 --
Stand Alone Retail Sites 877 Various 1985-1995 Various
Land committed to
be contributed -- -- 1985-1986 --
Other land and
property 434 Various 1985-1986 Various
-------
41,780
-------
Summit Green, Greensboro, NC:
Summit Green Phase I 3,120 1986 1986 40 Years
Other property -- 1986 1986 --
-------
3,120
-------
$44,900
=======
</TABLE>
NOTE: (a) Reconciliations of total real estate carrying value and accumulated
depreciation for the three years ended December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
Real Estate Accumulated Depreciation
-------------------------- ------------------------
1993 1994 1995 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $246,472 $249,714 $250,738 $26,039 $32,932 $40,009
Additions during the period:
Improvements, and other
capitalized costs 3,242 1,058 8,690 -- -- --
Provisions for depreciation -- -- -- 6,893 7,111 4,891
Deductions during the period:
Retirement of fully depreciated
assets and writeoffs -- (34) -- -- (34) --
------------------------------ ---------------------------
Balance at close of period $249,714 $250,738 $259,428 $32,932 $40,009 $44,900
============================== ===========================
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners of
CSC Associates, L.P. (A Limited Partnership)
We have audited the accompanying balance sheets of CSC Associates, L.P.
(the Partnership) as of December 31, 1994 and 1995, and the related statements
of operations, partners' capital, and cash flows for each of the three years in
the period ended December 31, 1995. Our audits also included the financial
statement schedule of CSC Associates, L.P. listed in the Index at Item 14(a).
These financial statements and schedule are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CSC Associates, L.P. as of
December 31, 1994 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Atlanta, Georgia
February 6, 1996
<PAGE>
<TABLE>
<CAPTION>
CSC ASSOCIATES, L.P.
--------------------
BALANCE SHEETS
--------------
DECEMBER 31, 1994 AND 1995
--------------------------
($ in thousands)
ASSETS
------
1994 1995
---- ----
<S> <C> <C>
REAL ESTATE ASSETS:
Building and improvements, including land and
land improvements of $22,818 in 1994 and 1995 ..... $203,275 $208,676
Accumulated depreciation (14,980) (21,232)
---------------------
188,295 187,444
---------------------
CASH .................................................... 1,395 97
--------------------
OTHER ASSETS:
Deferred expenses, net of accumulated
amortization of $2,715 and $3,664 in
1994 and 1995, respectively ......................... 8,170 8,306
Receivables (Note 3) .................................. 9,002 10,142
Furniture, fixtures and equipment, net of
accumulated depreciation of $866 and $1,218
in 1994 and 1995, respectively ...................... 1,167 871
Other ................................................. 28 29
--------------------
Total other assets ........................... 18,367 19,348
--------------------
$208,057 $206,889
====================
LIABILITIES AND PARTNERS' CAPITAL
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES ................$ 3,345 $ 2,951
--------------------
Total liabilities ............................ 3,345 2,951
--------------------
PARTNERS' CAPITAL (Note 1) .............................. 204,712 203,938
--------------------
$208,057 $206,889
====================
</TABLE>
The accompanying notes are an integral part of these balance sheets.
<PAGE>
<TABLE>
<CAPTION>
CSC ASSOCIATES, L.P.
--------------------
STATEMENTS OF OPERATIONS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
----------------------------------------------------
($ in thousands)
1993 1994 1995
---- ---- ----
<S> <C> <C>
REVENUES:
Rental income and recovery of expenses
charged directly to specific tenants $27,810 $28,931 $31,195
OPERATING EXPENSES:
Real estate taxes ...................... 3,673 3,493 3,482
Utilities .............................. 1,317 1,198 1,103
Management and personnel costs ......... 1,311 1,313 1,403
Cleaning ............................... 1,042 1,041 1,086
Contract security ...................... 419 412 434
Repairs and maintenance ................ 258 352 349
Elevator ............................... 193 274 305
Parking ................................ 186 206 208
Insurance .............................. 111 111 116
Grounds maintenance .................... 90 105 116
------------------------------
Total operating expenses ........ 8,600 8,505 8,602
------------------------------
OTHER EXPENSES:
Interest expense ....................... 12,317 -- --
Depreciation and amortization .......... 7,182 7,222 7,688
Marketing and other expenses ........... 174 154 164
General and administrative expenses .... 8 41 44
------------------------------
Total other expenses ............ 19,681 7,417 7,896
------------------------------
Total expenses .................. 28,281 15,922 16,498
------------------------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM .... (471) 13,009 14,697
EXTRAORDINARY ITEM (Note 4) ................ (723) -- --
------------------------------
NET INCOME (LOSS) .......................... $(1,194) $13,009 $14,697
==============================
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
<CAPTION>
CSC ASSOCIATES, L.P.
--------------------
STATEMENTS OF PARTNERS' CAPITAL
-------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
----------------------------------------------------
($ in thousands)
<S> <C>
BALANCE, December 31, 1992 $ 35,600
Net loss ............... (1,194)
Capital contributions .. 173,347
Distributions .......... (1,900)
--------
BALANCE, December 31, 1993 205,853
--------
Net income ............. 13,009
Distributions .......... (14,150)
--------
BALANCE, December 31, 1994 204,712
Net income ............. 14,697
Distributions .......... (15,471)
--------
BALANCE, December 31, 1995 $203,938
========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
CSC ASSOCIATES, L.P.
--------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
----------------------------------------------------
($ in thousands)
(Note 6)
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .............................. $ (1,194) $13,009 $14,697
Extraordinary item (Note 4) ...................... 723 -- --
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization .................. 7,182 7,222 7,688
Rental revenue recognized on straight-line
basis in excess of rental revenue
specified in the lease agreements ............. (3,333) (3,156) (1,148)
Change in other receivables and
other assets ................................ 31 (315) 7
Change in accounts payable and
accrued liabilities related to operations ... (1,016) 17 1,122
-------------------------
Net cash provided by operating activities ......... 2,393 16,777 22,366
-------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to building and improvements .......... (7,242) (1,120) (6,918)
Payments for deferred expenses .................. (1,732) (1,060) (1,285)
Proceeds from (payments for) furniture, fixtures
and equipment ................................. (388) (17) 10
-------------------------
Net cash used in investing activities ............. (9,362) (2,197) (8,193)
-------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from construction loan ................. 4,533 -- --
Repayment of construction loan .................. (168,046) -- --
Capital contributions ........................... 173,347 -- --
Partnership distributions ....................... (1,900) (14,150)(15,471)
-------------------------
Net cash provided by (used in) financing activities 7,934 (14,150)(15,471)
-------------------------
NET INCREASE (DECREASE) IN CASH ................... 965 4 (1,298)
CASH AT BEGINNING OF YEAR ......................... -- 965 1,395
--------------------------
CASH AT END OF YEAR ............................... $ -- $ 1,395 $ 97
==========================
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CSC ASSOCIATES, L.P.
--------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1993, 1994 AND 1995
--------------------------------
1. FORMATION OF THE PARTNERSHIP AND TERMS OF THE PARTNERSHIP AGREEMENT
-------------------------------------------------------------------
CSC Associates, L.P. ("CSC," or the "Partnership") was formed under the
terms of a Limited Partnership Agreement dated September 29, 1989 and by the
filing of its Certificate of Limited Partnership on October 27, 1989. C&S
Premises, Inc. ("Premises") and Cousins Properties Incorporated ("CPI") each own
a 1% general partnership and a 49% limited partnership interest in the
Partnership. Premises is a wholly owned subsidiary of NB Holdings Corporation
which is a wholly owned subsidiary of NationsBank Corporation. The Partnership
was formed for the purpose of developing and owning a 1.4 million gross square
foot office tower in downtown Atlanta, Georgia (the "Building"), which is the
Atlanta headquarters of NationsBank Corporation.
The Partnership Agreement and related documents (the "Agreements") contain
among other provisions, the following:
a. CPI is the Managing Partner.
b. CPI is obligated to contribute a total of $18.2 million cash to the
Partnership, all of which has been contributed. Premises is obligated to
contribute land parcels to the Partnership having an aggregate agreed upon value
of $18.2 million, all of which has been contributed, which property value, in
the opinion of the partners, was equal to the estimated fair market value of the
land at the time of formation of the Partnership. In October 1993, the partners
each contributed an additional $86.7 million.
c. No interest is earned on partnership capital.
d. Net income or loss and cash distributions are allocated to the partners
based on their percentage interests (50% each), subject to a preference to CPI.
The CPI preference was $2.5 million, and accrued to CPI, with interest at 9% to
the extent unpaid, over the period February 1, 1992 through January 31, 1995.
During the year ended December 31, 1994, CPI received distributions of the
preference and accrued interest of approximately $2.65 million. The remaining
preference amount of $71,000 was distributed to CPI in January 1995. Amounts
above the preference amount are allocated based on the partners' percentage
interests.
2. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
Capitalization Policies
All costs related to planning, development and construction of the
Building, and expenditures for the Building prior to the date it became
operational for financial statement purposes, have been capitalized. Interest
expense, amortization of financing costs, and real estate taxes were also
capitalized while the Building was under development.
Depreciation and Amortization
Depreciation of the Building commenced the date the Building became
operational for financial statement purposes and the Building is being
depreciated over 40 years. Leasehold and tenant improvements are amortized over
the life of the leases or useful life of the assets, whichever is shorter.
Furniture, fixtures, and equipment are depreciated over 5 years. Deferred
expenses which include organizational costs, certain marketing and leasing
costs, and loan acquisition costs are amortized over the period of estimated
benefit. The straight line method is used for all depreciation and amortization.
Income Taxes
No provision has been made for federal or state income taxes because each
partner's proportionate share of income or loss from the Partnership will be
passed through to be included on each partner's separate tax return.
Rental Income
In accordance with Statement of Financial Accounting Standards No. 13
("SFAS No. 13"), income on leases which include increases in rental rates over
the lease term is recognized on a straight-line basis.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
Impairment of Long-Lived Assets
The Partnership has adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. SFAS
No. 121 also addresses the accounting for long-lived assets that are expected to
be disposed of. The adoption of SFAS No. 121 had no effect on the financial
results of the Partnership.
3. LEASES
------
The Partnership has leased office space to NB Holdings Corporation, as well
as to unrelated third parties. The lease with NB Holdings Corporation was at
rates comparable to those quoted to third parties. The leases contain escalation
provisions and provisions requiring tenants to pay a pro rata share of operating
expenses. The leases typically include renewal options and all are classified
and accounted for as operating leases.
<PAGE>
At December 31, 1995, future minimum rentals to be received under existing
non-cancelable leases, including tenants' current pro rata share of operating
expenses, are as follows ($ in thousands):
<TABLE>
<CAPTION>
Lease Leases
With With
NB Holdings Third
Corporation Parties Total
----------- ------- -----
<C> <C> <C> <C>
1996 $ 15,091 $ 16,268 $ 31,359
1997 15,110 16,113 31,223
1998 15,114 16,415 31,529
1999 15,114 16,338 31,452
2000 15,114 16,215 31,329
Subsequent to 2000 172,981 114,588 287,569
----------------------------------
$248,524 $195,937 $444,461
==================================
</TABLE>
In the years ended December 31, 1994 and 1995, income recognized on a
straight-line basis exceeded income which would have accrued in accordance with
the lease terms by $3,156,000 and $1,148,000, respectively. At December 31, 1994
and 1995, receivables which related to the cumulative excess of revenues
recognized in accordance with SFAS No. 13 over revenues which accrued in
accordance with the actual lease agreements totaled $8,536,000 and $9,684,000,
respectively. Of that amount, 23% was related to leases with NB Holdings
Corporation. At December 31, 1995, two professional services firms leased
approximately 15% and 12%, respectively, of the net rentable space of the
Building.
4. NOTES PAYABLE
-------------
At December 31, 1992, notes payable consisted solely of the amount borrowed
under a Construction Loan Agreement with six banks under which a maximum of $210
million could have been drawn. On October 29, 1993, using capital contributions
made by each partner, the Partnership paid off this note payable, which had an
outstanding balance of $168 million. Approximately $723,000 of deferred loan
costs were written off due to the early extinguishment of this note payable and
is classified as an Extraordinary Item in the accompanying Statements of
Operations. The Construction Loan was payable interest only monthly and had a
floating interest rate equal to LIBOR plus the Applicable Spread Rate which was
reduced to .65% effective January 1, 1993 and .60% effective February 1, 1993 to
maturity.
The Partnership entered into an interest rate swap agreement with an
affiliate of Premises which effectively fixed LIBOR at 8.45% through September
1993. The face amount of the swap increased over time in amounts corresponding
to the projected increases in the Construction Loan balance.
The Partnership has an unsecured $3 million line of credit provided by an
affiliate of Premises. Interest on the line is paid at a floating rate (6.45%
weighted average rate in December 1995) and interest only is payable quarterly
through July 31, 1996, at which time the entire outstanding balance is due.
There were no borrowings under the line as of December 31, 1994 and 1995.
5. RELATED PARTIES
---------------
The Partnership engaged CPI and an affiliate of CPI to manage, develop and
lease the Building. During 1993, 1994 and 1995, fees to CPI and its affiliate
incurred by the Partnership were as follows ($ in thousands):
1993 1994 1995
---- ---- ----
Development and tenant construction fees $ 58 $ 25 $ 88
Leasing and procurement fees 684 230 229
Management fees 610 640 744
------------------------------
$1,352 $895 $1,061
==============================
6. STATEMENT OF CASH FLOWS - SIGNIFICANT NON-CASH TRANSACTIONS
-----------------------------------------------------------
In 1993, 1994 and 1995, there were no significant non-cash transactions.
Interest paid was $13,387,000 and $15,000 in 1993 and 1994, respectively. No
interest was paid in 1995.
7. SUBSEQUENT EVENT
----------------
On February 6, 1996, the Partnership issued $80 million of 6.377%
collateralized notes (the "Notes"). The Notes amortize in equal monthly
installments of $590,680 based on a 20 year amortization schedule, and mature
February 15, 2011. The Notes are non-recourse obligations of the Partnership and
are secured by a Deed to Secure Debt, Assignment of Rents and Security Agreement
covering the Partnership's interest in the Building. In conjunction with this
financing, Premises transferred its 1% general partnership interest in the
partnership to C&S Premises-SPE, Inc., a wholly owned subsidiary of Premises.
The Partnership has loaned the $80 million proceeds of the Notes to CPI
under a non-recourse loan (the "CPI Loan") secured by CPI's Partnership
interests under the same payment terms as those of the Notes. CPI paid all costs
of issuing the Notes and the CPI Loan, including a $400,000 fee to an affiliate
of NationsBank Corporation. In addition, CPI will pay a monthly fee to an
affiliate of NationsBank Corporation of .025% of the outstanding principal
balance of the Notes.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
CSC ASSOCIATES, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisition December 31, 1995
---------- -------------- -----------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b)
- ----------- ------------ ---- ------------ ----- --------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NationsBank Plaza
Atlanta, Georgia $ -- $ 18,200 $ -- $180,027 $ 10,449 $ 22,818 $185,858 $208,676
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Life on
Which De-
preciation
Accumu- In 1995
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
<S> <C> <C> <C> <C>
NationsBank Plaza
Atlanta, Georgia $21,232 1990-1992 1990 5-40
</TABLE>
NOTE: (a) Reconciliations of total real estate carrying value and accumulated
depreciation for the three years ended December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
Real Estate Accumulated Depreciation
------------------------------ --------------------------
1993 1994 1995 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $195,681 $200,781 $203,275 $3,463 $ 9,176 $14,980
Improvements and other capitalized costs 5,100 2,494 5,401 -- -- -- --
Provision for depreciation -- -- -- 5,713 5,804 6,252
------------------------------ --------------------------
Balance at close of period $200,781 $203,275 $208,676 $9,176 $14,980 $21,232
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
Haywood Mall Associates
(A South Carolina Joint Venture)
We have audited the accompanying balance sheets of Haywood Mall Associates
(A South Carolina Joint Venture) as of December 31, 1995 and 1994, and the
related statements of income, cash flows and venturers' equity for each of the
three years in the period ended December 31, 1995. Our audits also included the
financial statement schedules of Haywood Mall Associates listed in the Index at
Item 14(a). These financial statements and schedules are the responsibility of
the Management of the Joint Venture. Our responsibility is to express an opinion
on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Haywood Mall Associates (A
South Carolina Joint Venture) at December 31, 1995 and December 31, 1994, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles. Also, in our opinion the related financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
ERNST & YOUNG LLP
New York, NY
February 8, 1996
<PAGE>
<TABLE>
<CAPTION>
HAYWOOD MALL ASSOCIATES
(A South Carolina Joint Venture)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
1995 1994
---- ----
ASSETS
Shopping center:
<S> <C> <C>
Land .............................. $ 3,353,335 $ 3,353,335
Building and improvements ......... 38,861,068 19,339,940
-------------------------
42,214,403 22,693,275
Less: accumulated depreciation .... 8,550,512 7,412,999
-------------------------
33,663,891 15,280,276
Construction-in-progress .......... -- 11,862,132
Cash ................................. 2,971,993 1,630,497
Receivables (principally rentals) less
allowance of $428,094 and $249,291 2,716,834 1,988,716
Other assets ......................... 5,178,154 2,063,948
-------------------------
$44,530,872 $32,825,569
=========================
LIABILITIES AND VENTURERS' EQUITY
Accounts payable and
accrued liabilities ............... $ 1,237,422 $ 956,553
Venturers' equity:
Cousins Properties Incorporated ... 21,268,088 15,891,995
Bellwether Properties of
South Carolina, L.P. ............ 22,025,362 15,977,021
-------------------------
$44,530,872 $32,825,569
=========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
HAYWOOD MALL ASSOCIATES
(A South Carolina Joint Venture)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
---- ---- ----
INCOME
<S> <C> <C>
Rental income:
Minimum ............................ $ 6,667,505 $ 6,050,650 $6,064,131
Overage ............................ 261,214 568,546 435,082
Real estate taxes .................. 459,222 418,166 408,422
Utility charges and
other operating expense recoveries 3,776,482 3,287,614 3,044,326
Interest income .................... 104,741 45,655 27,320
--------------------------------------
11,269,164 10,370,631 9,979,281
--------------------------------------
EXPENSES
Mortgage interest ..................... -- 598,389 1,842,232
Repairs and maintenance ............... 1,014,931 882,580 916,474
Utilities ............................. 917,881 820,798 806,911
Managing agent's costs
(principally payroll) .............. 924,208 840,149 817,137
Depreciation .......................... 1,137,513 597,732 598,780
Other ................................. 742,457 486,981 477,501
Real estate taxes ..................... 539,020 450,338 444,642
Leasehold rent ........................ 66,752 64,765 61,984
--------------------------------------
5,342,762 4,741,732 5,965,661
--------------------------------------
INCOME BEFORE
EXTRAORDINARY ITEM ................. 5,926,402 5,628,899 4,013,620
Extraordinary loss from
prepayment of mortgage debt ........ -- 680,277 --
--------------------------------------
NET INCOME ................... $ 5,926,402 $ 4,948,622 $4,013,620
======================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
HAYWOOD MALL ASSOCIATES
(A South Carolina Joint Venture)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
---- ---- ----
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income ................................. $ 5,926,402 $ 4,948,622 $ 4,013,620
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ............................... 1,137,513 597,732 598,780
Amortization of deferred charges ........... 482,746 363,230 338,069
Straight line adjustment for
step lease rentals ....................... (209,567) (114,085) (255,254)
Loss from prepayment of
mortgage debt ............................ -- 680,277 --
Change in operating assets and
liabilities:
Decrease/(increase) in receivables ..... (518,551) (134,841) 53,552
Increase in other assets, principally
deferred leasing costs ............... (3,596,952) (543,502) (138,880)
Increase in accounts payable and
accrued liabilities .................. 280,869 58,522 17,915
-----------------------------------------
Net Cash Provided by
Operating Activities ....................... 3,502,460 5,855,955 4,627,802
-----------------------------------------
INVESTING ACTIVITIES
Investments in shopping center ............. (7,658,996) (11,864,544) (27,247)
-----------------------------------------
Cash Used in Investing Activities ............. (7,658,996) (11,864,544) (27,247)
-----------------------------------------
FINANCING ACTIVITIES
Principal payments on mortgages ............ -- (92,492) (260,913)
Prepayment of mortgage debt ................ -- (20,116,762) --
Cash distributions ......................... (6,698,000) (,758,268) (4,105,000)
Partners' capital contribution ............. 12,196,032 32,031,738 --
-----------------------------------------
Cash Provided by (Used) in Financing Activities 5,498,032 6,064,216 (4,365,913)
-----------------------------------------
Increase in cash ........................... 1,341,496 55,627 234,642
Cash at beginning of year .................. 1,630,497 1,574,870 1,340,228
-----------------------------------------
Cash at end of year ........................... $ 2,971,993 $ 1,630,497 $ 1,574,870
=========================================
SUPPLEMENTAL DISCLOSURE
Interest paid during the year .............. $ -- $ 750,964 $ 1,844,258
=========================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
HAYWOOD MALL ASSOCIATES
(A South Carolina Joint Venture)
STATEMENTS OF VENTURERS' EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 1995
Bellwether Cousins
Properties of Properties
South Carolina, L.P. Incorporated Total
-------------------- ------------ -----
<S> <C> <C> <C>
Balance at December 31, 1992 $ 369,152 $ 369,152 $ 738,304
Net income ............ 2,006,810 2,006,810 4,013,620
Cash distributions .... (2,052,500) (2,052,500) (4,105,000)
-------------------------------------------
Balance at December 31, 1993 323,462 323,462 646,924
Net income ............ 2,474,311 2,474,311 4,948,622
Cash distributions .... (2,879,134) (2,879,134) (5,758,268)
Capital contributions . 16,058,382 15,973,356 32,031,738
-------------------------------------------
Balance at December 31, 1994 15,977,021 15,891,995 31,869,016
Net income ............ 2,963,201 2,963,201 5,926,402
Cash distributions .... (3,349,000) (3,349,000) (6,698,000)
Capital contributions . 6,434,140 5,761,892 12,196,032
-------------------------------------------
Balance at December 31, 1995 $22,025,362 $21,268,088 $43,293,450
===========================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HAYWOOD MALL ASSOCIATES
(A South Carolina Joint Venture)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
NOTE A - JOINT VENTURE AGREEMENT
Haywood Mall Associates (the "Venture") is a South Carolina Joint Venture
between Bellwether Properties of South Carolina, L.P., a South Carolina Limited
Partnership, and Cousins Properties Incorporated (hereinafter collectively
referred to as the "Venturers") formed for the purpose of owning and operating a
regional shopping center in Greenville, South Carolina.
Under the terms of the joint venture agreement, the Venturers share equally
in the cash flow and the profits and losses of the Venture.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
Shopping Center: Land and building and improvements are stated at cost.
Depreciation of the building and improvements is computed on the straight-line
method over an estimated useful life of 35 years. The tenants' alterations are
amortized over the life of the related leases. Construction-in-progress at
December 31, 1994 represents costs incurred in connection with expanding the
shopping center which was completed during April 1995.
Taxes: No provision has been made for income taxes, since any taxes which
may be payable are the liability of the individual Venturers.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
NOTE C - MORTGAGES PAYABLE
The mortgage notes which bore interest at 9% and 10-1/2% and matured in
2000 were prepaid as of April 29. 1994. A prepayment fee equal to 3-1/2% of the
outstanding principal balance was paid in the amount of $680,277.
NOTE D - LEASES
The Venture has a land lease with a base period that extends through the
year 2017. Future lease payments due under the lease, at December 31, 1995, are
as follows:
1996 - $ 67,000
1997 - 67,000
1998 - 67,000
1999 - 70,000
2000 - 72,000
Thereafter - 1,274,000
There are five l0-year renewal option periods available beginning in the
year 2017. Annual payments during the renewal periods are based upon fair market
value as determined at each renewal date.
Space in the shopping center is leased to retail tenants. Leases generally
provide for minimum rentals plus overage rentals based on the tenants' sales
volume, and also require tenants to pay a portion of real estate taxes and other
property operating expenses. Lease periods generally range from 5 to 15 years
and contain various renewal options.
Future minimum rentals (excluding expenses billable to tenants) to be
received under leases, all of which are classified and accounted for as
operating leases at December 31, 1995 are as follows:
Year Ending December 31:
Amount*
-------
1996 $ 7,777,216
1997 7,823,488
1998 7,694,450
1999 6,707,140
2000 5,810,929
Thereafter 19,015,014
-----------
TOTAL $54,828,237
===========
*Does not include rentals applicable to renewal options.
At December 31, 1994 and 1995, receivables which related to the cumulative
excess of revenues recognized in accordance with Statement of Financial
Accounting Standards No. 13 "Accounting for Leases" over revenues which accrued
in accordance with the actual lease agreements aggregates $1,735,815 and
$1,945,382, respectively.
NOTE E - RELATED PARTY TRANSACTIONS
The Venture pays Corporate Property Investors, which has an indirect
ownership interest in one of the Venturers, a leasing fee of 1% of gross rentals
received, as defined. During the years ended December 31, 1995, 1994 and 1993,
the Venture incurred leasing fees of $61,601, $62,405 and $58,951 respectively.
Such amounts are included in managing agent's costs.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
HAYWOOD MALL ASSOCIATES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Costs Capitalized Gross Amount at Which
Initial Cost Subsequent Carried at
to Company to Acquisition December 31, 1995
---------- -------------- -----------------
Carrying
Costs
Buildings Less Cost Land Buildings
and Improve- of Sales and Land and Total
Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b)
- ----------- ------------ ---- ------------ ----- --------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Haywood Mall
Greenville, S.C. $ -- $ 3,598 $ 9,630 $ 10,669 $ 0 $ 3,353 $43,623 $46,976
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Life on
Which De-
preciation
Accumu- In 1995
lated Date of Income
Deprecia- Construc- Date Statement
tion (a) tion Acquired Is Computed
--------- --------- -------- -----------
<S> <C> <C> <C> <C>
Haywood Mall
Greenville, S.C. $ 9,108 1979-1980 1979 35 (1)
7 (2
=========
</TABLE>
NOTES: (1) Estimated useful life for Buildings and Improvements.
(2) Estimated useful life for Property Equipment.
(3) Amounts will not tie to Property totals on Balance Sheet as some
real estate assets are classified as Other Assets.
(4) Reconciliations of total real estate carrying value and
accumulated depreciation for the three years ended December 31,
1995 are as follows:
<TABLE>
<CAPTION>
Real Estate Accumulated Depreciation
-------------------------------- ----------------------------
1993 1994 1995 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $23,291 $23,392 $23,897 $6,321 $7,017 $7,722
Improvements and other capitalized costs 101 505 23,079 -- -- --
Provision for depreciation -- -- -- 696 705 1,386
--------------------------------- ---------------------------
Balance at close of period $23,392 $23,897 $46,976 $7,017 $7,722 $9,108
================================= ===========================
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 11
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK USED TO COMPUTE
PRIMARY AND FULLY DILUTED INCOME PER SHARE
FOR THE FIVE YEARS ENDED DECEMBER 31, 1995
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Shares outstanding at beginning of year ....... 17,337,364 17,341,364 21,716,911 27,830,631 27,863,741
Weighted average number of shares
issued during the year .................... 3,235 910,631 1,064,574 14,151 119,439
Weighted average number of shares
acquired during the year .................. (195) (2,689) -- (441) --
Dilutive effect of outstanding options and
warrants (as determined by the application
of the Treasury Stock Method) ............. -- -- -- -- --
-------------------------------------------------------------------------
Weighted average number of shares
outstanding, as adjusted .................. 17,340,404 18,249,306 22,781,485 27,844,341 27,983,180
=========================================================================
Income from operations before gain on sale
of investment properties (000's) .......... $ 9,108 $ 9,069 $ 10,038 $ 20,539 $ 24,480
Gain on sale of investment properties, net of
applicable income tax provision (000's) ... -- 6,644 1,927 6,356 1,862
-------------------------------------------------------------------------
Net income (000's) ............................ $ 9,108 $ 15,713 $ 11,965 $ 26,895 $ 26,342
=========================================================================
Income per share:
From operations before gain on
sale of investment properties .......... $ .53 $ .50 $ .44 $ .74 $ .87
From gain on sale of investment properties,
net of applicable income tax provision . -- .36 .09 .23 .07
-------------------------------------------------------------------------
Net income per share ...................... $ .53 $ .86 $ .53 $ .97 $ .94
=========================================================================
</TABLE>
Cousins Properties Incorporated and Consolidated Entities
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
December 31,
------------
1994 1995
---- ----
<S> <C> <C>
ASSETS
PROPERTIES (Notes 4 and 8):
Operating properties, net of accumulated depreciation of
$12,112 in 1994 and $15,483 in 1995 $ 92,464 $ 93,871
Land held for investment or future development 27,353 27,035
Projects under construction 8,711 87,503
Residential lots under development 8,602 11,452
--------- ---------
Total properties 137,130 219,861
CASH AND CASH EQUIVALENTS, at cost, which approximates market 3,407 1,552
NOTES AND OTHER RECEIVABLES (Note 3) 52,571 53,868
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Notes 4 and 5) 130,838 137,260
OTHER ASSETS 6,871 5,465
---------- ----------
TOTAL ASSETS $ 330,817 $ 418,006
========== ==========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
NOTES PAYABLE (Note 4) $ 41,799 $ 113,434
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 11,144 22,681
MINORITY INTERESTS IN CONSOLIDATED ENTITIES 3,631 3,837
DEPOSITS AND DEFERRED INCOME 1,345 376
---------- ----------
TOTAL LIABILITIES 57,919 140,328
---------- ----------
COMMITMENTS AND CONTINGENT LIABILITIES (Note 4)
STOCKHOLDERS' INVESTMENT (Note 6):
Common stock, $1 par value, authorized 50,000,000 shares;
issued 27,863,741 in 1994 and 28,222,639 in 1995 27,864 28,223
Additional paid-in capital 147,495 153,265
Cumulative undistributed net income 97,539 96,190
---------- ----------
TOTAL STOCKHOLDERS' INVESTMENT 272,898 277,678
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 330,817 $ 418,006
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
<PAGE>
Cousins Properties Incorporated and Consolidated Entities
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1993 1994 1995
---- ---- ----
REVENUES:
<S> <C> <C> <C>
Rental property revenues (Note 10) $ 6,687 $ 13,150 $ 19,348
Development and construction fees 898 1,020 3,515
Management fees 1,999 2,061 2,213
Leasing and other fees 3,006 1,942 2,156
Residential lot and outparcel sales -- 6,132 9,040
Interest and other 6,456 6,801 4,764
-------- --------- ---------
19,046 31,106 41,036
-------- --------- ---------
INCOME FROM UNCONSOLIDATED JOINT VENTURES (Note 5) 5,516 12,580 14,113
- -------- --------- ---------
COSTS AND EXPENSES:
Rental property operating expenses 2,310 3,338 4,681
General and administrative expenses 7,336 7,538 7,648
Depreciation and amortization 3,164 3,742 4,516
Leasing and other commissions 193 82 20
Stock appreciation right expense (Note 6) 721 433 1,298
Residential lot and outparcel cost of sales -- 5,762 8,407
Interest expense (Note 4) -- 411 687
Property taxes on undeveloped land 537 1,085 977
Other 1,058 922 1,688
-------- --------- ---------
15,319 23,313 29,922
-------- --------- ---------
INCOME FROM OPERATIONS BEFORE INCOME TAXES
AND GAIN ON SALE OF INVESTMENT PROPERTIES 9,243 20,373 25,227
PROVISION (BENEFIT) FOR INCOME TAXES FROM
OPERATIONS (Note 7) (795) (166) 747
- -------- --------- ---------
INCOME BEFORE GAIN ON SALE OF INVESTMENT
PROPERTIES 10,038 20,539 24,480
-------- --------- ---------
GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF
APPLICABLE INCOME TAX PROVISION (Note 7) 1,927 6,356 1,862
- -------- --------- ---------
NET INCOME $ 11,965 $ 26,895 $ 26,342
======== ========= =========
INCOME PER SHARE (Note 6)
From operations before gain on sale of investment properties $ .44 $ .74 $ .87
From gain on sale of investment properties, net of
applicable income tax provision .09 .23 .07
-------- --------- ---------
NET INCOME PER SHARE $ .53 $ .97 $ .94
======== ========= =========
CASH DIVIDENDS DECLARED PER SHARE (Note 6) $ .73 $ .90 $ .99
======== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
Cousins Properties Incorporated and Consolidated Entities
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
- --------------------------------------------------------------------------------
Years Ended December 31, 1993, 1994 and 1995
($ in thousands)
<TABLE>
<CAPTION>
Additional Cumulative
Common Paid-In Undistributed
Stock Capital Net Income Total
----- ------- ---------- -----
<S> <C> <C> <C> <C>
BALANCE, December 31, 1992 $ 21,717 $ 53,427 $ 100,947 $ 176,091
--- ---- -------- ---------- ---------- ----------
Net income, 1993 -- -- 11,965 11,965
Common stock issued pursuant to:
6,100,000 share stock offering,
net of expenses 6,100 93,401 -- 99,501
Exercise of options and
Director stock plan 14 190 -- 204
Dividends declared -- -- (17,204) (17,204)
-------- ---------- ---------- ----------
BALANCE, December 31, 1993 27,831 147,018 95,708 270,557
Net income, 1994 -- -- 26,895 26,895
Common stock issued pursuant to:
Exercise of options and
Director stock plan 12 169 -- 181
Compensation paid in stock in lieu of cash 21 308 -- 329
Dividends declared -- -- (25,064) (25,064)
-------- ---------- ---------- ----------
BALANCE, December 31, 1994 27,864 147,495 97,539 272,898
Net income, 1995 -- -- 26,342 26,342
Common stock issued pursuant to:
Exercise of options and
Director stock plan 42 638 -- 680
Dividend reinvestment plan 307 4,956 -- 5,263
Compensation paid in stock in lieu of cash 10 176 -- 186
Dividends declared -- -- (27,691) (27,691)
-------- ---------- ---------- ----------
BALANCE, December 31, 1995 $ 28,223 $ 153,265 $ 96,190 $ 277,678
======== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
- --------------------------------------------------------------------------------
Cousins Properties Incorporated and Consolidated Entities
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (Note 9)
- --------------------------------------------------------------------------------
($ in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before gain on sale of investment properties $ 10,038 $ 20,539 $ 24,480
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, net of minority interests' share 3,164 3,662 4,340
Stock appreciation right expense 721 433 1,298
Cash charges to expense accrual for stock appreciation rights (147) (49) (132)
Other non-cash charges (credits) 310 (623) --
Rental revenue recognized on straight-line basis in excess
of rental revenue specified in lease agreements (391) (209) (107)
Deferred income received 297 1,131 1,673
Deferred income recognized (252) (301) (2,800)
Income from unconsolidated joint ventures (5,516) (12,580) (14,113)
Operating distributions from unconsolidated joint ventures 7,507 15,665 15,786
Compensation paid in stock in lieu of cash -- 329 186
Residential lot and outparcel cost of sales -- 5,667 8,065
Changes in other operating assets and liabilities:
Change in other receivables 440 (606) (1,018)
Change in accounts payable and accrued liabilities (1,068) 2,549 62
--------- --------- ---------
Net cash provided by operating activities 15,103 35,607 37,720
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Gain on sale of investment properties, net of applicable income tax provision 1,927 6,356 1,862
Adjustments to reconcile gain on sale of investment properties
to net cash provided by sales activities:
Cost of sales 1,444 6,923 2,869
Note received as sales consideration -- -- (500)
Deposits and deferred income recognized (3,370) -- --
Property acquisition and development expenditures (31,358) (53,573) (87,234)
Investment in unconsolidated joint ventures, including interest
capitalized to equity investments (87,180) (20,844) (9,318)
Non-operating distributions from unconsolidated joint ventures -- 586 1,226
Collection of notes receivable 386 45,011 841
Change in other assets, net (458) (2,601) 802
Principal payments received on government agency securities 585 636 103
Investment in notes receivable (5,524) (28,039) (18)
--------- --------- ---------
Net cash used in investing activities (123,548) (45,545) (89,367)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of lines of credit -- (50,138) (86,336)
Proceeds from lines of credit 3,499 73,287 78,575
Proceeds from other notes payable 22,306 475 80,116
Repayment of other notes payable (43) (16,976) (720)
Dividends paid (17,204) (25,064) (27,691)
Common stock sold, net of expenses 99,564 77 5,848
Investment in joint venture by minority interest 974 -- --
--------- --------- ---------
Net cash (used in) provided by financing activities 109,096 (18,339) 49,792
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 651 (28,277) (1,855)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 31,033 31,684 3,407
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 31,684 $ 3,407 $ 1,552
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cousins Properties Incorporated and Consolidated Entities
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1993, 1994 and 1995
1. SIGNIFICANT ACCOUNTING POLICIES
Consolidation and 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." The Company's investments in its
non-majority owned joint ventures are recorded using the equity method of
accounting. However, the recognition of losses is limited to the amount of
direct or implied financial support. Information regarding the non-majority
owned joint ventures is included in Note 5.
Certain 1993 and 1994 amounts have been reclassified to conform with the
1995 presentation.
Income Taxes:
Since 1987, Cousins has elected to be taxed as a real estate investment
trust ("REIT"). As a REIT, Cousins is not subject to corporate federal income
taxes to the extent that it distributes 100% of its taxable income (excluding
CREC's and its wholly owned subsidiaries' consolidated taxable income) to
stockholders, which is Cousins' current intention. The Company computes taxable
income on a basis different from that used for financial reporting purposes (see
Note 7). CREC and its wholly owned subsidiaries file a consolidated federal
income tax return.
Depreciation and Amortization:
Buildings are depreciated over 30 to 40 years. Furniture, fixtures and
equipment are depreciated over 5 to 15 years. Leasehold improvements and tenant
improvements are amortized over the life of the applicable leases or the
estimated useful life of the assets, whichever is shorter. Deferred expenses are
amortized over the period of estimated benefit. The straight-line method is used
for all depreciation and amortization.
Fee Income and Cost Capitalization:
Development, construction, management, and leasing fees received from
unconsolidated joint ventures are recognized as earned. A portion of these fees
may be capitalized by the joint ventures; however, the Company expenses salaries
and other direct costs related to this income. The Company classifies its share
of fee income earned by unconsolidated joint ventures as fee income rather than
joint venture income for those ventures where the related expense is borne
primarily by the Company rather than the venture.
Development, construction, and leasing fees between consolidated entities
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 ($ in thousands):
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Fees eliminated in consolidation $ 918 $ 3,019 $ 5,479
Internal costs capitalized in consolidation to
projects on which fees were eliminated $ 1,107 $ 1,508 $ 2,552
Internal costs capitalized to CREC
residential developments $ 39 $ 292 $ 498
</TABLE>
Interest, real estate taxes, and rental revenues and expenses of properties
prior to the date they become operational are also capitalized for financial
reporting purposes. Interest is also capitalized to investments accounted for by
the equity method when the investee has property under development with a
carrying value in excess of the investee's borrowings. Deferred leasing and
other capitalized costs associated with a particular property are classified
with Properties in the Consolidated Balance Sheets.
Management fees received from consolidated entities are shown as a
reduction in rental property operating expenses.
<PAGE>
Cash and Cash Equivalents:
Cash and cash equivalents includes cash and highly liquid money market
instruments. Highly liquid money market instruments include securities and
repurchase agreements with original maturities of three months or less, money
market mutual funds, and securities on which the interest or dividend rate is
adjusted to market rate at least every three months. At December 31, 1995, cash
and cash equivalents included $550,000 from a property sale held in escrow
pending reinvestment in a tax free exchange.
Rental Property Revenues:
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
13, income on leases which include scheduled increases in rental rates over the
lease term is recognized on a straight-line basis.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Stock Based Compensation:
The Company will adopt SFAS No. 123, "Accounting for Stock-Based
Compensation" during 1996. The Company anticipates it will continue to measure
compensation costs using APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and therefore the adoption of this statement will not have any
effect on the financial results of the Company.
Impairment of Long-Lived Assets:
The Company has adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. SFAS
No. 121 also addresses the accounting for long-lived assets that are expected to
be disposed of. The adoption of SFAS No. 121 had no effect on the financial
results of the Company.
2. RELATIONSHIP WITH DEVELOPMENT AND LEASING ENTITY
CREC conducts certain development and leasing activities for real estate
projects. A wholly owned subsidiary of CREC, Cousins MarketCenters, Inc. ("CMC")
(formerly known as Cousins/New Market Development Company, Inc.), develops
retail power centers for the Company. CREC also manages a joint venture property
in which it has an ownership interest. At December 31, 1993, 1994 and 1995
Cousins owned 100% of CREC's $5,025,000 par value 8% cumulative preferred stock
and 100% of CREC's nonvoting common stock, which common stock is entitled to 95%
of any dividends of CREC after preferred dividend requirements. Thomas G.
Cousins, Chairman of the Board of Cousins, owns 100% of the voting common stock
of CREC, which voting common stock is entitled to 5% of any dividends of CREC
after preferred dividend requirements. CREC is included in the Company's
Consolidated Financial Statements, but is taxed as a regular corporation. CREC
has paid no common dividends to date, and for financial reporting purposes, none
of CREC's income is attributable to Mr. Cousins' minority interest because the
face amount of CREC's preferred stock plus accumulated dividends thereon
($8,241,000 in aggregate) exceed CREC's $4,279,508 of equity.
<PAGE>
3. NOTES AND OTHER RECEIVABLES
At December 31, 1994 and 1995, notes and other receivables include the
following ($ in thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
650 Massachusetts Avenue Mortgage Notes $ 28,039 $ 27,574
Wildwood Training Facility Mortgage Note 17,791 17,416
Miscellaneous Notes 669 1,082
Cumulative rental revenue recognized on a straight-
line basis in excess of revenue which accrued in
accordance with lease terms (see Note 1) 3,945 4,052
Other Receivables 2,127 3,744
--------- --------
Total Notes and Other Receivables $ 52,571 $ 53,868
========= ========
</TABLE>
650 Massachusetts Avenue Mortgage Notes - On March 10, 1994, the Company
purchased from the Resolution Trust Corporation ("RTC") two notes aggregating
$37 million at a total cost of approximately $28 million. The two notes, which
resulted from the RTC's restructuring in December 1993 of a $53 million note,
are secured by a first deed of trust on an office building containing
approximately 250,000 square feet located at 650 Massachusetts Avenue, NW, in
Washington, D.C. The notes mature December 31, 2003, at which time their
unamortized balance will be a maximum of approximately $32.1 million. The notes
require minimum monthly payments totaling $2,818,000 annually, which through the
year 2000 are supported by a U.S. government agency lease. For financial
reporting purposes, the discounted notes are treated as non-amortizing notes to
the extent of the minimum required payments, with the minimum required payments
treated as interest income at a rate of approximately 10%. Amounts in excess of
the minimum required payments ($0 in 1994 and $465,000 in 1995) are treated as a
reduction of principal.
Wildwood Training Facility Mortgage Note - This note, which has a face
amount of $25.9 million and matures November 30, 2013, is collateralized by a
building located on land owned by the Company and leased to a limited
partnership through November 30, 2013, with no renewal option. The building is
100% leased to International Business Machines Corporation ("IBM") through
November 30, 1998. The IBM lease generates net cash flow of approximately $2.4
million annually to the limited partnership, of which approximately $2.3 million
is paid to the Company as note and lease payments. Of these amounts, ground
lease payments of $304,000 per year have been treated as rental income in the
accompanying financial statements and the remaining $2.0 million is treated as
principal amortization over the remaining ground lease term and interest at
9.235% on the carrying value of the note. The leased land is carried at $0 in
the accompanying financial statements.
IBM has an option to extend its Training Facility lease from December 1,
1998 through November 30, 2003 on terms that would generate net cash flow to the
limited partnership of approximately $3.1 million annually, of which
approximately $3.0 million would be paid to the Company as note and ground lease
payments.
Fair Value - The estimated fair value of the Company's $46.5 million and
$46.1 million of notes receivable at December 31, 1994 and 1995, respectively,
is $49.3 million and $52.1 million, respectively, calculated by discounting
future cash flows from the notes receivable at the estimated rates at which
similar loans would be made currently.
<PAGE>
4. NOTES PAYABLE, COMMITMENTS, AND CONTINGENT LIABILITIES
<TABLE>
<CAPTION>
At December 31, 1994 and 1995, the composition of notes payable was as follows ($ in thousands):
December 31, 1994 December 31, 1995
Share of Share of
Unconsolidated Unconsolidated
Company Joint Ventures Total Company Joint Ventures Total
------- -------------- ----- ------- -------------- -----
<S> <C> <C> <C> <C> <C>
Floating Rate Lines of Credit $ 40,631 $ 6,905 $ 47,536 $ 32,870 $ 23,153 $ 56,023
Fixed Rate Mortgages (primarily
non-recourse) 1,168 72,650 73,818 80,564 64,759 145,323
-------- -------- --------- --------- -------- ---------
$ 41,799 $ 79,555 $ 121,354 $ 113,434 $ 87,912 $ 201,346
======== ======== ========= ========= ======== =========
</TABLE>
<TABLE>
<CAPTION>
The following table briefly summarizes the terms of the debt outstanding at December 31, 1995 ($ in thousands):
Term/
Amortization Balance at
Period Final December 31,
Description Rate (Years) Maturity 1995
----------- ---- ------- -------- ----
<S> <C> <C> <C> <C>
Company Debt:
Line of credit ($100 million maximum) secured
by partnership interest in CSC Associates, L.P. Fed Funds + .85% 2/ N/A 9/30/96 $ 32,870
North Point MarketCenter mortgage note 8.50% 10/25 7/15/05 29,853
Perimeter Expo mortgage note 8.04% 10/30 8/15/05 21,442
Note secured by Company's interest in 650
Massachusetts Avenue mortgage notes (see Note 3) 6.53% 5/ N/A 10/01/00 28,000
Other miscellaneous notes 0% to 8.5% Various Various 1,269
---------
113,434
---------
Share of Unconsolidated Joint Venture Debt:
Wildwood:
Line of credit ($25 million maximum) Fed Funds + .75% 2/ N/A 9/1/97 13,154
2300 Windy Ridge mortgage note 7.56% 10/25 12/01/05 36,000
2500 Windy Ridge mortgage note 7.45% 10/20 12/15/05 13,000
Summit Green mortgage note 9.875% 10/30 4/1/98 5,274
Ten Peachtree Place mortgage note 8.00% 10/18 11/30/01 10,485
CC-JM II Associates ($12.2 million
construction loan) LIBOR + .9% 5/ N/A 6/26/00 7,759
Norfolk Hotel Associates ($2.4 million line of credit)Fed Funds + .85% 1/ N/A 10/31/96 2,240
---------
87,912
---------
$ 201,346
=========
</TABLE>
The Company completed three new financings and two refinancings during
1995. The North Point MarketCenter, Perimeter Expo and 650 Massachusetts Avenue
financings were completed in July, August and December 1995, respectively.
Wildwood Associates refinanced two mortgage notes in December 1995. One of those
mortgage notes, which had an $81 million balance at a 9.09% rate and matured in
August 1999, was refinanced with a $72 million 7.56% mortgage note. The second
mortgage note, which had a $31 million balance at a 9.125% rate and matured in
June 1996, was refinanced with a $26 million 7.45% mortgage note.
The note secured by the Company's interest in the 650 Massachusetts Avenue
mortgage notes actually floats at LIBOR + 1%, but as of January 10, 1996 was
effectively fixed at the 6.53% rate shown above through an interest rate swap
agreement with a financial institution.
<PAGE>
Concurrent with an $80 million financing completed February 6, 1996 (see
Note 11), the Company's line of credit was paid down to $1,000, and the terms
were modified to provide for an unsecured $10 million line maturing April 30,
1996. Prior to April 30, 1996, the Company plans to increase the line amount and
extend the maturity date.
The CC-JM II Associates venture has a commitment for a $24,675,000, 17 year
fully amortizing loan at a 7% interest rate which should fund in the first
quarter of 1996.
The Company has guaranteed its share of the Wildwood Associates, CC-JM II
Associates, and Norfolk Hotel Associates short term credit facilities. At
December 31, 1995, the Company had outstanding letters of credit totaling
$495,000, and assets with carrying values of $182,958,000 and $131,185,000 were
pledged as security on the Company's and its unconsolidated joint ventures'
debt, respectively. The fixed rate long-term mortgage debt of the Company and
its unconsolidated joint ventures is non-recourse to the Company.
As of year-end 1995, after giving effect to the $80 million financing which
occurred subsequent to year-end, the weighted average maturity of the Company's
debt, including its share of unconsolidated joint ventures, was 9 years. The
aggregate maturities of the indebtedness at December 31, 1995 summarized above
are as follows ($ in thousands):
<TABLE>
<CAPTION>
Share of
Unconsolidated
Company Joint Ventures Total
------- -------------- -----
<S> <C> <C> <C>
1996 $ 34,439 $ 16,592 $ 51,031
1997 1,023 1,338 2,361
1998 1,060 7,009 8,069
1999 1,151 1,998 3,149
2000 27,295 9,913 37,208
Thereafter 48,466 51,062 99,528
---------- -------- ---------
$ 113,434 $ 87,912 $ 201,346
========= ======== =========
</TABLE>
For each of the years ended December 31, 1993, 1994 and 1995, interest
expense was recorded as follows ($ in thousands):
<TABLE>
<CAPTION>
Share of Unconsolidated
Company Joint Ventures Total
Year Expensed Capitalized Total Expensed Capitalized Total Expensed Capitalized Total
- ---- -------- ----------- ----- -------- ----------- ----- -------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993 $ $ 346 $ 346 $ 13,990 $ 108 $ 14,098 $ 13,990 $ 454 $14,444
1994 411 1,118 1,529 7,262 7,262 7,673 1,118 8,791
1995 687 5,073 5,760 6,760 302 7,062 7,447 5,375 12,822
</TABLE>
The Company had future lease commitments under a land lease aggregating
$7.4 million over its remaining term of 73 years. Current annual lease payments
are approximately $63,000. The Company has entered into construction and design
contracts for real estate projects, of which approximately $19.6 million remains
committed at December 31, 1995. At December 31, 1994 and 1995, the carrying
value of the Company's notes payable approximates fair value.
<PAGE>
5. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
The following information summarizes financial data and principal
activities of unconsolidated joint ventures in which the Company had ownership
interests ($ in thousands). Audited financial statements for Wildwood
Associates, CSC Associates, L.P., and Haywood Mall Associates are included in
the Company's Form 10-K.
<TABLE>
<CAPTION>
Company's
Total Assets Total Debt Total Equity Investment
------------ ---------- ------------ ----------
1994 1995 1994 1995 1994 1995 1994 1995
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF FINANCIAL POSITION:
Wildwood Associates $ 227,875 $ 232,866 $ 132,608 $ 134,855 $ 92,284 $ 90,168 $ 3,289 $ 2,231
CSC Associates, L.P. 208,057 206,889 -- -- 204,712 203,938 105,239 104,776
Ten Peachtree Place Associates 21,814 21,173 21,692 20,971 (140) (17) (75) (39)
Haywood Mall Associates 32,826 44,531 -- -- 31,869 43,293 15,985 21,961
Spring/Haynes Associates 16,344 16,527 -- -- 16,331 16,502 1,603 1,688
Norfolk Hotel Associates 8,011 8,169 4,810 4,480 3,144 3,631 1,572 1,815
CC-JM II Associates 7,498 27,253 -- 15,518 5,281 8,034 2,711 4,393
Other 2,781 1,183 -- -- 1,095 882 514 435
--------- --------- --------- ---------- --------- --------- --------- ---------
$ 525,206 $ 558,591 $ 159,110 $ 175,824 $ 354,576 $ 366,431 $ 130,838 $ 137,260
========= ========= ========= ========== ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Company's Share
Total Revenues Net Income (Loss) of Net Income (Loss)
-------------- ----------------- --------------------
1993 1994 1995 1993 1994 1995 1993 1994 1995
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Wildwood Associates $36,224 $ 36,305 $ 37,767 $ 4,322 $ 4,844 $ 5,884 $ 2,161 $ 2,422 $ 2,942
CSC Associates, L.P. 27,810 28,931 31,195 (1,194) 13,009 14,697 201 6,880 7,308
Ten Peachtree Place Associates 4,263 4,228 4,276 411 461 523 240 192
236
Haywood Mall Associates 9,979 10,371 11,269 4,014 4,949 5,926 2,007 2,474 2,963
Spring/Haynes Associates 57 63 289 (214) (66) 171 (107) (33) 86
Norfolk Hotel Associates 12,680 1,029 804 1,445 664 486 723 332 243
CC-JM II Associates -- -- -- -- -- -- -- (1) --
Other 1,784 999 1,215 582 627 675 291 314 335
------- -------- -------- ------- -------- -------- ------- -------- ---
$92,797 $ 81,926 $ 86,815 $ 9,366 $ 24,488 $ 28,362 $ 5,516 $ 12,580 $ 14,113
======= ======== ======== ======= ======== ======== ======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
Company's Share Of
Cash Flows From Cash Flows From Operating
Operating Activities Operating Activities Cash Distributions
-------------------- -------------------- ------------------
1993 1994 1995 1993 1994 1995 1993 1994 1995
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATING CASH FLOWS:
Wildwood Associates $ 12,006 $ 12,999 $ 12,812 $ 6,003 $ 6,500 $ 6,406 $ 4,000 $ 4,000 $ 4,000
CSC Associates, L.P. 2,393 16,777 22,366 2,070 8,840 11,219 950 8,400 7,771
Ten Peachtree Place Associates 935 1,165 1,100 280 315 305 200 200 200
Haywood Mall Associates 4,628 5,856 3,502 2,314 2,928 1,751 2,053 2,879 3,349
Spring/Haynes Associates (98) (83) 122 (49) (42) 61 -- -- --
Norfolk Hotel Associates 33 470 338 17 235 169 -- -- --
CC-JM II Associates -- -- -- -- -- -- -- -- --
Other 843 619 721 422 310 361 304 186 466
-------- -------- -------- -------- -------- -------- ------- -------- --------
$ 20,740 $ 37,803 $ 40,961 $ 11,057 $ 19,086 $ 20,272 $ 7,507 $ 15,665 $ 15,786
======== ======== ======== ======== ======== ======== ======= ======== ========
</TABLE>
<PAGE>
Wildwood Associates - Wildwood Associates was formed in 1985 between the
Company and IBM, each as 50% partners. The partnership owns three office
buildings totaling 1.6 million rentable square feet, two office buildings under
construction totaling 250,000 rentable square feet (see Note 8), other income
producing commercial properties, and additional developable land in Wildwood
Office Park ("Wildwood") in Atlanta, Georgia. Wildwood is an office park
containing a total of approximately 289 acres, of which approximately 85 acres
are owned by Wildwood Associates and an estimated 22 acres are committed to be
contributed to Wildwood Associates by the Company; the Company owns the balance
of the developable acreage in the office park.
Wildwood Associates and a related partnership (included in the amounts for
Wildwood Associates above) also own one office building at Summit Green, an
office project situated on 21 acres of leased land in Greensboro, North
Carolina.
The Summit Green project includes sites for two additional buildings.
Through December 31, 1995, IBM had contributed $46.6 million in cash plus
properties having an agreed value of $16.3 million for its one-half interest in
Wildwood Associates. The Company has contributed $84,000 in cash plus properties
having an agreed value of $49.3 million for its one-half interest in the
partnership, and is obligated to contribute the aforesaid estimated 22 acres of
additional land with an agreed value of $13.5 million. The Company and IBM each
lease office space from the partnership at rates comparable to those charged to
third parties.
The Company's investment as recorded in the Consolidated Balance Sheets
($2.2 million at December 31, 1995) is based upon the Company's historical cost
of the properties at the time they were contributed or committed to be
contributed to the partnership, whereas its investment as recorded on Wildwood
Associates' books ($45.1 million at December 31, 1995) is based upon the agreed
values at the time the partnership was formed.
CSC Associates, L.P. ("CSC") - CSC was formed in 1989 between the Company
and a wholly owned subsidiary of NationsBank Corporation, each as 50% partners.
CSC owns the 1.3 million rentable square foot NationsBank Plaza in Atlanta,
Georgia.
CSC's net income or loss and cash distributions are allocated to the
partners based on their percentage interests (50% each), subject to a preference
to Cousins. The Cousins preference is $2.5 million (giving Cousins an additional
$1.25 million over what it would otherwise receive), and accrued to Cousins,
with interest at 9% to the extent unpaid, over the period February 1, 1992
through January 31, 1995. In October 1993, the partnership fully repaid all of
its debt with equity contributions of $86.7 million made by each partner.
Following repayment of the partnership's debt, Cousins began recognizing its
accrued preference currently in income, which resulted in Cousins recognizing
$874,000, $451,000 and $36,000 in income over what it would have otherwise
recognized in the years ended December 31, 1993, 1994 and 1995, respectively.
During the years ended December 31, 1994 and 1995, Cousins received
distributions of the preference and accrued interest of approximately $2.65
million and $71,000, respectively. Amounts above the preference amount are
allocated based on the partners' percentage interests.
Ten Peachtree Place Associates ("TPPA") - TPPA is a general partnership
between the Company (50%) and a wholly owned subsidiary of The Coca-Cola Company
("Coca-Cola") (50%). The venture owns Ten Peachtree Place, a 259,000 rentable
square foot building located in midtown Atlanta, Georgia. The building is 100%
leased to Coca-Cola through November 30, 2001.
The TPPA partnership agreement generally provides that each of the partners
is entitled to receive 50% of cash flows from operating activities net of note
principal amortization through the term of the Coca-Cola lease, after which the
Company and its partner are entitled to receive 15% and 85% of the cash flows
(including any sales proceeds), respectively, until the two partners have
received a combined distribution of $15.3 million. Thereafter, each partner is
entitled to receive 50% of cash flows.
Haywood Mall Associates - Haywood Mall Associates is a venture between the
Company and an affiliate of Corporate Property Investors. The venture owns
Haywood Mall, a regional shopping center on 86 acres 5 miles southeast of
downtown Greenville, South Carolina. Expansion of the mall from 956,000 gross
leaseable square feet ("GLA") (of which the venture's ownership is approximately
272,000 GLA) to 1,256,000 GLA (of which the venture's ownership will be
approximately 330,000 GLA) was substantially completed in 1995. The balance of
the mall is owned by the mall's five major department stores. During the year
ended December 31, 1995, the Company contributed $5.8 million to fund its share
of the completion of the expansion.
<PAGE>
Spring/Haynes Associates - This general partnership was formed in 1985
between the Company and a wholly owned subsidiary of Coca-Cola, each as 50%
general partners, to jointly own and develop real estate. The Company
contributed 40 acres of undeveloped land at Georgia Highway 400 and Haynes
Bridge Road in north central suburban Atlanta, Georgia. Coca-Cola contributed 11
acres of property in midtown Atlanta. In September 1993, the undeveloped land at
Georgia Highway 400 was distributed to the partners who concurrently
recontributed certain acres of the land into North Point Market Associates,
L.P., a consolidated partnership formed between the partners to own North Point
MarketCenter and Mansell Crossing Phase II. The Company's remaining investment
in Spring/Haynes Associates as recorded in the Consolidated Balance Sheets ($1.7
million at December 31, 1995) is based upon the Company's historical cost,
whereas its investment as recorded on the partnership's books ($8.3 million at
December 31, 1995) is based upon the agreed values of the properties at the time
they were contributed to the partnership. (See Note 11 for a description of the
Company's exchange of its interest in these two partnerships subsequent to
year-end.)
Norfolk Hotel Associates ("NHA") - NHA is a partnership between the Company
and an affiliate of Odyssey Partners, L.P., each as 50% partners, which held a
mortgage note on and owned the land under the Omni International Hotel in
Norfolk, Virginia. In January 1992, NHA terminated the land lease and became the
owner of the hotel and a long-term parking agreement with an adjacent building
owner. In April 1993, the partnership sold the hotel, but retained its interest
in the parking agreement. The Company's share of the gain on this transaction
was approximately $.5 million and is included in Income From Unconsolidated
Joint Ventures in the accompanying Consolidated Statements of Income. The
partnership received a mortgage note for a portion of the sales proceeds. In
July 1994, NHA distributed to each partner a 50% interest in the parking
agreement held by NHA. The Company currently receives payments of approximately
$228,000 per year for its 50% interest in the agreement, and has entered into an
option agreement to sell its interest for $2 million in July 1996, which would
result in a profit to the Company of approximately $411,000.
CC-JM II Associates - This joint venture was formed in 1994 between the
Company and an affiliate of Carr Realty Corporation, each as 50% general
partners, to develop and own a 224,000 rentable square foot office building in
suburban Washington, D.C. The building is 100% leased for 15 years to Booz-Allen
& Hamilton, an international consulting firm, as a part of its corporate
headquarters campus. Rent commenced on January 21, 1996. The building is
expected to be completed at a total cost of approximately $32 million with
contributions to the venture of $4 million by each partner.
Other - This category consists of several other joint ventures including:
Cousins-Hines Partnerships - Through the Cousins-Hines partnerships, CREC
effectively owns 9.8% of the One Ninety One Peachtree Tower in Atlanta, Georgia.
This 1.2 million rentable square foot office building, which opened in December
1990, was developed in partnership with the Hines Interests Limited Partnership
and the Dutch Institutional Holding Company. Because CREC's effective ownership
of this building is less than 20%, the Company accounts for its investment using
the cost method of accounting, and therefore the above tables do not include the
Company's share of One Ninety One Peachtree Tower.
Temco Associates - Temco Associates was formed in 1991 as a partnership
between the Company (50%) and a subsidiary of Temple-Inland Inc. (50%). Temco
Associates has an option through March 2006, with no carrying costs, to acquire
approximately 35,000 acres in Paulding County, Georgia (northwest of Atlanta,
Georgia), of which approximately 13,000 acres would be a fee simple interest and
approximately 22,000 acres would be a timber rights interest only. The option
may be exercised in whole or in part over the option period, and the option
price of the fee simple land was $694 per acre at December 31, 1995, escalating
at 6% per year during the term of the option. During 1993 and 1994,
approximately 1,100 and 72 acres, respectively, of the option related to the fee
simple interest was exercised and simultaneously sold for gross profits of
$305,000 and $243,000, respectively. None of the option was exercised in 1995.
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 which is 34% leased to IBM. Cousins' venture
partners are IBM and Multi Development Corporation International B.V. ("Multi"),
a Dutch real estate development company. In December 1993, the building was
presold to an affiliate of Deutsche Bank. CREC and Multi jointly developed the
building. Due to the release of certain completion guarantees related to the
building, approximately $2.6 million of development income was recognized in
September 1995 ($931,000 of which had been deferred as of December 31, 1994).
Additional Information - The Company recognized $3,106,000, $2,539,000 and
$5,780,000 of development, construction, leasing, and management fees from
unconsolidated joint ventures in 1993, 1994 and 1995, respectively.
6. STOCKHOLDERS' INVESTMENT, STOCK APPRECIATION RIGHT EXPENSE AND
PER SHARE DATA
Options and Stock Appreciation Rights:
The Company has a stock incentive plan for key employees which provides for
the granting of stock options. Subject to stockholder approval, the Company
amended this plan effective as of September 1995 so as to allow for both stock
and stock option awards under the plan (see "Stock Grants" below). At December
31, 1995, the Company had granted options to key employees to purchase 1,412,578
shares of the Company's common stock (including 258,228 shares under a
predecessor plan), and subject to stockholder approval of the 1995 amendment, is
authorized to award an additional 1,202,850 stock options or shares of stock.
The Company may incorporate a provision in each stock option agreement to allow
the option holder to surrender options and request a cash payment for the
difference between the fair market value of the shares at the date of surrender
and the option price. Separately from the stock incentive plan, the Company has
issued stock appreciation rights ("SARs") to certain employees.
In order to compensate the holders of unexercised stock options for
decreases in the underlying value of shares subject to the options resulting
from certain capital gain distributions to stockholders, the Company issued
Deferred Payment Agreements from 1988 through 1991 to holders of unexercised
stock options at the time of such distributions. These Deferred Payment
Agreements provided for a fixed cash payment to stock option holders upon
exercise of the options in an amount approximately equal to the amount of the
capital gain distribution that would have been payable on the shares subject to
the options if the options had been exercised prior to the record date for the
distributions. Holders of SARs were similarly compensated by a downward
adjustment in the price of SARs held by them.
Financial Accounting Standards Board pronouncements require that all stock
options which have a cash payment election option be accounted for as SARs.
Accordingly, included in the Consolidated Statements of Income under the heading
"stock appreciation right expense" are increases or reductions in accrued
compensation expense to reflect the issuance of new SARs or stock options with
cash payment provisions, vesting, changes in the market value of the common
stock from the dates of grant, and expirations of non-vested options or SARs of
terminated employees. In the first quarter of 1993, the cash payment provision
associated with 374,341 stock options was given up by certain of the option
holders, thereby reducing stock appreciation right expense for 1993 by
approximately $502,000.
The following is a summary of stock option activity under the stock option
plan ($ in thousands, except per share amounts):
<TABLE>
<CAPTION>
Number of Total Option
Shares Price Option Price Per Share
------ ----- ----------------------
1994 1995 1994 1995 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 911 1,184 $ 13,503 $ 17,919 $ 4.82 to $17.75 $ 8.11 to $17.75
Terminated -- (29) -- (493) $ -- $ 15.75 to $17.75
Exercised (11) (42) (57) (579) $ 4.82 $ 8.11 to $17.75
Granted 284 300 4,473 5,396 $ 15.75 $ 18.00
----- ----- -------- --------
Outstanding, end of year 1,184 1,413 $ 17,919 $ 22,243 $ 8.11 to $17.75 $ 9.00 to $18.00
===== ===== ======== ========
Shares exercisable
at end of year 567 805
=== ===
</TABLE>
At December 31, 1994, the Company had 369,215 SARs outstanding (of which
225,360 were exercisable) at prices ranging from $10.78 per share to $16.875 per
share. At December 31, 1995, the Company had 344,050 SARs outstanding (of which
271,780 were exercisable) at prices ranging from $10.78 per share to $16.875 per
share.
At December 31, 1994 and 1995, the total amount accrued for stock options,
SARs, and Deferred Payment Agreements was $2,296,000 and $3,367,000,
respectively.
Stock Grants:
As indicated above, the September 1995 amendment to the stock incentive
plan provides for stock awards in addition to stock option awards, with the
amended plan being subject to stockholder approval. The stock awards may be
subject to specified performance and vesting requirements. Subject to
stockholder approval of the September 1995 amendment, 110,400 shares of common
stock have been awarded to date, of which 10,400 shares were awarded in lieu of
1995 cash bonuses, and 100,000 shares were awarded subject to specified
performance and vesting requirements. The estimated cost of the 100,000 shares,
which will not be issued until all requirements have been met, is being accrued
over the five year performance and vesting period, and $44,000 was accrued as of
December 31, 1995.
Per Share Data:
Primary income per share is computed by dividing income by the weighted
average number of shares of common stock and dilutive common stock equivalents
outstanding (22,781,485, 27,844,341 and 27,983,180 in 1993, 1994 and 1995,
respectively). Fully diluted income per share does not differ materially from
primary income per share in 1993, 1994 and 1995.
Ownership Limitations:
In order to maintain Cousins' qualification as a REIT, Cousins' Articles of
Incorporation include certain restrictions on the ownership of more than 3.9% of
the Company's common stock.
Distribution of REIT Taxable Income:
The following is a reconciliation between dividends declared and dividends
applied in 1993 and 1994 and estimated to be applied in 1995 to meet REIT
distribution requirements ($ in thousands):
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Dividends declared $ 17,204 $ 25,064 $ 27,691
That portion of dividends declared in current year, and paid in current
year, which was applied to the prior year distribution requirements (665) (161) (3,048)
That portion of dividends declared in subsequent year, and paid in
subsequent year, which will apply to current year 161 3,048 3,118
-------- -------- --------
Dividends applied to meet current year REIT distribution requirements $ 16,700 $ 27,951 $ 27,761
======== ======== ========
</TABLE>
Dividends applied to meet REIT distribution requirements were equal to
Cousins' taxable income (see Note 7). Since electing to qualify as a REIT in
1987, Cousins has had no accumulated undistributed taxable income.
7. INCOME TAXES
In 1993, 1994 and 1995, because Cousins qualified as a REIT and distributed
all of its taxable income (see Note 6), it incurred no federal income tax
liability. The differences between taxable income as reported on Cousins' tax
return (actual 1993 and 1994 and estimated 1995) and Consolidated Net Income as
reported herein are as follows ($ in thousands):
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Consolidated net income $ 11,965 $ 26,895 $ 26,342
Consolidating adjustments 515 (1,875) 348
Less CREC net loss (income) 1,413 394 (1,652)
-------- -------- --------
Cousins net income for financial reporting purposes 13,893 25,414 25,038
Adjustments arising from:
Sales of investment properties 17,563 3,909 (2,014)
Income from unconsolidated joint ventures (principally depreciation,
revenue recognition, and operational timing differences) (7,529) (2,361) (1,557)
Rental income recognition (403) (111) (192)
Interest income recognition -- 198 123
Wildwood Training Facility differences (7,664) 342 375
Interest expense 194 297 3,520
Compensation expense under stock option and SAR plans 138 92 290
Depreciation 59 336 324
Net operating loss generated (utilized) 295 (295) --
Other 154 130 1,854
-------- -------- --------
Cousins taxable income $ 16,700 $ 27,951 $ 27,761
======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The consolidated provision (benefit) for income taxes is composed of the
following ($ in thousands):
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
CREC and its wholly owned subsidiaries:
Currently payable (refundable):
Federal $ (577) $ -- $ 574
State (157) -- 17
(734) -- 591
Adjustments arising from:
Income from unconsolidated joint ventures 687 411 171
Operating loss carryforward (628) (94) 323
Stock appreciation right expense (166) (111) (324)
Fee income -- (361) 354
Other 16 (33) (49)
(91) (188) 475
CREC provision (benefit) for income taxes (825) (188) 1,066
Cousins provision (benefit) for state income taxes 30 22 (228)
Less provision applicable to gain on sale of investment properties -- -- (91)
-------- -------- --------
Consolidated provision (benefit) applicable to income from operations $ (795) $ (166) $ 747
======== ======== ========
</TABLE>
The Cousins provision (benefit) for state income taxes in 1995 is net of
$252,000 of state income tax refunds related to a successful judicial appeal by
Cousins of an assessment paid in 1992.
The net income tax provision (benefit) differs from the amount computed by
applying the statutory federal income tax rate to CREC's income (loss) before
taxes as follows ($ in thousands):
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
Amount Rate Amount Rate Amount Rate
------ ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Federal income tax provision (benefit) $ (761) 34% $(198) 34% $ 924 34%
State income tax provision (benefit), net of
federal income tax effect (90) 4 (23) 4 109 4
Other 26 (1) 33 (5) 33 1
------ --- ----- --- ----- ---
CREC provision (benefit) for income taxes (825) 37% (188) 33% 1,066 39%
--- --- ---
Cousins provision (benefit) for income taxes 30 22 (228)
Less provision applicable to gain on sale of
investment properties -- -- (91)
------ ----- -----
Consolidated provision (benefit) applicable to income
from operations $ (795) $(166) $ 747
====== ===== =====
</TABLE>
<TABLE>
<CAPTION>
The components of CREC's net deferred tax liability are as follows ($ in
thousands):
1994 1995
---- ----
<S> <C> <C>
Deferred tax assets $ 1,711 $ 1,405
Deferred tax liabilities (3,017) (3,221)
-------- --------
Net deferred tax liability $ (1,306) $ (1,816)
======== ========
</TABLE>
The tax effect of significant temporary differences representing CREC's
deferred tax assets and liabilities are as follows ($ in thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Operating loss carryforward $ 721 $ 310
Income from unconsolidated joint ventures (2,775) (2,946)
Stock appreciation right expense 430 755
Fee income 361 7
Other (43) 58
-------- --------
$ (1,306) $ (1,816)
======== ========
</TABLE>
8. PROPERTY TRANSACTIONS
Retail Properties
In September 1995, North Point MarketCenter Phase II, a 176,000 square foot
(60,000 of which is owned by the Company) retail power center expansion in north
central suburban Atlanta, became fully operational for financial reporting
purposes. In October 1995, Lawrenceville MarketCenter, a 499,000 square foot
retail power center in northeast suburban Atlanta, became partially operational
for financial reporting purposes. In December 1995, Lovejoy Station, a 77,000
square foot retail strip center in south central suburban Atlanta, became
partially operational for financial reporting purposes.
Construction which commenced during 1995 included: Mansell Crossing Phase
II, a 100,000 square foot retail power center expansion adjacent to the
Company's other North Point properties, in February 1995; Colonial Plaza
MarketCenter, a 533,000 square foot retail power center in suburban north
central Orlando, Florida, in February 1995; Greenbrier MarketCenter, a 474,000
square foot retail power center in Chesapeake, Virginia, in May 1995;
Presidential MarketCenter Phase II, a 130,000 square foot retail power center
expansion in northeast suburban Atlanta, in November 1995; and Rivermont
Station, a 92,000 square foot retail strip center in north central suburban
Atlanta, in December 1995.
Office Properties
In August 1995, Wildwood Associates commenced construction on two new
office buildings on approximately 12.6 acres of land it owns in Wildwood Office
Park. The two buildings will be a total of 250,000 rentable square feet of which
227,000 rentable square feet are pre-leased to Georgia-Pacific Corporation.
In November 1995, construction commenced on 200 North Point Center East, a
125,000 rentable square foot office building at North Point, adjacent to 100
North Point Center East (a building of similar size which opened in December
1995), North Point Mall and the Company's retail properties in north central
suburban Atlanta.
Residential Lots
The Company is currently developing five residential communities in
suburban Atlanta, including four in which development commenced in 1994 and one
in 1995. These developments currently include land on which approximately 827
lots are being developed (with additional lots developable on adjacent land
under option), of which 116 and 180 lots were sold in 1994 and 1995,
respectively. 9. CONSOLIDATED STATEMENTS OF CASH FLOWS - SUPPLEMENTAL
INFORMATION
<TABLE>
<CAPTION>
Interest (net of amounts capitalized) (see Note 4) and income taxes paid (net of refunds) were as follows ($ in
thousands):
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Interest paid $ -- $ 336 $ 846
Income taxes paid (refunded), net of $577 and
$252 refunded in 1994 and 1995, respectively $ 68 $ (549) $ 376
</TABLE>
Significant non-cash financing and investing included the following:
a. In 1994 and 1995, approximately $27,602,000 and $2,860,000,
respectively, was transferred from Projects Under Construction to Operating
Properties.
b. In 1994 and 1995, approximately $941,000 and $2,970,000, respectively,
was transferred from Land Held for Investment or Future Development to Projects
Under Construction. In 1993, approximately $4,709,000 was transferred from Land
Held for Investment or Future Development to Operating Properties.
c. In July 1994, Norfolk Hotel Associates distributed a 50% interest
(approximately $1,589,000) in a long-term parking agreement with an adjacent
building owner (see Note 5).
d. In September 1993, the carrying value of the Company's land and
infrastructure costs for North Point MarketCenter (approximately $7,933,000) was
transferred from Land Held for Investment or Future Development to Projects
Under Construction. Included in the $7,933,000 of costs transferred to Projects
Under Construction was the Company's carrying value (approximately $495,000) of
a concurrent land distribution from Spring/Haynes Associates. Also concurrently,
an affiliate of Coca-Cola contributed the land it previously held in
Spring/Haynes Associates for a 17.7% minority interest in the North Point
MarketCenter project, which was recorded at a value of $2,658,000 (see Note 5).
<PAGE>
10. RENTAL PROPERTY REVENUES
The Company's leases typically contain escalation provisions and provisions
requiring tenants to pay a pro rata share of operating expenses. The leases
typically include renewal options and all are classified and accounted for as
operating leases.
<TABLE>
<CAPTION>
At December 31, 1995, future minimum rentals to be received by consolidated
entities under existing non-cancelable leases, excluding tenants' current pro
rata share of operating expenses, are as follows ($ in thousands):
Retail Office Total
------ ------ -----
<S> <C> <C> <C>
1996 $ 13,949 $ 6,536 $ 20,485
1997 13,964 6,601 20,565
1998 13,959 6,394 20,353
1999 13,768 6,358 20,126
2000 13,306 5,047 18,353
Subsequent to 2000 148,920 16,882 165,802
--------- -------- ---------
$ 217,866 $ 47,818 $ 265,684
========= ======== =========
</TABLE>
For the years ended December 31, 1993, 1994 and 1995, income recognized on a
straight-line basis for financial reporting purposes exceeded income which
accrued in accordance with the lease terms by $391,000, $209,000 and $107,000,
respectively (see Notes 1 and 3). Of the future minimum office rentals, 75% are
attributable to the three major tenants of the Company's First Union Tower
project in Greensboro, North Carolina. 11. SUBSEQUENT EVENTS
CSC Associates, L.P. Financing
On February 6, 1996, CSC Associates, L.P. ("CSC") issued $80 million of
6.377% collateralized notes (the "Notes"). The Notes amortize in equal monthly
installments of $590,680 based on a 20 year amortization schedule, and mature
February 15, 2011. The Notes are non-recourse obligations of CSC and are secured
by a Deed to Secure Debt, an Assignment of Rents and Security Agreement covering
CSC's interest in the NationsBank Plaza building and related leases and
agreements.
CSC has loaned the $80 million proceeds of the Notes to the Company under a
non-recourse loan (the "Cousins Loan") secured by the Company's interest in CSC
under the same payment terms as those of the Notes. The Company paid all costs
of issuing the Notes and the Cousins Loan, including a $400,000 fee to an
affiliate of NationsBank Corporation. In addition, the Company will pay a fee to
an affiliate of NationsBank Corporation of .3% per annum of the outstanding
principal balance of the Notes. The Company used the proceeds to temporarily pay
down short term debt, and will ultimately use the funds for continuing
development opportunities.
Exchange of Interests in North Point Market Associates, L.P. and
Spring/Haynes Associates
At December 31, 1995, the Company had interests in two partnerships with
Coca-Cola which were exchanged subsequent to year-end: Spring/Haynes Associates
(50% interest) and North Point Market Associates, L.P. (82.3% interest) (see
Note 5). Effective January 1, 1996, the Company and Coca-Cola entered into an
exchange transaction which effectively resulted in Coca-Cola receiving 100% of
the Spring/Haynes Associates' property and the Company receiving $1,092,000 in
cash and 100% of North Point Market Associates, L.P.'s properties (North Point
MarketCenter and Mansell Crossing Phase II).
Los Altos MarketCenter
In February 1996, the Company purchased the Los Altos Shopping Center, a
retail center located in Long Beach, California. The Company commenced the
demolition of the retail center and began construction of Los Altos
MarketCenter, a 280,000 square foot (of which the Company will own 152,000
square feet) retail power center which is expected to be completed at a total
cost of approximately $23 million.
<PAGE>
Cousins Properties Incorporated and Consolidated Entities
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Rental property revenues $ 6,728 $ 6,933 $ 6,687 $ 13,150 $ 19,348
Fees 4,855 4,953 5,903 5,023 7,884
Residential lot and outparcel sales -- -- -- 6,132 9,040
Interest and other 7,127 6,989 6,456 6,801 4,764
---------- ---------- ---------- --------- ---------
Total revenues 18,710 18,875 19,046 31,106 41,036
---------- ---------- ---------- --------- ---------
Income from unconsolidated joint ventures 2,434 2,573 5,516 12,580 14,113
---------- ---------- ---------- --------- ---------
Rental property operating expenses 2,456 2,354 2,310 3,338 4,681
Depreciation and amortization 2,236 2,345 3,164 3,742 4,516
Stock appreciation right expense 378 860 721 433 1,298
Residential lot and outparcel cost of sales -- -- -- 5,762 8,407
Interest expense 1,149 820 -- 411 687
General, administrative, and other expenses 5,573 5,640 9,124 9,627 10,333
---------- ---------- ---------- --------- ---------
Total expenses 11,792 12,019 15,319 23,313 29,922
---------- ---------- ---------- --------- ---------
Provision (benefit) for income taxes
from operations 244 360 (795) (166) 747
Gain on sale of investment properties,
net of applicable income tax provision -- 6,644 1,927 6,356 1,862
---------- ---------- ---------- --------- ---------
Net income $ 9,108 $ 15,713 $ 11,965 $ 26,895 $ 26,342
========== ========== ========== ========= =========
Income per share:
From operations before gain on
sale of investment properties $ .53 $ .50 $ .44 $ .74 $ .87
From gain on sale of investment proper-
ties, net of applicable tax provision -- .36 .09 .23 .07
---------- ---------- ---------- --------- ---------
Net income per share $ .53 $ .86 $ .53 $ .97 $ .94
========== ========= ========== ========= =========
Cash dividends declared per share $ .60 $ .62 $ .73 $ .90 $ .99
========== ========= ========== ========= =========
Total assets $ 169,406 $ 195,791 $ 319,702 $ 330,817 $ 418,006
Notes payable 34,680 9,079 35,151 41,799 113,434
Stockholders' investment 114,100 176,091 270,557 272,898 277,678
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Stockholders of Cousins Properties Incorporated:
We have audited the accompanying consolidated balance sheets of Cousins
Properties Incorporated (a Georgia corporation) and consolidated entities as of
December 31, 1994 and 1995, and the related consolidated statements of income,
stockholders' investment and cash flows for each of the three years in the
period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of CSC Associates, L.P. and Haywood Mall Associates which
statements combined reflect assets of 46% and 45% of the joint ventures totals
as of December 31, 1994 and 1995 and revenues of 41%, 48% and 49% of the 1993,
1994 and 1995 joint ventures totals, respectively. Those statements were audited
by other auditors whose reports have been furnished to us and our opinion,
insofar as it relates to the amounts included for those entities as of December
31, 1994 and 1995 and for each of the three years in the period ended December
31, 1995, is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Cousins Properties Incorporated and consolidated
entities as of December 31, 1994 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 20, 1996
<PAGE>
Cousins Properties Incorporated and Consolidated Entities
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Results of Operations For The Three Years Ended December 31, 1995
General. Historically, the Company's financial results have been
significantly affected by sale transactions and the fees generated by, and
start-up operations of, major real estate developments, which transactions and
developments do not necessarily recur. Accordingly, the Company's historical
financial statements may not be indicative of future operating results. For
information as to certain factors which may affect future income and cash flow,
see "Additional Prospective Information." The notes referenced in the discussion
below are the "Notes to Consolidated Financial Statements" included in this
annual report.
Rental Property Revenues and Operating Expenses. Rental property revenues
increased from $6,687,000 in 1993 to $13,150,000 and $19,348,000 in 1994 and
1995, respectively. The increases in 1994 and 1995 are primarily due to rental
property revenues from the Company's retail power centers. Perimeter Expo which
became operational in December 1993 increased $3,022,000 and $418,000 in 1994
and 1995, respectively. North Point MarketCenter which became operational in May
1994 (Phase I) and July 1995 (Phase II) increased $1,958,000 and $2,437,000 in
1994 and 1995, respectively. Presidential MarketCenter which became operational
in December 1994 increased $117,000 and $1,762,000 in 1994 and 1995,
respectively. Lawrenceville MarketCenter which became operational in December
1995 contributed to the increased results in 1995 by $312,000.
Rental property revenues from 20 acres of the Georgia Highway 400 land
being ground leased to freestanding users also increased in 1994 and 1995 by
$400,000 and $429,000, respectively. Approximately 6 acres of leases began
generating income during the fourth quarter of 1993, with 7 acres of leases
beginning throughout 1994 and an additional 7 acres of leases beginning
throughout 1995.
Rental property revenues were also affected by changes which occurred in
the 3301 Windy Ridge Parkway Building, a 107,000 square foot Company wholly
owned building in Wildwood Office Park, which had rental property revenues of
$0, $876,000 and $1,001,000 in 1993, 1994 and 1995, respectively. This building
was unoccupied during 1993. Subsequently, commencing January 1994 a single
tenant leased the building for a term of ten years. The lease was initially for
60% of the building, with options permitting the tenant to expand its occupancy
to the remainder of the building over the next several years; the first such
option for an additional 10% of the space was exercised in the fourth quarter of
1994. Rental property revenues were also favorably impacted over the three year
period by First Union Tower, which had rental property revenues of $5,421,000,
$5,522,000 and $5,961,000 in 1993, 1994 and 1995, respectively.
Rental property operating expenses increased from $2,310,000 in 1993 to
$3,338,000 and $4,681,000 in 1994 and 1995, respectively. The increases in 1994
and 1995 were primarily related to the occupancy of the retail power centers and
the two office buildings discussed above.
Development and Construction Fees. Development and construction fee income
increased from $898,000 in 1993 to $1,020,000 and $3,515,000 in 1994 and 1995,
respectively. The increase in 1995 is due primarily to the recognition of
development income from the Dusseldorf project ($2,604,000) (see Note 5) and an
increase of $244,000 in development fees recognized from Wildwood Associates.
This increase was partially offset by a decrease in development fees of $313,000
recognized by CMC from third party retail developments. Development fees
received from the Emory Conference Center, a third party development, also
decreased in 1995 by $117,000.
The increase in 1994 was primarily related to development fees received
from the Emory Conference Center, ($235,000 increase). This increase was
partially offset by a decrease of $112,000 in office tenant construction
activity.
Management Fees. Management fees increased from $1,999,000 in 1993 to
$2,061,000 and $2,213,000 in 1994 and 1995, respectively. Management fees
increased in 1994 and 1995 primarily due to lease-up of the projects from which
management fees are received.
Leasing and Other Fees and Leasing and Other Commissions Expense. Leasing
and other fees decreased from $3,006,000 in 1993 to $1,942,000 in 1994, and then
increased to $2,156,000 in 1995. The increase in 1995 was due primarily to a
$374,000 third party incentive fee and a $276,000 cash flow and sale
participation received from third party retail projects. Leasing fee income from
NationsBank Plaza also increased $141,000 in 1995. Partially offsetting these
increases was a decrease in leasing fees received from third party retail
projects as such third party work was phased out and in-house development
increased.
The decrease in 1994 was also due to a decrease in leasing fees received
from third party retail projects of $802,000. Office leasing fees also decreased
in 1994 by $262,000.
Changes in leasing commission expense were associated primarily with the
changes in leasing fee income recognized from One Ninety One Peachtree Tower and
retail leasing and other fees received from third parties.
Residential Lot and Outparcel Sales and Cost of Sales. Residential lot and
outparcel sales increased from $0 in 1993 to $6,132,000 and $9,040,000 in 1994
and 1995, respectively. Both the increases in 1994 and 1995 were due to
increases in residential lot sales by CREC from none in 1993 to 116 and 180 in
1994 and 1995, respectively. CMC also recognized $1,300,000 and $525,000 in
outparcel sales in 1994 and 1995, respectively.
Residential lot and outparcel cost of sales increased from $0 in 1993 to
$5,762,000 and $8,407,000 in 1994 and 1995, respectively. The increases in both
years were due to the increases in sales discussed above.
Interest and Other Income. Interest and other income increased from
$6,456,000 in 1993 to $6,801,000 in 1994 and then decreased to $4,764,000 in
1995. The decrease in 1995 is due to decreases in interest income received from
the 9.1% Mortgage Notes ($1,813,000 decrease) and temporary investments
($163,000 decrease). The 9.1% Mortgage Notes which had a balance of $39,927,000
at December 31, 1993 were repaid in full on June 30, 1994. The decrease in
temporary investment income was primarily due to the Company's investment of its
excess cash in real estate assets in 1995. Partially offsetting these decreases
was an increase of $533,000 due to the recognition of a full year of interest
income from the 650 Massachusetts Avenue Notes which were purchased in March
1994 (see Note 3).
The increase in 1994 is primarily due to interest income of $2,285,000
being recognized from the purchase of the 650 Massachusetts Avenue Notes.
Additionally, the Company recognized a gain of $623,000 on the sale of a
non-real estate asset in November 1994. Offsetting these increases in 1994 were
decreases in interest income received from the 9.1% Mortgage Notes ($1,820,000
decrease) and temporary investments ($511,000 decrease).
Income From Unconsolidated Joint Ventures. (All amounts reflect the
Company's share of joint venture income.) Income from unconsolidated joint
ventures increased from $5,516,000 in 1993 to $12,580,000 and $14,113,000 in
1994 and 1995, respectively.
Income from CSC Associates, L.P. increased from $201,000 in 1993 to
$6,880,000 and $7,308,000 in 1994 and 1995, respectively. The increase in 1995
is due to the continued lease-up of NationsBank Plaza as the leases which were
executed in 1994 began to favorably impact the operating results in 1995. The
Company's share of both the 1994 and 1995 results benefited by $451,000 and
$36,000 in 1994 and 1995, respectively, due to recognition by the Company of a
partnership income preference after the partnership's debt was repaid in October
1993 and net income became positive (see Note 5). In addition, the total
interest expense of the partnership was reduced by approximately $12.3 million
in 1994 because of the partnership's debt prepayment (see Note 5).
Income from Wildwood Associates increased from $2,161,000 in 1993 to
$2,422,000 and $2,942,000 in 1994 and 1995, respectively. The increase in 1995
is the result of the lease-up of the 2500 Windy Ridge Parkway Building ($144,000
increase in net operating income) and the 3200 Windy Hill Road Building ($67,000
increase in net operating income). Results in 1995 were favorably impacted by
lower interest expense (approximately $155,000) which was due to increased
interest capitalization and refinancings of two mortgage notes payable in
December 1995. Depreciation and amortization expense which was lower in 1995
(approximately $147,000) and increased rental income from certain ground lease
sites (approximately $57,000) also favorably impacted 1995 results. The increase
in 1994 was primarily because of leaseup of the 3200 Windy Hill Road Building
($287,000 increase in net operating income). Results in 1994 were also favorably
impacted by increased rental income (approximately $139,000) from certain ground
lease sites which began generating revenue during the fourth quarter of 1993 and
second quarter of 1994.
Income from Haywood Mall Associates increased from $2,007,000 in 1993 to
$2,474,000 and $2,963,000, in 1994 and 1995, respectively. The Company's share
of the 1995 results was favorably impacted by the venture's prepayment of its
outstanding debt through equity contributions of $10 million from each partner
on April 29, 1994. Results in 1995 reflect no interest expense as compared to
four months of interest expense in 1994 (a decrease in interest expense of
$299,000). Results in 1995 also reflect increases in operating income due to the
completion and lease-up of the expansion of Haywood Mall (see Note 5). The
Company's share of the 1994 results also benefited from the prepayment of the
debt as discussed above. Results in 1994 reflect four months of interest expense
as compared to twelve months of interest expense in 1993 ($613,000 decrease).
Partially offsetting this favorable impact of reduced interest expense in 1994
was a $340,000 charge incurred related to the prepayment of the venture's
mortgage debt.
Income from Norfolk Hotel Associates decreased from $723,000 in 1993 to
$332,000 and $243,000 in 1994 and 1995, respectively. The decrease in 1995 was a
result of the July 1994 distribution to each partner of a 50% interest in the
parking agreement (see Note 5). The 1994 results include seven months of income
from the parking agreement versus none in 1995, a decrease of $121,000. Income
in 1993 was favorably impacted by a $460,000 gain recognized upon the sale of
the Omni International Hotel in April 1993. Subsequent to the sale, the
partnership recognized more net income from the sales proceeds (including a
purchase money first mortgage note) than it was receiving from hotel operations
prior to the sale.
General and Administrative Expenses. General and administrative expenses
increased from $7,336,000 in 1993 to $7,538,000 and $7,648,000 in 1994 and 1995,
respectively. The increases in 1994 and 1995 were primarily because of personnel
increases related to the Company's expansion, offset by an increase in costs
capitalized to projects under development ($3,049,000 in 1995 versus $1,800,000
in 1994).
Depreciation and Amortization. Depreciation and amortization increased from
$3,164,000 in 1993 to $3,742,000 and $4,516,000 in 1994 and 1995, respectively.
Both the 1994 and 1995 increases are due primarily to the retail power centers
becoming operational as discussed above (increases of $824,000 and $1,061,000 in
1994 and 1995, respectively). These increases were partially offset by decreases
of $439,000 and $211,000 in 1994 and 1995, respectively, in amortization of
intangible assets acquired when the Company purchased the retail development
business of New Market Companies, Inc. These intangible assets were being
written off as the related income was recognized.
Stock Appreciation Right Expense. Stock appreciation right expense
decreased from $721,000 in 1993 to $433,000 in 1994 and then increased to
$1,298,000 in 1995. This non-cash item is primarily related to the price per
share of the common stock, which increased over the three year period and was
$16.50, $17.375 and $20.25 per share at December 31, 1993, 1994 and 1995,
respectively. The cash payment provision associated with 374,341 stock options
was given up by certain of the option holders in 1993, thereby reducing stock
appreciation right expense by approximately $502,000 (see Note 6).
Interest Expense. Interest expense increased from $0 in 1993 to $411,000
and $687,000 in 1994 and 1995, respectively. All interest was capitalized in
1993. In 1995, interest expense before capitalization increased to $5,760,000
from $1,529,000 in 1994 due to higher debt levels. This increase was partially
offset by increased capitalization because of a higher level of projects under
development. The amount of interest capitalized to projects under development (a
reduction of interest expense) increased to $5,073,000 in 1995 from $1,118,000
in 1994.
Property Taxes on Undeveloped Land. Property taxes on undeveloped land
increased from $537,000 to $1,085,000 in 1994 and then decreased to $977,000 in
1995. The increase in 1994 is due primarily to an increase in property taxes of
the Company's Georgia Highway 400 land ($579,000 increase of which $150,000
related to a 1993 property tax reassessment).
Other Expenses. Other expenses decreased from $1,058,000 in 1993 to
$922,000 in 1994 and then increased to $1,688,000 in 1995. The increase in 1995
is due primarily to an increase of $631,000 in predevelopment expenses. Other
expenses were negatively impacted in 1993 because of a $310,000 charge made for
the present value of an indemnification an insurance company in rehabilitation
had made to the Company in 1974, but defaulted on in the third quarter of 1993.
This obligation is due in monthly installments of principal and interest of
$3,208 through December 2009. Partially offsetting the favorable variance of no
similar expense in 1994 was an increase in predevelopment expenses of $244,000
from 1993 to 1994.
Provision (Benefit) For Income Taxes From Operations. The benefit for
income taxes from operations decreased from a benefit of $795,000 in 1993 to a
benefit of $166,000 in 1994, which benefit decreased in 1995 to a provision of
$747,000. The provision (benefit) for income taxes from operations increased
from 1994 to 1995 due primarily to an increase in CREC and its subsidiaries' net
income before income taxes from a net loss before income taxes of $582,000 to
net income before income taxes of $2,626,000. The increase in CREC and its
subsidiaries' net income before income taxes was due to the recognition of
certain of the development income from the Dusseldorf project by CREC (see Note
5). Also contributing to the increase in net income before income taxes was an
increase in intercompany development and leasing fees recognized from $3,019,000
in 1994 to $5,479,000 in 1995. Intercompany fee income is eliminated in
consolidation (see Note 1), 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. The benefit for income taxes from
operations decreased from 1993 to 1994 due primarily to a decrease in CREC and
its subsidiaries' net loss before income taxes from $2,238,000 in 1993 to
$582,000 in 1994. The decrease in CREC and its subsidiaries' net loss before
income taxes was due to an increase in intercompany development and leasing fees
recognized, and decreased intangible amortization.
<PAGE>
Gain on Sale of Investment Properties. Gain on sale of investment
properties, net of applicable income tax provision was $1,927,000, $6,356,000
and $1,862,000 in 1993, 1994 and 1995, respectively. The 1995 gain included the
following: the August 1995 sale of an approximately 1 acre parcel proximate to
the CNN Center in downtown Atlanta ($1.6 million gain) and the September 1995
sale of a 6.2 acre parcel in West Cobb County, Georgia ($.5 million gain). The
1994 gain included the following: the June 1994 sale of the Company's 9 acre
Peachtree Road property ($3.3 million gain), the August 1994 sale of the 10.8
acre site in North Point MarketCenter Phase II ($1.8 million gain), and the
November 1994 sale of a 21 acre parcel in West Cobb County, Georgia ($1.3
million gain). The 1993 gain was from profits recognized on the sale of 100
acres in 1988 at North Point; the Company recognized profits on this sale based
on percentage of completion accounting as certain infrastructure work required
by the sales contract was completed in 1992 and 1993. Net proceeds received from
land sales were $0, $13,279,000 and $4,731,000 in 1993, 1994 and 1995,
respectively.
Additional Prospective Information
The Company opened three retail centers during 1995: North Point
MarketCenter Phase II in July 1995, Lawrenceville MarketCenter in October 1995
and Lovejoy Station in December 1995. Rental property revenues, net of rental
property operating expenses from these three centers will increase in 1996 as
the Company recognizes a full year of operations. Additionally, several retail
power centers which were under construction as of December 31, 1995 will become
operational during 1996 and will also increase rental property operating
results, including Colonial Plaza MarketCenter, Greenbrier MarketCenter, Mansell
Crossing Phase II and Presidential MarketCenter Phase II. The Company's
increased ownership of North Point MarketCenter (see Note 11) will also increase
rental property operating results.
Development fees are expected to decrease in 1996 as the development income
recognized in 1995 included approximately $2.6 million from the Dusseldorf
project (see Note 5).
The Company's share of Wildwood Associates cash flows from operating
activities will be favorably impacted in 1996 as the two new buildings discussed
in Note 8 become operational. Wildwood Associates' cash flows from operating
activities will also be favorably impacted by lower interest expense on two
mortgage notes payable which were refinanced in December 1995. These increases
will be partially offset by a decrease in rental rates at the Wildwood 2500
Building. The Company's share of CSC Associates' and CC-JM II Associates' cash
flows from operating activities will also increase, the former due to continued
leaseup of the NationsBank Plaza, and the latter due to the building's
completion and full occupancy in January 1996.
The Company has entered into an option agreement to sell its interest in
the Norfolk parking agreement for $2 million in July 1996, which would result in
a profit to the Company of approximately $411,000 (see Note 5).
Interest expense will increase in 1996 as projects that have been under
construction become operational and associated interest expense is no longer
capitalized. In addition to being a 50% partner in Wildwood Associates, IBM is a
major tenant in Wildwood Office Park and Summit Green. In 1993 and 1994, IBM
underwent a downsizing and made a portion of its leased space available to new
tenants. This provided Cousins with a marketing advantage by allowing cash flow
to be maintained, while making space available to prospective tenants for
extended leases on very competitive lease terms.
<TABLE>
<CAPTION>
The following is a breakdown as of February 15, 1996, of the office space
leased by IBM (square feet in thousands):
Square Feet
Re-leased Square Feet
Square Feet Primary or Sub-leased to Currently Square Feet
Leased at Lease Others During Available Currently
January 1, Expiration 1993, 1994 for Re-leasing Retained
Building 1993 Date and 1995 or Sub-leasing by IBM
- -------- ---- ---- -------- -------------- ------
<S> <C> <C> <C> <C> <C>
Wildwood 2300 315 December 2002 305 10 --
Wildwood 2500 186 December 1995 158 28 --
Wildwood 3100 188 November 1998 -- -- 188
Wildwood 3200 446 December 2001 24 -- 422
Summit Green 104 November 1996 46 46 12
----- --- -- ---
1,239 533 84 622
===== === == ===
</TABLE>
Major tenants in the re-leased space included Coca-Cola Enterprises
(140,000 square feet) and Georgia Pacific (63,000 square feet).
Liquidity and Capital Resources
The Company's debt (including its pro rata share of unconsolidated joint
venture debt) was 26% of total market capitalization at December 31, 1995,
giving the Company excellent financial flexibility. As discussed in Notes 4 and
8, concurrent with an $80 million financing completed on February 6, 1996, the
Company's line of credit was paid down to $1,000, and the terms were modified to
provide for an unsecured $10 million line maturing April 30, 1996. Prior to
April 30, 1996, the Company plans to increase the line amount and extend the
maturity date. The Company temporarily used the remaining proceeds from the
financing to pay down short term debt.
The Company has development projects in various planning stages. The
Company currently intends to finance these projects and projects currently under
construction discussed in Notes 8 and 11, by using the excess proceeds from the
$80 million financing discussed above, existing lines of credit (increasing
those lines of credit as required), and long-term non-recourse financing on the
Company's unleveraged projects as market conditions warrant. Effects of
Inflation
The Company attempts to minimize the effect of inflation on income from
operating properties by the use of rents tied to tenants' sales, periodic
fixed-rent increases and increases based on cost-of-living adjustments, and/or
pass-through of operating cost increases to tenants.
<PAGE>
- --------------------------------------------------------------------------------
<PAGE>
Cousins Properties Incorporated and Consolidated Entities
- --------------------------------------------------------------------------------
MARKET AND DIVIDEND INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The high and low sales prices for the Company's common stock and cash dividends declared per share were as follows:
1994 Quarters 1995 Quarters
------------- -------------
First Second Third Fourth First Second Third Fourth
----- ------ ----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High $ 17-5/8 $ 18 $ 17-3/4 $ 17-3/8 $ 17-3/4 $ 18-1/8 $ 18-3/8 $ 20-1/4
Low 15-7/8 15-1/8 15-3/4 15-1/4 16-1/2 16-1/2 17-1/8 17
Dividends Declared .22 .22 .22 .24 .24 .24 .24 .27
Payment Date 2/22/94 5/27/94 8/24/94 12/21/94 2/22/95 5/30/95 8/24/95 12/21/95
</TABLE>
The Company's stock trades on the New York Stock Exchange (ticker symbol
CUZ). At December 31, 1995, there were 1,241 stockholders of record.
In 1994, the Company designated as capital gain dividends 42.1818% of the
dividend paid February 22, 1994 and all of the dividends paid May 27, 1994. In
1995, the Company designated as capital gain dividends 2.4815% of the dividend
paid December 21, 1995. All other dividends paid in 1994 and 1995 were taxable
as ordinary dividends. In addition, in 1994 and 1995 an amount calculated as
3.73% and 3.25% of total dividends, respectively, was an "adjustment attributed
to depreciation of tangible property placed in service after 1986" for
alternative minimum tax purposes. This amount was passed through to stockholders
and must be used as an item of adjustment in determining each stockholder's
alternative minimum taxable income.
ABOUT YOUR DIVIDENDS
- --------------------------------------------------------------------------------
Timing of Dividends - Cousins normally pays regular dividends four times
each year in February, May, August and December.
Differences Between Net Income and Cash Dividends Declared - Cousins'
current intention is to distribute 100% of its taxable income and thus incur no
corporate income taxes. However, Consolidated Net Income for financial reporting
purposes and Cash Dividends Declared will generally not be equal for the
following reasons:
a. There will continue to be considerable differences between Consolidated
Net Income as reported to stockholders (which includes the income of a
consolidated non-REIT entity that pays corporate income taxes) and Cousins'
taxable income. The differences are enumerated in Note 7 of "Notes to
Consolidated Financial Statements."
b. For purposes of meeting REIT distribution requirements, dividends may be
applied to the calendar year before or after the one in which they are declared.
The differences between dividends declared in the current year and dividends
applied to meet current year REIT distribution requirements are enumerated in
Note 6 of "Notes to Consolidated Financial Statements."
Capital Gains Dividends - In some years, as it did in 1993, 1994 and 1995,
Cousins will have taxable capital gains, and Cousins currently intends to
distribute 100% of such gains to stockholders. The Form 1099-DIV sent by Cousins
to stockholders of record each January shows total dividends paid (including the
capital gains dividends) as well as that which should be reported as a capital
gain. For individuals, the capital gain portion of the dividends is subtracted
from total dividends on Schedule B of IRS Form 1040 and reported separately as a
capital gain in accordance with the Schedule B instructions.
Tax Preference Items and "Differently Treated Items" - Internal Revenue
Code Section 59(d) requires that certain corporate tax preference items and
"differently treated items" be passed through to a REIT's stockholders and
treated as tax preference items and items of adjustment in determining the
stockholder's alternative minimum taxable income. The amount of this adjustment
is included under "Market and Dividend Information" in this report.
Tax preference items and adjustments are includable in a stockholder's
income only for purposes of computing the alternative minimum tax. These
adjustments will not affect a stockholder's tax filing unless that stockholder's
alternative minimum tax is higher than that stockholder's regular tax.
Stockholders should consult their tax advisors to determine if the adjustment
reported by Cousins affects their tax filing. Many stockholders will find that
the adjustment reported by Cousins will have no effect on their tax filing
unless they have other large sources of alternative minimum tax adjustments or
tax preference items.
<PAGE>
Cousins Properties Incorporated and Consolidated Entities
- --------------------------------------------------------------------------------
SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
Selected quarterly information for the two years ended December 31, 1995 ($ in
thousands, except per share amounts):
<TABLE>
<CAPTION>
Quarters
First Second Third Fourth
----- ------ ----- ------
<S> <C> <C> <C> <C>
1994:
Revenues $ 5,507 $ 6,751 $ 8,147 $ 10,701
Income from unconsolidated joint ventures 3,241 2,774 3,335 3,230
Gain on sale of investment properties, net of applicable income
tax provision 3,242 1,677 1,437
Net income 4,798 8,056 6,134 7,907
Net income per share .17 .29 .22 .28
1995:
Revenues 8,000 8,409 15,330 9,297
Income from unconsolidated joint ventures 3,374 3,495 3,467 3,777
Gain on sale of investment properties, net of applicable income
tax provision 1,746 116
Net income 5,873 5,441 9,599 5,429
Net income per share .21 .20 .34 .19
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
Arthur Andersen LLP
COUNSEL
King & Spalding
Troutman Sanders
Kilpatrick & Cody
Arrington & Hollowell, P.C.
TRANSFER AGENT AND REGISTRAR
First Union National Bank
Shareholder Services Group
Two First Union Center, M-12
Charlotte, North Carolina 28288-1154
Telephone Number: 1-800-829-8432
FAX Number: 1-704-374-6987
DIVIDEND REINVESTMENT PLAN
The Company offers its stockholders the opportunity to purchase additional
shares of common stock through the Dividend Reinvestment Plan with purchases at
95% of current market value. A copy of the Plan prospectus and an enrollment
card may also be obtained by calling or writing to the Company.
FORM 10-K AVAILABLE
The Company's annual report on Form 10-K and interim reports on Form 10-Q are
filed with the Securities and Exchange Commission. Copies are available without
exhibits free of charge to any person who is a record or beneficial owner of
common stock upon written request to the Company at 2500 Windy Ridge Parkway,
Suite 1600, Atlanta, Georgia 30339-5683.
EXHIBIT 21
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
SUBSIDIARIES OF THE REGISTRANT
DECEMBER 31, 1995
At December 31, 1995, the Registrant had no 100% owned subsidiaries.
At December 31, 1995, the financial statements of the following entities
were consolidated with those of the Registrant in the Consolidated Financial
Statements incorporated herein:
Cousins Real Estate Corporation and subsidiaries (100% of non-voting
common stock and 100% of preferred stock owned by Registrant);
subsidiaries include Cousins MarketCenters, Inc. (100% owned by
Cousins Real Estate Corporation)
North Greene Associates Limited Partnership (85% owned by Registrant)
Rocky Creek Properties, Inc. & MT&E - Macon-Harris (75% owned by
Registrant)
North Point Market Associates, L.P. (82.3% owned by Registrant)
Perimeter Expo Associates, L.P. (90% owned by Registrant and 10% owned
by Cousins MarketCenters, Inc.)
At December 31, 1995, the Registrant and its consolidated entities had the
following significant unconsolidated subsidiaries which were not 100% owned:
CC-JM II Associates (50% owned by Registrant)
C-H Associates, Ltd. (49% owned by Cousins Real Estate Corporation)
C-H Leasing Associates (50% owned by Cousins Real Estate Corporation)
C-H Management Associates (50% owned by Cousins Real Estate Corporation)
CSC Associates, L.P. (50% owned by Registrant)
Green Valley Associates II (50% owned by Registrant)
Haywood Mall Associates (50% owned by Registrant)
Hickory Hollow Associates (50% owned by Cousins Real Estate Corporation)
Norfolk Hotel Associates (50% owned by Registrant)
MC Dusseldorf Holding B.V. (10% voting interest owned by Registrant and
40% voting interest owned by Cousins Real Estate Corporation)
Spring/Haynes Associates (50% owned by Registrant)
Wildwood Associates (50% owned by Registrant)
Ten Peachtree Place Associates (50% owned by Registrant)
Temco Associates (50% owned by Cousins Real Estate Corporation)
West Georgia Commons Associates (50% owned by Cousins Real Estate
Corporation)
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports included or incorporated by reference in this Form 10-K, into
Cousins Properties Incorporated's previously filed Registration Statements File
No. 33-41927, 33-56787 and 33-60350.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 28, 1996
EXHIBIT 23(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Amendment No. 1 to the
Registration Statement (Form S-3 No. 33-60350) pertaining to the Dividend
Reinvestment Plan of Cousins Properties Incorporated and in the related
Prospectus, in the Registration Statement (Form S-8 No. 33-56787) pertaining to
the 1989 Stock Option Plan of Cousins Properties Incorporated and in the related
Prospectus, and in the Registration Statement (Form S-8 No. 33-41927) pertaining
to the 1989 Stock Option Plan, 1987 Restricted Stock Plan for Outside Directors
and Incentive Stock Option Plan of Cousins Properties Incorporated and in the
related Prospectus, of our report dated February 6, 1996, with respect to the
financial statements and schedule of CSC Associates, L.P. and our report dated
February 8, 1996, with respect to the financial statements and schedule of
Haywood Mall Associates, included in the Form 10-K of Cousins Properties
Incorporated for the year ended December 31, 1995.
ERNST & YOUNG LLP
Atlanta, Georgia
March 28, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,552
<SECURITIES> 0
<RECEIVABLES> 53,868
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 219,861
<DEPRECIATION> 15,483
<TOTAL-ASSETS> 418,006
<CURRENT-LIABILITIES> 0
<BONDS> 113,434
0
0
<COMMON> 28,223
<OTHER-SE> 249,455
<TOTAL-LIABILITY-AND-EQUITY> 418,006
<SALES> 0
<TOTAL-REVENUES> 41,036
<CGS> 0
<TOTAL-COSTS> 29,922
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 687
<INCOME-PRETAX> 25,227
<INCOME-TAX> 747
<INCOME-CONTINUING> 24,480
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,342
<EPS-PRIMARY> 0.94
<EPS-DILUTED> 0.94
</TABLE>
COUSINS PROPERTIES INCORPORATED
PROFIT SHARING PLAN
AS AMENDED AND RESTATED
EFFECTIVE AS OF
January 1, 1996
<PAGE>
TABLE OF CONTENTS
ss. 1. DEFINITIONS .......................................................... 1
1.1. Account ........................................................... 1
1.2. Actual Deferral Percentage ........................................ 1
1.3. Adjustment ........................................................ 1
1.4. Affiliate ......................................................... 2
1.5. Average Actual Deferral Percentage ................................ 2
1.6. Beneficiary ....................................................... 2
1.7. Board ............................................................. 2
1.8. Break in Service .................................................. 2
1.9. Brokerage Account ................................................. 2
1.10. Code ............................................................. 2
1.11. Company .......................................................... 3
1.12. Company Account .................................................. 3
1.13. Company Contribution ............................................. 3
1.14. Compensation...................................................... 3
1.15. Contributory Account ............................................. 3
1.16. Distributable Account ............................................ 4
1.17. Elective Deferrals ............................................... 4
1.18. Employee ......................................................... 4
1.19. ERISA ............................................................ 4
1.20. Employment Commencement Date ..................................... 4
1.21. Employment Termination Date ...................................... 4
1.22. Excess Contributions ............................................. 5
1.23. Excess Deferrals ................................................. 5
1.24. Forfeiture ....................................................... 5
1.25. 401(k) Account.................................................... 5
1.26. 401(k) Contributions.............................................. 5
1.27. Fund ............................................................. 5
1.28. Highly Compensated Employee ...................................... 5
1.29. Leave of Absence ................................................. 7
1.30. Maternity or Paternity ........................................... 8
1.31. Nonhighly Compensated Employee ................................... 8
1.32. OBRA'93 Annual Compensation Limit ................................ 8
1.33. Participant ...................................................... 8
1.34. Plan ............................................................. 8
1.35. Plan Sponsor ..................................................... 8
1.36. Plan Year ........................................................ 8
1.37. Trust Agreement................................................... 8
1.38. Trustee .......................................................... 9
1.39. Valuation Date ................................................... 9
1.40. W-2 Compensation ................................................. 9
ss. 2. PARTICIPATION ........................................................ 9
2.1. Participation Requirements........................................ 9
2.2. Reemployment ..................................................... 9
2.3. Not a Contract of Employment ..................................... 9
ss. 3. CONTRIBUTIONS ........................................................ 9
3.1. Company Contribution .............................................. 9
3.2. 401(k) Contributions ............................................. 10
3.3. Contribution Limitations ......................................... 10
3.4. No After-Tax or Rollover Contributions ........................... 11
ss. 4. ALLOCATIONS TO ACCOUNTS ............................................. 11
4.1. Administrative Action ............................................ 11
4.2. Allocation of Investment Gains or Losses ......................... 11
4.3. Allocation of 401(k) Contributions ............................... 11
4.4. Annual Allocation of Forfeitures and Company
Contribution ..................................................... 11
4.5. Statutory Allocation Restrictions ................................ 12
4.6. Allocation Report ................................................ 17
4.7. Allocation Corrections ........................................... 17
ss. 5. PLAN BENEFITS ....................................................... 17
5.1. Retirement Benefit ............................................... 17
5.2. Disability Benefit ............................................... 17
5.3. Death Benefit .................................................... 18
5.4. Vested Benefit ................................................... 19
5.5. Missing Claimant ................................................. 22
ss. 6. BENEFIT DISTRIBUTION ................................................ 22
6.1. Lump Sum Distribution ............................................ 22
6.2. Distribution Deadlines and Consent Requirement ................... 23
6.3. Distributions Procedure .......................................... 24
6.4. Hardship Distributions ........................................... 26
ss. 7. ADMINISTRATION ...................................................... 28
7.1. Plan Sponsor Powers and Duties ................................... 28
7.2. Liquidity Requirements ........................................... 29
7.3. Records .......................................................... 29
7.4. Information from Others .......................................... 29
ss. 8. TRUST FUNDS AND TRUSTEE ............................................. 29
8.1. Trust Funds ...................................................... 29
8.2. Notification to Trustee .......................................... 32
8.3. Loans ............................................................ 33
ss. 9. AMENDMENT, TERMINATION AND INDEMNIFICATION .......................... 35
9.1. Amendment ........................................................ 35
9.2. Termination ...................................................... 35
9.3. Indemnification .................................................. 35
ss. 10. MISCELLANEOUS ...................................................... 36
10.1. Headings and References ......................................... 36
10.2. Construction .................................................... 36
10.3. Spendthrift Clause .............................................. 36
10.4. Legally Incompetent ............................................. 36
10.5. Benefits Supported Only by Funds ................................ 36
10.6. No Discrimination ............................................... 36
10.7. Claims .......................................................... 37
10.8. Nonreversion .................................................... 37
10.9. Merger or Consolidation ......................................... 37
10.10. Agent for Service of Process ................................... 37
10.11. Qualified Domestic Relations Order ............................. 38
<PAGE>
COUSINS PROPERTIES INCORPORATED
PROFIT SHARING PLAN
-------------------
The Cousins Properties Incorporated Profit Sharing Plan, which was (1) first
adopted effective as of January 1, 1966, (2) last amended and restated in its
entirety effective as of January 1, 1991, and (3) thereafter amended by
amendments adopted on December 22, 1992, November 4, 1994 and September 21,
1995, is hereby amended and restated in its entirety effective as of January 1,
1996 to add a cash or deferred arrangement described in Code ss. 401(k). Unless
otherwise expressly set forth in this Plan, the terms of this Plan shall apply
only to Employees whose employment as such terminates on or after January 1,
1996. The rights and benefits, if any, of a former Employee whose employment
terminated before such date, and who is not reemployed after such date, shall be
determined solely in accordance with the terms of this Plan as in effect on the
date his or her employment as such terminated. This Plan has been a profit
sharing plan, and this amended and restated Plan shall continue to be a profit
sharing plan, up to 100% of the assets of which may be invested in common stock
issued by the Plan Sponsor.
ss. 1. DEFINITIONS
------------------
The following terms shall have the meanings set forth opposite such terms for
purposes of this Plan.
1.1. Account - means such amount of money, if any, as is evidenced by the last
balance posted to the individual bookkeeping account of each Participant and
each Beneficiary in accordance with this Plan. Each Account may consist of more
than one sub-Account, and the record of each such individual account shall be
maintained by the Plan Sponsor. An Account shall cease to exist when the money
evidenced thereby is exhausted through distributions or Forfeitures made in
accordance with this Plan.
1.2. Actual Deferral Percentage -- means for each Plan Year for each Participant
who is eligible to make 401(k) Contributions at any time during such Plan Year
the ratio (expressed as a percentage) of (a) the 401(k) Contributions, if any,
made on his or her behalf for such Plan Year to (b) his or her Compensation for
such Plan Year. The Actual Deferral Percentage of a Participant who is eligible
to make, but does not make, 401(k) Contributions shall be zero.
1.3. Adjustment - means for each Valuation Date the net increase or decrease in
the fair market value of the Funds attributable to investments (after deducting
expenses) for the period beginning immediately after the preceding Valuation
Date and ending on such Valuation Date as such increase or decrease is
determined by the Plan Sponsor, excluding the net increase or decrease
attributable to the assets of Brokerage Accounts.
1.4. Affiliate - means for each calendar year (a) any parent, subsidiary or
sister corporation which during such year is a member of a controlled group of
corporations (as defined in Code ss. 1563(a), disregarding Code ss.ss.
1563(a)(4) and 1563(e)(3)(C)) of which the Plan Sponsor is a member, (b) any
trade or business, whether or not incorporated, which during such year is
considered to be under common control with the Plan Sponsor under Code ss.
414(c), (c) any member of an affiliated service group (under Code ss. 414(m))
which includes the Plan Sponsor, and (d) any entity required to be aggregated
with the Plan Sponsor under Code ss. 414(o).
1.5. Average Actual Deferral Percentage - means for each Plan Year the average
(expressed as a percentage) of the Actual Deferral Percentages computed
separately (a) for the group of Participants who are Highly Compensated
Employees during such Plan Year and (b) for the group of Participants who are
Nonhighly Compensated Employees during such Plan Year.
1.6. Beneficiary - means the person or persons so designated as such in
accordance with ss. 5.3 by a Participant or by operation of this Plan.
1.7. Board - means the Plan Sponsor's Board of Directors.
1.8. Break in Service - means any 12 consecutive month period which begins on an
Employee's Employment Termination Date during which the Employee is neither paid
nor entitled to payment for the performance of duties as an Employee; provided,
however, if an Employee is absent from service for Maternity or Paternity
reasons, the 12 consecutive month period beginning on the first anniversary of
the first date of the absence shall neither constitute a Break in Service nor a
period of severance or a period of service.
1.9. Brokerage Account - means an account which the Plan Sponsor directs one, or
more than one, Trustee to establish pursuant to a Participant's direction at a
brokerage firm (selected by the Plan Sponsor) through which such Participant can
exercise investment discretion over his or her Account (other than his or her
401(k) Account) upon the transfer of the assets of such Account (in accordance
with ss. 8.1(b)) to such brokerage account.
1.10. Code - means the Internal Revenue Code of 1986, as amended, and, if the
Code is amended, any reference to a section of the Code in this Plan
automatically shall be deemed amended to conform to the related amendment to the
Code.
1.11. Company - means the Plan Sponsor, Cousins Real Estate Corporation, Cousins
MarketCenters, Inc. (which formerly was known as Cousins/New Market Development
Company, Inc.), and each other Affiliate which the Board designates as such for
such calendar year.
1.12. Company Account - means the sub-Account which reflects a Participant's
share of Forfeitures, Company Contributions and the related investment gains and
losses.
1.13. Company Contribution - means any payment by a Company to the Fund with
respect to a calendar year in accordance with ss. 3.1.
1.14. Compensation - means for each Employee for each calendar year the lesser
of
(a) the OBRA'93 Annual Compensation Limit or
(b) the actual compensation which is paid to such Employee by a
Company for such calendar year and which is subject to federal
income tax withholding,
(1) plus his or her 401(k) Contributions and any other
amount which is contributed on his or her behalf for such
calendar year by a Company to a plan pursuant to a salary
reduction agreement and which is not includable in his or
her gross income for federal income tax purposes under Code
ss.ss. 125 or 401(k), and
(2) minus all of the following (to the extent subject to
federal income tax withholding): (A) expense reimbursements
and other expense allowances, (B) fringe benefits (cash and
noncash), (C) reimbursements for moving expenses, (D)
deferred compensation benefits (including, without
limitation, contributions to this Plan and income
attributable to the exercise of any stock options or stock
appreciation rights or similar arrangements) and (E) welfare
benefits (including, without limitation, contributions to
group insurance plans and any other employee welfare benefit
plans which are not made pursuant to a salary reduction
agreement and compensation paid to such Employee
specifically for the purchase of life insurance and other
welfare benefits).
1.15. Contributory Account - means the fully vested sub-Account which reflects
the amounts contributed by a Participant as a Minimum Contribution (as defined
in this Plan as in effect on December 31, 1981 and as made on or before such
date) and as a Voluntary Contribution (as defined in this Plan as in effect on
December 31, 1986 and as made on or before such date), and the related
investment gains and losses.
1.16. Distributable Account - means the 401(k) Contribution Account and
Contributory Account, if any, and the vested percentage of a Company Account
which is distributable to a Participant or Beneficiary under ss. 6 as a result
of an event described in ss. 5.
1.17. Elective Deferrals - means the 401(k) Contributions made on a
Participant's behalf under this Plan and the employer contributions made on his
or her behalf pursuant to an election to defer under any qualified cash or
deferred arrangement as described in Code ss. 401(k), any simplified employee
pension cash or deferred arrangement as described in Code ss. 402(h)(1)(B), any
plan described under Code ss. 501(c)(18), any salary reduction agreement for the
purchase of an annuity contract under Code ss. 403(b) and, to the extent
required under Code ss. 402(g)(8)(A)(ii), any eligible deferred compensation
plan under Code ss. 457.
1.18. Employee - means each person who is an employee of a Company or an
Affiliate (which is not a Company) under such organization's uniform and
nondiscriminatory personnel policy and each person who is treated as such as a
result of the "leased employee" rules under Code ss. 414(n).
1.19. ERISA - means the Employee Retirement Income Security Act of 1974, as
amended and, if ERISA is amended, any reference to a section of ERISA in this
Plan automatically shall be deemed amended to conform to the related amendment
to ERISA.
1.20. Employment Commencement Date - means the first date for which a new
Employee is paid or is entitled to payment as an Employee for the performance of
duties as an Employee or, in the event such person subsequently incurs a Break
in Service, the first date for which such Employee thereafter is paid or is
entitled to payment as an Employee for the performance of duties as a result of
his or her reemployment as such; provided, further, that the Employment
Commencement Date for a person who is an employee of an organization on the date
such organization becomes an Affiliate shall be treated as the date such
organization becomes an Affiliate.
1.21. Employment Termination Date - means for each Employee the first to occur
of (a) the earlier of the date his or her employment terminates either on
account of a quit, discharge, death or retirement or (b) the date on which ends
a 12 consecutive month period of absence from active employment during which
period such Employee is neither on a Leave of Absence nor paid nor entitled to
payment for the performance of duties as an Employee; provided, further, that
the Employment Termination Date for a person who is an Employee of an Affiliate
on the date on which its status as an Affiliate terminates (other than by reason
of a merger into a Company or another Affiliate) shall be treated as the date
such organization terminates its status as an Affiliate unless such person
remains an Employee after such date.
1.22. Excess Contributions - means for each Highly Compensated Employee for each
Plan Year the excess of (a) the 401(k) Contributions actually taken into account
in determining his or her Actual Deferral Percentage for such Plan Year over (b)
the maximum amount of such contributions permitted for such Plan Year under Code
ss. 401(k)(3)(A), where such maximum shall be determined by reducing such
contributions made on behalf of such Highly Compensated Employees in order of
their Actual Deferral Percentages, beginning with the highest of such
percentages.
1.23. Excess Deferrals - means for each Participant for each taxable year the
401(k) Contributions for such taxable year that exceed $9,500 (or, after 1996,
the dollar limit under Code ss. 402(g) in effect at the beginning of such
taxable year) and that the Participant elects to be refunded from this Plan
pursuant to the procedures set forth in ss. 4.5(b).
1.24. Forfeiture - means the balance of a Participant's Company Account which is
forfeited under this Plan as a result of a termination of his or her employment
as an Employee.
1.25. 401(k) Account - means the fully vested sub-Account which reflects a
Participant's 401(k) Contributions and the related investment gains and losses.
1.26. 401(k) Contributions - means the contributions made by a Company on a
Participant's behalf in lieu of cash compensation pursuant to his or her
election under ss. 3.2.
1.27. Fund - means the trust fund which is established and maintained as part of
and in accordance with this Plan under each Trust Agreement.
1.28. Highly Compensated Employee -
(a) General. The term "Highly Compensated Employee" means for each
Plan Year each Participant who performs service for the Plan
Sponsor or an Affiliate during the determination year and who is
described in any one or more of the following groups:
(1) an Employee who is a 5% owner as defined in Code ss.
416(i)(1)(A)(iii) at any time during the determination year
or the look back year;
(2) an Employee who receives compensation in excess of
$100,000 (indexed after 1996 in accordance with Code
ss. 415(d)) during the look back year;
(3) an Employee who receives compensation in excess of
$66,000(indexed after 1996 in accordance with Code
ss. 415(d)) during the look back year and is a member of the
top-paid group for the look back year, where the top-paid
group consists of the top 20% of Employees ranked on the
basis of compensation received during the applicable year,
and for purposes of determining the number of Employees in
the top-paid group, the following Employees shall be
excluded:
(A) Employees who have not completed 6 months of
service,
(B) Employees who normally work less than 17 1/2
hours per week,
(C) Employees who normally work during less than 6
months during any year,
(D) Employees who have not attained age 21, and
(E) except to the extent provided in regulations,
Employees who are included in a unit of Employees
covered by an agreement which the Secretary of Labor
finds to be a collective bargaining agreement between
employee representatives and the Plan Sponsor or an
Affiliate, which agreement does not provide for
participation in this Plan;
(4) an Employee who is an officer, within the meaning of
Code ss. 416(i), during the look back year and who receives
compensation in the look back year greater than $60,000 (or,
after 1996, 50% of the dollar limitation in effect under
Code ss. 415(b)(1)(A) for the calendar year in which the
look back year begins), where
(A) the number of officers taken into account is
limited to 50 (or if less, the greater of 3 Employees
or 10% of Employees) excluding those Employees who
may be excluded in determining the top-paid group as
set forth in (3) above; and
(B) when no officer has compensation in excess of 50%
of the dollar limitation in effect under Code ss.
415(b)(1)(A), the highest paid officer is treated as
a Highly Compensated Employee; and
(5) an Employee who is described in ss. 1.28(a)(2), (3)
or (4), when such sections are modified to substitute the
determination year for the look-back year, and who is one of
the 100 Employees who received the most compensation from
the Plan Sponsor and the Affiliates during the determination
year.
(b) Additional Rules. For purposes of this ss. 1.28:
(1) the determination of which Employees are Highly
Compensated Employees shall at all times be subject to Code
ss. 414(q) and any related regulations, rulings, notices or
procedures;
(2) the determination year is the Plan Year for which the
determination of who is highly compensated is being made,
and the look-back year is the 12-month period immediately
preceding the determination year;
(3) "compensation" means W-2 Compensation, plus elective or
salary reduction contributions to a cafeteria plan under
Code ss. 125, a cash or deferred arrangement under Code
ss.ss. 402(e)(3) or 402(h), or a tax sheltered annuity under
Code ss. 403(b);
(4) employers aggregated under Code ss. 414(b), (c), (m)
or (o) shall be treated as a single employer;
(5) a Highly Compensated Employee who is either a 5% owner
or one of the ten most highly compensated employees is
subject to the family aggregation rules under Code ss.
414(q)(6) and, with respect to any such Highly Compensated
Employee or former Highly Compensated Employee, "family
member" means such person's spouse and lineal ascendants or
descendents and the spouses of such lineal ascendants and
descendents; and
(6) in determining whether an Employee is a Highly
Compensated Employee for any Plan Year, the Plan Sponsor
shall use the calendar year calculation election described
in the regulations under Code ss. 414(q) and may make any
other elections authorized under the applicable
regulations, rulings or revenue procedures, including the
simplified method and snapshot day determination authorized
under Revenue Procedure 93-42.
1.29. Leave of Absence - means an approved leave of absence granted in writing
to an Employee by a Company or, where appropriate, an Affiliate (which is not a
Company) in accordance with applicable federal or state law or such
organization's personnel policy for a period during which such Employee is
expected to cease actively performing duties for which such Employee is paid or
entitled to payment as an Employee under circumstances which do not involve a
quit, discharge or retirement.
1.30. Maternity or Paternity - means an Employee's absence from work by reason
of the Employee's pregnancy, the birth of a child of the Employee, the placement
of a child with the Employee in connection with the adoption of such child by
such Employee, or for purposes of caring for such child for a period beginning
immediately following such birth or placement.
1.31. Nonhighly Compensated Employee - means an individual who is neither a
Highly Compensated Employee nor a family member (as described in Code ss.
414(q)(6)) of a Highly Compensated Employee.
1.32. OBRA'93 Annual Compensation Limit - means $150,000, as adjusted after 1996
for increases in the cost of living in accordance with Code ss. 401(a)(17)(B).
The cost-of-living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which Compensation is determined
(determination period) beginning in such calendar year. If a determination
period consists of fewer than 12 months, the OBRA'93 Annual Compensation Limit
will be multiplied by a fraction, the numerator of which is the number of months
in the determination period, and the denominator of which is 12. Any reference
in this Plan to the limitation under Code ss. 401(a)(17) shall mean the OBRA'93
Annual Compensation Limit set forth in this ss. 1.32.
If Compensation for any prior determination period is taken into account in
determining an Employee's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the OBRA'93
Annual Compensation Limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA'93 Annual
Compensation Limit is $150,000.
1.33. Participant - means for any calendar year each salaried Employee of a
Company who satisfies the requirements described in ss. 2 and who is not treated
as an Employee solely by reason of the "leased employee" rules under Code ss.
414(n) and each former Employee from whom an Account is maintained.
1.34. Plan - means this Cousins Properties Incorporated Profit Sharing Plan as
effective as of January 1, 1996 and all amendments to such plan or, when
required by the context, this Plan as in effect before January 1, 1996.
1.35. Plan Sponsor - means Cousins Properties Incorporated and any successor to
such organization.
1.36. Plan Year - means the calendar year.
1.37. Trust Agreement - means each separate agreement that establishes a
separate trust fund which is a part of this Plan.
1.38. Trustee - means the individual or individuals appointed by the Plan
Sponsor and designated to serve as the trustee or trustees of each Fund and any
successor to such individual or individuals.
1.39. Valuation Date - means (a) for each Company Account and Contributory
Account that is not invested in a Brokerage Account, the last day of each
calendar month, (b) for each Company Account and Contributory Account that is
invested in a Brokerage Account, the last day of each Plan Year and each other
date, if any, as agreed upon between the Plan Sponsor and the Trustees for
valuing such accounts, and (c) for each 401(k) Account, the last day of each
calendar month and each other date, if any, as agreed upon between the Plan
Sponsor and the Trustees for valuing such accounts.
1.40. W-2 Compensation - means for each Participant his or her wages and other
payments required to be reported as "wages, tips and other compensation" on his
or her Form W-2 under Code ss.ss. 6041, 6051 and 6052 as determined in
accordance with the regulations under Code ss. 415.
ss. 2. PARTICIPATION
--------------------
2.1. Participation Requirements. Each salaried Employee of a Company shall
satisfy the participation requirements of this Plan on his or her Employment
Commencement Date if he or she is a salaried Employee of a Company on such date
and is not treated as an employee solely by reason of the "leased employee"
rules under Code ss. 414(n).
2.2. Reemployment. A salaried Employee who terminates employment and is
reemployed as a salaried Employee of a Company shall be treated as satisfying
the participation requirements under ss. 2.1 upon his or her reemployment by
such Company.
2.3. Not a Contract of Employment. This Plan is not a contract of employment and
participation in this Plan shall not give any person the right to be retained in
the employ of a Company or any Affiliate or, upon the termination of such
employment, to have any interest or right in the Funds other than as expressly
set forth in this Plan.
ss. 3. CONTRIBUTIONS
--------------------
3.1. Company Contribution. Subject to ss. 4.5, the Plan Sponsor contemplates
that each Company for each calendar year will contribute the same overall
percentage of Compensation for Participants who are employed by that Company on
the last day of such calendar year as the overall percentage of Compensation
which the Plan Sponsor contributes for Participants who are employed by the Plan
Sponsor on the last day of such calendar year. If a Company for any calendar
year elects to contribute a different overall percentage of such Compensation
for Participants, the Company Contribution made by such Company and the
Forfeitures attributable to Participants employed by such Company thereafter
shall be allocated exclusively to Participants employed by such Company and no
other Company Contributions or Forfeitures shall be allocated to such
Participants. If a Participant has Compensation from more than one Company and
his or her total Compensation under ss. 1.14(b) exceeds the OBRA'93 Annual
Compensation Limit, each Company's contribution under this ss. 3.1 with respect
to such Participant shall be based on a fraction of the OBRA'93 Annual
Compensation Limit, where the numerator of such fraction shall be his or her
Compensation attributable under ss. 1.14(b) to such Company and the denominator
of which shall be his or her total Compensation under ss. 1.14(b).
3.2. 401(k) Contributions.
(a) General Rule. Subject to the rules set forth in this ss. 3.2
and the limitations set forth in ss. 4.5, each Participant who is
an Employee may elect that the Company employing such Participant
make 401(k) Contributions from his or her Compensation for each
payroll period for which such election is effective. All such
401(k) Contributions shall be made exclusively through payroll
withholding and shall be transferred to the Trustees as soon as
practicable after the end of the payroll period during which such
contributions are withheld.
(b) Election Procedure. The Plan Sponsor from time to time shall
establish and shall communicate in writing to Participants such
procedures for making the elections described in this ss. 3.2 as
the Plan Sponsor deems appropriate under the circumstances for the
uniform and proper administration of this Plan. A Participant's
election shall be made on an election form provided for this
purpose and no election shall be effective unless such election
form is properly completed and timely filed in accordance with such
procedures. An election shall remain in effect until revised or
terminated in accordance with such procedures. The Plan Sponsor
shall have the right at any time unilaterally to reduce the amount
or percentage of 401(k) Contributions which a Participant has
elected be made on his or her behalf if the Plan Sponsor determines
that such reduction might be necessary to satisfy the limitations
under ss. 4.5.
3.3. Contribution Limitations. The 401(k) Contributions and Company Contribution
for each calendar year in no event shall exceed the limitations described in ss.
4.5 for such calendar year. Furthermore, in the event a suspense account under
ss. 4.5(a)(3) is in existence on the first day of a calendar year, no Company
Contribution for such year shall be made if the allocation in such year of the
amount in such suspense account then would be precluded by Code ss. 415.
3.4. No After-Tax or Rollover Contributions. The only contributions that a
Participant can elect to make are 401(k) Contributions under ss. 3.2. No other
elective contributions shall be made by Participants or Employees under this
Plan either directly or through a rollover from an individual retirement account
or any other employee benefit plan.
ss. 4. ALLOCATIONS TO ACCOUNTS
------------------------------
4.1. Administrative Action. As soon as practicable after each Valuation Date,
Participants and Beneficiaries who as of such Valuation Date are entitled to one
or more of the allocations called for in this ss. 4 shall be identified and the
information which the Plan Sponsor (in its judgment) needs to make such
allocations shall be furnished to the Plan Sponsor by each Company as a
condition to the Plan Sponsor making such allocations.
4.2. Allocation of Investment Gains or Losses. The Plan Sponsor shall allocate
the Adjustment for each Valuation Date among the applicable sub- Accounts of
each Participant and Beneficiary in the proportion that each such sub-Account
bears to all such sub-Accounts in order that each such sub-Account will
proportionately benefit from any earnings or appreciation in the value of the
assets of the Funds in which such sub-Account is invested or proportionately
suffer any losses or depreciation in the value of such assets. This allocation
shall be made in accordance with such reasonable and equitable procedures as may
be established from time to time by the Plan Sponsor, which procedures may
include allocations based on units, and shall be made wholly without reference
to the suspense account referred to in ss. 4.5(a)(3) or to Brokerage Accounts.
Notwithstanding the foregoing, all investment gains and losses attributable to
the assets of a Brokerage Account shall be allocated exclusively to such account
as of each Valuation Date.
4.3. Allocation of 401(k) Contributions. Subject to the restrictions set forth
in ss. 4.5, as of each Valuation Date the Plan Sponsor shall credit any 401(k)
Contributions made for the period ending on such Valuation Date to the 401(k)
Account of each Participant on whose behalf such contributions are made.
4.4. Annual Allocation of Forfeitures and Company Contribution.
(a) Forfeitures. Subject to the restrictions set forth in ss. 4.5,
the Plan Sponsor as the first allocation step in the annual
allocations shall allocate the Forfeitures for each calendar year
as of the last day of such calendar year among the Company Accounts
of each Participant described in ss. 4.4(c) in the same proportion
that his or her Compensation for such calendar year bears to the
total Compensation of all such Participants for such year.
(b) Company Contribution. Subject to the restrictions set forth in
ss. 4.5, the Plan Sponsor as the second allocation step in the
annual allocations shall allocate the Company Contribution for each
calendar year as of the last day of such calendar year among the
Company Accounts of each Participant described in ss. 4.4(c) in the
same proportion that his or her Compensation for such calendar year
bears to the total Compensation of all such Participants for such
year.
(c) Eligible Participants. A Participant shall be eligible to
share in the allocations of the Forfeitures and Company
Contribution for a Plan Year only if he or she
(1) is a salaried Employee of a Company on the last day of
such Plan Year and
(2) was a salaried Employee of a Company on or before the
first day of such Plan Year and either (A) he or she has not
had 5 or more consecutive Breaks in Service since such date
or (B) his or her Account was vested at least in part before
he or she had 5 or more consecutive Breaks in Service.
A salaried Employee who is reemployed by a Company after he or she
has 5 or more consecutive Breaks in Service shall be treated under
ss. 4.4(c)(2) as if he or she had never been an Employee unless his
or her interest in his or her Account was vested at least in part
before such Employee had such Breaks in Service.
4.5. Statutory Allocation Restrictions.
(a) Code ss. 415 Limitations.
(1) General Rule. The sum of the 401(k) Contributions
(including any Excess Contributions distributed to the
Participant under ss. 4.5(c)), Forfeitures and the Company
Contribution allocated for any calendar year to the Account
of any Participant shall (after taking in account the
special rules under ss. 4.5(a)(2)) under no circumstances
exceed the lesser of:
(A) 25% of the Participant's W-2 Compensation for
such calendar year; or
(B) the greater of $30,000 or one-fourth of the
defined benefit dollar limit set forth in Code
ss. 415(b)(1) as in effect for such calendar year.
(2) Special Rules.
(A) A contribution made by or on behalf of an
Employee under any other defined contribution
plan (as defined in Code ss. 414(i)) which is
maintained by a Company or an Affiliate (which is
not a Company) shall be treated as made under this
Plan by or on behalf of such Employee.
(B) No contribution shall be made under this Plan on
behalf of an Employee who has accrued a benefit under
any defined benefit plan (as defined in Code
ss. 414(j)) which is maintained by a Company or an
Affiliate (which is not a Company) to the extent
that making such contribution would result in
the sum of the defined benefit plan fraction (as
defined in Code ss. 415(e)(3)) and the defined
contribution plan fraction (as defined in Code
ss. 415(e)(3)) for such Employee exceeding 1.0.
(C) The figure "1.0" shall be substituted for the
figure "1.25" in Code ss.ss. 415(e)(2)(B) and
415(e)(3)(B) for any calendar year if, as of the
December 31 which immediately precedes the beginning
of that calendar year, the sum of (i) the
Accounts of all "key employees" (as defined in
Code ss. 416(i)) under this Plan and all other defined
contribution plans (as defined in Code ss. 414(i))
maintained by a Company and any Affiliate, (which
is not a Company) and (ii) the present value of the
accumulated accrued benefits for each such "key
employee" under each defined benefit plan (as
defined in Code ss. 414(j)) maintained by a
Company and any Affiliate (which is not a Company)
exceeds in the aggregate 90% of such accounts and such
present values under such plans for all Employees
of a Company and such Affiliates (which are not a
Company) who participate in such plans, all as
determined in accordance to the rules set forth in
Code ss. 416.
(D) A contribution which is credited under a welfare
benefit fund maintained by a Company or any Affiliate
(which is not a Company) for any year to a reserve
for post-retirement medical benefits for an Employee
who is a "key employee" (as defined in Code ss.
416(i)) shall be treated as part of the Company
Contribution made on his or her behalf under this
Plan when, and to the extent, required under Code ss.
419A(d).
(3) Excess Amount. In the event that ss. 4.5(a)(1) actually
restricts the amount otherwise allocable in any allocation
step to any Account, the total amount which was unallocable
in such step ("Excess Amount") shall be disposed of as
follows. First, the Participant's 401(k) Contributions, if
any, shall be refunded to the extent that such refund would
satisfy such limitation. If an Excess Amount still exists
after such refund, the amount otherwise allocable in any
allocation step shall be deemed to be a Forfeiture and shall
be allocated and reallocated (subject to ss. 4.5(a)(1)) in
successive allocation steps by the Plan Sponsor among the
Accounts of the remaining Participants according to the
allocation procedure described ss. 4.4(a) until such Excess
Amount has been allocated in its entirety. If the
restriction set forth in ss. 4.5(a)(1) applies to all
Participants before such Excess Amount has been allocated in
its entirety, the Plan Sponsor shall transfer such
unallocable amount to a suspense account which (1) shall not
be subject to any Adjustment, (2) shall be deemed to be a
Forfeiture for purposes of the annual allocations for the
succeeding calendar year and (3) shall be added to the
Adjustment as an investment gain in the event that there is
a termination of this Plan (within the meaning of ss. 9.2)
before the date as of which such suspense account becomes
allocable in its entirety as a Forfeiture.
(b) Dollar Limitations on 401(k) Contributions.
(1) General. No Participant shall be permitted to have
Elective Deferrals made on his or her behalf under this
Plan or any other qualified plan maintained by the Plan
Sponsor or an Affiliate during any taxable year in excess of
$9,500 (or, after 1996, the dollar limit under Code ss.
402(g) in effect at the beginning of such taxable year).
If a Participant's 401(k) Contributions under this Plan
exceed such dollar limit, such Participant shall be
deemed to have made a request for a refund under
ss. 4.5(b)(2) and such excess shall be refunded in
accordance with ss. 4.5(b)(3).
Although a Participant's 401(k) Contributions under this
Plan cannot exceed such dollar limit, his or her aggregate
Elective Deferrals nevertheless can exceed such dollar limit
in a calendar year if he or she participates in at least one
other plan that provides for Elective Deferrals. In that
event, such Participant may request a refund in accordance
with ss. 4.5(b)(2) and his or her Excess Deferrals shall be
refunded in accordance with ss. 4.5(b)(3).
(2) Refund Election. A Participant may request a refund
from this Plan of any Excess Deferrals made during a taxable
year by filing a claim with the Plan Sponsor on or before
March 1 of the next taxable year. Such claim shall be in
writing, shall specify the dollar amount of the
Participant's Excess Deferrals assigned to this Plan for
such taxable year and shall include a written statement
that such amounts, if not distributed to such
Participant, will exceed the limit imposed on the
Participant by Code ss. 402(g) for the taxable year in which
the deferral occurred.
(3) Distribution of Excess Deferrals. Excess Deferrals, plus
any income and minus any loss allocable to such Excess
Deferrals for the taxable year in which such Excess
Deferrals were made (as determined in accordance with ss.
4.2 and the regulations under Code ss. 402(g)), shall be
distributed no later than April 15 of any calendar year to
Participants whose Excess Deferrals for the preceding Plan
Year were assigned to this Plan under ss. 4.5(b)(2).
(c) Limitations on 401(k) Contributions for Highly Compensated
Employees.
(1) General. The Average Actual Deferral Percentage for
Participants who are Highly Compensated Employees for any
Plan Year shall not exceed the greater of
(A) the Average Actual Deferral Percentage for
Participants who are Nonhighly Compensated Employees
for such Plan Year multiplied by 1.25, or
(B) the Average Actual Deferral Percentage for
Participants who are Nonhighly Compensated Employees
for such Plan Year multiplied by 2, provided that the
Average Actual Deferral Percentage for Participants
who are Highly Compensated Employees does not exceed
the Average Actual Deferral Percentage for
Participants who are Nonhighly Compensated
Employees by more than 2 percentage points.
(2) Special Rules.
(A) Other Plan or Arrangements. For purposes of
this ss. 4.5(c), the Actual Deferral Percentage for
any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to
have "elective deferrals" as described in Code ss.
402(g)(3)(A) allocated to his or her account under
two or more plans or arrangements described in
Code ss. 401(k) that are maintained by the Plan
Sponsor or an Affiliate shall be determined as
if all such contributions were made under this
Plan.
(B) Code ss. 410(b) Aggregation. If this Plan
satisfies the requirements of Code ss.ss. 401(k),
401(a)(4) or 410(b) only if aggregated with one
or more other plans, or if one or more other plans
satisfy the requirements of such Code sections only
if aggregated with this Plan, then this ss. 4.5(c)
shall be applied by determining the Actual Deferral
Percentages of Participants as if all such plans were
a single plan.
(C) Family Members. For purposes of determining the
Actual Deferral Percentage of a Participant who
is a Highly Compensated Employee described in Code
ss. 414(q)(6)(A), the 401(k) Contributions and
Compensation of such Participant shall include
the 401(k) Contributions and Compensation of his or
her "family members" (as such family members are
determined under Code ss. 414(q)(6)(B)), and such
family members shall be disregarded as separate
Participants in determining the Actual Deferral
Percentage both for Participants who are Nonhighly
Compensated Employees and for Participants who are
Highly Compensated Employees. In the case of a
Highly Compensated Employee whose Actual Deferral
Percentage is determined under the family
aggregation rules described in this ss. 4.5(c)(2)(C),
the determination of the amount of Excess
Contributions under ss. 4.5(c) shall be made by
reducing the Actual Deferral Percentage in
accordance with the "leveling" method described in
ss. 1.401(k)-1(f)(2) of the regulations under Code
ss. 401(k) and allocating the Excess Contributions
among the family members in proportion to the
contributions of each family member that have been
combined.
(D) Other Requirements. The determination and
treatment of the 401(k) Contributions and Actual
Deferral Percentage and Excess Contributions of any
Participant shall satisfy such other requirements
as may be prescribed by the Secretary of the Treasury.
(3) Distribution of Excess Contributions. Excess
Contributions made for any Plan Year, plus any income and
minus any loss allocable to such Excess Contributions for
such Plan Year (as determined in accordance with ss. 4.2
and the regulations under Code ss. 401(k)), shall be
distributed no later than the last day of the immediately
following Plan Year to Participants on whose behalf such
Excess Contributions were made. Such distributions shall
be made to such Participants on the basis of the respective
portions of the Excess Contributions attributable to
each such Participant.
(4) Order for Determining Excess Contributions.
Excess Contributions shall be determined after first
determining Excess Deferrals. The Excess Contributions which
would otherwise be distributed to the Participant shall be
reduced, in accordance with federal income tax regulations,
by the Excess Deferrals distributed to the Participant
under ss. 4.5(b).
4.6. Allocation Report. After the Plan Sponsor has made the allocations for any
Valuation Date described in this ss. 4, the Plan Sponsor shall deliver to each
Company a report which lists each Participant and states the balance credited to
each Account maintained for each such person. The Plan Sponsor also shall
deliver at least annually to each Company an individual statement for each
Participant which states the balance credited to his or her Account and which
may be forwarded to that person.
4.7. Allocation Corrections. If an error or omission is discovered in any
Account, the Plan Sponsor shall make such adjustment as it, acting in its
discretion, deems appropriate to correct such error or omission.
ss. 5. PLAN BENEFITS
--------------------
5.1. Retirement Benefit. The Company Account of a Participant who is an Employee
on the date he or she reaches age 65 shall become fully vested not later than
such date, and his or her Distributable Account thereafter shall be payable to
such Participant under ss. 6 upon his or her retirement.
5.2. Disability Benefit.
(a) In order to compensate for a disability and to provide a
measure of security to the disabled Participant and his or her
family, the Company Account of a Participant whose employment with
a Company or an Affiliate is terminated by reason of his or her
being disabled shall become nonforfeitable on the date his or her
employment is so terminated, and his or her Distributable Account
shall be payable to such Participant in accordance with ss. 6 upon
his or her termination of employment.
(b) A person shall be treated as disabled for purposes of this ss.
5.2 if he or she is unable to engage in any substantially gainful
activity at his or her customary level of compensation, competence
or responsibility as an Employee due to any medically determinable
physical or mental impairment or impairments which may be expected
to result in death or to be permanent.
(c) The Plan Sponsor shall have exclusive responsibility for
determining whether a person is disabled and they may consider
whether a person is disabled upon their own motion or upon the
written request of such person. The Plan Sponsor's determination
shall be based on a consideration of all the facts and
circumstances which in its absolute discretion it deems pertinent,
including reports from one or more licensed physicians or
psychiatrists appointed by the Plan Sponsor and paid by the Company
(which employs or had employed the Participant) to examine the
Participant. Any determination by the Plan Sponsor of whether a
person is disabled for purposes of this Plan shall be conclusive.
5.3. Death Benefit.
(a) In order to provide a measure of security in the event of a
Participant's death, the Company which employs (or which last
employed) a Participant immediately before his or her death
promptly shall notify the Plan Sponsor of the name of his or her
Beneficiary, and his or her Account shall be changed to the name of
his or her Beneficiary and shall be paid to such Beneficiary under
ss. 6. Furthermore, if a Participant dies while he or she is an
Employee, his or her Company Account shall become fully vested on
his or her date of death.
(b) If a Participant under applicable law has a spouse on his or
her date of death, such spouse automatically shall (unless
otherwise permissible under Code ss. 401(a)(11)) be treated as his
or her Beneficiary under this Plan absent such spouse's written and
notarized consent to the designation by the Participant of any
other person as his or her Beneficiary or to the designation of any
other person as his or her Beneficiary in accordance with the terms
of this Plan. On the other hand, if a Participant has no such
spouse or if his or her spouse so consents, such Participant's
Beneficiary shall be a person or persons so designated in writing
by a Participant on a form satisfactory to the Plan Sponsor or, in
the event no such designation is made, or if no person so
designated survives the Participant, or if after checking his or
her last known mailing address the whereabouts of the person so
designated is unknown and no death benefit claim is submitted to
the Plan Sponsor by such person within one year after the date of
his or her death, the personal representative of such Participant,
if any has qualified within twelve (12) months from the date of his
or her death or, if no personal representative has so qualified,
any heirs at law of the Participant whose whereabouts are known by
the Plan Sponsor.
5.4. Vested Benefit.
(a) General. A Participant who (as of the date of the termination
of his or her employment as an Employee) is ineligible for any
other benefit payment under this Plan shall be eligible for the
payment of his or her 401(k) Account and Contributory Account, if
any, and the vested percentage, if any, of his or her Company
Account under ss. 6. The vested percentage, if any, of his or her
Company Account shall be determined under this ss. 5.4.
(b) Vesting Schedule. The Plan Sponsor shall determine the vested
percentage of a Participant's Company Account as of the date his or
her employment as an Employee terminates in accordance with the
vesting schedule set forth in this ss. 5.4(b). Such determination
shall be made based on the Participant's Years of Service under ss.
5.4(c). The vested percentage of his or her Company Account shall
be maintained as a separate special Account until distributed by
the Plan Sponsor under ss. 6. The balance, or the nonvested
percentage, of his or her Company Account shall become a Forfeiture
as of the earlier of (1) the date as of which payment of the vested
portion of the Participant's Company Account is made or, if such
vested portion is zero, the date payment otherwise would have been
made under ss. 6 if such vested portion at the Participant's
termination of employment was $3,500 or less, (2) the last day of
the Plan Year in which the Participant terminates employment, or
(3) the date as of which the Participant has 5 consecutive Breaks
in Service.
Full Years Vested Percentage of
of Service Company Account
---------- ---------------
Less than 2 0
2 20%
3 40%
4 60%
5 80%
6 or More 100%
If a Participant's employment terminates after he or she has completed
at least two Years of Service plus some fractional Year of Service, the
vested percentage of his or her Company Account shall equal the sum of
(1) the percentage figure shown on the vesting schedule (set forth in
this ss. 5.4(b)) opposite the number of full Years of Service which
such Participant had then completed and (2) a fractional amount of the
difference between such percentage figure and the percentage figure
opposite one additional full Year of Service, where the numerator of
such fraction shall be the number of full months which such Participant
had completed in such fractional Year of Service and the denominator
shall be 12.
(c) Year of Service.
(1) General. Subject to the exceptions set forth in ss.
5.4(c)(2) and (3), a Participant's Years of Service shall
equal his or her full years of service as an Employee
completed during the period from his or her Employment
Commencement Date to his or her Employment Termination Date
which coincides with the first day of his or her first Break
in Service following that Employment Commencement Date.
If an Employee has two or more periods of employment, the
number of days in each such period in excess of the full years
of employment in each such period shall be aggregated into
additional full years of service on the assumption that 365
days of service equal one full year of service.
(2) Former New Market Employees. With respect to an
Employee of Cousins MarketCenters, Inc. (which formerly was
known as Cousins/New Market Development Company, Inc.), such
Employee's employment by New Market Development Company, Ltd.
or one of its affiliates for periods after October 31,
1987 shall be treated as employment by a Company under this
ss. 5.4(c) if such Employee became an employee of Cousins/New
Market Development Company, Inc. on November 1, 1992 and he
or she had been an employee of New Market Development Company,
Ltd. or one of its affiliates on October 31, 1992.
(3) Breaks in Service. If an Employee is reemployed after he
or she has 5 or more consecutive Breaks in Service and
the vested percentage of his or her Account before the first
such Break in Service had been zero, Year of Service credit
shall be carried forward from his or her prior period of
employment only if the number of his or her full Years of
Service completed before the first such Break in Service
exceeds the number of consecutive Breaks in Service which such
Employee had immediately before his or her reemployment.
(d) Reemployment.
(1) If a Participant is reemployed before he or she has 5
consecutive Breaks in Service and before the balance, or
nonvested percentage, of his or her Company Account is
treated as a Forfeiture under ss. 5.4(b), his or her vested
interest in that part of his or her Company Account thereafter
shall be determined in accordance with the formula set forth
in ss. 5.4(d)(3).
(2) If a Participant is reemployed before he or she has 5
consecutive Breaks in Service and while this Plan remains in
effect but after the balance, or nonvested percentage, of his
or her Company Account has been treated as a Forfeiture under
ss. 5.4(b), the Plan Sponsor shall cause the Trustees, upon
the Participant's completion of one Year of Service (after his
or her reemployment) to restore such balance to a special
Company Account for such Participant (subject to the
Adjustment which the Plan Sponsor determines would have been
allocable to that balance on the assumption that such balance
were invested in the Funds as described in ss. 8.1(a) and not
in a Brokerage Account as described in ss. 8.1(b) or other
individually directed investments as described in ss. 8.1(c)),
and his or her vested interest in such special Company Account
thereafter shall be determined in accordance with the formula
set forth in ss. 5.4(d)(3). Such restoration shall be made
from Company Contributions or from an assessment against each
Company, whichever the Plan Sponsor deems reasonable and
appropriate under the circumstances.
(3) For purposes of ss. 5.4(d)(1) and ss. 5.4(d)(2),
X = P (AB + D) - D, where
X = the dollar amount, if any, of the vested
percentage of the Participant's existing or
restored special Company Account;
P = the vested percentage of his or her existing or
restored special Company Account as determined under
the vesting schedule in ss. 5.4(b);
AB = the then balance of his or her existing or restored
special Company Account; and D = the dollar amount, if
any, distributed to the former Employee from the vested
percentage of his or her Company Account as a result of
his or her previous termination of employment.
5.5. Missing Claimant. If no Beneficiary of a deceased Participant is identified
and located pursuant to the procedure set forth in ss. 5.3(b), or if the Account
of a Participant becomes payable under ss. 5 for any reason other than his or
her death and the Plan Sponsor is unable to locate such Participant after
sending written notice to his or her last known mailing address and the last
known mailing address of any Beneficiaries such Participant may have designated,
the Plan Sponsor, in its discretion, may treat his or her Account as a
Forfeiture as of the last day of the calendar year which includes the second
anniversary of the date his or her Account first became payable, or as of the
last day of any subsequent calendar year. However, if such missing Beneficiary
or Participant in a subsequent calendar year files a written claim with the Plan
Sponsor while this Plan remains in effect for the Account forfeited and proves
to the satisfaction of the Plan Sponsor his or her identity as the person then
entitled to such benefit under the terms of this Plan, the Plan Sponsor shall
direct the payment to such Beneficiary or Participant in accordance with ss. 6
of an amount which equals dollar for dollar the amount treated as a Forfeiture.
Such payment at the Plan Sponsor's discretion may come from Company
Contributions or directly from one, or more than one, Company, or from an
assessment against each Company, whichever the Plan Sponsor deems reasonable and
appropriate under the circumstances.
ss. 6. BENEFIT DISTRIBUTION
---------------------------
6.1. Lump Sum Distribution.
(a) General. A Participant's Distributable Account shall be paid only
as a result of an event described in ss. 5 or in ss. 6.4 and, further,
shall be paid only to such Participant or, in the case of his or her
death before payment has been made, only to his or her Beneficiary in a
lump sum.
(b) Direct Rollovers.
(1) Election. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a distributee's election
under this ss. 6, a distributee (as described in ss.
6.1(b)(4)) may elect, at the time and in the manner prescribed
by the Plan Sponsor, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement
plan specified by the distributee in a direct rollover.
(2) Eligible rollover distribution. An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent
such distribution is required under Code ss. 401(a)(9); and
the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer
securities).
(3) Eligible retirement plan. An eligible retirement plan is
an individual retirement account described in Code ss.
408(a), an individual retirement annuity described in Code
ss. 408(b), an annuity plan described in Code ss. 403(a), or
a qualified trust described in Code ss. 401(a), that
accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to
the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.
(4) Distributee. A distributee includes an employee or former
employee. In addition, the employee's or former employee's
surviving spouse and the employee's or former employee's
spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Code ss.
414(p), are distributees with regard to the interest of
the spouse or former spouse.
(5) Direct rollover. A direct rollover is a payment by
the Plan to the eligible retirement plan specified by the
distributee.
6.2. Distribution Deadlines and Consent Requirement.
(a) General Rule. A Participant's Distributable Account automatically
shall be paid as soon as practicable after his or her employment as an
Employee terminates unless his or her Distributable Account exceeds
$3,500. If his or her Distributable Account exceeds $3,500, his or her
Distributable Account shall be paid (1) as soon as practicable after
the Plan Sponsor determines that the Code ss. 411(a)(11) consent
requirements for a Distributable Account in excess of $3,500 have been
satisfied with respect to such account or, if earlier, (2) when
required under ss. 6.2(b). The distribution of each Distributable
Account shall be made no later than the later of 60 days after the end
of the calendar year in which a Participant reaches age 65 or retires
unless such consent requirements prohibit such a distribution or ss.
6.2(b) requires an earlier distribution.
(b) Statutory Deadlines.
(1) Participant.
(A) Initial Deadline. A Participant's Distributable
Account shall in any event be distributed to such
Participant no later than April 1 of the calendar
year which follows the calendar year in which he
or she reaches age 70 1/2.
(B) Additional Contributions. Any contributions
credited to a Participant's Distributable Account
after the date payment is required to be made to
such Participant under this ss. 6.2(b)(1) shall
be paid to such Participant in a lump sum in cash
no later than 270 days after the date as of which
such contributions are credited to such account.
(2) Beneficiary. If a distribution is made to a Participant's
Beneficiary, such distribution shall be made by December
31 of the calendar year containing the fifth anniversary
of the date of the Participant's death.
6.3. Distributions Procedure.
(a) General. The amount of a Distributable Account to be distributed
under this ss. 6 shall be determined by the Plan Sponsor on the basis
of the Valuation Date which immediately precedes the date that such
distribution is made, and no distribution shall be made to a
Participant or Beneficiary on the basis of a Valuation Date which comes
before the event which triggers such distribution under ss. 5.
(b) Special Rule for Large Distributions or Transfers.
(1) If a distribution (including a hardship distribution under
ss. 6.4, but excluding a distribution from a Brokerage Account
or other individually directed investments under ss. 8.1) to
be made under this ss. 6 as of a Valuation Date or a transfer
to a Brokerage Account or other individually directed
investments to be made under ss. 8.1 as of a Valuation Date
equals or exceeds $10,000.00, such distribution or transfer
shall (subject to ss. 6.3(b)(2) and ss. 6.3(d)) be made in a
combination of property and cash in accordance with the
following rules:
(A) Step One. Before any distributions or transfers
are made, all of the assets of all of the Funds
(excluding assets held in Brokerage Accounts or other
individually directed investments) shall be divided
for purposes of this ss. 6.3(b) into two accounts,
one of which shall consist exclusively of common
stock issued by the Plan Sponsor ("Employer Stock
Account") and the other of which shall consist of all
the other assets of all of the Funds ("Other Assets
Account").
(B) Step Two. The portion of each class of common
stock in the Employer Stock Account to be
distributed to, or transferred on behalf of,
each Participant whose distribution or transfer
equals or exceeds $10,000 and each Participant who
has elected under ss. 6.3(c) to treat his or her
distribution or transfer as subject to this
ss. 6.3(b), shall be determined by multiplying
the value as of such Valuation Date of each class
of common stock in the Employer Stock Account by a
fraction, the numerator of which shall be the total
value as of such Valuation Date of the
distribution or transfer to be made as of such
date for such Participant and the denominator of
which shall be the total value of all of the assets
of the Funds (excluding assets held in Brokerage
Accounts or other individually directed
investments) as of such date; provided, however, no
fractional share of common stock shall be paid or
transferred under this Step Two and, if a
fractional share is distributable or
transferable under this Step Two, the value of such
fractional share shall be distributed from the
Other Assets Account in cash in Step Three of this
ss. 6.3(b).
(C) Step Three. The balance of each remaining
distribution or transfer shall be made in cash.
(2) A Participant may elect (on the form provided for this
purpose) at any time prior to a Valuation Date that any
distribution or transfer which otherwise would be subject to
ss. 6.3(b)(1) as of such Valuation Date be made either (A) i
cash or (B) in a higher proportion of cash than provided in
ss. 6.3(b)(1), and the Plan Sponsor shall, on or before such
Valuation Date, direct the Trustees either (i) to make such
distribution or transfer from the cash available in the Fund;
(ii) to sell the applicable portion of the Participant's
Account's pro rata share (in whole shares) of Employer Stock
to the Plan Sponsor as of such Valuation Date; or (iii) to
sell the applicable portion of the Participant's Account's
pro rata share (in whole shares) of Employer Stock on the open
market as soon as practicable after such Valuation Date, and
deduct the cost of such sale from the Participant's Account.
(c) Special Rule for Other Distributions or Transfers. If ss. 6.3(b)
does not automatically apply to a distribution or transfer, a
Participant nevertheless may elect that the Plan Sponsor treat any such
distribution or transfer (except a distribution described in ss.
6.2(b)(1)(B)) as subject to ss. 6.3(b), and the Plan Sponsor (subject
to ss. 6.3(d)) shall do so if the Participant satisfies such reasonable
requirements as the Plan Sponsor may set for such an election.
(d) Exception to Special Rules for Certain Distributions and Transfers.
If either the Plan Sponsor or the Trustee determines that a
distribution of common stock issued by the Plan Sponsor under ss.
6.3(b) or ss. 6.3(c) might result in "Excess Shares" under Article 11
of the Plan Sponsor's Articles of Incorporation or might violate any
applicable law or any other provision in the Plan Sponsor's Articles of
Incorporation, or might cause the Plan Sponsor to lose its status as a
real estate investment trust under the Code, such distribution shall be
made in cash or in cash and other property (in lieu of such stock) in
accordance with this ss. 6.3(d). If such a determination is made, the
Trustee shall as of the first day of the calendar month which follows
such determination set aside the Participant's entire Distributable
Account in a Brokerage Account. Only the Trustee shall have the right
to make investment decisions regarding buying or selling of the Plan
Sponsor's common stock in such Brokerage Account, and the Trustee shall
begin an orderly liquidation of the Plan Sponsor's common stock
allocated to such account with a view towards completing such
liquidation on or before the third anniversary of the establishment of
such Brokerage Account. The affected Participant shall have the right
(subject to ss. 6.2(b), Statutory Deadlines) to direct the Trustee
respecting the timing of distributions from such account.
(e) Statutory Restrictions. The Plan Sponsor shall have the right to
unilaterally direct the Trustee to make part or all of any distribution
under this ss. 6.3 in the form of common stock issued by the Plan
Sponsor and held by the Funds if the Plan Sponsor determines (on the
advice of counsel) that any statute, rule or regulation makes it
impermissible or imprudent for the Trustee to sell such common stock in
order to effect a distribution or transfer.
(f) No Annuities. In no event shall a Participant's Distributabl
Account be distributed to such Participant in the form of a life
annuity.
6.4. Hardship Distributions.
(a) Hardship Distribution of Contributory Account. Upon the request of
an Employee who has a Contributory Account, the Plan Sponsor may
distribute all or a part of a Participant's Contributory Account to
such Participant during any calendar month (based on the immediately
preceding Valuation Date) to the extent that the Plan Sponsor
determines that such a distribution (1) is necessary in order to avoid
a hardship due to a death, serious illness or accident in his or her
immediate family or (2) is for use by the Participant in acquiring a
personal residence or (3) is needed to pay his or her educational
expenses of educating members of his or her immediate family.
(b) Hardship Distribution of 401(k) Account. A Participant shall have
the right to request a withdrawal of all or any portion of his or her
401(k) Account (other than the investment gains or losses allocated to
such 401(k) Account) at any time before he or she terminates employment
with the Plan Sponsor and all Affiliates, and the Plan Sponsor shall
grant such request if, and to the extent that, it determines (based on
all the relevant facts and circumstances and in accordance with the
regulations under Code ss. 401(k)) that the withdrawal is "necessary"
(as described in ss. 6.4(b)(1)) to satisfy an "immediate and heavy
financial need" (as described in ss. 6.4(b)(2)).
Any request for a withdrawal for a financial hardship shall be made in
writing and shall set forth in detail the nature of such hardship and
the amount of the withdrawal needed as a result of such hardship, and
the Participant shall supplement such request with such additional
information as the Plan Sponsor requests consistent with this ss.
6.4(b).
(1) Amount Necessary to Satisfy Need. A withdrawal shall be
deemed to be "necessary" to satisfy an immediate and heavy
financial need only if
(A) the withdrawal is not in excess of the amount of
such need, including any amounts necessary to pay any
federal, state or local income taxes or penalties
reasonably anticipated to result from such
withdrawal, and
(B) the Participant has obtained all distributions
(other than hardship distributions) and all
nontaxable loans currently available from this Plan
and all other plans maintained by the Plan Sponsor
and all Affiliates. Notwithstanding the foregoing, a
Participant will not be required to obtain a loan
from this Plan or any other plan maintained by the
Plan Sponsor or an Affiliate if the effect of the
loan would be to increase the amount of the need.
A Participant who receives a withdrawal for a financial
hardship under this ss. 6.4(b) shall not be eligible to make
any 401(k) Contributions under this Plan or any elective
contributions or employee contributions under any other
qualified plan or nonqualified plan of deferred compensation
maintained by the Plan Sponsor or an Affiliate for the twelve
month period following the date of such withdrawal. Further,
such Participant's 401(k) Contributions under this Plan and
any elective contributions under any other plan maintained by
the Plan Sponsor or an Affiliate for the calendar year
immediately following the calendar year in which such
withdrawal occurred shall not exceed the dollar limitation
under Code ss. 402(g) for such following calendar year (as
described in ss. 4.5(b)) reduced by the amount of his or her
401(k) Contributions under this Plan and any elective
contributions under any other plan maintained by the Plan
Sponsor or an Affiliate for the calendar year in which such
withdrawal occurred.
(2) Immediate and Heavy Financial Need. An "immediate
and heavy financial need" shall mean
(A) expenses for medical care described in Code ss.
213(d) previously incurred by the Participant or his
or her spouse or dependents (as defined in Code ss.
152) or amounts necessary for such individuals to
obtain such medical care,
(B) costs directly related to the purchase (excluding
mortgage payments) of a principal residence for the
Participant,
(C) the payment of tuition, related educational fees
and room and board for the next twelve months of
post-secondary education for the Participant or his
or her spouse, children or dependents,
(D) payments necessary to prevent the eviction
of the Participant from his or her principal
residence or foreclosure on the mortgage of the
Participant's principal residence, or
(E) such other events as the Internal Revenue Service
deems to constitute an "immediate and heavy
financial need" under Code ss. 401(k).
ss. 7. ADMINISTRATION
---------------------
7.1. Plan Sponsor Powers and Duties. The Plan Sponsor shall have the exclusive
responsibility and complete discretionary authority to control the operation,
management and administration of this Plan, with all powers necessary to enable
it properly to carry out its duties in that respect, including but not limited
to, the power to construe the terms of this Plan and the Trust Agreements, to
determine status, coverage and eligibility for benefits, and to resolve all
interpretative, equitable, and other questions that shall arise in the operation
and administration of this Plan. The Plan Sponsor ordinarily shall act through
its Chief Financial Officer. All actions and decisions of the Plan Sponsor on
all matters within the scope of its authority shall be final, conclusive and
binding on all persons.
7.2. Liquidity Requirements. The Plan Sponsor shall determine anticipated
liquidity requirements to meet projected benefit payments for each calendar year
and, if any adjustment from previous annual liquidity requirements is
appropriate, the Plan Sponsor shall appropriately coordinate the Trustees' Fund
investment policies with Plan needs.
7.3. Records. All records of this Plan, together with such other documents as
may be necessary for the administration of this Plan shall be maintained for at
least six years in the custody of the Plan Sponsor.
7.4. Information from Others. The Plan Sponsor, the Trustee, and the officers
and directors of each Company shall be entitled to rely upon all information and
data contained in any certificate or report or other material prepared by any
actuary, accountant, attorney or other consultant or adviser selected by the
Plan Sponsor or the Trustee to perform services on behalf of this Plan or any
Fund.
ss. 8. TRUST FUNDS AND TRUSTEE
------------------------------
8.1. Trust Funds.
(a) General. The assets of this Plan shall be held in one or more
separate Funds, as determined by the Plan Sponsor. Each of the Funds
shall be held and managed by one, or more than one, individual Trustee
appointed by the Plan Sponsor pursuant to a separate Trust Agreement
and shall be invested up to 100% in the common stock of the Plan
Sponsor, or any successor to the Plan Sponsor, except to the extent
that a Participant who is an Employee exercises his or her right under
ss. 8.1(b) to direct the investment of his or her Account (other than
his or her 401(k) Account) through a Brokerage Account or to the extent
Accounts are invested in other individually directed investments under
ss. 8.1(c). No individual shall at any time serve as the Trustee for
more than one Fund. The Plan Sponsor shall determine how assets of this
Plan are to be allocated among the Funds and shall have the power to
direct the Trustee of any Fund to transfer assets of such Fund to the
Trustee of any other Fund or Funds.
(b) Brokerage Account. A Participant who desires to manage the
investment of his or her own Account (other than his or her 401(k)
Account) may file a written election to do so with the Plan Sponsor,
and the Plan Sponsor will direct one, or more than one, Trustee to
establish a Brokerage Account on behalf of such Participant and to
transfer the assets of his or her Account (other than his or her 401(k)
Account) to such Brokerage Account as of the first day of the calendar
month which follows the date the Plan Sponsor actually receives such
Participant's election. The cash or other assets to be transferred to a
Participant's Brokerage Account shall be determined under ss. 6.3 as if
the Participant's employment had terminated on the date the Plan
Sponsor receives his or her election under this ss. 8.1(b). A
Participant upon the establishment of his or her Brokerage Account
shall be exclusively responsible for the management of the assets of
such Brokerage Account subject to the following terms and conditions:
(1) All investments shall be made through the broker
designated by the Plan Sponsor as the broker for all Brokerage
Accounts,
(2) Investments shall be made only in securities which are
ordinarily and customarily available through the brokerage
firm which maintains the Brokerage Account,
(3) No investment shall be made under any circumstances on
"margin" or in any "naked" option,
(4) Investments shall be made only if such investments will be
shown on the standard monthly account statements
prepared by the brokerage firm which maintains the Brokerage
Account, and
(5) The Participant agrees to such other terms and conditions
as the Trustee, the Plan Sponsor and the brokerage firm
(whether individually or collectively) shall establish from
time to time for Brokerage Accounts.
All transaction fees, commissions and any annual maintenance fee for a
Participant's Brokerage Account will be paid directly from such
Brokerage Account. If a Brokerage Account is maintained for a
Participant and the Participant desires that the Trustee resume the
management of his or her Account (other than his or her 401(k)
Account), a Participant can request the Plan Sponsor in writing that
the Trustee does so, and the Plan Sponsor shall direct the Trustee to
do so on the Valuation Date which first follows the date the
Participant converts all of his or her investments in his or her
Brokerage Account to cash; provided, however, a Participant shall not
have the right to make more than one such request in any 12 consecutive
month period. No part of an Adjustment shall be allocated to a
Brokerage Account, but all investment gains and losses (whether
realized or unrealized) from the investment of the assets of a
Brokerage Account shall be allocated exclusively to such account as of
each Valuation Date. Finally, if a Participant's employment terminates
as an Employee (for any reason, including death) while he or she has a
Brokerage Account, his or her Brokerage Account shall be payable under
ss. 6 subject to the following special rules:
(A) if such Participant's Account exceeds $3,500
and is fully vested, he or she shall have the right
to maintain his or her Brokerage Account or to
request a distribution of the assets of his or her
Brokerage Account when his or her employment
terminates, and
(B) if such Participant's Account is less than $3,500
and is fully vested, he or she shall have the
right to request a distribution of the assets of
his or her Brokerage Account when his or her
employment terminates but, if he or she fails to do
so, the Plan Sponsor shall convert the assets in
his or her Brokerage Account to cash, and
(C) if his or her Account is less than fully vested,
the Participant shall, within 20 days after the
end of the calendar month in which his or her
employment terminates, convert assets in his or her
Brokerage Account to cash in an amount equal to no
less than the dollar amount of the nonvested
portion of his or her Company Account (as
determined as of the end of such calendar
month). If the Participant fails to convert
sufficient assets in his or her Brokerage Account
within such time period, the Plan Sponsor shall
direct one, or more than one, Trustee to convert
sufficient assets to cash by selling assets in such
amounts and at such times as it determines in its
sole discretion as necessary or appropriate to
effectuate the Forfeiture of the Participant's
nonvested Company Account. The Plan Sponsor
thereafter shall direct one, or more than one,
Trustee to transfer cash equal to the nonvested
portion of the Participant's Company Account
from his or her Brokerage Account to one or more of
the funds described in ss. 8.1(a) as soon as
practicable after such cash is available in such
Brokerage Account, and such transferred amounts
shall remain in the Participant's Company Account
until it becomes a Forfeiture under ss. 5.4(b).
A Beneficiary of a Participant described in clause (A) above
shall also have the right to maintain and direct the
investment of a Brokerage Account.
(c) Other Individually Directed Investments. The Plan Sponsor may at
any time establish procedures to allow individuals to direct the
investment of their Accounts. The Plan Sponsor as part of establishing
any such procedures shall direct one, or more than one, Trustee to
establish the investment alternatives designated by the Plan Sponsor
and to accept directions to invest all or any specified portion of the
individual's Account among such alternatives. The Plan Sponsor shall
establish as part of such procedures such rules for effecting the
investment elections as it deems necessary or appropriate, which rules
shall be applied on a uniform and nondiscriminatory basis to all
similarly situated individuals. Except as required under ERISA, neither
a Company nor a Trustee shall be responsible for any investment
decisions made by an individual with respect to his or her Account. If
an individual fails to direct the investment of his or her Account, the
Trustee shall assume the investment responsibility for such Account.
(d) ERISA 404(c). To the extent that the Plan Sponsor chooses to do so,
the Plan Sponsor may take advantage of any relief afforded to Plan
fiduciaries under ERISA ss. 404(c) and the related regulations. If
Participants, Beneficiaries or alternate payees are permitted to direct
the investment of their Accounts, the Plan Sponsor shall designate a
fiduciary who shall implement such individuals' directions and shall
determine the manner and frequency of investment instructions, any
limitations on such instructions and such other procedures as may be
necessary or appropriate to implement such individuals' directions or
to satisfy the requirements of ERISA ss. 404(c). Any such procedures
may be amended or modified from time to time by the Plan Sponsor in its
discretion and all such procedures and any amendments or modifications
to such procedures are incorporated into and made a part of this Plan.
8.2. Notification to Trustee. Any action of the Plan Sponsor pursuant to any of
the provisions of this Plan shall be communicated to each Trustee in accordance
with such procedures as the Plan Sponsor deems appropriate under the
circumstances.
8.3. Loans.
(a) Administration and Procedures. The Plan Sponsor shall establish
objective nondiscriminatory procedures for the administration of the
loan program under this Plan and such procedures and any amendments to
such procedures are incorporated by this reference as a part of this
Plan. Such procedures shall include, but are not limited to:
(1) the class of Participants and Beneficiaries who are
eligible for a loan;
(2) the identity of the person or position authorized to
administer the loan program;
(3) the procedures for applying for a loan;
(4) the basis on which loans will be approved or denied;
(5) the limitations, if any, on the types and amounts of
loans offered;
(6) the procedures for determining a reasonable rate of
interest;
(7) the types of collateral that may be used as security
for a loan; and
(8) the events constituting default and the steps that will be
taken to preserve Plan assets in the event of such default.
(b) General Statutory Requirements. All loans made under this
Plan shall
(1) be made available to Participants and Beneficiaries
who are eligible for a loan on a reasonably equivalent basis;
(2) not be made available to Highly Compensated Employees
in an amount greater than the amount made available to other
Employees;
(3) be made in accordance with specific provisions
regarding loans set forth in this Plan and the procedures
described above;
(4) bear a reasonable rate of interest; and
(5) be adequately secured.
(c) Other Conditions. All loans made under this Plan shall be
subject to the following additional conditions.
(1) Principal and interest on the loan shall be repaid in
substantially level installments with payments not less
frequently than quarterly over a period of 5 years or less.
However, if so provided in the loan procedures described
above, the repayment period may exceed 5 years if the loan is
classified as a "home loan" (as described in Code ss. 72(p)).
(2) If the loan is secured by any portion of the Participant's
Account, the Account balance shall not be reduced as a
result of a default until a distributable event occurs under
the Plan.
(3) The Participant or Beneficiary must agree to any other
terms and conditions required under the procedures described
above.
(d) Statutory Limitation on Amounts. The principal amount of any loan
to a Participant (when added to the outstanding principal balance of
any outstanding loans made to the Participant under this Plan and all
other plans maintained by the Plan Sponsor or an Affiliate that are tax
exempt under Code ss. 401) may not exceed the lesser of:
(1) $50,000 reduced by the excess, if any, of
(A) the highest outstanding principal balance of
previous loans to the Participant from the Plan (and
all other plans described above) during the one year
period ending immediately before the date the current
loan is made, over
(B) the current outstanding principal balance of
those previous loans on the date the current loan
is made; or
(2) 50% of the vested interest in the Participant's
Account at the time the loan is made.
(e) Distributions. The vested Account balance actually payable to an
individual who has an outstanding loan shall be determined by reducing
the vested Account balance by the amount of the security interest in
the Account (if any). The Trustee may cancel the Plan's security
interest in the Account and distribute the note in full satisfaction of
that portion of the Participant's Account equal to the outstanding
balance of the loan or the amount that would have been outstanding but
for a discharge in bankruptcy or through any other legal process.
Notwithstanding anything to the contrary in this Plan or the loan
procedures described above, in the event of default, foreclosure on the
note and execution of the Plan's security interest in the Account shall
not occur until a distributable event occurs under this Plan and
interest shall continue to accrue only to the extent permissible under
applicable law.
ss. 9. AMENDMENT, TERMINATION AND INDEMNIFICATION
-------------------------------------------------
9.1. Amendment. The Plan Sponsor reserves the right at any time and from time to
time to amend this Plan in writing, provided that no amendment shall be made
which would divert any of the assets of the Funds to any purpose other than the
exclusive benefit of Participants and Beneficiaries unless such amendment is
necessary to cause this Plan to continue to be exempt from income taxes under
the Code.
9.2. Termination. The Plan Sponsor expects this Plan to be continued
indefinitely but, of necessity, reserves the right to completely or partially
terminate this Plan or to discontinue contributions at any time by action of the
Board. If this Plan is completely or partially terminated under this ss. 9.2, or
if the Plan Sponsor declares a permanent discontinuance of contributions to this
Plan, the Company Account of each affected Participant who then is an Employee
shall become fully vested on the date of such complete or partial termination or
on the date of such declaration of discontinuance, as the case may be.
In the case of such a complete termination of this Plan or such a permanent
discontinuance of contributions, the Trustees shall liquidate Fund investments
as necessary and distribute Accounts to Participants and Beneficiaries after the
receipt of a favorable determination letter from the Internal Revenue Service
respecting such termination or discontinuance.
9.3. Indemnification. Each Company (to the extent permissible under applicable
law) shall indemnify each of its officers and Employees from and against any
liability, assessment, loss, expense or other cost of any kind or description
whatsoever, including legal fees and expenses, actually incurred by such person
on account of any action or proceeding, actual or threatened, which arises as a
result of his or her acting on behalf of a Company under this Plan, provided (1)
such action or proceeding does not arise as a result of his or her own
negligence, willful misconduct or lack of good faith and (2) such protection is
not otherwise provided through insurance. Each Trustee shall (to the extent
permissible under law) be indemnified and held harmless by the Plan Sponsor
(subject to a right of contribution against each Company) for any expenses,
including legal fees, incurred in the defense of any actual or threatened legal
action which arises as a result of his or her appointment as a Trustee, provided
that he or she is not ultimately determined in such action to be liable for a
breach of his or her fiduciary (as distinguished from his or her co-fiduciary)
duty under this Plan.
ss. 10. MISCELLANEOUS
---------------------
10.1. Headings and References. The headings and subheadings in this Plan have
been inserted for convenience of reference only and are to be ignored in
construction of the provisions of this Plan. All references to sections and
subsections shall be to sections and subsections in this Plan unless otherwise
set forth in this Plan.
10.2. Construction. In the construction of this Plan, the masculine shall
include the feminine and the singular the plural in all cases where such
meanings would be appropriate. This Plan shall be construed in accordance with
the laws of the State of Georgia to the extent that such laws are not preempted
by federal law.
10.3. Spendthrift Clause. Except to the extent permitted by law or ss. 10.11, no
Account, benefit, payment or distribution under this Plan shall be subject to
the claim of any creditor of a Participant or Beneficiary, or to any legal
process by any creditor of such person and no Participant or Beneficiary shall
have any right to alienate, commute, anticipate, or assign (either at law or
equity) all or any portion of his or her Account, benefit, payment or
distribution under this Plan.
10.4. Legally Incompetent. The Plan Sponsor in its discretion shall direct the
Trustee to make payment on such direction directly to (i) an incompetent or
disabled person, whether because of minority or mental or physical disability,
(ii) to the guardian of such person or to the person having custody of such
person, or (iii) to any person designated or authorized under any state statute
to receive such payment on behalf of such incompetent or disabled person,
without further liability either on the part of the Plan Sponsor or the Trustee
for the amount of such payment to the person on whose account such payment is
made.
10.5. Benefits Supported Only by Funds. Any person having any claim for any
benefit under this Plan shall (except to the extent required under ERISA) look
solely and exclusively to the assets of the Funds for satisfaction. In no event
will a Company, or any of its officers, members of its board of directors or a
Trustee in his or her individual capacity be liable to any person whomsoever for
the payment of benefits under this Plan.
10.6. No Discrimination. The Plan Sponsor shall administer this Plan in a
uniform and consistent manner with respect to all Participants and
Beneficiaries.
10.7. Claims. Any payment to a Participant or Beneficiary or to their legal
representative, or heirs-at-law, made in accordance with the provisions of this
Plan shall to the extent of such payment be in full satisfaction of all claims
under this Plan against the Trustees and each Company, either of whom may
require such person, his or her legal representative or heirs-at-law, as a
condition precedent to such payment, to execute a receipt and release therefor
in such form as shall be determined by the Trustees or the Plan Sponsor, as the
case may be.
10.8. Nonreversion.
(a) Except as provided in ss. 10.8(b), no Company shall have any
present or prospective right, claim, or interest in the Fund or in
any Company Contribution made to the Trustee.
(b) To the extent permitted by Code and ERISA, the Company
Contributions, plus any earnings and less any losses on such
contributions, shall be returned by the Trustee to a Company in the
event that:
(1) A Company Contribution is made by such Company by a
mistake of fact, provided such return is effected within one
year after the payment of such contribution; or
(2) A deduction for a Company Contribution is disallowed
under Code ss. 404, in which event such contribution shall
be returned to the Company which made such contribution
within one year after such disallowance, all contributions
being hereby conditioned upon being deductible under Code
ss. 404.
The Trustee shall have no obligation or responsibility whatsoever
to determine whether the return of any such Company Contribution is
permissible under the Code or ERISA and shall be indemnified and
held harmless by each Company for their actions in accordance with
this ss. 10.8.
10.9. Merger or Consolidation. In the case of any merger or consolidation of
this Plan with, or transfer of assets or liabilities of this Plan to, any other
employee benefit plan, each person for whom an Account is maintained shall be
entitled to receive a benefit from such other employee benefit plan, if it is
then terminated, which is equal to or greater than the benefit such person would
have been entitled to receive immediately before the merger, consolidation or
transfer, if this Plan had been terminated.
10.10. Agent for Service of Process. The agent for service of process for
this Plan shall be the person currently listed in the records of the Secretary
of State of Georgia as the agent for service of process for the Plan Sponsor.
10.11. Qualified Domestic Relations Order. In accordance with uniform and
nondiscriminatory procedures established by the Plan Sponsor from time to time,
the Plan Sponsor upon the receipt of a domestic relations order which seeks to
require the distribution of a Participant's Account in whole or in part to an
"alternate payee" (as that term is defined in Code ss. 414(p)(8)) shall
(a) promptly notify the Participant and such "alternate payee" of
the receipt of such order and of the procedure which the Plan
Sponsor will follow to determine whether such order constitutes a
"qualified domestic relations order" within the meaning of Code ss.
414(p),
(b) determine whether such order constitutes a "qualified domestic
relations order", notify the Participant and the "alternate payee"
of the results of such determination and, if the Plan Sponsor
determines that such order does constitute a "qualified domestic
relations order",
(c) direct the Trustee to transfer such amounts, if any, as the
Plan Sponsor determines necessary or appropriate from the
Participant's Account to a special Account for such "alternate
payee", and
(d) direct the Trustee to make such distribution to such "alternate
payee" from such special Account as the Plan Sponsor deems called
for under the terms of such order in accordance with Code ss.
414(p).
An "alternate payee's" special Account shall be distributed in accordance with
ss. 6 as if the "alternate payee" was a Beneficiary as soon as practicable after
that Account has been established under this ss. 10.11, without regard to
whether the date of such distribution is prior to the earliest date that a
distribution could be made to a Participant under the terms of this Plan and
prior to a Participant's "earliest retirement age" under Code ss. 414(p). An
"alternate payee" shall have the right to designate (in the same manner as a
Participant who has no spouse) a Beneficiary for the payment of his or her
special Account in the event of the alternate payee's death before such special
Account is paid.
The determinations and the distributions made by, or at the direction of, the
Plan Sponsor under this ss. 10.11 shall be final and binding on the Participant,
the "alternate payee" and all other persons interested in such order.
IN WITNESS WHEREOF, the Plan Sponsor has caused this Plan to be executed by its
duly authorized officers and its seal to be affixed to this Plan this ______ day
of ________________, 1995.
COUSINS PROPERTIES INCORPORATED
(CORPORATE SEAL) By:_________________________________
Title:______________________________
ATTEST:
By:______________________________
Title:___________________________
ACKNOWLEDGMENT BY PARTICIPATING COMPANIES. To acknowledge its acceptance of this
amended and restated Plan, each Company has caused this Plan to be executed by
its duly authorized officers and its seal to be affixed to this Plan.
COUSINS REAL ESTATE CORPORATION
(CORPORATE SEAL) By:_________________________________
Title:______________________________
Date:_______________________________
ATTEST:
By:______________________________
Title:___________________________
COUSINS MARKETCENTERS, INC.
(CORPORATE SEAL) By:_________________________________
Title:______________________________
Date:_______________________________
ATTEST:
By:______________________________
Title:___________________________
