SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1999 Commission file number 0-3576
COUSINS PROPERTIES INCORPORATED
A GEORGIA CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO. 58-0869052
2500 WINDY RIDGE PARKWAY
ATLANTA, GEORGIA 30339-5683
TELEPHONE: 770-955-2200
Registrant has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and
has been subject to such filing requirements for the past 90 days.
At July 31, 1999, 32,131,434 shares of common stock of the Registrant were
outstanding.
<PAGE>
<TABLE>
<CAPTION>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts)
June 30, December 31,
1999 1998
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
PROPERTIES:
Operating properties, net of accumulated
depreciation of $26,782 as of June 30, 1999
and $23,421 as of December 31, 1998 $317,948 $235,588
Land held for investment or future development 15,448 15,530
Projects under construction 269,135 178,736
Residential lots under development 6,744 8,771
-------- --------
Total properties 609,275 438,625
-------- --------
CASH AND CASH EQUIVALENTS, at cost which approximates
market 5,378 1,349
NOTES AND OTHER RECEIVABLES 35,593 39,470
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 164,627 264,648
OTHER ASSETS 9,746 8,766
-------- --------
TOTAL ASSETS $824,619 $752,858
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- ----------------------------------------
NOTES PAYABLE $202,979 $198,858
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 35,366 36,104
DEPOSITS AND DEFERRED INCOME 118,431 120,966
-------- --------
TOTAL LIABILITIES 356,776 355,928
-------- --------
MINORITY INTERESTS 28,632 17,065
-------- --------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' INVESTMENT:
Common stock, $1 par value, authorized
150,000,000 shares; issued 32,131,334
shares at June 30, 1999 and 31,887,298
shares at December 31, 1998 32,131 31,887
Additional paid-in capital 251,531 244,778
Cumulative undistributed net income 155,549 103,200
-------- --------
TOTAL STOCKHOLDERS' INVESTMENT 439,211 379,865
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $824,619 $752,858
======== ========
The accompanying notes are an integral part of these consolidated balance
sheets.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
1999 1998 1999 1998
------ ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES:
Rental property revenues $12,967 $16,832 $24,632 $32,966
Development income 1,374 732 3,134 1,524
Management fees 1,255 928 2,361 1,818
Leasing and other fees 1,688 480 2,299 1,014
Residential lot and outparcel sales 4,974 4,317 7,651 8,774
Interest and other 829 925 1,694 1,972
------- ------- ------- -------
23,087 24,214 41,771 48,068
------- ------- ------- -------
INCOME FROM UNCONSOLIDATED JOINT VENTURES 5,392 4,547 9,499 9,128
------- ------- ------- -------
COSTS AND EXPENSES:
Rental property operating expenses 3,827 4,308 7,028 8,142
General and administrative expenses 3,447 2,893 7,033 5,965
Depreciation and amortization 3,019 3,765 5,826 7,363
Stock appreciation right expense (credit) 460 (118) 136 80
Residential lot and outparcel cost of
sales 3,859 4,059 6,148 8,238
Interest expense 65 2,731 430 5,543
Property taxes on undeveloped land 224 227 442 449
Other 820 94 1,110 109
------- ------- ------- -------
15,721 17,959 28,153 35,889
------- ------- ------- -------
INCOME FROM OPERATIONS BEFORE INCOME TAXES 12,758 10,802 23,117 21,307
PROVISION (BENEFIT) FOR INCOME TAXES FROM
OPERATIONS 390 (89) 1,255 (107)
------- ------- ------- -------
INCOME BEFORE GAIN ON SALE OF
INVESTMENT PROPERTIES 12,368 10,891 21,862 21,414
GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF
APPLICABLE INCOME TAX PROVISION 51,198 886 56,706 1,657
------- ------- ------- -------
NET INCOME $63,566 $11,777 $78,568 $23,071
======= ======= ======= =======
WEIGHTED AVERAGE SHARES 32,079 31,545 32,015 31,520
======= ======= ======= =======
BASIC NET INCOME PER SHARE $ 1.98 $ .37 $ 2.45 $ .73
======= ======= ======= =======
ADJUSTED WEIGHTED AVERAGE SHARES 32,749 32,029 32,578 31,996
======= ======= ======= =======
DILUTED NET INCOME PER SHARE $ 1.94 $ .37 $ 2.41 $ .72
======= ======= ======= =======
CASH DIVIDENDS DECLARED PER SHARE $ .41 $ .36 $ .82 $ .72
======= ======= ======= =======
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
($ in thousands)
1999 1998
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before gain on sale of
investment properties $ 21,862 $21,414
Adjustments to reconcile income before gain on sale
of investment properties to net cash provided by
operating activities:
Depreciation and amortization 5,826 7,363
Stock appreciation right expense 136 80
Cash charges to expense accrual for stock
appreciation rights (122) (39)
Effect of recognizing rental revenues on a
straight-line basis (202) (155)
Income from unconsolidated joint ventures (9,499) (9,128)
Operating distributions from unconsolidated
joint ventures 24,192 14,609
Residential lot and outparcel cost of sales 6,019 7,965
Changes in other operating assets and liabilities:
Change in other receivables (1,447) (1,335)
Change in accounts payable and accrued
liabilities 2,189 3,961
-------- -------
Net cash provided by operating activities 48,954 44,735
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Gain on sale of investment properties, net of
applicable income tax provision 56,706 1,657
Adjustments to reconcile gain on sale of
investment properties to net cash provided
by sales activities:
Cost of sales 28,178 1,200
Deferred income recognized (2,066) --
Property acquisition and development expenditures (195,572) (92,263)
Investment in unconsolidated joint ventures,
including interest capitalized to equity investments (23,189) (18,096)
Net cash received in formation of venture 100,000 --
Collection of notes receivable 5,521 1,267
Non-operating distributions from unconsolidated
joint ventures 2,000 22,617
Investment in notes receivable (4) (5,969)
Change in other assets, net (1,399) 1,374
-------- -------
Net cash used in investing activities (29,825) (88,213)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit 170,672 85,062
Repayment of line of credit (163,969) (49,087)
Dividends paid (26,219) (22,681)
Common stock sold, net of expenses 6,998 2,779
Repayment of other notes payable (2,582) (3,507)
-------- -------
Net cash (used in) provided by financing activities (15,100) 12,566
-------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,029 (30,912)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,349 32,694
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,378 $ 1,782
======== =======
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<PAGE>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION
- --------------------------
The Consolidated Financial Statements include the accounts of Cousins
Properties Incorporated ("Cousins") and its majority and wholly-owned
affiliates, Cousins Real Estate Corporation ("CREC") and its subsidiaries, and
CREC II, Inc. ("CREC II") and its subsidiaries. All of the entities included in
the Consolidated Financial Statements are hereinafter referred to collectively
as the "Company."
Cousins has elected to be taxed as a real estate investment trust
("REIT"), and intends to distribute 100% of its federal taxable income to
stockholders, thereby eliminating any liability for future corporate federal
income taxes. Therefore, the results included herein do not include a federal
income tax provision for Cousins. However, CREC and its subsidiaries and CREC II
and its subsidiaries are taxed separately from Cousins as regular corporations.
Accordingly, the Consolidated Statements of Income include a provision (benefit)
for CREC's and CREC II's income taxes.
The Consolidated Financial Statements were prepared by the Company
without audit, but in the opinion of management reflect all adjustments
necessary for the fair presentation of the Company's financial position as of
June 30, 1999, and results of operations for the three and six month periods
ended June 30, 1999 and 1998. Results of operations for the interim 1999 periods
are not necessarily indicative of results expected for the full year. While
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission, the Company believes that the disclosures
herein are adequate to make the information presented not misleading. These
condensed financial statements should be read in conjunction with the
Consolidated Financial Statements and the notes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1998. The
accounting policies employed are the same as those shown in Note 1 to the
Consolidated Financial Statements included in such Form 10-K.
Certain 1998 amounts have been reclassified to conform with the 1999
presentation.
2. SUPPLEMENTAL INFORMATION CONCERNING CASH FLOWS
- ---------------------------------------------------
Interest (net of $7,209,000 and $3,335,000 capitalized in 1999 and
1998, respectively) and income taxes paid were as follows for the six months
ended June 30, 1999 and 1998 ($ in thousands):
1999 1998
------ ------
Interest paid $1,137 $5,458
Income taxes paid $1,336 $ 110
During the six months ended June 30, 1999, approximately $23,236,000
was transferred from Projects Under Construction to Operating Properties. In
November 1998, the Company entered into a venture arrangement (the "Prudential
Venture") with The Prudential Insurance Company of America ("Prudential"),
whereby the Company contributed nine properties and Prudential is to contribute
a total of $230,469,000 of cash on agreed-upon dates. (See Note 5 of "Notes to
Consolidated Financial Statements" in the Company's Form 10-K for the year ended
December 31, 1998.) Prudential contributed $100,000,000 in the first six months
of 1999, bringing the total amount to $205,000,000 as of June 30, 1999. The
effect of this contribution on the Consolidated Balance Sheet as of June 30,
1999 was a decrease of $88,500,000 in Investment in Unconsolidated Joint
Ventures and an increase of $11,500,000 in Minority Interests.
At June 30, 1999, cash and cash equivalents included approximately
$831,000 which is restricted under a municipal bond indenture.
3. NOTES PAYABLE AND INTEREST EXPENSE
- ---------------------------------------
<TABLE>
<CAPTION>
At June 30, 1999 and December 31, 1998, notes payable included the
following $ in thousands):
June 30, 1999 December 31, 1998
----------------------------------- --------------------------------------
Share of Share of
Unconsolidated Unconsolidated
Company Joint Ventures Total Company Joint Ventures Total
-------- -------------- -------- -------- -------------- -----
<S> <C> <C> <C> <C> <C> <C>
Floating Rate Lines of Credit
and Construction Loans $ 17,823 $ 2,991 $ 20,814 $ 11,120 $ -- $ 11,120
Other Debt
(primarily non-recourse
fixed rate mortgages) 185,156 197,188 382,344 187,738 221,498 409,236
-------- -------- -------- -------- -------- --------
$202,979 $200,179 $403,158 $198,858 $221,498 $420,356
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
For the three and six months ended June 30, 1999, interest expense was
recorded as follows ($ in thousands):
Three Months Ended Six Months Ended
June 30, 1999 June 30, 1999
----------------------------------- -------------------------------------
Share of Share of
Unconsolidated Unconsolidated
Company Joint Ventures Total Company Joint Ventures Total
------- -------------- ------ ------- -------------- -------
<S> <C> <C> <C> <C> <C> <C>
Interest Expensed $ 65 $3,706 $3,771 $ 430 $7,397 $ 7,827
Interest Capitalized 3,784 281 4,065 7,209 776 7,985
------ ------ ------ ------ ------ -------
$3,849 $3,987 $7,836 $7,639 $8,173 $15,812
====== ====== ====== ====== ====== =======
</TABLE>
During the second quarter of 1999, interest was capitalized related to
the Company's and the Company's share of unconsolidated joint venture projects
under construction which had an average balance of approximately $295 million.
In June 1999, the Company executed a temporary extension of its $150
million Line of Credit until August 27, 1999. The Company is currently
negotiating the modification of this $150 million Line of Credit and currently
anticipates a closing on the modification on or before August 27, 1999.
4. EARNINGS PER SHARE DATA
- ---------------------------
Weighted average shares and adjusted weighted average shares are as
follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
----------------- ----------------
1999 1998 1999 1998
------ ------ ------ ------
Weighted average shares 32,079 31,545 32,015 31,520
Dilutive potential common shares 670 484 563 476
------ ------ ------ ------
Adjusted weighted average shares 32,749 32,029 32,578 31,996
====== ====== ====== ======
Anti-dilutive options not included - - - 585
====== ====== ====== =====
5. REPORTABLE SEGMENTS
- -----------------------
The Company has four reportable segments: Office Division, Retail
Division, Medical Office Division and Land Division. The Office Division, Retail
Division and Medical Office Division develop, lease and manage office buildings,
retail centers and medical office buildings, respectively. The Land Division
owns various tracts of strategically located land which are being held for
future development. The Land Division also develops single-family residential
communities which are parceled into lots and sold to various home builders.
The management of the Company evaluates performance of its reportable
segments based on Funds From Operations ("FFO"). The Company calculates its FFO
using the National Association of Real Estate Investment Trusts ("NAREIT")
definition of FFO adjusted to (i) eliminate the recognition of rental revenues
on a straight-line basis, (ii) reflect stock appreciation right expense on a
cash basis and (iii) recognize certain fee income as cash is received rather
than when recognized in the financial statements. The Company believes its FFO
presentation more properly reflects its operating results. The Company's
reportable segments are broken down based on what type of product the division
provides. The divisions are managed separately because each product they provide
has separate and distinct development issues, leasing and/or sales strategies
and management issues. The notations (100%) and (JV) used in the following
tables indicate wholly-owned and unconsolidated joint ventures, respectively,
and all amounts are in thousands.
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Office Retail Medical Land Unallocated
June 30, 1999 Division Division Office Division Division and Other Total
- ------------------ -------- -------- --------------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Rental property revenues (100%) $ 6,544 $4,687 $1,545 $ - $ 93 $12,869
Rental property revenues (JV) 15,719 4,049 135 - - 19,903
Development income, management
fees and leasing and other fees (100%) 3,409 333 515 60 - 4,317
Development income, management fees
and leasing and other fees (JV) 451 - - - - 451
Other income (100%) - 815 - 4,159 829 5,803
Other income (JV) - - - 243 47 290
-----------------------------------------------------------------------
Total revenues 26,123 9,884 2,195 4,462 969 43,633
-----------------------------------------------------------------------
Rental property operating expenses (100%) 2,183 1,135 509 - - 3,827
Rental property operating expenses (JV) 4,210 987 47 - - 5,244
Other expenses (100%) - 358 - 3,725 4,939 9,022
Other expenses (JV) 167 242 - 61 3,915 4,385
-----------------------------------------------------------------------
Total expenses 6,560 2,722 556 3,786 8,854 22,478
-----------------------------------------------------------------------
Consolidated funds from operations 19,563 7,162 1,639 676 (7,885) 21,155
-----------------------------------------------------------------------
Depreciation and amortization (100%) (1,582) (877) (331) - (74) (2,864)
Depreciation and amortization (JV) (4,451) (985) (41) - - (5,477)
Effect of the recognition of rental
revenues on a straight-line basis (100%) 98 - - - - 98
Effect of the recognition of rental
revenues on a straight-line basis (JV) (67) (76) - - - (143)
Adjustment to reflect stock appreciation
right expense on an accrual basis - - - - (401) (401)
Gain on sale of investment properties, net
of applicable income tax provision - - - - 51,198 51,198
-----------------------------------------------------------------------
Net income 13,561 5,224 1,267 676 42,838 63,566
-----------------------------------------------------------------------
Provision for income taxes from operations - - - - 390 390
-----------------------------------------------------------------------
Income from operations before income taxes $ 13,561 $5,224 $1,267 $ 676 $43,228 $63,956
=======================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended Office Retail Medical Land Unallocated
June 30, 1999 Division Division Office Division Division and Other Total
- ---------------- -------- -------- --------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Rental property revenues (100%) $ 12,557 $ 9,431 $ 2,263 $ - $ 179 $ 24,430
Rental property revenues (JV) 31,063 8,503 334 - - 39,900
Development income, management
fees and leasing and other fees (100%) 6,019 869 786 120 - 7,794
Development income, management fees
And leasing and other fees (JV) 451 - - - - 451
Other income (100%) - 815 - 6,836 1,694 9,345
Other income (JV) - - - 249 75 324
------------------------------------------------------------------------
Total revenues 50,090 19,618 3,383 7,205 1,948 82,244
------------------------------------------------------------------------
Rental property operating expenses (100%) 4,144 2,134 719 - 31 7,028
Rental property operating expenses (JV) 8,777 2,061 111 - - 10,949
Other expenses (100%) - 358 - 6,232 10,254 16,844
Other expenses (JV) 167 242 - 72 7,478 7,959
------------------------------------------------------------------------
Total expenses 13,088 4,795 830 6,304 17,763 42,780
------------------------------------------------------------------------
Consolidated funds from operations 37,002 14,823 2,553 901 (15,815) 39,464
------------------------------------------------------------------------
Depreciation and amortization (100%) (3,045) (1,678) (649) - (156) (5,528)
Depreciation and amortization (JV) (9,467) (2,455) (103) - - (12,025)
Effect of the recognition of rental
revenues on a straight-line basis (100%) 202 - - - - 202
Effect of the recognition of rental
revenues on a straight-line basis (JV) (176) (61) - - - (237)
Adjustment to reflect stock appreciation
right expense on an accrual basis - - - - (14) (14)
Gain on sale of investment properties, net
of applicable income tax provision - - - - 56,706 56,706
Net income 24,516 10,629 1,801 901 40,721 78,568
------------------------------------------------------------------------
Provision for income taxes from operations - - - - 1,255 1,255
------------------------------------------------------------------------
Income from operations before income taxes $ 24,516 $ 10,629 $ 1,801 $ 901 $41,976 $ 79,823
========================================================================
Total assets $484,350 $220,351 $56,212 $10,456 $53,250 $824,619
========================================================================
Investment in unconsolidated joint ventures $124,217 $ 29,786 $ 1,699 $ 3,408 $ 5,517 $164,627
========================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Office Retail Medical Land Unallocated
June 30, 1998 Division Division Office Division Division and Other Total
- ------------------ -------- -------- --------------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Rental property revenues (100%) $ 8,013 $ 8,189 $427 $ - $ 127 $16,756
Rental property revenues (JV) 2,353 2,044 - - - 14,397
Development income, management
fees and leasing and other fees (100%) 1,700 202 238 - - 2,140
Development income, management fees
And leasing and other fees (JV) - - - - - -
Other income (100%) - - - 4,317 925 5,242
Other income (JV) - - - 19 31 50
-----------------------------------------------------------------------
Total revenues 22,066 10,435 665 4,336 1,083 38,585
-----------------------------------------------------------------------
Rental property operating expenses (100%) 2,472 1,672 144 - 20 4,308
Rental property operating expenses (JV) 5,829 642 - - - 6,471
Other expenses (100%) - - - 4,286 5,761 10,047
Other expenses (JV) - - - 19 - 19
-----------------------------------------------------------------------
Total expenses 8,301 2,314 144 4,305 5,781 20,845
-----------------------------------------------------------------------
Consolidated funds from operations 13,765 8,121 521 31 (4,698) 17,740
-----------------------------------------------------------------------
Depreciation and amortization (100%) (1,995) (1,471) (78) - (104) (3,648)
Depreciation and amortization (JV) (2,574) (383) - - - (2,957)
Effect of the recognition of rental
revenues on a straight-line basis (100%) 76 - - - - 76
Effect of the recognition of rental
revenues on a straight-line basis (JV) (428) (25) - - - (453)
Adjustment to reflect stock appreciation
right expense on an accrual basis - - - - 133 133
Gain on sale of investment properties, net
of applicable income tax provision - - - - 886 886
-----------------------------------------------------------------------
Net income 8,844 6,242 443 31 (3,783) 11,777
-----------------------------------------------------------------------
Benefit for income taxes from operations - - - - (89) (89)
-----------------------------------------------------------------------
Income from operations before income taxes $ 8,844 $ 6,242 $443 $ 31 $(3,872) $11,688
=======================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended Office Retail Medical Land Unallocated
June 30, 1998 Division Division Office Division Division and Other Total
- ---------------- -------- -------- --------------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Rental property revenues (100%) $ 15,651 $ 16,154 $ 757 $ - $ 249 $ 32,811
Rental property revenues (JV) 24,280 4,025 - - - 28,305
Development income, management
fees and leasing and other fees 3,585 323 448 - - 4,356
Other income (100%) - 800 - 7,974 1,972 10,746
Other income (JV) - - - 144 54 198
-----------------------------------------------------------------------
Total revenues 43,516 21,302 1,205 8,118 2,275 76,416
-----------------------------------------------------------------------
Rental property operating expenses (100%) 4,654 3,171 257 - 60 8,142
Rental property operating expenses (JV) 11,550 1,229 - - - 12,779
Other expenses (100%) - 712 - 7,975 11,786 20,473
Other expenses (JV) - - - 54 - 54
-----------------------------------------------------------------------
Total expenses 16,204 5,112 257 8,029 11,846 41,448
-----------------------------------------------------------------------
Consolidated funds from operations 27,312 16,190 948 89 (9,571) 34,968
-----------------------------------------------------------------------
Depreciation and amortization (100%) (3,877) (2,887) (155) - (207) (7,126)
Depreciation and amortization (JV) (5,018) (679) - - - (5,697)
Effect of the recognition of rental
revenues on a straight-line basis (100%) 155 - - - - 155
Effect of the recognition of rental
revenues on a straight-line basis (JV) (822) (23) - - - (845)
Adjustment to reflect stock appreciation
right expense on an accrual basis - - - - (41) (41)
Gain on sale of investment properties, net
of applicable income tax provision - - - - 1,657 1,657
-----------------------------------------------------------------------
Net income 17,750 12,601 793 89 (8,162) 23,071
-----------------------------------------------------------------------
Benefit for income taxes from operations - - - - (107) (107)
-----------------------------------------------------------------------
Income from operations before income taxes $ 17,750 $ 12,601 $ 793 $ 89 $(8,269) $ 22,964
=======================================================================
Total assets $320,911 $244,083 $35,514 $13,426 $52,459 $666,393
=======================================================================
Investment in unconsolidated joint ventures $ 87,600 $ 21,512 $ - $ 1,081 $ 3 $110,196
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
Reconciliation to Consolidated Revenues
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
---------------------- -----------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Rental property revenues (100%) $12,869 $16,756 $24,430 $32,811
Effect of the recognition of rental
revenues on a straight-line basis (100%) 98 76 202 155
Development income, management fees
and leasing and other fees 4,317 2,140 7,794 4,356
Residential lot and outparcel sales 4,974 4,317 7,651 8,774
Interest and other 829 925 1,694 1,972
--------------------- ----------------------
Total consolidated revenues $23,087 $24,214 $41,771 $48,068
===================== ======================
</TABLE>
6. SALE OF INTEREST IN HAYWOOD MALL AND PURCHASE OF INFORUM
- -------------------------------------------------------------
On June 28, 1999, the Company sold its 50% ownership interest in
Haywood Mall, located in Greenville, South Carolina, to Simon Property Group for
$69 million, recognizing a gain of $50.1 million which is included in Gain on
Sale of Investment Properties, Net of Applicable Income Tax Provision in the
accompanying Consolidated Statements of Income. The sale of its 50% ownership
interest in Haywood Mall was structured as a tax-deferred exchange for income
tax purposes, with the proceeds being reinvested into the purchase of the
Inforum, an 876,000 square foot office building with an additional 111,000 of
exhibition space located in downtown Atlanta, Georgia on June 30, 1999. The
purchase price of the Inforum was $71 million.
<PAGE>
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Three and Six Months Ended June 30,
1999 and 1998.
Results of Operations:
- ----------------------
Rental Property Revenues and Operating Expenses. Rental property
revenues were approximately $3,865,000 and $8,334,000 lower in the three and six
month 1999 periods, respectively. Rental property revenues from the Company's
office division decreased approximately $1,447,000 and $3,047,000 in the three
and six month 1999 periods, respectively. Rental property revenues decreased
approximately $1,633,000, $721,000 and $732,000 in the three month 1999 period
and $3,246,000, $1,414,000 and $1,437,000 in the six month 1999 period, from the
contribution of three office properties, First Union Tower, 100 North Point
Center East and 200 North Point Center East, respectively, in November 1998 to
the Prudential Venture (see Note 2). Grandview II was also contributed to the
Prudential Venture but was not operational for financial reporting purposes in
the first half of 1998. Additionally, rental property revenues from 615
Peachtree Street decreased approximately $279,000 for the six month 1999 period
due partially to the receipt of two cancellation penalties in the first quarter
1998 and partially to lower average economic occupancy in 1999. The decreases
were partially offset by increases in rental property revenues of $608,000 and
$1,250,000 in the three and six month 1999 periods, respectively, from the June
1998 acquisition of Lakeshore Park Plaza and increases of approximately $558,000
and $1,280,000 in the three and six month 1999 periods, respectively, in rental
property revenues from 333 North Point Center East which became partially
operational for financial reporting purposes in June 1998. 333 John Carlyle
became partially operational for financial reporting purposes in May 1999, which
increased rental property revenues by $420,000 for the three and six month 1999
periods.
Rental property revenues from the Company's retail division decreased
approximately $3,502,000 and $6,722,000 for the three and six month 1999
periods, respectively. Rental property revenues decreased approximately
$1,379,000, $1,304,000, $833,000 and $329,000 in the three month 1999 period and
$2,825,000, $2,600,000, $1,659,000 and $661,000 in the six month 1999 period
from the contribution of North Point MarketCenter, Greenbrier MarketCenter, Los
Altos MarketCenter and Mansell Crossing II, respectively, to the aforementioned
Prudential Venture in November 1998. The decreases were also due to the sale of
Abbotts Bridge Station in February 1999, which contributed approximately
$407,000 and $435,000 to the decrease in the three and six month 1999 periods,
respectively. The decreases were partially offset by an increase of
approximately $626,000 and $1,239,000 in the three and six month 1999 periods,
respectively, from Laguna Niguel Promenade, which became partially operational
in July 1998.
Rental property revenues from the Company's medical office division
increased approximately $1,118,000 and $1,506,000 in the three and six month
1999 periods, respectively. The June 1998 acquisition of Northside/Alpharetta I
contributed to the increase in rental property revenues by approximately
$559,000 and $1,217,000 in the three and six month 1999 periods, respectively.
The AtheroGenics medical office building became fully operational in March 1999,
which contributed approximately $217,000 and $277,000 to the increase in the
three and six month 1999 periods, respectively. Meridian Mark Plaza became
partially operational in April 1999, which contributed approximately $671,000 to
both the increases in the three and six month 1999 periods. These increases were
partially offset by a decrease of approximately $329,000 and $659,000 for the
three and six month 1999 periods, respectively, due to the contribution of
Presbyterian Medical Plaza at University to the aforementioned Prudential
Venture in November 1998.
Rental property operating expenses decreased approximately $481,000 and
$1,114,000 in the three and six month 1999 periods, respectively, which
decreases were primarily related to the contribution of the three office
buildings, the four retail centers and one medical office building to the
Prudential Venture. The decreases were partially offset by the June 1998
acquisitions of Lakeshore Park Plaza and Northside/Alpharetta I, as well as 333
North Point Center East, Laguna Niguel Promenade, AtheroGenics and Meridian Mark
Plaza becoming fully or partially operational in June 1998, July 1998, March
1999 and April 1999, respectively.
Development Income. Development income was approximately $642,000 and
$1,610,000 higher in the three and six month 1999 periods, respectively. The
increase in development income was partially due to development fees recognized
from three of the Company's joint ventures which are developing Gateway Village
($245,000 and $489,000 in the three and six month periods, respectively), 1155
Perimeter Center West ($149,000 and $292,000 in the three and six month periods,
respectively) and the Bentwater residential development ($60,000 and $120,000 in
the three and six month periods, respectively). Development income of
approximately $225,000 and $675,000 in the three and six month 1999 periods,
respectively, was also recognized from a build to suit for Walgreens on an
outparcel at Colonial Plaza MarketCenter. Additionally, development income
increased approximately $223,000 in both the three and six month 1999 periods
from the Crawford Long Hospital campus redevelopment. Partially offsetting the
aforementioned increases in development income was a decrease in development
income of approximately $182,000 and $303,000 in the three and six month
periods, respectively, from the Brad Cous Golf Venture, Ltd., for which the
Company is developing World Golf Village, and by a decrease of approximately
$115,000 from the Dusseldorf project in the six month 1999 period.
Management Fees. Management fees were approximately $327,000 and
$543,000 higher in the three and six month 1999 periods, respectively, partially
due to approximately $191,000 and $354,000 of management fees recognized in the
three and six month 1999 periods, respectively, from the aforementioned
Prudential Venture for the management of the nine contributed properties and
partially due to an increase of approximately $99,000 and $126,000 in the three
and six month periods, respectively, of management fees from the Cousins LORET
Venture L.L.C. ("Cousins LORET").
Residential Lot and Outparcel Sales and Cost of Sales. Residential lot
and outparcel sales increased approximately $657,000 in the three month 1999
period and decreased approximately $1,123,000 in the six month 1999 period. The
increase for the three month 1999 period is due to one outparcel sale in the
three month 1999 period of approximately $815,000. There were no outparcel sales
in the three month 1998 period. The increase in the three month 1999 period was
partially offset by a decrease in residential lot sales from 92 lots in the
three month 1998 period to 85 lots in the three month 1999 period, which
decreased residential lot sales by approximately $158,000. The decrease for the
six month 1999 period was due to a decrease in the number of residential lot
sales from 176 in the six month 1998 period to 151 in the six month 1999 period,
which decreased residential lot sales by $1,138,000.
Residential lot and outparcel cost of sales decreased approximately
$200,000 and $2,090,000 in the three and six month 1999 periods, respectively,
due partially to the aforementioned decreases in residential lot sales. The
decrease in residential lot cost of sales was greater than the corresponding
decrease in residential lot sales due to an increase in the first half of 1999
in gross profit percentages used to calculate the cost of sales on residential
lot sales in certain of the residential developments. The decreases were also
due to lower outparcel cost of sales for the 1999 outparcel sale as compared to
the 1998 outparcel sales, with the outparcel sales prices between years being
approximately the same.
Interest and Other Income. Interest and other income decreased
approximately $278,000 in the six month 1999 period. The decrease was primarily
due to a decrease in interest income recognized from temporary investments. In
the six months ended June 30, 1998, the Company recognized interest income on
temporary investments made with the remaining proceeds from the December 1997
common stock offering of 2,150,000 shares. No similar amounts were invested in
the six months ended June 30, 1999.
Income from Unconsolidated Joint Ventures. (All amounts reflect the
Company's share of joint venture income.) Income from unconsolidated joint
ventures increased approximately $845,000 and $371,000 in the three and six
month 1999 periods, respectively.
Income from CSC Associates, L.P. increased approximately $184,000 and
$361,000 in the three and six month 1999 periods, respectively, primarily due to
the continued lease-up of NationsBank Plaza. Average economic occupancy of
NationsBank Plaza increased to 98% in the first half of 1999 from 93% in the
first half of 1998.
Income from Wildwood Associates decreased approximately $116,000 and
$442,000 for the three and six month 1999 periods, respectively. The decrease
was due partially to a decrease in interest capitalization of $260,000 and
$545,000 in the three and six month 1999 periods, respectively, and an increase
in depreciation and amortization of approximately $153,000 and $328,000 in the
three and six month 1999 periods, respectively, as the 4200 Wildwood Parkway
Building became partially operational in June 1998. Additionally, interest
expense increased approximately $368,000 and $737,000 in the three and six month
1999 periods, respectively, due to the $44 million non-recourse financing of the
4200 Wildwood Parkway Building which was completed in June 1998. The overall
decrease was partially offset by income before depreciation, amortization and
interest expense of $611,000 and $895,000 in the three and six month 1999
periods, respectively, from the 4200 Wildwood Parkway Building. Income before
depreciation, amortization and interest expense also favorably impacted results
by an increase of approximately $191,000 for the six month 1999 period due to
the continued lease-up of the 2300 Windy Ridge Parkway and the 2500 Windy Ridge
Parkway Buildings, which also partially offset the overall decrease in income
from Wildwood Associates.
Income from Cousins LORET decreased approximately $162,000 and $318,000
in the three and six month 1999 periods, respectively. The decrease was
primarily due to an increase in interest expense before capitalization of
approximately $622,000 and $1,244,000 for the three and six month 1999 periods,
respectively, due to the funding of the $70 million non-recourse financing of
The Pinnacle, which was completed on December 30, 1998. Depreciation and
amortization increased approximately $358,000 and $555,000 for the three and six
month 1999 periods, respectively, due to The Pinnacle becoming partially
operational for financial reporting purposes in March 1999. Partially offsetting
the decrease for the six month period was an increase of approximately $253,000
in interest capitalized to The Pinnacle. Income before depreciation,
amortization and interest expense from The Pinnacle also partially offset the
decrease by approximately $784,000 and $1,078,000 for the three and six month
1999 periods, respectively, and by approximately $173,000 for the six month 1999
period from the lease-up of Two Live Oak.
Income from Haywood Mall Associates increased approximately $277,000
and $316,000 for the three and six month 1999 periods, respectively, due to the
continued lease-up of the expansion of Haywood Mall.
Income from Cousins Stone LP increased $284,000 in the three and six
month 1999 periods. Cousins Stone LP was formed June 1, 1999 when Cousins
acquired Faison's 50% interest in Faison-Stone.
Income from Temco Associates increased $176,000 in the three month 1999
period. In June 1999, Temco Associates exercised an option to purchase
approximately 66 acres of land, which it simultaneously sold. CREC's share of
the gain on the sale was approximately $178,000.
General and Administrative Expenses. General and administrative
expenses increased approximately $554,000 and $1,068,000 in the three and six
month 1999 periods, respectively. The increase was primarily due to the
Company's continued expansion, partially offset by an increased level of
salaries and overhead being capitalized to a higher level of projects under
development in the three and six month 1999 periods.
Depreciation and Amortization. Depreciation and amortization decreased
approximately $746,000 and $1,537,000 in the three and six month 1999 periods,
respectively. The decreases were due to the aforementioned contribution of nine
properties to the Prudential Venture, partially offset by the June 1998
acquisitions of Lakeshore Park Plaza and Northside/Alpharetta I, and 333 North
Point Center East, Laguna Niguel Promenade, AtheroGenics and Meridian Mark Plaza
becoming fully or partially operational in June 1998, July 1998, March 1999 and
April 1999, respectively.
Stock Appreciation Right (Credit) Expense. The credit to stock
appreciation right expense increased approximately $578,000 from a credit of
$118,000 in the three month 1998 period to an expense of $460,000 in the three
month 1999 period. This non-cash item is primarily related to the Company's
stock price, which was $32.25, $28.9375, and $33.8125 at December 31, 1998,
March 31, 1999 and June 30, 1999, respectively; and $29.3125, $30.875, and
$29.875 at December 31, 1997, March 31, 1998, and June 30, 1998, respectively.
Interest Expense. Interest expense decreased approximately $2,666,000
and $5,113,000 in the three and six month 1999 periods, respectively. Interest
expense before capitalization decreased to approximately $3,849,000 and
$7,639,000 in 1999 from $4,595,000 and $8,878,000 in 1998 for the three and six
month periods, respectively, due to lower debt levels. Further contributing to
this decrease was an increase of approximately $1,920,000 and $3,874,000 in
interest capitalized to projects under development (a reduction of interest
expense) to $3,784,000 and $7,209,000 in 1999 from $1,864,000 and $3,335,000 in
1998 for the three and six month periods, respectively.
Other Expenses. Other expenses increased approximately $726,000 and
$1,001,000 in the three and six month 1999 periods, respectively, due primarily
to the recognition of Prudential's minority interest in the aforementioned
Prudential Venture.
Provision (Benefit) for Income Taxes from Operations. Provision
(benefit) for income taxes from operations increased $479,000 in the three month
1999 period from a benefit of $89,000 in 1998 to a provision of $390,000 in
1999. Provision (benefit) for income taxes from operations increased $1,362,000
in the six month 1999 period from a benefit of $107,000 in 1998 to a provision
of $1,255,000 in 1999. The increase in both periods is due to an increase in
CREC and its subsidiaries income from operations before income taxes of $974,000
and $3,313,000 for the three and six month 1999 periods, respectively. CREC and
its subsidiaries' income from operations before income taxes increased mainly
due to the aforementioned increase in development income. Certain development
fees recorded on CREC and its subsidiaries' books are intercompany fee income
which is eliminated in consolidation, but the tax effect is not, and such
intercompany fees increased in both the three and six month 1999 periods.
Additionally, CREC II has a 50% interest in Cousins Stone LP for which its share
of income from operations before income taxes was $244,000 for the three and six
month 1999 periods.
Gain on Sale of Investment Properties. Gain on sale of investment
properties increased approximately $50,312,000 and $55,049,000 in the three and
six month 1999 periods, respectively. The 1999 gain included the following: the
January 1999 sale of 3 acres of McMurray land ($.1 million gain), the February
1999 sale of Abbotts Bridge Station, a neighborhood retail center ($3.5 million
gain), the March 1999 sale of Kennesaw Crossings neighborhood retail center ($.9
million gain), the May 1999 sale of 2 acres of Hidden Hills land ($.1 million
gain), the June 1999 sale of the Company's 50% interest in Haywood Mall ($50.1
million gain) (see Note 6) , and amortization of deferred gain from the
aforementioned formation of the Prudential Venture ($2.0 million). The 1998 gain
included the following: the March 1998 sale of 6 acres of land ($.6 million
gain) and the April 1998 sale of approximately 23 acres of land ($1.0 million
gain), both at the Company's North Point development.
Liquidity and Capital Resources:
- --------------------------------
Financial Condition. The Company's debt (including its pro rata share
of unconsolidated joint venture debt) was 27% of total market capitalization at
June 30, 1999.
The Company has development and acquisition projects in various
planning stages. The Company currently intends to finance these projects, as
well as the completion of projects currently under construction, using its
existing lines of credit (increasing those lines of credit as required) (see
Note 3), long-term non-recourse financing on the Company's unleveraged projects,
other financings, and the sale of common stock, warrants to purchase common
stock and debt securities under a $200 million shelf registration statement the
Company filed with the Securities and Exchange Commission in September 1996, of
which approximately $132 million remains available at June 30, 1999.
The Company from time to time evaluates opportunities and strategic
alternatives, including but not limited to joint ventures, mergers and
acquisitions and new private or publicly-owned entities created to hold existing
assets and acquire new assets. These alternatives may also include sales of
single or multiple assets when the Company perceives opportunities to capture
value and redeploy proceeds or distribute proceeds to shareholders. The
Company's consideration of these alternatives is part of its ongoing strategic
planning process. There can be no assurance that any such alternative, if
undertaken and consummated, would not materially adversely affect the Company or
the market price of Cousins' Common Stock.
Cash Flows. Net cash provided by operating activities increased
approximately $4.2 million in 1999. Changes in other operating assets and
liabilities decreased approximately $1.9 million. Residential lot and outparcel
cost of sales decreased approximately $1.9 million due to a decrease in the
number of residential lots sold in 1999. Depreciation and amortization decreased
approximately $1.5 million due to the aforementioned contribution of the
properties to the Prudential Venture. Operating distributions from
unconsolidated joint ventures increased approximately $9.6 million, which
partially offset the aforementioned decreases, primarily due to approximately
$6.9 million of operating distributions from the Prudential Venture and to
approximately $2.0 million of operating distributions from Cousins LORET.
Net cash used in investing activities decreased approximately $58.4
million in 1999. Net cash received related to the Prudential Venture increased
approximately $100 million in 1999 (see Note 2) which primarily caused the
decrease in the net cash used in investing activities. Also contributing to the
decrease in net cash used in investing activities was an increase in net cash
provided by sales activities of approximately $82 million. This increase was due
mainly to four sales in the first half of 1999: Abbotts Bridge Station, Kennesaw
Crossings, McMurray land and the Company's 50% interest in Haywood Mall. The
collection of notes receivable also increased approximately $4.3 million due to
the repayment of the Cousins LORET note receivable in the first half of 1999.
The decrease in net cash used in investing activities was partially offset by an
increase of approximately $103.3 million in property acquisition and development
expenditures, as a result of the Company having a higher level of projects under
development in 1999 and the June 1999 acquisition of the Inforum office building
(see Note 6). Non-operating distributions from unconsolidated joint ventures
decreased $20.6 million, which also partially offset the decrease in net cash
used in investing activities. In the first half of 1999, Cousins LORET
distributed approximately $2.0 million, which represented a portion of the
proceeds from the aforementioned $70 million financing of The Pinnacle in
December 1998. In 1998, the Company received a distribution from Wildwood
Associates of $22.6 million, primarily due to the completion of the $44 million
financing of the 4200 Wildwood Parkway Building. No such distribution occurred
in 1999. Investment in unconsolidated joint ventures increased $5.1 million
primarily due to the formation of Cousins Stone LP on June 1, 1999, which also
partially offset the decrease in net cash used in investing activities.
Investment in notes receivable increased approximately $6.0 million due to the
loan to Cousins LORET being made in the first half of 1998. No similar loan was
made in the first half of 1999. Deferred income recognized increased
approximately $2.1 million which related to the Prudential Venture (see Note 5
of "Notes to Consolidated Financial Statements" in the Company's annual report
on Form 10-K for the year ended December 31, 1998) and also partially offset the
aforementioned decreases. Change in other assets, net, also decreased $2.8
million, which further offset the aforementioned decreases.
Net cash used in financing activities increased approximately $27.7
million in 1999 from net cash provided by financing activities, which was
primarily attributable to a decrease of $29.3 million in the net amount drawn on
the Company's line of credit. An increase in the dividends paid per share to
$.41 in 1999 from $.36 in 1998 and an increase in the number of shares
outstanding also contributed to the increase in net cash used in financing
activities, as dividends paid increased approximately $3.5 million. Partially
offsetting the increase in net cash used in financing activities was an increase
of approximately $4.2 million in the proceeds received from common stock sold,
net of expenses.
Quantitative and Qualitative Disclosure About Market Risk:
- ----------------------------------------------------------
There have been no significant changes in the Company's market risk
related to its notes payable and notes receivable from that disclosed in the
Company's annual report on Form 10-K for the year ended December 31, 1998.
Year 2000:
- ----------
The "Year 2000 issue" is the result of certain computer systems,
software, electronic equipment or embedded chips (collectively known as
"computer systems") being written using two digits rather than four to define
the applicable year. Therefore, certain computer systems may not distinguish
between a year that begins with a "20" rather than a "19." This could result in
system failures which could cause disruptions of operations. The Company has
completed its initial assessment of the impact of the Year 2000 issue on its
business and operations and has identified the areas which rely on computer
systems and may be potentially impacted, which mainly include the systems
utilized in the operations of its real estate properties and in the processing
of its accounting data.
The Company has substantially completed an inventory of the material
computer systems being utilized in its existing operating real estate properties
which may be adversely affected by the Year 2000 issue. Such systems include,
but are not limited to, building control systems, heating and air conditioning
controls, elevator controls, fire alarms and security devices. Certain of these
systems are being replaced, upgraded or modified as deemed necessary, the cost
of which is not expected to be material.
The Company is currently in the process of upgrading its accounting
software to a version that its software vendor has represented to be Year 2000
compliant, as they define it. The Company expects to have the installation of
the upgrade completed by the third quarter of 1999. The hardware and operating
system used to run the accounting software has been represented to be Year 2000
compliant. The Company has also assessed its non-financial computer systems, and
is replacing, upgrading or modifying such systems as needed. The cost of the
upgrades to the accounting software and non-financial computer systems is not
expected to be material.
The Company has significantly completed its survey of all material
third party vendors to determine their Year 2000 compliance status and has
received certificates, where possible, as to their compliancy. No estimates can
be made as to any potential adverse impact resulting from the failure of any
third party vendor or service provider to be Year 2000 compliant. To the extent
the Year 2000 issue has a material adverse effect on the business operations or
financial condition of third parties with which the Company has material
relationships, such as vendors, suppliers, tenants and financial institutions,
the Year 2000 issue could also have a material adverse effect on the Company's
business, results of operations and financial condition.
To date, the cost to analyze and prepare for the Year 2000 issue has
not been material. There can be no assurance that the Company will be able to
identify and correct all aspects of the effect of the Year 2000 issue on the
Company. However, the Company does not currently expect the Year 2000 issue will
have a material impact on the Company's business, operations or financial
condition.
The Company is currently developing contingency plans on a property by
property basis. This involves assessing critical tenants, systems and vendors.
Certain servicing arrangements have been contracted with particular vendors to
provide immediate response if the need arises and the Company is arranging for
specific employees to staff certain properties in case of need.
The preceding "Year 2000" discussion contains various forward-looking
statements, within the meaning of the federal securities laws, which represent
the Company's beliefs or expectations regarding future events. When used in this
discussion, the words "expects" and "anticipates" and similar expressions are
intended to identify forward-looking statements. Forward-looking statements
include, without limitation, the Company's expectations as to when it will
complete its Year 2000 evaluation, the estimated costs of achieving Year 2000
readiness and the Company's expectation that Year 2000 issues will not have a
material impact on the Company's business, operations or financial condition.
All forward-looking statements involve a number of risks and uncertainties that
could cause the actual results to differ materially from the projected results.
Factors that may cause these differences include, but are not limited to, the
availability of qualified personnel, technology resources, any actions of third
parties with respect to Year 2000 problems and other risks detailed from time to
time in the Company's filings with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Supplemental Financial Information:
- -----------------------------------
Depreciation and amortization expense included the following
components for the three and six months ended June 30, 1999 ($ in thousands):
Three Months Ended Six Months Ended
June 30, 1999 June 30, 1999
--------------------------------- --------------------------------
Share of Share of
Unconsolidated Unconsolidated
Company Joint Ventures Total Company Joint Ventures Total
------- -------------- ------- ------- -------------- -------
<S> <C> <C> <C> <C> <C> <C>
Furniture, fixtures and equipment $ 155 $ 15 $ 170 $ 298 $ 16 $ 314
Deferred financing costs - 4 4 - 8 8
Goodwill and related business
acquisition costs 75 5 80 150 10 160
Real estate related:
Building (including tenant
first generation) 2,532 5,287 7,819 4,859 11,592 16,451
Tenant second generation 257 185 442 519 423 942
------ ------ ------ ------ ------- -------
$3,019 $5,496 $8,515 $5,826 $12,049 $17,875
====== ====== ====== ====== ======= =======
</TABLE>
Exclusive of new developments and purchases of furniture, fixtures and
equipment, the Company had the following capital expenditures for the three and
six months ended June 30, 1999, including its share of unconsolidated joint
ventures ($ in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1999 June 30, 1999
--------------------------------- ---------------------------------
Office Retail Medical Total Office Retail Medical Total
------ ------ ------- ----- ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Second generation related costs $186 $ 18 $ - $204 $435 $ 18 $ - $453
Building improvements - - - - - - - -
---- ---- ---- ---- ---- ---- ---- ----
$186 $ 18 $ - $204 $435 $ 18 $ - $453
==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(a)(i) Amendment to Articles of Incorporation of
Registrant, as approved by the
Stockholders on May 4, 1999.
27 Financial Data Schedule
(b) Reports on Form 8-K
There have been no reports on Form 8-K filed
by the Registrant during the quarter ended June 30, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COUSINS PROPERTIES INCORPORATED
Registrant
/s/ Kelly H. Barrett________________________
Kelly H. Barrett
Senior Vice President - Finance
(Authorized Officer)
(Principal Accounting Officer)
August 13, 1999
<PAGE>
ARTICLES OF AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION
OF
COUSINS PROPERTIES INCORPORATED
Cousins Properties Incorporated, a corporation organized and existing
under the laws of the State of Georgia, hereby certifies as follows:
1. The name of the corporation is Cousins Properties Incorporated (the
"Corporation").
2. Pursuant to Section 14-2-1003 of the Georgia Business Corporation
Code, these Articles of Incorporation amend the Restated Articles of
Incorporation of the Corporation, as amended (the "Articles of Amendment").
These Articles of Amendment were duly adopted by the shareholders of the
Corporation in accordance with the provisions of Section 14-2-1003 of the
Georgia Business Corporation Code on May 4, 1999.
3. The Restated Articles of Incorporation of the Corporation as
heretofore amended or supplemented are hereby further amended by amending
paragraph A. to Article 4 to increase the number of shares of Common Stock, $1
par value per share, authorized for issuance from 50 million to 150 million
shares. Paragraph A. to Article 4 shall hereafter read in its entirety as
follows:
"A. The Corporation shall have the authority to issue 150 million
shares of Common Stock, $1 par value per share. Each share of
Common Stock shall have one vote on each matter submitted to
a vote of the shareholders of the Corporation. The holders of
shares of Common Stock shall be entitled to receive, in
proportion to the number of shares of Common Stock held, the
net assets of the Corporation upon dissolution after any
preferential amounts required to be paid or distributed to
holders of outstanding shares of Preferred Stock, if any, are
so paid or distributed."
<PAGE>
IN WITNESS WHEREOF, Cousins Properties Incorporated has caused this
Articles of Amendment to be executed, its corporate seal to be affixed, and its
seal and execution thereof to be attested, all by its duly authorized officers
this __ day of August, 1999.
COUSINS PROPERTIES INCORPORATED
[CORPORATE SEAL]
By:
_______________________________
Attest: Name:
Title:
By:____________________________
Name:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 5,378
<SECURITIES> 0
<RECEIVABLES> 35,593
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 636,057
<DEPRECIATION> 26,872
<TOTAL-ASSETS> 824,619
<CURRENT-LIABILITIES> 35,366
<BONDS> 202,979
0
0
<COMMON> 32,131
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 824,619
<SALES> 0
<TOTAL-REVENUES> 51,270
<CGS> 0
<TOTAL-COSTS> 28,153
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 430
<INCOME-PRETAX> 23,117
<INCOME-TAX> 21,862
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78,568
<EPS-BASIC> 2.45
<EPS-DILUTED> 2.41
</TABLE>
