1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from..............to..............
Commission file number 0-3576
COUSINS PROPERTIES INCORPORATED
(Exact name of registrant as specified in its charter)
Georgia 58-0869052
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2500 Windy Ridge Parkway
Atlanta, Georgia 30339-5683
(Address of principal executive offices) (Zip Code)
(770) 955-2200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---- ----
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes X No
---- ----
As of April 25, 2003, there were 48,356,623 shares of the registrant's common
stock, par value $1 per share, outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share and per share amounts)
March 31, December 31,
2003 2002
----------- ------------
(Unaudited)
ASSETS
- ------
PROPERTIES:
Operating properties, net of accumulated
depreciation of $161,736 as of March 31, 2003
and $145,920 as of December 31, 2002 $ 783,323 $ 690,952
Operating properties held for sale, net of
accumulated depreciation of $9,857 as of
March 31, 2003 and $9,180 as of
December 31, 2002 65,701 66,377
Land held for investment or future development 16,653 16,632
Projects under construction 83,091 171,135
Residential lots under development 19,052 20,100
---------- ----------
Total properties 967,820 965,196
---------- ----------
CASH AND CASH EQUIVALENTS, at cost which
approximates market 11,456 9,471
NOTES AND OTHER RECEIVABLES 60,332 50,607
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 186,808 185,516
OTHER ASSETS, including goodwill of $15,696 in
2003 and $15,612 in 2002 41,622 37,287
---------- ----------
TOTAL ASSETS $1,268,038 $1,248,077
========== ==========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- ----------------------------------------
NOTES PAYABLE $ 686,011 $ 669,792
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 31,506 35,445
DEPOSITS AND DEFERRED INCOME 4,232 3,429
---------- ----------
TOTAL LIABILITIES 721,749 708,666
---------- ----------
MINORITY INTERESTS 26,695 26,959
---------- ----------
DEFERRED GAIN 102,631 103,568
---------- ----------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' INVESTMENT:
Common stock, $1 par value, authorized
150,000,000 shares; issued 51,034,210
shares at March 31, 2003 and 50,843,835
shares at December 31, 2002 51,034 50,844
Additional paid-in capital 291,553 288,172
Treasury stock at cost, 2,691,582 shares in
2003 and 2,457,482 shares in 2002 (64,894) (59,356)
Unearned compensation (2,361) (2,647)
Cumulative undistributed net income 141,631 131,871
---------- ----------
TOTAL STOCKHOLDERS' INVESTMENT 416,963 408,884
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $1,268,038 $1,248,077
========== ==========
See notes to consolidated financial statements.
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(UNAUDITED)
(In thousands, except per share amounts)
Three Months
Ended March 31,
------------------
2003 2002
------- -------
REVENUES:
Rental property revenues $58,076 $36,130
Development income 764 1,186
Management fees 2,105 2,354
Leasing and other fees 1,111 1,157
Residential lot and outparcel sales 3,928 4,035
Interest and other 1,055 1,135
------- -------
67,039 45,997
------- -------
INCOME FROM UNCONSOLIDATED JOINT VENTURES 6,497 7,030
------- -------
COSTS AND EXPENSES:
Rental property operating expenses 11,094 10,420
General and administrative expenses 7,214 7,295
Depreciation and amortization 15,400 11,156
Stock appreciation right expense - 41
Residential lot and outparcel cost of sales 3,231 2,970
Interest expense 9,789 8,532
Loss on debt extinguishment - 3,501
Property taxes on undeveloped land 185 176
Other 1,131 987
------- -------
48,044 45,078
------- -------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 25,492 7,949
PROVISION FOR INCOME TAXES FROM OPERATIONS 249 986
------- -------
INCOME FROM CONTINUING OPERATIONS BEFORE
GAIN ON SALE OF INVESTMENT PROPERTIES 25,243 6,963
GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF
APPLICABLE INCOME TAX PROVISION 1,003 1,029
------- -------
INCOME FROM CONTINUING OPERATIONS 26,246 7,992
------- -------
INCOME FROM DISCONTINUED OPERATIONS 1,348 1,282
------- -------
NET INCOME $27,594 $ 9,274
======= =======
BASIC NET INCOME PER SHARE:
Income from continuing operations $ .54 $ .16
Income from discontinued operations .03 .03
------- -------
Basic net income per share $ .57 $ .19
======= =======
DILUTED NET INCOME PER SHARE:
Income from continuing operations $ .54 $ .16
Income from discontinued operations .03 .02
------- -------
Diluted net income per share $ .57 $ .18
======= =======
CASH DIVIDENDS DECLARED PER SHARE $ .37 $ .37
======= =======
WEIGHTED AVERAGE SHARES 48,135 49,367
======= =======
DILUTED WEIGHTED AVERAGE SHARES 48,780 50,406
======= =======
See notes to consolidated financial statements.
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(UNAUDITED)
($ in thousands)
2003 2002
------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations before gain on sale
of investment properties $25,243 $ 6,963
Adjustments to reconcile income from continuing
operations before gain on sale of investment properties
to net cash provided by operating activities:
Depreciation and amortization 15,400 11,156
Amortization of unearned compensation 81 180
Stock appreciation right expense - 41
Cash charges to expense accrual for stock
appreciation rights - (56)
Effect of recognizing rental revenues on a
straight-line basis (466) (909)
Residential lot and outparcel cost of sales 2,929 2,663
Changes in other operating assets and liabilities:
Change in other receivables (8,936) 430
------- --------
Change in accounts payable and accrued liabilities (4,287) (3,040)
------- --------
Net cash provided by operating activities of continuing
operations 29,964 17,428
------- --------
Net cash provided by operating activities of discontinued
operations 2,024 2,146
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Gain on sale of investment properties, net of applicable
income tax provision 1,003 1,029
Adjustments to reconcile gain on sale of investment
properties, net of applicable income tax provision to
net cash provided by sales activities:
Deferred income recognized (1,002) (1,031)
Property acquisition and development expenditures (22,498) (22,867)
Distributions in excess of income from unconsolidated
joint ventures 3,690 5,085
Investment in unconsolidated joint ventures, including
interest capitalized to equity investments (4,982) (2,493)
Investment in notes receivable, net (325) (328)
Change in other assets, net (2,512) (3,295)
------- --------
Net cash used in investing activities (26,626) (23,900)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of credit facility (46,685) (149,223)
Proceeds from credit facility 64,299 79,335
Common stock sold, net of expenses 3,776 4,861
Common stock repurchases (5,538) -
Dividends paid (17,834) (18,329)
Proceeds from other notes payable 211 150,000
Repayment of other notes payable (1,606) (68,083)
------- --------
Net cash used in financing activities (3,377) (1,439)
------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,985 (5,765)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,471 10,556
------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $11,456 $ 4,791
======= ========
See notes to consolidated financial statements.
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(UNAUDITED)
1. BASIS OF PRESENTATION
---------------------
The Consolidated Financial Statements include the accounts of Cousins
Properties Incorporated ("Cousins"), its majority owned partnerships and wholly
owned subsidiaries, 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 for CREC
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 (which adjustments are of a normal and recurring nature) for the fair
presentation of the Company's financial position as of March 31, 2003 and
results of operations for the three month periods ended March 31, 2003 and 2002.
Results of operations for the interim 2003 period are not necessarily indicative
of results expected for the full year. While certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States ("GAAP") 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, 2002. The
accounting policies employed are the same as those shown in Note 1 to the
Consolidated Financial Statements included in such Form 10-K.
2. SUPPLEMENTAL INFORMATION CONCERNING CASH FLOWS
----------------------------------------------
Interest paid (net of $1,567,000 and $1,897,000 capitalized in 2003 and
2002, respectively) and income taxes refunded were as follows for the three
months ended March 31, 2003 and 2002 ($ in thousands):
2003 2002
------ ------
Interest paid $9,753 $7,443
Income taxes refunded $ - $ 12
During the three months ended March 31, 2003, approximately
$106,773,000 was transferred from Projects Under Construction to Operating
Properties and approximately $2,374,000 was transferred from Operating
Properties to Other Assets. Also in the three months ended March 31, 2003, an
adjustment of the performance accelerated restricted stock granted in 2000 (see
Note 6 of "Notes to Consolidated Financial Statements" in the Company's Annual
Report on Form 10-K for the year ended December 31, 2002) was made and
approximately $7,000 of Common Stock and approximately $198,000 of Additional
Paid-In-Capital were transferred to Unearned Compensation.
3. NOTES PAYABLE AND INTEREST EXPENSE
----------------------------------
The following table summarizes the terms of the debt outstanding at
March 31, 2003 ($ in thousands):
Term/
Amortization Balance at
Period Final March 31,
Description Rate (Years) Maturity 2003
----------- -------------- ------------ -------- ----------
Credit facility (a maximum of $275,000), Floating based
unsecured on LIBOR 3/N/A 8/31/04 $176,771
Perimeter Expo mortgage note 8.04% 10/30 8/15/05 19,714
Northside/Alpharetta I mortgage note 7.70% 8/28 1/01/06 9,856
101 Independence Center mortgage note 8.22% 11/25 12/01/07 44,682
Lakeshore Park Plaza mortgage note 6.78% 10/30 11/01/08 10,033
101 Second Street mortgage note 8.33% 10/30 4/19/10 87,843
The Avenue East Cobb mortgage note 8.39% 10/30 8/01/10 38,167
Meridian Mark Plaza mortgage note 8.27% 10/28 10/01/10 24,855
Presidential MarketCenter mortgage note 7.65% 10/30 5/02/11 27,600
600 University Park Place mortgage note 7.38% 10/30 8/10/11 13,786
333 John Carlyle/1900 Duke Street mortgage note 7.00% 10/25 11/01/11 48,328
333/555 North Point Center East mortgage note 7.00% 10/30 11/01/11 31,829
Note secured by Company's interest in
CSC Associates, L.P. 6.958% 10/20 3/01/12 147,842
Other miscellaneous notes Various Various Various 4,705
--------
$686,011
========
For the three months ended March 31, 2003, interest expense was
recorded as follows ($ in thousands):
Interest Expensed $ 9,789
Interest Capitalized 1,567
-------
$11,356
=======
During the first quarter 2003, interest was capitalized related to the
Company's projects under construction which had an average balance of
approximately $92 million.
4. EARNINGS PER SHARE ("EPS")
--------------------------
Basic EPS is calculated as net income available to common stockholders
divided by the weighted average number of common shares outstanding during the
period. Diluted EPS is calculated as net income available to common stockholders
divided by the diluted weighted average number of common shares outstanding
during the period. Diluted weighted average number of common shares is
calculated to reflect the potential dilution that would occur if stock options
or other contracts to issue common stock were exercised and resulted in
additional common shares outstanding. The income amounts used in the Company's
EPS calculations is the same for both basic and diluted EPS.
Weighted average shares and diluted weighted average shares are as
follows (in thousands):
Three Months Ended
March 31,
------------------
2003 2002
------ ------
Weighted average shares 48,135 49,367
Dilutive potential common shares 645 1,039
------ ------
Diluted weighted average shares 48,780 50,406
====== ======
Anti-dilutive options not included 990 908
====== ======
5. STOCK-BASED EMPLOYEE COMPENSATION
---------------------------------
The Company has several stock-based employee compensation plans which
are described fully in Note 6 of "Notes to Consolidated Financial Statements" in
the Company's Annual Report on Form 10-K for the year ended December 31, 2002.
The Company has elected to account for its plans under Accounting Principles
Board ("APB") No. 25, "Accounting for Stock Issued to Employees," which requires
the recording of compensation expense for some, but not all, stock-based
compensation, rather than the alternative accounting permitted by SFAS No. 123,
"Accounting for Stock-Based Compensation." No stock-based employee compensation
cost was reflected in net income for options granted under the plans, as all
options granted had an exercise price equal to the market value of the
underlying common stock on the date of grant. Stock-based employee compensation
cost was reflected in net income for stock appreciation rights and restricted
stock grants issued under the plans.
For purposes of the pro forma disclosures required by SFAS No. 123, the
Company has computed the value of all stock awards and stock options granted
during the three months ended March 31, 2003 and 2002 using the Black-Scholes
option pricing model with the following weighted average assumptions and
results:
2003 2002
------- -------
Assumptions
-----------
Risk-free interest rate 3.95% 5.27%
Assumed dividend yield 6.16% 6.07%
Assumed lives of option
awards 8 years 8 years
Assumed volatility 0.190 0.195
Results
Weighted average fair value
of options granted $2.02 $ 2.71
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions. In the Company's opinion, because the
Company's stock-based compensation awards have characteristics significantly
different from traded options and because changes in the subjective assumptions
can materially affect the fair value estimate, the results obtained from the
valuation model do not necessarily provide a reliable single measure of the
value of its stock-based compensation awards.
If the Company had accounted for its stock-based compensation awards in
2003 and 2002 in accordance with SFAS No. 123, pro forma results would have been
as follows ($ in thousands, except per share amounts):
2003 2002
------- ------
Net income, as reported $27,594 $9,274
Add: Stock-based employee
compensation expense included
in reported net income, net of
related tax effects 70 197
Deduct: Total stock-based employee
compensation expense determined
under fair-value-based method for
all awards, net of related tax effects (463) (1,220)
------- ------
Pro forma net income $27,201 $8,251
======= ======
Net income per share:
Basic - as reported $ .57 $ .19
======= ======
Basic - pro forma $ .57 $ .17
======= ======
Diluted - as reported $ .57 $ .18
======= ======
Diluted - pro forma $ .56 $ .16
======= ======
6. NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------
In April 2002, Statement of Financial Accounting Standards ("SFAS") No.
145, "Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13, and
Technical Corrections," was issued. SFAS No. 145, among other things, eliminates
the requirement that all gains and losses from the extinguishment of debt be
aggregated and, if material, classified as an extraordinary item. However, a
gain or loss arising from such an event or transaction would continue to be
classified as an extraordinary item if the event or transaction is both unusual
in nature and infrequent in occurrence per the criteria in Accounting Principles
Board ("APB") No. 30, "Reporting the Results of Operations - Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions." As part of the transition
guidance, although net income would not be affected, gains and losses from debt
extinguishment in prior periods that do not meet the criteria in APB No. 30
cannot be treated as extraordinary items for all periods presented. At January
1, 2003, upon adoption of SFAS No. 145, the Company reclassified the
extraordinary loss recognized in the first quarter 2002 to Loss on Debt
Extinguishment (included in recurring operations) in the accompanying Statements
of Income. This loss on extinguishment of debt related to the Company's $150
million mortgage note payable for CSC Associates, L.P. obtained in February 2002
(see Note 4 of "Notes to Consolidated Financial Statements" in the Company's
Annual Report on Form 10-K for the year ended December 31, 2002).
In January 2003, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation No. 46 ("FIN 46"), "Consolidation of Variable
Interest Entities, an Interpretation of ARB No. 51." The interpretation
addresses consolidation by business enterprises of variable interest entities.
FIN 46 is applicable to all variable interest entities created or entered into
after January 31, 2003. It is applicable to the Company's existing variable
interest entities in the quarter ended September 30, 2003. The Company does not
believe it has any variable interest entities and therefore does not anticipate
that adoption of FIN 46 will have an impact on the Company's financial condition
or results of operations.
7. DISCONTINUED OPERATIONS
-----------------------
In August 2001, SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," was issued, which the Company adopted effective
January 1, 2002. SFAS No. 144 addresses financial accounting and reporting for
the impairment of long-lived assets and long-lived assets to be disposed of.
SFAS No. 144 also requires that the gains and losses from the disposition of
certain real estate assets and the related historical operating results be
included in a separate line item, Income from Discontinued Operations, in the
Consolidated Statements of Income for all periods presented. In the normal
course of business, the Company recycles invested capital by disposing of
existing assets and redeploying the proceeds in order to enhance total returns
to stockholders.
In the fourth quarter 2002, the Company sold Salem Road Station ("Salem
Road"), a 67,000 square foot retail neighborhood center. The Company
reclassified the results of operations for Salem Road to Income from
Discontinued Operations in the accompanying 2002 Consolidated Statement of
Income.
In the first quarter 2003, the Company determined that AT&T Wireless
Services Headquarters, a 222,000 rentable square foot office building, and
Cerritos Corporate Center - Phase II, a 105,000 rentable square foot office
building (collectively called "Cerritos"), which are under firm contract to be
sold, met the criteria of qualifying dispositions in accordance with SFAS No.
144. The Company anticipates that Cerritos will be sold in a single transaction
to an unrelated third party in the second quarter 2003. The Company reclassified
the carrying amount of Cerritos to Operating Properties Held for Sale in the
accompanying Consolidated Balance Sheets for all periods presented.
Additionally, the results of operations for Cerritos were reclassified to Income
from Discontinued Operations in the accompanying Consolidated Statements of
Income for all periods presented.
The following table details the adjustments made to the Consolidated
Statements of Income ($ in thousands):
Three Months Ended Three Months Ended
March 31, 2003 March 31, 2002
----------------- ---------------------------------
Salem
Cerritos Cerritos Road Total
-------- -------- ----- -----
Rental property revenues $2,937 $3,080 $191 $3,271
Rental property operating expenses 913 1,050 39 1,089
Depreciation and amortization 676 807 57 864
Provision for income taxes - - 36 36
------ ------ ---- -------
Income from discontinued operations $1,348 $1,223 $ 59 $ 1,282
====== ====== ==== =======
8. REPORTABLE SEGMENTS
-------------------
The Company has three reportable segments: Office Division, Retail
Division and Land Division. The Office Division and Retail Division develop,
lease and manage office buildings and retail centers, respectively. The Land
Division owns various tracts of strategically located land which are being held
for investment or future development. The Land Division also develops
single-family residential communities which are parceled into lots and sold to
various home builders. The Company's reportable segments are broken down based
on the 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 management of the Company evaluates the 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, which is net income (computed in accordance
with GAAP), excluding extraordinary items, cumulative effect of change in
accounting principle and gains or losses from sales of depreciable property,
plus depreciation and amortization or impairment of real estate assets, and
after adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures are calculated to
reflect FFO on the same basis. The Company changed its method of calculating FFO
in the first quarter 2003 to agree with NAREIT's definition, and FFO for prior
reporting periods has been restated.
FFO is used by industry analysts, investors and the Company as a
supplemental measure of an equity REIT's operating performance. Historical cost
accounting for real estate assets implicitly assumes that the value of real
estate assets diminishes predictably over time. Since real estate values instead
have historically risen or fallen with market conditions, many industry
investors and analysts have considered presentation of operating results for
real estate companies that use historical cost accounting to be insufficient by
themselves. Thus, NAREIT created FFO as a supplemental measure of REIT operating
performance that excludes historical cost depreciation, among other items, from
GAAP net income. The use of FFO, combined with the required primary GAAP
presentations, has been fundamentally beneficial, improving the understanding of
operating results of REITs among the investing public and making comparisons of
REIT operating results more meaningful. In addition to Company management
evaluating the operating performance of its reportable segments based on FFO
results, management uses FFO and FFO per share, along with other measures, to
assess performance in connection with evaluating and granting incentive
compensation to its officers and employees. See Part II, Item 5 of this report
for a discussion of non-GAAP measures.
The notations (100%) and (JV) used in the following tables indicate
wholly owned and unconsolidated joint ventures, respectively, and all amounts
are in thousands.
Three Months Ended Office Retail Land Unallocated
March 31, 2003 Division Division Division and Other Total
- ------------------ -------- -------- -------- ----------- ----------
Rental property revenues - continuing (100%) $ 47,675 $ 10,374 $ - $ 27 $ 58,076
Rental property revenues - discontinued (100%) 2,937 - - - 2,937
Rental property revenues (JV) 19,330 662 547 - 20,539
Development income, management
fees and leasing and other fees (100%) 3,467 407 106 - 3,980
Development income, management
fees and leasing and other fees (JV) - - - - -
Other income (100%) - - 3,928 1,055 4,983
Other income (JV) - - 547 - 547
----------------------------------------------------------
Total revenues 73,409 11,443 5,128 1,082 91,062
----------------------------------------------------------
Rental property operating expenses -
continuing (100%) 8,899 2,194 - 1 11,094
Rental property operating expenses -
discontinued (100%) 913 - - - 913
Rental property operating expenses (JV) 6,159 205 - - 6,364
Other expenses (100%) 4,501 1,947 4,065 11,608 22,121
Other expenses (JV) - - 33 3,209 3,242
Provision for income taxes from operations -
continuing (100%) - - - 249 249
----------------------------------------------------------
Total expenses 20,472 4,346 4,098 15,067 43,983
----------------------------------------------------------
Consolidated funds from operations 52,937 7,097 1,030 (13,985) 47,079
----------------------------------------------------------
Depreciation and amortization - continuing (100%) (10,998) (3,830) - (1) (14,829)
Depreciation and amortization - discontinued (100%) (676) - - - (676)
Depreciation and amortization (JV) (4,281) (151) - - (4,432)
Gain on sale of investment properties, net
of applicable income tax provision (100%) 462 541 - - 1,003
Impairment loss on depreciable property (JV) (551) - - - (551)
----------------------------------------------------------
Net income $ 36,893 $ 3,657 $ 1,030 $(13,986) $ 27,594
==========================================================
Total assets $883,475 $264,033 $34,952 $ 85,578 $1,268,038
==========================================================
Investment in unconsolidated joint ventures $156,709 $ 16,266 $13,833 $ - $ 186,808
==========================================================
Reconciliation to Consolidated Revenues
- ---------------------------------------
Three Months Ended
March 31,
--------------------
2003 2002
------- -------
Rental property revenues - continuing (100%) $58,076 $36,130
Development income, management fees
and leasing and other fees (100%) 3,980 4,697
Residential lot and outparcel sales 3,928 4,035
Interest and other 1,055 1,135
---------------------
Total consolidated revenues $67,039 $45,997
=====================
Three Months Ended Office Retail Land Unallocated
March 31, 2002 Division Division Division and Other Total
- ------------------ -------- -------- -------- ----------- -----
Rental property revenues - continuing (100%) $ 27,756 $ 8,346 $ - $ 28 $ 36,130
Rental property revenues - discontinued (100%) 3,080 191 - - 3,271
Rental property revenues (JV) 18,913 629 - - 19,542
Development income, management
fees and leasing and other fees (100%) 4,147 379 171 - 4,697
Other income (100%) - - 4,035 1,135 5,170
Other income (JV) - - 1,044 - 1,044
------------------------------------------------------------
Total revenues 53,896 9,545 5,250 1,163 69,854
------------------------------------------------------------
Rental property operating expenses -
continuing (100%) 8,360 2,056 - 4 10,420
Rental property operating expenses -
discontinued (100%) 1,050 39 - - 1,089
Rental property operating expenses (JV) 5,747 171 - - 5,918
Other expenses (100%) 4,919 1,571 3,476 14,058 24,024
Other expenses (JV) - - 14 3,349 3,363
Provision for income taxes from operations -
continuing (100%) - - - 986 986
Provision for income taxes from operations -
discontinued (100%) - - - 36 36
------------------------------------------------------------
Total expenses 20,076 3,837 3,490 18,433 45,836
------------------------------------------------------------
Consolidated funds from operations 33,820 5,708 1,760 (17,270) 24,018
------------------------------------------------------------
Depreciation and amortization - continuing (100%) (7,824) (2,809) - (1) (10,634)
Depreciation and amortization - discontinued (100%) (807) (57) - - (864)
Depreciation and amortization (JV) (4,032) (243) - - (4,275)
Gain on sale of investment properties, net
of applicable income tax provision (100%) 473 556 - - 1,029
------------------------------------------------------------
Net income $ 21,630 $ 3,155 $ 1,760 $(17,271) $ 9,274
============================================================
Total assets $856,040 $265,522 $23,573 $ 73,113 $1,218,248
============================================================
Investment in unconsolidated joint ventures $154,651 $ 16,690 $11,464 $ - $ 182,805
============================================================
8. SUBSEQUENT EVENT
----------------
In April 2003, the Company entered into an agreement to sell Mira Mesa
MarketCenter, a 480,000 square foot retail center in San Diego, California, to
an unrelated third party. The sale is currently expected to close in second
quarter 2003.
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Three Months Ended March 31, 2003
and 2002
Critical Accounting Policies:
- -----------------------------
There has been no material change in the Company's critical accounting
policies from that disclosed in the Company's Annual Report on Form 10-K for the
year ended December 31, 2002.
Results of Operations:
- ----------------------
Rental Property Revenues and Operating Expenses. Rental property
revenues increased approximately $21,946,000 in the three month 2003 period.
Rental property revenues from the Company's office portfolio increased
approximately $19,919,000 in the three month 2003 period. Rental property
revenues from 55 Second Street, which became partially operational for financial
reporting purposes in February 2002, increased approximately $20,810,000. In
February 2003, Cable & Wireless Internet Services, Inc. agreed to pay a $20
million termination fee to terminate its lease on 158,000 square feet at 55
Second Street. The Company is actively marketing this space to be re-leased.
While the Company is hopeful, there is no guarantee that the space will be
re-leased in the near future. In addition, the San Francisco market continues to
be a difficult leasing market. Due to these uncertainties the Company cannot
currently estimate the results of its efforts to re-lease 55 Second Street and
the resulting impact on rental property revenues for the remainder of 2003 and
beyond. Rental property revenues decreased approximately $899,000 in the three
month 2003 period from 101 Second Street, as its average economic occupancy
decreased from 95% in 2002 to 80% in 2003, which partially offset the 2003
increase in rental property revenues. In August 2002, the Company entered into a
termination agreement with Arthur Andersen which terminated its 148,000 square
foot lease at 101 Second Street (although approximately 106,000 square feet of
this space has been released as of April 25, 2003; see "Management Discussion
and Analysis of Financial Condition and Results of Operations" in the Company's
Annual Report on Form 10-K for the year ended December 31, 2002). Additionally,
rental property revenues decreased approximately $200,000 from One Georgia
Center, as its average economic occupancy decreased from 89% in 2002 to 76% in
2003, and rental property revenues decreased approximately $271,000 from 555
North Point Center East, as its average economic occupancy decreased from 93% in
2002 to 72% in 2003, both of which also partially offset the 2003 increase in
rental property revenues.
Rental property revenues from the Company's retail portfolio increased
approximately $2,028,000 in the three month 2003 period. Rental property
revenues increased approximately $1,067,000 in the 2003 period from The Avenue
of the Peninsula, due primarily to the recognition of termination fees of
approximately $841,000 and to an increase in percentage rents. Rental property
revenues increased approximately $310,000 in the first quarter 2003 from The
Avenue Peachtree City, as its average economic occupancy increased from 70% in
2002 to 95% in 2003, and approximately $228,000 from Mira Mesa MarketCenter, due
to an addition to the center which opened in March 2002 and to an allowance for
bad debts recorded in 2002. Additionally, rental property revenues increased
approximately $215,000 from The Avenue East Cobb primarily due to the
recognition of termination fees of approximately $205,000 in the first quarter
2003.
Rental property operating expenses increased approximately $674,000 in
the three month 2003 period due primarily to 55 Second Street becoming partially
operational for financial reporting purposes.
Development Income. Development income decreased approximately $422,000
in the three month 2003 period. Development and tenant construction fees
decreased approximately $276,000 in the three month 2003 period from Crawford
Long - CPI, LLC, as construction of the Emory Crawford Long Medical Office Tower
was substantially completed in February 2002.
Management Fees. Management fees decreased approximately $249,000 in
the three month 2003 period. Approximately $212,000 of this decrease related to
Cousins Properties Services LP, due to decreased contracts for third party
office building management services.
Residential Lot and Outparcel Sales and Cost of Sales. Residential lot
and outparcel sales decreased approximately $107,000 in the three month 2003
period. Residential lots sold decreased from 91 lots in the three month 2002
period to 76 lots in the three month 2003 period.
Residential lot and outparcel cost of sales increased approximately
$261,000 in the three month 2003 period. Cost of sales increased in the three
month 2003 period while sales decreased due to fluctuations between 2002 and
2003 of the gross profit percentages used to calculate the cost of lot sales in
certain of the residential developments. Additionally, a profit adjustment was
recognized in 2002 for the final lot sales within a residential development.
Income from Unconsolidated Joint Ventures. (All amounts reflect the
Company's share of joint venture income.) Income from unconsolidated joint
ventures decreased approximately $533,000 in the three month 2003 period.
Income from Wildwood Associates decreased approximately $648,000 in the
three month 2003 period. This decrease is partially due to an impairment loss of
approximately $551,000 recognized on property within Wildwood Office Park that
the venture is selling in the second quarter 2003. Contributing to the decrease
in income from Wildwood Associates was a decrease in average economic occupancy
at the 2300 Windy Ridge Parkway Building from 99% in 2002 to 87% in 2003. The
decrease in income from Wildwood Associates was partially offset by the reversal
of an allowance for bad debts of approximately $378,000.
Income from Temco Associates decreased approximately $498,000 in the
three month 2003 period. The primary reason for this decrease was the exercise
and simultaneous sale of approximately 559 acres of land under option in first
quarter 2002, which contributed approximately $371,000 to income from Temco
Associates. There were no such sales in 2003. The number of lots sold at
Bentwater, which is owned by Temco Associates, increased from 101 lots in 2002
to 119 lots in 2003, which increased income from Temco Associates by
approximately $112,000. However, this increase was offset by amortization of
certain costs of $91,000 and an adjustment recorded in first quarter 2002 of
$136,000, which primarily caused the remaining decrease in income from Temco
Associates.
Income from CPI/FSP I, L.P. increased approximately $159,000 in the
three month 2003 period. Austin Research Park - Buildings III and IV became
fully operational for financial reporting purposes in March 2002.
Income from Crawford Long - CPI, LLC increased approximately $203,000
in the three month 2003 period, as the Emory Crawford Long Medical Office Tower
became partially operational for financial reporting purposes in February 2002.
Loss from Ten Peachtree Place Associates decreased approximately
$113,000 in the three month 2003 period as its average economic occupancy for
the three month period increased from 15% in 2002 to 34% in 2003.
Income from CSC Associates, L.P. increased approximately $194,000 in
the three month 2003 period, primarily due to an increase in rental revenues
from a tenant whose increase in rental rate did not require straight-lining
under SFAS No. 13.
General and Administrative Expenses. General and administrative
expenses decreased approximately $81,000 in the three month 2003 period.
Contributing to the decrease in general and administrative expenses was an
increase of approximately $351,000 in capitalized salaries, primarily related to
salaries for development and leasing personnel due to an increase in the number
of projects under development in 2003. The decrease was also partially due to
the capitalization of additional general and administrative expenses to offset
the partial elimination of certain development and leasing fees from joint
ventures. The decrease in general and administrative expenses was partially
offset by an increase in salaries and related benefits due to increased
personnel and an increase in legal expense.
Depreciation and Amortization. Depreciation and amortization increased
approximately $4,244,000 in the three month 2003 period due to 55 Second Street
becoming partially operational for financial reporting purposes and to
write-offs of unamortized tenant improvements and leasing commissions related to
certain tenants who effected early terminations of their lease obligations.
Interest Expense. Interest expense increased approximately $1,257,000
in the three month 2003 period. Interest expense before capitalization increased
to approximately $11,356,000 in the three month 2003 period from approximately
$10,429,000 in the three month 2002 period. Interest expense increased
approximately $840,000 due to the refinancing of Bank of America Plaza (see Note
4 of "Notes to Consolidated Financial Statements" in the Company's Annual Report
on Form 10-K for the year ended December 31, 2002). Also contributing to the
increase in interest expense was a decrease of approximately $330,000 in the
three month 2003 period in interest capitalized to projects under development (a
reduction of interest expense). Interest capitalized decreased to approximately
$1,567,000 in 2003 from approximately $1,897,000 in 2002, primarily due to lower
weighted average expenditures on projects under development in 2003.
Loss on Debt Extinguishment. Loss on debt extinguishment decreased
approximately $3,501,000 in the three month 2003 period due to the refinancing
of Bank of America Plaza in February 2002 (see Note 5 contained in this report).
Other Expenses. Other expenses increased approximately $144,000 in the
three month 2003 period. The increase in other expenses was due to an increase
of approximately $238,000 in predevelopment expense, partially offset by a
decrease of $107,000 in minority interest expense related to 101 Second Street.
Provision for Income Taxes from Operations. The provision for income
taxes from operations decreased approximately $737,000 in the three month 2003
period. The decrease in the provision for income taxes from operations was
primarily due to a decrease in income before income taxes and gain on sale of
investment properties from CREC and its subsidiaries. This decrease was
primarily due to decreases in income from residential lot sales, net of cost of
sales, income from Temco Associates, development fees and an increase in general
and administrative expenses.
Income from Discontinued Operations. See Note 6 contained in this
report for a discussion of the components of Income from Discontinued
Operations.
Liquidity and Capital Resources:
- --------------------------------
Financial Condition.
At March 31, 2003, notes payable included the following ($ in
thousands):
Share of
Unconsolidated
Company Joint Ventures Total
------- -------------- --------
Floating Rate Credit Facility
and Floating Rate Debt $178,051 $ 6,335 $184,386
Other Debt
(primarily non-recourse
fixed rate mortgages) 507,960 256,994 764,954
-------- -------- --------
$686,011 $263,329 $949,340
======== ======== ========
As shown above, the Company's debt (including its pro rata share of
unconsolidated joint venture debt) was $949.3 million or 43% of total market
capitalization (shares outstanding multiplied by stock price at March 31, 2003
plus debt) at March 31, 2003. Bank covenants related to the Company's credit
facility specifically exclude debt related to Charlotte Gateway Village, L.L.C.
("Gateway"; $89.7 million), as it is fully secured by the underlying property
and non-recourse to the borrower and is fully amortized by rental payments under
a long-term lease to Bank of America. The Company's debt (including its pro rata
share of unconsolidated joint venture debt) to total market capitalization is
lower excluding the Gateway debt.
The Company had $177 million drawn on its $275 million revolving credit
facility as of March 31, 2003. There has been no material change in the
Company's contractual obligations and commitments from that disclosed in the
Company's Annual Report on Form 10-K for the year ended December 31, 2002.
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 credit facility (increasing the credit facility as required), long-term
non-recourse financing on the Company's unleveraged projects, joint ventures,
project sales and other financings as market conditions warrant. In September
1996, the Company filed a shelf registration statement with the Securities and
Exchange Commission ("SEC") for the offering from time to time of up to $200
million of common stock, warrants to purchase common stock and debt securities,
of which approximately $132 million remains available at March 31, 2003.
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 stockholders. 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 the Company's common stock.
Cash Flows. Net cash provided by operating activities of continuing
operations increased approximately $12.5 million in the three month 2003 period
as compared to the three month 2002 period. Income from continuing operations
before gain on sale of investment properties increased approximately $18.3
million which contributed to the increase in net cash provided by operating
activities. Depreciation and amortization increased approximately $4.2 million
due to 55 Second Street becoming partially operational for financial reporting
purposes and the write-offs of unamortized tenant improvements and leasing
commissions related to certain tenants who effected early terminations of their
lease obligations. Changes in other operating assets and liabilities decreased
approximately $10.6 million, which partially offset the increase in net cash
provided by operating activities.
Net cash used in investing activities increased approximately $2.7
million in the three month 2003 period. Investment in unconsolidated joint
ventures increased approximately $2.5 million, which contributed to the increase
in net cash used in investing activities. Contributions to Ten Peachtree Place
Associates increased approximately $3.9 million to pay for re-leasing costs at
Ten Peachtree Place, partially offset by a decrease in contributions to Crawford
Long - CPI, LLC of approximately $1.4 million. Distributions in excess of income
from unconsolidated joint ventures decreased approximately $1.4 million, which
also contributed to the increase in net cash used in investing activities. The
decrease in distributions in excess of income from unconsolidated joint ventures
was mainly due to a decrease in distributions of approximately $1.9 million, due
to a decrease in distributions of approximately $3.5 million from Wildwood
Associates, partially offset by an increase in distributions of approximately
$1.9 million from CSC Associates.
Net cash used in financing activities increased approximately $1.9
million in the three month 2003 period. The increase is mainly due to a decrease
of approximately $149.8 million in proceeds from other notes payable, due to the
February 2002 refinancing of Bank of America Plaza (see Note 4 of "Notes to
Consolidated Financial Statements" in the Company's Annual Report on Form 10-K
for the year ended December 31, 2002). Also contributing to the increase in net
cash used in financing activities was an increase of approximately $5.5 million
in common stock repurchases and a decrease in common stock sold, net of
expenses, of approximately $1.1 million. Partially offsetting the increase in
net cash used in financing activities was an increase in net amounts drawn on
the credit facility of $87.5 million. Additionally, repayment of other notes
payable decreased approximately $66.5 million due to the aforementioned
refinancing of Bank of America, which also partially offset the increase in net
cash used in financing activities.
Item 3. Quantitative and Qualitative Disclosure About Market Risk:
----------------------------------------------------------
There has been no material change 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, 2002.
Item 4. Controls and Procedures:
------------------------
Within the 90 days prior to the date of this report, the Company
carried out an evaluation, under the supervision of the Chief Executive Officer
and Chief Financial Officer and with the participation of the Company's
management, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective in
timely alerting them to material information relating to the Company required to
be included in the Company's periodic Securities and Exchange Commission
filings. No significant changes were made in the Company's internal controls or
in other factors that could significantly affect the Company's disclosure
controls or procedures subsequent to the date of their evaluation.
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
-----------------
The Company is subject to routine actions for negligence and
other claims and administrative proceedings arising in the
ordinary course of business, some of which are expected to be
covered by liability insurance and all of which collectively
are not expected to have a material impact on the financial
condition or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The Company's Annual Meeting of Stockholders was held on
May 6, 2003.
(b) Not applicable.
(c) The following proposals were adopted by the stockholders
of the Company:
(i) The election of eight Directors.
The vote on the above was:
For Against Abstained
---------- ------- ---------
Thomas D. Bell, Jr. 41,837,061 - 245,313
Richard W. Courts, II 40,632,839 - 1,449,535
Thomas G. Cousins 41,564,834 - 517,540
Lillian C. Giornelli 41,560,217 - 522,157
Terence C. Golden 40,635,796 - 1,446,578
Boone A. Knox 41,642,262 - 440,107
Hugh L. McColl, Jr. 41,829,378 - 252,996
William Porter Payne 41,635,665 - 446,709
(ii) A proposal to approve an amendment to the
1999 Incentive Stock Plan to increase the
number of shares of common stock available
under the 1999 Incentive Stock Plan by 1.0
million shares.
The vote on the above was:
For 37,966,559
Against 3,878,098
Abstained 237,717
Item 5. Other Information
-----------------
Form 10-Q and 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 without exhibits are available free of
charge upon written request to the Company at 2500 Windy Ridge
Parkway, Suite 1600, Atlanta, Georgia 30339-5683, Attention:
Mark A. Russell, Vice President - Chief Financial Analyst and
Director of Investor Relations. These items are also posted on
the Company's Web site at www.cousinsproperties.com.
Non-GAAP Financial Measures:
----------------------------
The Company uses non-GAAP financial measures in its filings
and other public disclosures. These non-GAAP financial
measures are defined below. For oral presentations,
reconciliations to the most directly comparable GAAP measure
may be accessed through the "Quarterly Press Release and
Supplemental Information" link and the "Supplemental SEC
Information" link on the Investor Relations page of the
Company's Web site, www.cousinsproperties.com.
The following is a list of non-GAAP financial measures that
the Company commonly uses and a description for each measure
of (1) the reasons that management believes the measure is
useful to investors, and (2) if material, any additional uses
of the measure by management of the Company.
"Funds From Operations" ("FFO") is a supplemental
operating performance measure used in the real estate
industry. See Note 7 contained in this report for a discussion
of FFO, including a definition of the term, an explanation of
why management believes it is useful to investors and the uses
of FFO by investors and the Company.
"Rental Property Revenues Less Rental Property
Operating Expenses" is used by industry analysts, investors
and Company management to measure operating performance of the
Company's properties. Like FFO, Rental Property Revenues Less
Rental Property Operating Expenses excludes certain components
from Net Income in order to provide results that are more
closely related to a property's results of operations. Certain
items, such as interest expense, while included in FFO and Net
Income, do not affect the operating performance of a real
estate asset and are often incurred at the corporate level as
opposed to the property level. As a result, management uses
only those income and expense items that are incurred at the
property level to evaluate a property's performance.
Depreciation and amortization are also excluded from this item
for the reasons described under FFO in Note 7. Additionally,
appraisals of real estate are based on the value of an income
stream before interest and depreciation.
"2nd Generation Tenant Improvements and Leasing Costs
and Building Capital Expenditures" is used in the valuation
and analysis of real estate. Because the Company develops and
acquires properties, in addition to operating existing
properties, its property acquisition and development
expenditures included in the Statements of Cash Flows includes
both initial costs associated with developing and acquiring
investment assets and those expenditures necessary for
operating and maintaining existing properties at historical
performance levels. The latter costs are referred to as second
generation costs and are useful in evaluating the economic
performance of the asset and in valuing the asset.
Accordingly, the Company discloses the portion of its property
acquisition and development expenditures that pertain to
second generation space in its operating properties.
"Adjusted Debt" is defined as the Company's debt and
the Company's pro rata share of unconsolidated joint venture
debt, excluding debt related to Charlotte Gateway Village,
L.L.C. ("Gateway"). The Company excludes Gateway debt as it is
fully secured by the underlying property and non-recourse to
the borrower and is fully amortized by rental payments under a
long-term lease to Bank of America. The Gateway debt is also
excluded from debt and coverage ratios for purposes of the
bank covenants pertaining to the Company's credit facility.
This measure is useful as a measure of the Company's ability
to meet its debt obligations and to raise additional debt.
"Interest Expense Coverage Ratio" is defined as the
ratio of FFO plus consolidated interest expense ("Consolidated
FFO Before Interest") divided by consolidated interest
expense. Consolidated interest expense is the sum of the
Company's interest expense plus its share of interest expense
for unconsolidated joint ventures. The Company's share of
interest expense for Gateway has been excluded in accordance
with the discussion under "Adjusted Debt" above. This measure
is useful as a measure of the Company's ability to meet its
debt obligations and to raise additional debt.
"Fixed Charge Coverage Ratio" is defined as
Consolidated FFO Before Interest divided by fixed charges.
Fixed charges is the sum of interest expense, principal
amortization under mortgage notes payable and ground lease
rental payments. Fixed charges include the Company's share of
fixed charges for unconsolidated joint ventures, with Gateway
expenses excluded, as discussed above. This measure is useful
as a measure of the Company's ability to meet its debt
obligations and to raise additional debt.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
3.1 Restated and Amended Articles of
Incorporation of the Registrant,
as amended August 9, 1999
(incorporated by reference from
the Company's quarterly report
on Form 10-Q for the quarter ended
June 30, 2002).
3.2 Bylaws of the Registrant, as
amended April 29, 1993
(incorporated by reference from
the Company's quarterly report on
Form 10-Q of the quarter ended
June 30, 2002).
10(a)(ii) Cousins Properties Incorporated
1999 Incentive Stock Plan,
approved by the Stockholders on
May 4, 1999, filed as Exhibit A to
the Registrant's Proxy Statement
dated March 29, 1999; as amended
and restated, approved by the
Stockholders on December 28, 2000,
filed as Exhibit A to the
Registrant's Proxy Statement dated
December 1, 2000; as amended and
restated, approved by the
Stockholders on May 1, 2001, filed
as Annex B in the Registrant's
Proxy Statement dated March 30,
2001; and as amended and restated,
approved by the Stockholders on
May 7, 2002, filed as Annex A in
the Registrant's Proxy Statement
dated March 29, 2002; and as
amended and restated, approved by
the Stockholders on May 6, 2003,
filed as Annex A in the
Registrant's Proxy Statement dated
March 25, 2003, and incorporated
herein by reference.
Exhibit 11 Computation of Per Share
Earnings.*
Exhibit 99.1 Certification Pursuant to
18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
Exhibit 99.2 Certification Pursuant to
18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) There were no reports on Form 8-K filed by the Registrant
during the quarter ended March 31, 2003.
* Data required by SFAS No. 128, "Earnings Per Share," is provided in Note 4 to
the consolidated financial statements in this report.
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
/s/ Tom G. Charlesworth
----------=-----------------------
Tom G. Charlesworth
Executive Vice President, Chief
Financial Officer and Chief
Investment Officer
(Duly Authorized Officer and
Principal Financial Officer)
May 8, 2003
FORM OF CERTIFICATION
---------------------
I, Thomas D. Bell, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Cousins
Properties Incorporated;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 8, 2003
/s/ Thomas D. Bell, Jr.
- ----------------------------------
Thomas D. Bell, Jr.
President, Chief Executive Officer
and Vice Chairman of the Board
FORM OF CERTIFICATION
---------------------
I, Tom G. Charlesworth, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Cousins
Properties Incorporated;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 8, 2003
/s/ Tom G. Charlesworth
- -------------------------------------------------
Tom G. Charlesworth
Executive Vice President, Chief Financial Officer
and Chief Investment Officer
A signed original of this written statement required by Section 906 has
been provided to Cousins Properties Incorporated and will be retained by Cousins
Properties Incorporated and furnished to the Securities and Exchange Commission
("SEC") or its staff upon request.