-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DeJN5iQHdisu8DKyxRAu4tXsEoJHxc/AicPWIvQVIRYN9Nx9qWOUTK6t5PpZXPPV 3y2ZA9zfjGJ6Buugm8cTaw== 0000025232-95-000020.txt : 19951109 0000025232-95-000020.hdr.sgml : 19951109 ACCESSION NUMBER: 0000025232-95-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951108 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COUSINS PROPERTIES INC CENTRAL INDEX KEY: 0000025232 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 580869052 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-03576 FILM NUMBER: 95588408 BUSINESS ADDRESS: STREET 1: 2500 WINDY RIDGE PKWY STE 1600 CITY: MARIETTA STATE: GA ZIP: 30067 BUSINESS PHONE: 4049552200 MAIL ADDRESS: STREET 1: 2500 WINDY RIDGE PARKWAY STREET 2: SUITE 1600 CITY: ATLANTA STATE: GA ZIP: 30339-5683 10-Q 1 SECURITIES AND EXCHANGE COMMISSION FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 1995 Commission file number 0-3576 COUSINS PROPERTIES INCORPORATED A GEORGIA CORPORATION I.R.S. EMPLOYER IDENTIFICATION NO. 58-0869052 2500 WINDY RIDGE PARKWAY ATLANTA, GEORGIA 30339-5683 TELEPHONE: 770-955-2200 Registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and has been subject to such filing requirements for the past 90 days. At October 31, 1995, 28,086,974 shares of common stock of the Registrant were outstanding. COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES CONSOLIDATED BALANCE SHEETS ($ in thousands, except per share amounts)
DECEMBER 31, SEPTEMBER 30, 1994 1995 ------------ ------------- (Unaudited) ASSETS - ------ PROPERTIES: Operating properties $104,576 $108,578 Land held for investment or future development 27,353 31,688 Projects under construction 8,711 57,511 Residential lots under development 8,602 10,592 Less: accumulated depreciation (12,112) (14,576) -------- -------- Total properties 137,130 193,793 -------- -------- CASH AND CASH EQUIVALENTS, at cost which approximates market 3,407 657 NOTES AND OTHER RECEIVABLES 52,571 52,757 INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 130,838 137,401 OTHER ASSETS 6,871 5,335 -------- -------- TOTAL ASSETS $330,817 $389,943 ======== ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT - ---------------------------------------- NOTES PAYABLE $ 41,799 $ 91,929 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 11,144 16,447 MINORITY INTERESTS IN CONSOLIDATED ENTITIES 3,631 3,823 DEPOSITS AND DEFERRED INCOME 1,345 373 -------- -------- TOTAL LIABILITIES 57,919 112,572 -------- -------- STOCKHOLDERS' INVESTMENT Common stock, $1 par value, authorized 50,000,000 shares; issued 27,863,741 shares at December 31, 1994 and 28,086,974 shares at September 30, 1995 27,864 28,087 Additional paid-in capital 147,495 150,932 Cumulative undistributed net income 97,539 98,352 -------- -------- TOTAL STOCKHOLDERS' INVESTMENT 272,898 277,371 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $330,817 $389,943 ======== ========
The accompanying notes are an integral part of these consolidated balance sheets. COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1995 (UNAUDITED) ($ in thousands, except per share amounts)
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, ------------------- ------------------- 1994 1995 1994 1995 ---- ---- ---- ---- REVENUES: Rental property revenues $3,507 $ 4,844 $ 8,957 $13,867 Development and construction fees 148 2,804 564 3,305 Management fees 522 547 1,539 1,648 Leasing and other fees 425 421 1,422 1,743 Residential lot and outparcel sales 2,389 5,469 2,959 7,595 Interest and other 1,156 1,245 4,964 3,581 ------ ------- ------- ------- 8,147 15,330 20,405 31,739 ------ ------- ------- ------- INCOME FROM UNCONSOLIDATED JOINT VENTURES 3,335 3,467 9,350 10,336 ------ ------- ------- ------- COSTS AND EXPENSES: Rental property operating expenses 798 1,119 2,293 3,227 General and administrative expenses 1,825 1,801 5,924 5,819 Depreciation and amortization 1,065 1,088 2,770 3,208 Leasing and other commissions 3 13 61 18 Stock appreciation right expense 380 308 184 493 Residential lot and outparcel cost of sales 2,172 5,142 2,657 7,085 Interest expense 10 123 348 377 Property taxes on undeveloped land 554 286 860 740 Other 383 502 701 1,138 ------ ------- ------- ------- 7,190 10,382 15,798 22,105 ------ ------- ------- ------- INCOME FROM OPERATIONS BEFORE INCOME TAXES AND GAIN ON SALE OF INVESTMENT PROPERTIES 4,292 8,415 13,957 19,970 PROVISION (BENEFIT) FOR INCOME TAXES FROM OPERATIONS (165) 562 (112) 803 INCOME BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES 4,457 7,853 14,069 19,167 GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF APPLICABLE INCOME TAX PROVISION 1,677 1,746 4,919 1,746 ------ ------- ------- ------- NET INCOME $6,134 $ 9,599 $18,988 $20,913 ====== ======= ======= ======= INCOME PER SHARE: From operations before gain on sale of investment properties $ .16 $ .28 $ .50 $ .69 From gain on sale of investment properties, net of applicable income tax provision .06 .06 .18 .06 ------ ------- ------- ------- NET INCOME PER SHARE $ .22 $ .34 $ .68 $ .75 ====== ======= ======= ======= CASH DIVIDENDS DECLARED PER SHARE $ .22 $ .24 $ .66 $ .72 ====== ======= ======= =======
The accompanying notes are an integral part of these consolidated statements. COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1995 (UNAUDITED) ($ in thousands)
1994 1995 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Income from operations before gain on sale of investment properties $14,069 $19,167 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization, net of minority interests' share 2,723 3,099 Stock appreciation right expense 184 493 Cash charges to expense accrual for stock appreciation rights (48) (103) Rental revenue recognized on straight-line basis in excess of rental revenue specified in lease agreements (164) (90) Deferred income received 691 1,673 Deferred income recognized (301) (2,800) Income from unconsolidated joint ventures (9,350) (10,336) Operating distributions from unconsolidated joint ventures 12,592 11,220 Residential lot and outparcel cost of sales 2,629 6,832 Changes in other operating assets and liabilities: Change in other receivables (281) 60 Change in accounts payable and accrued liabilities 2,160 1,040 ------- ------- Net cash provided by operating activities 24,904 30,255 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Property acquisition and development expenditures (28,541) (63,925) Investment in unconsolidated joint ventures (16,100) (8,671) Gain on sale of investment properties, net of applicable income tax provision 4,919 1,746 Investment properties cost of sales 2,844 1,051 Change in other assets, net (1,386) 1,085 Non-operating distributions from unconsolidated joint ventures 586 1,226 Collection of notes receivable 44,926 744 Principal payments received on government agency securities 618 128 Investment in notes receivable (28,043) - ------- ------- Net cash used in investing activities (20,177) (66,616) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of lines of credit (46,369) (58,373) Proceeds from lines of credit 47,486 57,241 Proceeds from other notes payable 841 51,500 Dividends paid (18,376) (20,100) Common stock issued under dividend reinvestment plan - 3,328 Common stock issued under employee/director plans 77 253 Repayment of other notes payable (16,964) (238) Net cash (used in) provided by financing activities (33,305) 33,611 ------- ------- NET DECREASE IN CASH AND CASH EQUIVALENTS (28,578) (2,750) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 31,684 3,407 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,106 $ 657 ======= =======
The accompanying notes are an integral part of these consolidated statements. COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (UNAUDITED) 1. BASIS OF PRESENTATION - ------------------------- The Consolidated Financial Statements include the accounts of Cousins Properties Incorporated ("Cousins") and its majority owned partnerships, as well as Cousins Real Estate Corporation ("CREC") and its subsidiaries. All of the entities included in the Consolidated Financial Statements are hereinafter referred to collectively as the "Company." Cousins has elected to be taxed as a real estate investment trust ("REIT"), and intends to distribute 100% of its federal taxable income to stockholders, thereby eliminating any liability for future corporate federal income taxes. Therefore, the results included herein do not include a federal income tax provision for Cousins. However, CREC and its subsidiaries are taxed separately from Cousins as a regular corporation. Accordingly, the Consolidated Statements of Income include a provision for CREC's income taxes. The Consolidated Financial Statements were prepared by the Company without audit, but in the opinion of management reflect all adjustments necessary for the fair presentation of the Company's financial position as of September 30, 1995, and results of operations for the nine month periods ended September 30, 1994 and 1995. Results of operations for the interim 1995 period are not necessarily indicative of results expected for the full year. While certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, the Company believes that the disclosures herein are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1994. The accounting policies employed are the same as those shown in Note 1 to the Consolidated Financial Statements included in Form 10-K. 2. SUPPLEMENTAL INFORMATION CONCERNING CASH FLOWS - -------------------------------------------------- Interest (net of $741,000 and $3,469,000 capitalized in 1994 and 1995, respectively) and income taxes paid (net of $252,000 refunded in 1995) were as follows for the nine months ended September 30, 1994 and 1995 ($ in thousands):
1994 1995 ---- ---- Interest paid $294 $568 Income taxes paid $ 29 $201
In September 1995, North Point MarketCenter-Phase II (approximately $2,860,000) was transferred from Projects Under Construction to Operating Properties. 3. COSTS CAPITALIZED AND FEES ELIMINATED IN CONSOLIDATION - --------------------------------------------------------- Development, construction, and leasing fees received by CREC and its subsidiaries from Cousins and Cousins' majority owned joint ventures are eliminated in consolidation. Costs related to planning, development, leasing and construction of properties (including related general and administrative expenses) are capitalized. The table below shows the fees eliminated, the internal costs capitalized related to these fees, and the additional internal costs capitalized by CREC to its own residential developments for the nine months ended September 30, 1994 and 1995 ($ in thousands):
1994 1995 ------ ------ Fees eliminated in consolidation $2,510 $3,775 Internal costs capitalized to projects on which fees were eliminated 936 1,919 Internal costs capitalized to CREC residential developments 194 355
4. NOTES PAYABLE AND INTEREST EXPENSE - -------------------------------------- At December 31, 1994 and September 30, 1995, the composition of notes payable were as follows ($ in thousands):
December 31, 1994 September 30, 1995 Share of Share of Consolidated Unconsolidated Consolidated Unconsolidated Entities Joint Ventures Total Entities Joint Ventures Total ------------ -------------- -------- ------------ -------------- -------- Fixed Rate Mortgages (non-recourse) $ 1,168 $72,650 $ 73,818 $52,429 $71,991 $124,420 Floating Rate Lines of Credit 40,631 6,905 47,536 39,500 10,983 50,483 ------- ------- -------- ------- ------- -------- $41,799 $79,555 $121,354 $91,929 $82,974 $174,903 ======= ======= ======== ======= ======= ========
n July 1995, the Company completed the long term non-recourse financing of its North Point MarketCenter and Perimeter Expo retail power centers. The North Point MarketCenter financing is for $30 million, with an interest rate of 8.5% and a maturity of 10 years. The Perimeter Expo financing is for $21.5 million, with an interest rate of 8.04% and a maturity of 10 years. Proceeds of the financings were used to reduce borrowing under the Company's line of credit. The Company and its unconsolidated joint ventures have received commitments for the following financings and refinancings which are expected to be closed in the fourth quarter of 1995. Cousins has received a commitment to borrow $28 million for five years at a floating interest rate of LIBOR plus 1% secured by its interest in the 650 Massachusetts Avenue Mortgage Notes (see Note 3 of "Notes to Consolidated Financial Statements" in the Company's annual report on Form 10-K for the year ended December 31, 1994). Wildwood Associates ("WWA") has received commitments to refinance two existing mortgages. The mortgage note payable secured by the 2500 Windy Ridge Parkway Building (due June 28, 1996 with a balance of $30.8 million as of September 30, 1995 and an interest rate of 9.125%) will be paid down to and refinanced at $26 million. The new mortgage will have a ten year term with an interest rate of 7.45%. The mortgage note payable secured by the 2300 Windy Ridge Parkway Building (due August 10, 1999 with a balance of $81.4 million as of September 30, 1995 and an interest rate of 9.09%) will be paid down to and refinanced at $72 million. The new mortgage will have a ten year term with an interest rate of 7.56%. There is no prepayment penalty associated with the refinancing of the 2300 Windy Ridge Parkway Building. WWA will draw against its existing $50 million line of credit to finance the difference between the existing mortgages' balances and the refinanced amounts. This line of credit was extended to September 1, 1997 with all terms remaining the same. For the three and nine months ended September 30, 1995, interest expense was recorded as follows ($ in thousands):
Three Months Ended Nine Months Ended September 30, 1995 September 30, 1995 ------------------------------------- ------------------------------------- Share of Share of Consolidated Unconsolidated Consolidated Unconsolidated Entities Joint Ventures Total Entities Joint Ventures Total ------------ -------------- ------- ------------ -------------- ------- Interest Expensed $ 123 $1,685 $1,808 $ 377 $5,140 $5,517 Interest Capitalized 1,563 94 1,657 3,469 94 3,563 ------ ------ ------ ------ ------ ------ $1,686 $1,779 $3,465 $3,846 $5,234 $9,080 ====== ====== ====== ====== ====== ======
During the third quarter of 1995, interest related to consolidated and the Company's share of unconsolidated joint venture projects under construction with an average balance of $84 million was capitalized. 5. DEVELOPMENT ACTIVITIES - -------------------------- 4100/4300 Wildwood Parkway -------------------------- In August 1995, construction commenced on two new office buildings in the Wildwood Office Park on approximately 12.6 acres of land owned by Wildwood Associates. The two buildings are expected to cost approximately $32 million and will be a total of 250,000 rentable square feet, of which 227,000 rentable square feet are pre-leased to Georgia-Pacific Corporation. North Point Center-East Phase II -------------------------------- In November 1995, construction commenced on Phase II of North Point Center-East, a 125,000 rentable square foot office building at North Point, adjacent to North Point Mall and the Company's retail properties in north central suburban Atlanta. Construction commenced on this building after Phase I, a 128,000 rentable square foot office building, became 100% pre-committed. Phase I is expected to be completed in December 1995, and Phase II is scheduled for completion in the second half of 1996. 6. DUSSELDORF JOINT VENTURE - ---------------------------- In 1992, the Company entered into a joint venture agreement for the development of a 133,000 rentable square foot office building in Dusseldorf, Germany (see Note 5 of "Notes to Consolidated Financial Statements" in the Company's annual report on Form 10-K for the year ended December 31, 1994). Due to the release of certain completion guarantees related to the building, approximately $2,604,000 of previously deferred development income was recognized in September 1995. PART I. FINANCIAL INFORMATION - ------------------------------ Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended September 30, 1994 and 1995. RESULTS OF OPERATIONS: - --------------------- RENTAL PROPERTY REVENUES AND OPERATING EXPENSES. Rental property revenues were approximately $1,337,000 and $4,910,000 higher in the three and nine month 1995 periods, respectively. The increase was primarily due to rental property revenues from two retail power centers, North Point MarketCenter and Presidential MarketCenter-Phase I. North Point MarketCenter, which increased $508,000 and $2,243,000 in the three and nine month 1995 periods, respectively, became operational in May 1994 (Phase I) and September 1995 (Phase II). Presidential MarketCenter-Phase I, which increased $479,000 and $1,293,000 in the three and nine month 1995 periods, respectively, became operational in December 1994. Perimeter Expo, which was still in the lease-up phase during the third quarter of 1994, also contributed to the increase ($46,000 and $433,000, in the three and nine month 1995 periods, respectively). In addition, $115,000 and $315,000 of the increase in the three and nine month 1995 periods, respectively, was due to revenue from additional parcels of the Georgia Highway 400 land being ground leased to free standing users. Rental property revenues were also favorably impacted by First Union Tower ($127,000 and $289,000 increases in the three and nine month 1995 periods, respectively) and the 3301 Windy Ridge Parkway Building ($42,000 and $106,000 increases in the three and nine month 1995 periods, respectively). Rental property operating expenses increased approximately $321,000 and $934,000 in the three and nine month 1995 periods, respectively, which increase is primarily related to the occupancy of the three retail power centers in 1994. DEVELOPMENT AND CONSTRUCTION FEES. Development and construction fees were approximately $2,656,000 and $2,741,000 higher in the three and nine month 1995 periods, respectively. The increase is due primarily to the recognition of development income from the Dusseldorf project ($2,604,000) which had previously been deferred (see Note 6). Also contributing to the increase were development and construction fees related to Wildwood Office Park (increases of $128,000 and $202,000 in three and nine month 1995 periods, respectively), primarily due to construction of two new buildings (see Note 5). Partially offsetting these increases were decreases of $38,000 and $82,000 in the three and nine month 1995 periods, respectively, in development fees recognized by the Company's retail division from third party developments . LEASING AND OTHER FEES. Leasing and other fees decreased approximately $4,000 in the three month 1995 period and increased approximately $321,000 in the nine month 1995 period. The increase in the nine month period was due primarily to a $374,000 third party incentive fee received by the Company's retail division. This increase was partially offset by a decrease of $209,000 in leasing fees recognized by the Company's retail division from third party developments. In the nine month 1995 period, leasing fee income from NationsBank Plaza increased $152,000. RESIDENTIAL LOT AND OUTPARCEL SALES AND COST OF SALES. Residential lot and outparcel sales increased $3,080,000 and $4,636,000 in the three and nine month 1995 periods, respectively. The increase in the three month 1995 period was due to an increase in residential lot sales from 42 lots sold in the 1994 period to 123 lots sold in the 1995 period. The increase in the nine month 1995 period was also due to an increase in residential lot sales from 55 lots sold in the 1994 period to 150 lots sold in the 1995 period. Also included in the increase of the nine month 1995 period was $525,000 from the sale of an outparcel site in Presidential MarketCenter-Phase I by a subsidiary of CREC. There was no similar sale in the nine month 1994 period. Residential lot and outparcel cost of sales increased $2,970,000 and $4,428,000 in the three and nine month 1995 periods, respectively. These increases were directly related to the sales increases discussed above. INTEREST AND OTHER REVENUE. Interest and other revenue increased approximately $89,000 in the three month 1995 period and decreased approximately $1,383,000 in the nine month 1995 period. The increase in the three month 1995 period is due primarily to interest of $71,000 on tax refunds received as discussed below. Approximately $1,813,000 of the decrease in the nine month 1995 period was primarily due to repayment of $39.9 million of 9.1% mortgage notes upon their maturity in June 1994. Additionally, interest income decreased $135,000 in the nine month 1995 period due to lower cash balances. The decrease in the nine month 1995 period was partially offset by interest income recognized on the 650 Massachusetts Avenue mortgage notes acquired in March 1994 ($533,000 increase). INCOME FROM UNCONSOLIDATED JOINT VENTURES. (All amounts reflect the Company's share of joint venture income.) Income from unconsolidated joint ventures increased approximately $132,000 and $986,000 in the three and nine month 1995 periods, respectively. Income from Haywood Mall Associates decreased approximately $123,000 in the three month 1995 period and increased approximately $424,000 in the nine month 1995 period. The increase was due primarily to the venture's prepayment of its outstanding debt through equity contributions of $10 million from each partner on April 29, 1994. Income from CSC Associates, L.P. increased approximately $79,000 and $334,000 in the three and nine month 1995 periods, respectively, as leases at NationsBank Plaza executed in 1994 impacted operating results in 1995. Income from Wildwood Associates increased approximately $66,000 and $223,000 in the three and nine month 1995 periods, respectively, due to increased office building rentals and increased rental revenue from certain ground lease sites which began generating rental revenue during the second quarter of 1994 and during the second quarter of 1995. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses decreased approximately $24,000 and $105,000 in the three and nine month 1995 periods, respectively. This decrease was primarily due to an increase in costs capitalized to projects under development ($2,274,000 in the nine month 1995 period versus $1,130,000 in the nine month 1994 period and $799,000 in the three month 1995 period versus $434,000 in the three month 1994 period). The decrease was partially offset by increases related to personnel increases due to the Company's continued expansion. DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased approximately $23,000 and $438,000 in the three and nine month 1995 periods, respectively. This increase is due primarily to Perimeter Expo, North Point MarketCenter-Phases I and II and Presidential MarketCenter-Phase I retail power centers, becoming operational in December 1993, May 1994, September 1995 and December 1994, respectively (increases of $148,000 and $724,000 in the three and nine month 1995 periods, respectively). These increases were partially offset by decreases of $67,000 and $208,000 in the three and nine month 1995 periods, respectively, in the amortization of intangible assets acquired from the purchase of the Company's retail division in 1992. These intangible assets were fully amortized in 1994. STOCK APPRECIATION RIGHT EXPENSE. This non-cash item is primarily related to the Company's stock price, which was $16.50, $15.50, and $16.75 at December 31, 1993, June 30, 1994, and September 30, 1994, respectively; and $17.375, $17.75, and $18.25 at December 31, 1994, June 30, 1995 and September 30, 1995, respectively. INTEREST EXPENSE. Interest expense increased approximately $113,000 and $29,000 in the three and nine month 1995 periods, respectively. Interest expense before capitalization increased approximately $1,495,000 and $2,757,000 in the three and nine month 1995 periods, respectively, due to higher debt levels and higher interest rates. Interest rates on floating rate debt increased in the three and nine month 1995 periods, respectively. Additionally, during the third quarter of 1995, $50 million of floating rate debt was replaced with long term fixed rate debt at higher interest rates. The increase in interest expense was partially offset by increased capitalization because of a higher level of projects under development. INCOME TAXES. The provision for income taxes from operations increased approximately $727,000 and $915,000 in the three month and nine month 1995 periods, respectively. The increase is due to an increase in CREC and its subsidiaries' income before income taxes of approximately $2,552,000 and $3,046,000 in the three and nine month 1995 periods, respectively. This increase in CREC and its subsidiaries' income before income taxes was primarily due to the recognition of CREC's share of the development income from the Dusseldorf project in the three month 1995 period (see Note 6). Also, contributing to the increase in CREC and its subsidiaries' income before income taxes was an increase in intercompany development and leasing fees and decreased intangible amortization. Intercompany fee income is eliminated in consolidation, but the tax effect is not. The increase in the provision for income taxes from operations was partially offset by $252,000 of state income tax refunds received related to a successful judicial appeal by Cousins of an assessment paid in 1992. GAIN ON SALE OF INVESTMENT PROPERTIES. The $4,919,000 gain on sale of investment properties in 1994 was from the June 1994 sale of the Company's 9 acre Peachtree Road property and the August 1994 sale of the 10.8 acre site in North Point MarketCenter - Phase II. The $1,746,000 gain on sale of investment properties in 1995 included the following: the August 1995 sale of the approximately 1 acre parcel proximate to the CNN Center in downtown Atlanta, the September sale of a 6.2 acre parcel in West Cobb County Georgia and the September simultaneous purchase and sale of a 78 acre parcel adjacent to the Company's Bradshaw Farm residential development in suburban Atlanta. FINANCIAL CONDITION: - ------------------- Major investment activity during the third quarter of 1995 included $18.9 million of property acquisition and development investments, primarily in projects under construction. The Company also made $600,000 of contributions during the third quarter of 1995 to Haywood Mall Associates to fund the expansion of the mall (see Note 5 of "Notes to Consolidated Financial Statements" in the Company's annual report on Form 10-K for the year ended December 31, 1994). The source of cash for these investments was primarily the Company's line of credit and net cash proceeds of $2.8 million from the sale of certain investment properties as discussed above. The Company has development projects in various stages. The Company currently intends to finance these projects, as well as the completion of projects currently under construction, using its existing lines of credit. The Company intends to pay down its line of credit from time to time through long term non-recourse financing secured by completed projects, as it did in July 1995 (see Note 4). Additionally, the Company and its unconsolidated joint ventures have received commitments for financings and refinancings which are expected to be closed in the fourth quarter of 1995 (see Note 4). SUPPLEMENTAL FINANCIAL INFORMATION: - ---------------------------------- Depreciation and amortization expense include the following components for the three and nine months ended September 30, 1995 ($ in thousands):
Three Months Ended Nine Months Ended September 30, 1995 September 30, 1995 ------------------------------------ ------------------------------------ Share of Share of Consolidated Unconsolidated Consolidated Unconsolidated Entities Joint Ventures Total Entities Joint Ventures Total ------------ -------------- ------- ------------ -------------- ------- General and administrative $ 95 $ 24 $ 119 $ 294 $ 99 $ 393 Deferred financing costs - 20 20 - 60 60 Goodwill and related business acquisition costs 57 6 63 171 21 192 Real estate related: Building (including tenant first generation) 898 2,059 2,957 2,631 6,031 8,662 Tenant second generation 38 163 201 112 436 548 ------ ------ ------ ------ ------ ------ $1,088 $2,272 $3,360 $3,208 $6,647 $9,855 ====== ====== ====== ====== ====== ======
Exclusive of new developments, the Company had the following capital expenditures during the three and nine months ended September 30, 1995, including its share of unconsolidated joint ventures ($ in thousands):
Three Months Ended Nine Months Ended September 30, 1995 September 30, 1995 ------------------------- ------------------------- Office Retail Other Total Office Retail Other Total ------ ------ ----- ----- ------ ------ ----- ----- Second generation related costs $ 354 $ - $ - $354 $888 $ - $ - $ 888 Building improvements - - - - 17 23 - 40 Furniture, fixtures and equipment - - 53 53 18 - 158 176 ---- --- --- ---- ---- --- ---- ------ $354 $ - $53 $407 $923 $23 $158 $1,104 ==== === === ==== ==== === ==== ======
PART II. OTHER INFORMATION - --------------------------- Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits -------- 27 Financial Data Schedule (b) Reports on Form 8-K ------------------- There were no reports on Form 8-K filed by the Registrant during the fiscal quarter ended September 30, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. COUSINS PROPERTIES INCORPORATED Registrant /s/ Peter A. Tartikoff ---------------------------------------------- Peter A. Tartikoff Senior Vice president - Finance (Authorized Officer) (Principal Financial Officer) November 8, 1995 EX-27 2
5 3-MOS DEC-31-1995 SEP-30-1995 657 0 52,757 0 0 0 208,369 14,576 389,943 0 0 28,087 0 0 249,284 389,943 0 31,739 0 22,105 0 0 377 19,970 803 20,913 0 0 0 20,913 .75 .75
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